Roces vs Posadas

Case: action to recover from the defendant, Collector of Internal Revenue, certain sums of money paid
by them under protest as inheritance tax.

Facts:
Esperanza Tuazon donated certain parcels of land to the Roces (plaintiffs) which the latter accepted. A
year later, Tuazon died without any forced heirs. The donees were then instituted as legatees in
Tuazon's will which was admitted to probate. Before the delivery of the shares of the donees, the
Collector of Internal Revenue ruled that the Roces should pay inheritance tax. At first the appellants
refused to pay but later they agreed to pay them under protest.

Issue
Whether or not the plaintiffs are liable to pay the inheritance tax.

Ruling:
Yes. The tax collected by the appellee on the properties donated in 1925 really constitutes an
inheritance tax imposed on the transmission of said properties in contemplation or in consideration of
the donor's death and under the circumstance that the donees were later instituted as the former's
legatees.

The Court said that a donee inter vivos who, after the predecessor's death proved to be an heir,
A legatee, or a donee mortis causa, would have to pay the tax, another donee inter vivos who did not
prove to he an heir, a legatee, or a donee mortis causa of the predecessor, would be exempt from such
a tax.

The donees were instituted legatees in the donor's will which was admitted to probate. It is from these
allegations, especially the last, that we infer a presumption juris tantum that said donations were made
mortis causa and, as such, are subject to the
payment of inheritance tax
Dison vs Posadas

Case: appeal from the decision of the Court of First Instance of Pampanga for the recovery of an
inheritance tax in the sum of P2,808.73 paid under protest.

Facts:
A deed of gift transferring twenty-two tracts of land is executed by Felix Dison on April 9, 1928, in favor
of Luis W. Dison, his only child and heir before his death. on April 21, 1928, Don Felix Dison died. At the
time of his death, Don Dison was also a widower.

Sometime later, Luis W. Dison paid inheritance tax under protest. As a consequence of this he filed for
the recovery of the inheritance tax paid under protest. He alleged that the tax is illegal because he
received the property from his father before his death by a deed of
gift inter vivos which was duly accepted and registered before the death of his father.

Issue
Whether or not the plaintiffs are liable to pay the inheritance tax.

Ruling:
Additions of Gifts and Advances. — After the aforementioned deductions have been made, there shall be
added to the resulting amount the value of all gifts or advances made by the predecessor to any of those
who, after his death, shall prove to be his heirs, devises, legatees, or donees mortis causa.

Yes. The Court held that section is applicable and the tax to have been properly assessed by the
Collector of Internal Revenue. The law confers upon him the status of a forced heir. The appellant in this
case occupies the status of heir to his deceased father cannot be questioned

The law presumes that such gifts have been made in anticipation of inheritance, devise, bequest, or gift
mortis causa, when the donee, after the death of the donor proves to be his heir, devisee or donee
mortis causa The donees were instituted legatees in the donor's will which was admitted to probate. It is
from these allegations, especially the last, that we infer a presumption juris tantum that said donations
were made mortis causa and, as such, are subject to the payment of inheritance tax
Lorenzo vs Posadas

Case: refund of the amount of P2,052.74, paid by the plaintiff as inheritance tax on the estate of the
deceased

Facts:
In May 1922, Thomas Hanley died leaving a will. The will provides that any money left by the deceased
be given to his nephew Matthew as well as real estate own by the former. The real estate however
should not be sold or otherwise disposed of for a period of ten (10) years after his death. Proceeds
thereof however should be given to Matthew. After the lapse of 10 years, Matthew is now free to
dispose of the propoerty as he saw fit.

The court then found it propoer to appoint trustees to administer the real properties at which Mr.
Moore was appointed and subsequently replaced by Pablo Lorenzo. During the incumbency of Lorenzo,
the Collector assessed that the estate is liable to pay ingeritance tax together with penalties for
defeciency. Lorenzo paid the sam under protest. Lorenzo then brought an action to the Court of First
Instance of Zambales agaisnt the Collector of Internal revenue for the refund of the inheritance tax paid
under protest

Issues
(a) When does the inheritance tax accrue and when must it be satisfied?
(b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the
testator's death, or on its value ten years later?
(c) Is it proper to deduct the compensation due to trustees?
(d) What law governs the case at bar?
(e) Has there been deliquency in the payment of the inheritance tax?

Ruling:
a. The general rule under the law is that 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 decedent's death.

However, there certain exemptions to acquisitions and transmissions for taxations purposes. That is the
transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees shall
not be taxed. 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 P. J. M. Moore as trustee
on March 10, 1924

b. transmission by inheritance is taxable at the time of the predecessor's death, notwithstanding the
postponement of the actual possession or enjoyment of the estate by the beneficiary, and the tax
measured by the value of the property transmitted at that time regardless of its appreciation or
depreciation.
c. 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. It is well-settled that inheritance taxation is governed by the statute in force at the time of the death
of the decedent. 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 went into effect on January 1, 1930. It, therefore, was not the law in force when the
testator died on May 27, 1922. The law at the time was section 1544 above-mentioned, as amended by
Act No. 3031

e. Yes. It was the duty of the executor to pay the inheritance tax before the delivery of the decedent's
property to the trustee. the delivery of the estate to the trustee was in esse delivery of the same estate
to the cestui que trust, the beneficiary in this case. When Moore accepted the trust and took possession
of the trust estate he thereby admitted that the estate belonged not to him but to his cestui que trust
MARCOS II vs. CA
273 SCRA 47, GR No. 120880, June 5, 1997
Facts:
Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to
levy the properties of the late Pres. Marcos to cover the payment of his tax delinquencies during the
period of his exile in the US. The Marcos family was assessed by the BIR after it failed to file estate tax
returns. However the assessment were not protested administratively by Mrs. Marcos and the heirs of the
late president so that they became final and unappealable after the period for filing of opposition has
prescribed. Marcos contends that the properties could not be levied to cover the tax dues because they are
still pending probate with the court, and settlement of tax deficiencies could not be had, unless there is an
order by the probate court or until the probate proceedings are terminated.
Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on
the Marcos properties were issued beyond the allowed period, and are therefore null and void.

Issue:
Whether or not the contentions of Bongbong Marcos are correct

Ruling:
No. Being the lifeblood of the government, the collection is not conditioned upon any outcome of a
probate proceeding.

The deficiency income tax assessments and estate tax assessment are already final and unappealable -and-
the subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by
Section 213 and 218 of the National Internal Revenue Code. This summary tax remedy is distinct and
separate from the other tax remedies (such as Judicial Civil actions and Criminal actions), and is not
affected or precluded by the pendency of any other tax remedies instituted by the government.

The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not a
mandatory requirement in the collection of estate taxes. On the contrary, under Section 87 of the NIRC, it
is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of
the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is
shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This
provision disproves the petitioner's contention that it is the probate court which approves the assessment
and collection of the estate tax.

On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to contest
or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of the NIRC,
in case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission,
and any tax so assessed may be collected by levy upon real property within 3 years (now 5 years)
following the assessment of the tax. Since the estate tax assessment had become final and unappealable
by the petitioner's default as regards protesting the validity of the said assessment, there is no reason why
the BIR cannot continue with the collection of the said tax.

Notes in Book:
Collection of Estate Taxes
Estate tax being a national tax as provided for under Sec. 21(b) of the NIRC is collected by the
Bureau of Internal Revenue by virtue of its mandate under Sec. 2 of the same Code. Being
the lifeblood of the government, the collection is not conditioned upon any outcome of a probate
proceeding.

In the case of Ferdinand Marcos II v. CA (273 SCRA 47 [1997]), it was held that the approval
of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory
requirement in the collection of estate taxes. It cannot therefore be argued that the Tax Bureau
erred in proceeding with the levying and sale of the properties allegedly owned by the late
President, on the ground that it was required to seek first the probate court's sanction. There is
nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the
probate or estate settlement court's approval of the state's claim for estate taxes, before the same
can be enforced and collected.

It is in this case that the petitioner also expresses his reservation as to the propriety of the BIR's
total assessment of P23,292,607,638.00, stating that this amount deviates from the findings of the
Department of Justice's Panel of Prosecutors as per its resolution of 20 September 1991.
Allegedly, this is clear evidence of the uncertainty on the part of the Government as to the total
value of the estate of the late President. The high Court said, "This is, to [the Court's] mind, the
petitioner's last ditch effort to assail the assessment of estate tax which had already become final
and unappealable.

It is not the Department of Justice which is the government agency tasked to determine the
amount of taxes due upon the subject estate, but the Bureau of Internal Revenue, whose
determinations and assessments are presumed correct and made in good faith. The taxpayer
has the duty of proving otherwise. In the absence of proof of any irregularities in the
performance of official duties, an assessment will not be disturbed. Even an assessment based on
estimates is prima facie valid and lawful where it does not appear to have been arrived at
arbitrarily or capriciously. The burden of proof is upon the complaining party to show clearly
that the assessment is erroneous. Failure to present proof of error in the assessment will justify
the judicial affirmance of said assessment. In this instance, petitioner has not pointed out one
single provision in the Memorandum of the Special Audit Team which gave rise to the
questioned assessment, which bears a trace of falsity.