Wells Fargo Bank & Union Trust Company vs The Collector of Internal Revenue

G.R. No. L-46720; June 28, 1940

Facts:
In September 1932, Birdie Lillian Eye died in Los Angeles, California, USA which was also her place
of domicile. She left various properties. Among those properties include some intangibles consisting of
70,000 shares in the Benguet Consolidated Mining Company, a corporation organized and existing
under Philippine laws.

The Collector of Internal Revenue sought to assess and collect estate tax on the said shares. Wells
Fargo Banks & Union Trust Company, the trustee of the estate of the decedent Eye, objected to said
assessment. Wells Fargo averred that said shares were already subjected to inheritance tax in California
and hence cannot be taxed again in the Philippines (note at that time the Philippines was still under the
Commonwealth and were not yet totally independent from the US).

Issue: Whether or not the shares are subject to estate tax in the Philippines.

Held: Yes. The Supreme Court ruled that even though the Philippines was considered a US territory at
that time, it is still a separate jurisdiction from the US in several aspects particularly taxation. Hence,
the Philippines has the power to tax said shares. The situs of taxation is here in the Philippines because
the situs of the shares of stock concerned is here in the Philippines because of the fact that the said
shares were issued here by a corporation organized and existing under the laws of the Philippines
which is also domiciled here.

Originally, the settled law in the United States is that intangibles have only one situs for the purpose of
inheritance tax, and that such situs is in the domicile of the decedent at the time of his death. But this
rule has, of late, been relaxed. The maxim mobilia sequuntur personam, upon which the rule rests, has
been described as a mere "fiction of law having its origin in consideration of general convenience and
public policy, and cannot be applied to limit or control the right of the state to tax property within its
jurisdiction. However, Section 104 of the NIRC provides that if the shares have attained business
situs here in the Philippines, then said shares are taxable here even if the owner of said shares are
domiciled abroad.