Republic of the Philippines

Supreme Court
Manila
En Banc

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

WELLS FARGO BANK & UNION TRUST COMPANY, petitioner
vs.
THE COLLECTOR OF INTERNAL REVENUE, respondent

MORAN, J.:

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 (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

RULING:

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 since the said shares were issued
here by a corporation organized and existing under the laws of the Philippines which
is also domiciled here. Further, when Eye was alive, she actually delivered the title
to said shares to the resident secretary of the corporation here in the Philippines
hence the shares never left the Philippines.