COMMISSIONER

GR No. L-28896, February 17, 1988

158 SCRA 9

v.

ALGUE,

INC.

FACTS: Private respondent corporation Algue Inc. filed its income tax returns for 1958 and
1959showing deductions, for promotional fees paid, from their gross income, thus lowering their
taxable income. The BIR assessed Algue based on such deductions contending that the claimed
deduction is disallowed because it was not an ordinary, reasonable and necessary expense.
ISSUE: Should an uncommon business expense be disallowed as a proper deduction in computation of
income taxes, corollary to the doctrine that taxes are the lifeblood of the government?
HELD: No. Private respondent has proved that the payment of the fees was necessary and reasonable
in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to
venture in an xperimental enterprise and involve themselves in a new business requiring millions of
pesos. This was no mean feat and should be, as it was, sufficiently recompensed.
It is well-settled that taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance On the other hand, such collection should be made in accordance with law as
any arbitrariness will negate the very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real
purpose of taxation, which is the promotion of the common good, may be achieved.
But even as we concede the inevitability and indispensability of taxation, it is a requirement in all
democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If
it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all
the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can
demonstrate, as it has here, that the law has not been observed.

Commissioner vs. Algue

158 SCRA 9
Facts:
The Philippine Sugar Estate Development Company (PSEDC). Appointed
Algue Inc. as its agent. Algue received a commission of 125,000.00 and it was
from their commission that it paid organizers of VOICP 75,000.00 in proportional
fees. He received an assessment from the CIR. He filed a letter of protest or
reconsideration. The CIR contends that the claimed deduction was properly
disallowed because it was not an ordinary, reasonable or necessary expense.
Issue: Is the CIR correct?
Ruling:
No. taxes are the lifeblood of the government and should be collected
without unnecessary hindrance. Every person who is able to pay must contribute his
share in the running of the government. The government for its part is expected to

respond in the form of tangible and intangible benefits intended to improve the lives
of the people and enhance their moral and material values. This symbiotic
relationship is the rationale of taxation and should dispel the erroneous notion that
is an arbitrary method of exaction by those in the seat of power.
On the other hand, such collection should be made in accordance with law
as any arbitrariness will negate the very reason for government itself.

CIR vs. BPI

G.R. No. 134062

April 17, 2007

Corona, J.:
FACTS:
In October 28, 1988, petitioner assessed BPI of deficiency percentage
and documentary stamp tax for the year 1986, in the total amount of
P129,488,056.63. A letter reply by respondent was sent on December 10, 1988
stating among other:
... we shall inform you the taxpayers decision on whether to pay of protest the
assessment, CTA ruled that BPI failed to protest on time under Sec 270 of NIRC of
1986.
ISSUE:
Whether or not the assessments issued to BPI for deficiency percentage
and documentary stamp taxes for 1986 had already become final and unappealable.
RULING:
In merely notifying BPI of his findings. CIR relied on the provisions of the
former Section 270 prior to its amendment by RA 8424. The sentence
the taxpayers shall be informed in writing of the law and the facts on which the
assessment is made
Was not in the old Section 270 but was only later on inserted in the
renumbered Section 228 in 1997.
Tax assessments by tax examiners are presumed correct and are made
in good faith. The taxpayer has the duty to prove otherwise. In the absence of proof
of any irregularities in the performance of duties, an assessment duly made by BIR

examiner and approved by his superior officers will not be distributed. All
presumptions are in favor of the correctness of tax assessments.

TIO VS. VIDEOGRAM REGULATORY BOARD [151 SCRA 208; G.R. No. L-75697; 18 Jun
1987]
Friday, January 30, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law
Facts: The case is a petition filed by petitioner on behalf of videogram operators
adversely affected by Presidential Decree No. 1987, An Act Creating the Videogram
Regulatory Board" with broad powers to regulate and supervise the videogram
industry.
A month after the promulgation of the said Presidential Decree, theamended the
National Internal Revenue Code provided that:
"SEC. 134. Video Tapes. There shall be collected on each processed video-tape
cassette, ready for playback, regardless of length, an annual tax of five pesos;
Provided, That locally manufactured or imported blank video tapes shall be subject
to sales tax."
"Section 10. Tax on Sale, Lease or Disposition of Videograms. Notwithstanding
any provision of law to the contrary, the province shall collect a tax of thirty percent
(30%) of the purchase price or rental rate, as the case may be, for every sale, lease
or disposition of a videogram containing a reproduction of any motion picture or
audiovisual program.
Fifty percent (50%) of the proceeds of the tax collected shall accrue to theprovince,
and the other fifty percent (50%) shall accrue to the municipality where the tax is
collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by
the City/Municipality and the Metropolitan Manila Commission.
The rationale behind the tax provision is to curb the proliferation and unregulated
circulation of videograms including, among others, videotapes, discs, cassettes or
any technical improvement or variation thereof, have greatly prejudiced the
operations of movie houses and theaters. Such unregulated circulation have caused
a sharp decline in theatrical attendance by at least forty percent (40%) and a
tremendous drop in the collection of sales, contractor's specific, amusement and

other taxes, thereby resulting in substantial losses estimated at P450 Million

annually in government revenues.
Videogram(s) establishments collectively earn around P600 Million per annum from
rentals, sales and disposition of videograms, and these earnings have not been
subjected to tax, thereby depriving the Government of approximately P180 Million
in taxes each year.
The unregulated activities of videogram establishments have also affected the
viability of the movie industry.

Issues:
(1) Whether or not tax imposed by the DECREE is a valid exercise of police power.
(2) Whether or nor the DECREE is constitutional.

Held: Taxation has been made the implement of the state's police power. The levy
of the 30% tax is for a public purpose. It was imposed primarily toanswer the need
for regulating the video industry, particularly because of the rampant film piracy,
the flagrant violation of intellectual property rights, and the proliferation of
pornographic video tapes. And while it was also an objective of the DECREE to
protect the movie industry, the tax remains a valid imposition.
We find no clear violation of the Constitution which would justify us in pronouncing
Presidential Decree No. 1987 as unconstitutional and void. While the underlying
objective of the DECREE is to protect the moribund movie industry, there is
no question that public welfare is at bottom of its enactment, considering "the
unfair competition posed by rampant film piracy; the erosion of the moral fiber of
the viewing public brought about by the availability of unclassified and
unreviewed video tapes containing pornographic films and films with brutally violent
sequences; and losses in government revenues due to the drop in theatrical
attendance, not to mention the fact that the activities of video establishments are
virtually untaxed since mere payment of Mayor's permit and municipal license fees
are required to engage in business."
WHEREFORE, the instant Petition is hereby dismissed. No costs.

R. No. 168557 Case Digest

G.R. No. 168557, February 16, 2007

FELS Energy, Inc.

vs Province of Batangas and the Office of the Provincial Assessor of
Batangas
Ponente: Callejo, Sr.

Facts:
January 1993, NPC entered into a lease contract with Polar Energy over MW diesel
engine power barges in Batangas for a period of 5 years. Subsequently, Polar
assigned its rights under the agreement to FELS. NPC initially opposed.

August 1995, FELS received an assessment of real property taxes on the barges.
FELS referred the matter to NPC reminding it of its obligation under the agreement
to pay the real estate taxes. NPC sought for reconsideration of the decision but the
motion was denied.
NPC filed a petition to the Local Board Assessment Appeals. The provincial Assessor
averred that the barges were real property for the purpose of taxation. LBAA still
denied the petition filed by NPC and ordered FELS to pay the taxes.
LBAA Ruling: power plant facilities are considered real property because they are
installed at a specific location with a character of permanency. The owner of the
barges-FELS is a private corporation-is the one being taxed, not NPC. The
agreement will not justify the exemption of FELS.
FELS then appealed to Central BAA. CBAA rendered s decision finding the power
barges exempt from real property tax.
CBAA Ruling: the power barges belong to NPC since they are actually used by it.
FELS appealed before the CA but was denied as well.
Held:
YES. The CBAA and LBAA power barges are real property and are thus subject to
real property tax. This is also the inevitable conclusion, considering that G.R. No.
165113 was dismissed for failure to sufficiently show any reversible error. Tax
assessments by tax examiners are presumed correct and made in good faith, with
the taxpayer having the burden of proving otherwise. Besides, factual findings of
administrative bodies, which have acquired expertise in their field, are generally
binding and conclusive upon the Court; we will not assume to interfere with the
sensible exercise of the judgment of men especially trained in appraising property.

Where the judicial mind is left in doubt, it is a sound policy to leave the assessment
undisturbed. We find no reason to depart from this rule in this case.
Moreover, Article 415 (9) of the New Civil Code provides that docks and structures
which, though floating, are intended by their nature and object to remain at a fixed
place on a river, lake, or coast are considered immovable property. Thus, power
barges are categorized as immovable property by destination, being in the nature of
machinery and other implements intended by the owner for an industry or work
which may be carried on in a building or on a piece of land and which tend directly
to meet the needs of said industry or work.
Petitioners maintain nevertheless that the power barges are exempt from real
estate tax under Section 234 (c) of R.A. No. 7160 because they are actually, directly
and exclusively used by petitioner NPC, a government- owned and controlled
corporation engaged in the supply, generation, and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the owner of the taxable
properties is petitioner FELS, which in fine, is the entity being taxed by the local
government. As stipulated under Section 2.11, Article 2 of the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the
fixtures, fittings, machinery and equipment on the Site used in connection with the
Power Barges which have been supplied by it at its own cost. POLAR shall operate,
manage and maintain the Power Barges for the purpose of converting Fuel of
NAPOCOR into electricity.
It follows then that FELS cannot escape liability from the payment of realty taxes by
invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed, the law states
that the machinery must be actually, directly and exclusively used by the
government owned or controlled corporation; nevertheless, petitioner FELS still
cannot find solace.

CIR vs. Tokyo Shipping Co., Ltd.

Facts: Tokyo shipping is a foreign corporation which owns and operates a vessel. The
vessel was chartered by a certain Nasutra to load raw sugar in the Phil thru its
representative. Thus, Tokyo Shippings representative made a pre-payment of the
required income and common carriers taxes. Upon arrival at the port, the vessel
found no sugar for loading, thus, claimed for a tax refund. The CIR failed to act
promptly, thus, respondent went to CTA which decided in their favor. The CIR claims
otherwise.
Issue: WON Tokyo Shipping is entitled to a tax refund.
Held: Affirmative.

Pursuant to section 24 (b) (2) of the National Internal Revenue Code, a resident
foreign corporation engaged in the transport of cargo is liable for taxes depending
on the amount of income it derives from sources within the Philippines. Thus, before
such a tax liability can be enforced the taxpayer must be shown to have earned
income sourced from the Philippines. The respondent court held that sufficient
evidence has been adduced by the private respondent proving that it derived no
receipt from its charter agreement with NASUTRA.
Fair deal is expected by our taxpayers from the BIR and the duty demands that BIR
should refund without any unreasonable delay what it has erroneously collected.
The power of taxation is sometimes called also the power to destroy. Therefore it
should be exercised with caution to minimize injury to the proprietary rights of a
taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill
the hen that lays the golden egg. And, in order to maintain the general publics
trust and confidence in the Government this power must be used justly and not
treacherously.
Pilipinas Shell Petrolium Corp v. CIR
G.R. No. 172598; December 21, 2007

Facts: In 1988, BIR sent a collection letter to Petitioner Pilipinas Shell Petroleum
Corporation (PSPC) for alleged deficiency excise tax liabilities of PhP
1,705,028,008.06 for the taxable years 1992 and 1994 to 1997, inclusive of
delinquency surcharges and interest. As basis for the collection letter, the BIR
alleged that PSPC is not a qualified transferee of the TCCs it acquired from other
BOI-registered companies. These alleged excise tax deficiencies covered by the
collection letter were already paid by PSPC with TCCs acquired through, and issued
and duly authorized by the Center, and duly covered by Tax Debit Memoranda
(TDM) of both the Center and BIR, with the latter also issuing the corresponding
Accept Payment for Excise Taxes (APETs).

PSPC protested the collection letter, but it was denied. Because of respondent
inaction on a motion for reconsideration PSPC filed a petition for review before the
CTA.

In 1999, the CTA ruled that the use by PSPC of the TCCs was legal and valid, and
that respondents attempt to collect alleged delinquent taxes and penalties from
PSPC without an assessment constitutes denial of due process. Respondent
elevated CTA Decision to the Court of Appeals (CA) through a petition for review.

Despite the pendency of this case, PSPC received assessment letter from
respondent for excise tax deficiencies, surcharges, and interest based on the first
batch of cancelled TCCs and TDM covering PSPCs use of the TCCs. All these
cancelled TDM and TCCs were also part of the subject matter of the now pending
before the CA.

PSPC protested the assessment letter, but the protest was denied by the BIR,
constraining it to file another case before the CTA. Subsequently, CTA ruled in favor
of PSPC and accordingly cancelled and set aside the assessment issued by the
respondent. Respondent motion for reconsideration of the above decision which was
rejected thus respondent appealed the above decision before the CTA En Banc.

The CTA En Banc ruled in favor of respondent and ordered PSPC to pay the amount
of P570,577,401.61 as deficiency excise tax for the taxable years 1992 and 1994 to
1997, inclusive of 25% surcharge and 20% interest.
Issue: Whether or not petitioner is liable for the assessment of deficiency excise tax
after the validly issued TCCs were subsequently cancelled for having been issued
fraudulently

Held: No. Petitioner is not liable for the assessment of deficiency excise tax.

In the instant case, with due application, approval, and acceptance of the payment
by PSPC of the subject TCCs for its then outstanding excise tax liabilities in 1992
and 1994 to 1997, the subject TCCs have been canceled as the money value of the
tax credits these represented have been used up. Therefore, the DOF through the
Center may not now cancel the subject TCCs as these have already been canceled
and used up after their acceptance as payment for PSPCs excise tax liabilities.
What has been used up, debited, and canceled cannot anymore be declared to be
void, ineffective, and canceled anew.
Besides, it is indubitable that with the issuance of the corresponding TDM, not only
is the TCC canceled when fully utilized, but the payment is also final subject only to
a post-audit on computational errors. Under RR 5-2000, a TDM is a certification,
duly issued by the Commissioner or his duly authorized representative, reduced in a
BIR Accountable Form in accordance with the prescribed formalities, acknowledging
that the taxpayer named therein has duly paid his internal revenue tax liability in

the form of and through the use of a Tax Credit Certificate, duly issued and existing
in accordance with the provisions of these Regulations. TheTax Debit Memo shall
serve as the official receipt from the BIR evidencing a taxpayers payment or
satisfaction of his tax obligation. The amount shown therein shall be charged
against and deducted from the credit balance of the aforesaid Tax Credit Certificate.
Thus, with the due issuance of TDM by the Center and TDM by the BIR, the
payments made by PSPC with the use of the subject TCCs have been effected and
consummated as the TDMs serve as the official receipts evidencing PSPCs payment
or satisfaction of its tax obligation. Moreover, the BIR not only issued the
corresponding TDM, but it also issued ATAPETs which doubly show the payment of
the subject excise taxes of PSPC.
Based on the above discussion, we hold that respondent erroneously and without
factual and legal basis levied the assessment. Consequently, the CTA En Banc erred
in sustaining respondents assessment.

Coconut Oil Refiners Association, Inc. vs. Ruben Torres (Case Digest)
Facts:
This is a Petition to enjoin and prohibit the public respondent Ruben Torres in his
capacity as Executive Secretary from allowing other private respondents to continue
with the operation of tax and duty-free shops located at the Subic Special Economic
Zone (SSEZ) and the Clark Special Economic Zone (CSEZ). The petitioner seeks to
declare Republic Act No. 7227 as unconstitutional on the ground that it allowed only
tax-free (and duty-free) importation of raw materials, capital and equipment. It
reads:
The Subic Special Economic Zone shall be operated and managed as a separate
customs territory ensuring free flow or movement of goods and capital within, into
and exported out of the Subic Special Economic Zone, as well as provide incentives
such as tax and duty-free importations of raw materials, capital and
equipment. However, exportation or removal of goods from the territory of the Subic
Special Economic Zone to the other parts of the Philippine territory shall be subject
to customs duties and taxes under the Customs and Tariff Code and other relevant
tax laws of thePhilippines [RA 7227, Sec 12 (b)].
Petitioners contend that the wording of Republic Act No. 7227 clearly limits the
grant of tax incentives to the importation of raw
materials, capital and equipment only thereby violating the equal protection clause
of the Constitution.

He also assailed the constitutionality of Executive Order No. 97-A for being violative
of their right to equal protection. They asserted that private respondents operating
inside the SSEZ are not different from the retail establishments located outside.
The respondent moves to dismiss the petition on the ground of lack of legal
standing and unreasonable delay in filing of the petition.
Issues:
(1) Statutory Construction; Political Law; Taxation Law:
Whether or not there is a violation of equal protection clause.
(2) Political Law:
Whether or not the case can be dismiss due to lack of the petitioners legal standing.
(3) Remedial Law:
Whether or not the case can be dismissed due to unreasonable delay in filing of the
petition.
Held:
(1) The SC ruled in the negative. The phrase tax and duty-free importations of raw
materials, capital and equipment was merely cited as an example of incentives that
may be given to entities operating within the zone. Public respondent SBMA
correctly argued that the maxim expressio unius est exclusio alterius, on which
petitioners impliedly rely to support their restrictive interpretation, does not apply
when words are mentioned by way of example.
The petition with respect to declaration of unconstitutionality of Executive Order No.
97-A cannot be, likewise, sustained. The guaranty of the equal protection of the
laws is not violated by a legislation based which was based on reasonable
classification. A classification, to be valid, must (1) rest on substantial distinction,
(2) be germane to the purpose of the law, (3) not be limited to existing conditions
only, and (4) apply equally to all members of the same class. Applying the foregoing
test to the present case, this Court finds no violation of the right to equal protection
of the laws. There is a substantial distinctions lying between the establishments
inside and outside the zone. There are substantial differences in a sense that,
investors will be lured to establish and operate their industries in the so-called
secured area and the present business operators outside the area. There is, then,
hardly any reasonable basis to extend to them the benefits and incentives accorded
in R.A. 7227.
(2) No. Anent the claim on lack of legal standing, respondents argue that
petitioners, being mere suppliers of the local retailers operating outside the special
economic zones, do not stand to suffer direct injury in the enforcement of the

issuances being assailed herein. Assuming this is true, this Court has nevertheless
held that in cases of paramount importance where serious constitutional questions
are involved, the standing requirements may be relaxed and a suit may be allowed
to prosper even where there is no direct injury to the party claiming the right of
judicial review.
(3) No. With respect to the other alleged procedural flaws, even assuming the
existence of such defects, this Court, in the exercise of its discretion, brushes aside
these technicalities and takes cognizance of the petition considering the importance
to the public of the present case and in keeping with the duty to determine whether
the other branches of the government have kept themselves within the limits of the
Constitution.

LORENZO vs. POSADAS

OCTOBER 31, 2011 ~ VBDIAZ
LORENZO vs. POSADAS JR.
G.R. No. L-43082
June 18, 1937

FACTS: Thomas Hanley died, leaving a will and a considerable amount of real and
personal properties. Proceedings for the probate of his will and the settlement and
distribution of his estate were begun in the CFI of Zamboanga. The will was
admitted to probate.
The CFI considered it proper for the best interests of the estate to appoint a trustee
to administer the real properties which, under the will, were to pass to nephew
Matthew ten years after the two executors named in the will was appointed trustee.
Moore acted as trustee until he resigned and the plaintiff Lorenzo herein was
appointed in his stead.
During the incumbency of the plaintiff as trustee, the defendant Collector of Internal
Revenue (Posadas) assessed against the estate an inheritance tax, together with
the penalties for deliquency in payment. Lorenzo paid said amount under protest,
notifying Posadas at the same time that unless the amount was promptly refunded
suit would be brought for its recovery. Posadas overruled Lorenzos protest and
refused to refund the said amount. Plaintiff went to court. The CFI dismissed
Lorenzos complaint and Posadas counterclaim. Both parties appealed to this court.
ISSUE:

(e) Has there been delinquency in the payment of the inheritance tax?

HELD: The judgment of the lower court is accordingly modified, with costs against
the plaintiff in both instances
YES
The defendant maintains that it was the duty of the executor to pay the inheritance
tax before the delivery of the decedents property to the trustee. Stated otherwise,
the defendant contends that delivery to the trustee was delivery to the cestui que
trust, the beneficiary in this case, within the meaning of the first paragraph of
subsection (b) of section 1544 of the Revised Administrative Code. This contention
is well taken and is sustained. A trustee is but an instrument or agent for the cestui
que trust

The appointment of Moore as trustee was made by the trial court in conformity with
the wishes of the testator as expressed in his will. It is true that the word trust is
not mentioned or used in the will but the intention to create one is clear. No
particular or technical words are required to create a testamentary trust. The words
trust and trustee, though apt for the purpose, are not necessary. In fact, the use
of these two words is not conclusive on the question that a trust is created. To
constitute a valid testamentary trust there must be a concurrence of three
circumstances:

(1) Sufficient words to raise a trust;

(2) a definite subject;
(3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect
so providing.

There is no doubt that the testator intended to create a trust. He ordered in his will
that certain of his properties be kept together undisposed during a fixed period, for
a stated purpose. The probate court certainly exercised sound judgment in
appointmening a trustee to carry into effect the provisions of the will

As the existence of the trust was already proven, it results that the estate which
plaintiff represents has been delinquent in the payment of inheritance tax and,
therefore, liable for the payment of interest and surcharge provided by law in such
cases.
The delinquency in payment occurred on March 10, 1924, the date when Moore
became trustee. On that date trust estate vested in him. The interest due should be
computed from that date.
NOTES: Other issues:

(a) When does the inheritance tax accrue and when must it be satisfied?
The accrual of the inheritance tax is distinct from the obligation to pay the same.
Acording to article 657 of the Civil Code, the rights to the succession of a person
are transmitted from the moment of his death. In other words, said Arellano, C.
J., . . . the heirs succeed immediately to all of the property of the deceased
ancestor. The property belongs to the heirs at the moment of the death of the
ancestor as completely as if the ancestor had executed and delivered to them a
deed for the same before his death.
Whatever may be the time when actual transmission of the inheritance takes place,
succession takes place in any event at the moment of the decedents death. The
time when the heirs legally succeed to the inheritance may differ from the time
when the heirs actually receive such inheritance. Thomas Hanley having died on
May 27, 1922, the inheritance tax accrued as of the date.
From the fact, however, that Thomas Hanley died on May 27, 1922, it does not
follow that the obligation to pay the tax arose as of the date. The time for the
payment on inheritance tax is clearly fixed by section 1544 of the Revised
Administrative Code as amended by Act No. 3031, in relation to section 1543 of the
same Code. The two sections follow:
SEC. 1543. Exemption of certain acquisitions and transmissions. The following
shall not be taxed:
(a) The merger of the usufruct in the owner of the naked title.
(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the trustees.
(c) The transmission from the first heir, legatee, or donee in favor of another
beneficiary, in accordance with the desire of the predecessor. xx
SEC. 1544. When tax to be paid. The tax fixed in this article shall be paid:

(a) In the second and third cases of the next preceding section, before entrance
into possession of the property.
(b) In other cases, within the six months subsequent to the death of the
predecessor; but if judicial testamentary or intestate proceedings shall be instituted
prior to the expiration of said period, the payment shall be made by the executor or
administrator before delivering to each beneficiary his share.
The instant case does[not] fall under subsection (a), but under subsection (b), of
section 1544 above-quoted, as there is here no fiduciary heirs, first heirs, legatee or
donee. Under the subsection, the tax should have been paid before the delivery of
the properties in question to Moore as trustee.
(b) Should the inheritance tax be computed on the basis of the value of the estate
at the time of the testators death, or on its value ten years later?

If death is the generating source from which the power of the estate to impose
inheritance taxes takes its being and if, upon the death of the decedent, succession
takes place and the right of the estate to tax vests instantly, the tax should be
measured by the value of the estate as it stood at the time of the decedents death,
regardless of any subsequent contingency value of any subsequent increase or
decrease in value

(c) In determining the net value of the estate subject to tax, is it proper to deduct
the compensation due to trustees?

A trustee, no doubt, is entitled to receive a fair compensation for his services. But
from this it does not follow that the compensation due him may lawfully be
deducted in arriving at the net value of the estate subject to tax. There is no statute
in the Philippines which requires trustees commissions to be deducted in
determining the net value of the estate subject to inheritance tax

(d) What law governs the case at bar? Should the provisions of Act No. 3606
favorable to the tax-payer be given retroactive effect?

A statute should be considered as prospective in its operation, whether it enacts,

amends, or repeals an inheritance tax, unless the language of the statute clearly
demands or expresses that it shall have a retroactive effect, . . . . Act No. 3606

itself contains no provisions indicating legislative intent to give it retroactive effect.

No such effect can be given the statute by this court.