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ESTATE TAX Taxation Lorenzo v Posadas 64 Phil Dizon v Posadas 57 Phil Villa de Roces v Posadas 58 Phil Collector v Fischer L-11621, January 28, Wells Fargo v Collector 70 Phil Velilla v Posadas 62 Phil Collector v Lara 102 Phil Delpher v IAC 157 SCRA Gallardo v Morales 107 Phil BPI v Posadas 56 Phil...

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Taxation 2 ESTATE TAX 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Lorenzo v Posadas Dizon v Posadas Villa de Roces v Posadas Collector v Fischer Wells Fargo v Collector Velilla v Posadas Collector v Lara Delpher v IAC Gallardo v Morales BPI v Posadas Marcos II v CA Balboa v Fanales Vera v Navarro Ozaeta v Palanca Sison v Teodoro Vera v Fernandez Estate of Hilario Ruiz v CA Elegado v CTA Commissioner v Pineda Gonzales v CTA CIR v CA Dizon v CTA

64 Phil 353 57 Phil 465 58 Phil 108 L-11621, January 28, 1961 70 Phil 505 62 Phil 624 102 Phil 813 157 SCRA 349 107 Phil 903 56 Phil 215 GR No. 120880, June 5, 1997 51 Phil 498 79 SCRA 408 101 Phil. 976 100 Phil. 1056 89 SCRA 199 252 SCRA 541 173 SCRA 285 21 SCRA 104 101 SCRA 633 GR No. 123206, March 22, 2000 GR No 140944, April 30, 2008 DONOR’S TAX

23. 24. 25.

Pirovano v Commissioner Lladoc v Commissioner Tang Ho v CA

14 SCRA 832 14 SCRA 293 97 Phil 890

Additional cases 36. Del Rosario v Ferrer 37. Arangote v Maglunob 38. Guerrero v RTC 39. Siochi v Gozon 40. Abello v CIR 41. Collector v Campos-Rueda

GR No. L-19201, June 16, 1965 579 SCRA 620 229 SCRA 274 616 SCRA 87 GR No. 129721, February 23, 2005 42 SCRA 23 VALUE-ADDED TAX

26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

Tolentino v CIR Tolentino v CIR ABAKADA v Ermita Philamlife v CA CIR v CA American Express v CIR CIR v Burmeister & Wain CIR v Magsaysay Lines CIR v Seagate Tech

235 SCRA 630 GR No. 115455, October 30, 1995 GR No. 168056, September 1, 2005 GR SP 31283, April 25, 1995 GR No. 125355, March 30, 2000 GR No. 62727, February 28, 2002 GR No. 152609, June 28, 2005 GR No. 153205, January 22, 2007 GR No. 146984, July 28, 2006 GR No. 153811, February 11, 2005

42. 43. 44. 45.

Microsoft Philippines Inc. v CIR CIR v Sony Philippines KEPCO Phils v CIR AT&T Communications v CIR

GR No. 180172, April 6, 2011 GR No. 178697, November 17, 2010 GR No. 181858, November 24, 2010 GR No. 182364, August 3, 2010

46. 47. 48. 49.

Silicon Philippines v CIR Diaz v Secretary of Finance PAGCOR v BIR Atlas v CIR

GR No. 172378, January 12, 2011 GR No. 193007, July 9, 2011 GR No. 172087, March 15, 2011 GR No. 141104 & 148763, June 8, 2007

50. 51. 52. 53. 54. 55. 56. 57.

CIR v Aichi Forging Company Mirant v CIR CIR v San Roque CIR v San Roque Fort Bonifacio v CIR CIR v Benguet CIR v SM Prime Holdings CIR v Phil American Accident

GR No. 184923, October 6, 2010 GR No. 172129, September 12, 2008 GR No. 187485, February 12, 2013 GR No. 187485, October 8, 2013 GR No. 158885 & 170680, April 2, 2009 GR No. 134587 & 134588, July 8, 2005 GR No. 183505, February 26, 2010 GR No. 141658, March 18, 2005

OTHER PERCENTAGE TAXES 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68.

Chinabanking Corp v CTA RP v Sunlife CIR v Lhuillier First Planters v CIR CIR v Solidbank CIR v Bank of Commerce CIR v BPI CIR v Citytrust Asianbank Corp. v CIR RP v Sunlife PBA v CTA

GR No. 146749, June 10, 2003 GR No. 158085, October 14, 2005 GR No. 150947, July 15, 2005 GR No. 174134, July 30, 2008 GR No. 148191, November 25, 2003 GR No. 149636, June 8, 2005 GR No. 147375, June 26, 2006 GR No. 139786 GR No. 140857, September 27, 2006 GR No. 158058, October 14, 2005 GR No. 119122, August 8, 2000

EXCISE TAXES ON CERTAIN GOODS 69. 70. 71. 72. 73. 74.

British American v Camacho Exxonmobil Petroleum v CIR CIR v Pilipinas Shell Phil Geothermal v CIR SILKAIR v CIR Apex Mining v CIR

GR No. 163583, August 20, 2008 GR No. 180909, January 19, 2011 GR No. 188497, April 23, 2012 GR No. 154028, July 29, 2005 GR No. 173594, February 6, 2005 GR No. 122472, October 20, 2005

DOCUMENTARY STAMP TAX 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93.

Del Rosario v Hamoy CIR v Fireman’s Fund CIR v Heald Lumber Gabucan v Manta Lincoln v CA Int’l Exchange Bank v CIR BDO v CIR Chinabank v CIR Int’l Exchange Bank v CIR CIR v Lincoln RP v Sunlife Blue Healthcare v Olivares Philhealthcare v CIR CIR v Construction Resources Phil Consolidated Coconut BDO v CIR CIR v First Express CIR v Manila Bankers Supreme Transliner v BPI

GR No. L-77154, June 30, 1987 GR No. L-30644, March 9, 1987 10 SCRA 376 95 SCRA 752 GR No. 118043, July 23, 1998 GR No. 171266, April 4, 2007 GR No. 173602, January 15, 2007 CTA 6400, January 3, 2006 GR No. 171266, April 4, 2007 GR No. 119176, March 19, 2002 GR No. 158085, October 14, 2005 GR No. 169737, February 12, 2008 GR No. 167330, June 12, 2008 145 SCRA 673 70 SCRA 22 CTA EB 165 August 15, 2005 GR Nos. 172045-172046, June 16, 2009 GR No. 169103, March 16, 2011 GR No. 165617, February 25, 2011 REMEDIES

94. 95. 96.

RP v CTA Collector v Bautista CIR v Metro Star Superama

GR No. L-38540, 149 SCRA 351 L-12250, L-12259, May 27, 1959 (Not found) GR No. 185371, December 8, 2010

97. 98. 99.

Republic v Ricarte Advertising Assoc v CTA CIR v Union Shipping

GR No. L-46893, November 12, 1985 133 SCRA 765 GR No. 66160, May 21, 1990

100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132.

Surigao Electric v CTA CIR v Isabela Cultural Oceanic Wireless v CIR Gibbs v Commissioner Gibbs v Collector CIR v TMX Sales & CTA Commissioner v Philamlife Pacific Pro Ltd Case United Airlines v CIR CIR v Wyeth ABS-CBN v CTA Lim v CA CIR v CA & Lucio Tan CIR v CTA & Fortune CIR v Pascor Realty CIR v Lascona San Agustin v CIR Phil Journalists v CIR CIR v Phil Global RCBC v CIR BPI v CIR Petron v CIR CIR v Gonzales Estate of Diez v CIR Asianbank v Commissioner CIR v Enron CIR v FMF Development Corp FEBTC v CIR CIR v Reyes Santos v People Fitness v CIR Asia Int’l v Parayno British American v Camacho

57 SCRA 523 GR No. 135210, July 11, 2001 GR No. 148380, December 9, 2005 GR No. L-17406, November 29, 1965 GR No. L-13453, February 29, 1960 GR No. 83736, January 16, 1992 GR No. 105208, May 29, 1995 GR No. 68013, November 12, 1984 (Not found) GR No. 178788, September 29, 2010 GR No. 76281, September 30, 1991 108 SCRA 143 GR No. L-48134-37, October 18, 1990 GR No. 119322, June 4, 1996 GR No. 119761, August 29, 1996 GR No. 128315, June 29, 1999 GR No. 58061, October 25, 2005 GR No. 138485, September 10, 2001 GR No. 162852, December 16, 2004 GR No. 167146, October 31, 2006 GR No. 168498, April 24, 2007 GR No. 174942 (Not found) GR No. 180385, July 28, 2010 (Not found) GR No. 177279, October 13, 2010 (Not found) GR No. 15554, January 27, 2004 CTA 6095, October 9, 2001 (Not found) GR No. 166387, January 19, 2009 GR No. 167766, June 30, 2008 GR No. 138919, May 2, 2006 GR No. 159694, January 27, 2006 GR No. 173176, August 26, 2008 GR No. 177982, October 17, 1008 540 SCRA 536 (2007) 562 SCRA 611 (2008)

COMPLIANCE REQUIREMENTS 133. 134.

Thomson Shirt v CIR Lim Hoa Ting v Central

CTA 377, 8/27/1963 (Not found) 104 Phil 573

STATUTORY OFFENSES & PENALTIES 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145.

Castro v CIR Hilado v CIR CIR v Citytrust Collector v Clement Collector v Solano Bisaya Land v Collector Bollozos v CTA Republic v Patanao People v Balagtas Phil. Int’l Fair v Collector People v Tierra

GR No. L-12174, April 26, 1962 GR No. L-9408, October 31, 1956 GR No. 106611, July 21, 1994 GR No. L-12194, January 24, 1959 GR No. L-11475, July 31, 1958 (Not found) GR No. L-12100, May 23, 1959 GR No. L-16441 GR No. L-22356, July 21, 1967 GR No. L-10210, July 29, 1959 (Not found) GR No. L-12928, March 31, 1962 GR No. L-17177-17180, December 28, 1964

1. Lorenzo v Posadas GR No L-43082, June 18, 1937 FACTS: Lorenzo, in his capacity as trustee of the estate of Thomas Hanley, brought an action against the Collector of Internal Revenue Posadas for the refund of P2,052.74 inheritance taxes. The properties under the will were to pass to Matthew Hanley after 10 years. ISSUE: (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) In determining the net value of the estate subject to tax, is it proper to deduct the compensation due to trustees? (d) What law governs the case? (e) Has there been delinquency in the payment of the inheritance tax? RULING: (a) Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of that date. But it must be paid before the delivery of the properties in question to PJM Moore as trustee on March 10, 1924. (b) It should be computed at the time of the decedent’s death, regardless of any subsequent contingency value of any increase or decrease, and notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary and tax measured by the value of the property transmitted at that time regardless of its appreciation or depreciation. (c) No. The compensation of a trustee, earned not in the administration of the estate, but in the management thereof for the benefit of the legatees or devises, does not come properly within the class or reason for exempting administration expenses. (d) Act 3031 and not Act 3606 applies. Even if Act 3606 is more favorable to the taxpayer, revenue laws, generally, which impose taxes collected by means ordinarily resorted to for the collection of taxes are not classed as penal laws. (e) Yes. That taxes must be collected promptly is a policy deeply entrenched in our tax system. Thus, no court is allowed to grant injunction to restrain the collection of any internal revenue tax. The mere fact that the estate of the deceased was placed in trust did not remove it from the operation of our inheritance tax laws or exempt it from the payment of the inheritance tax.

2. Dison v Posadas, Jr. GR No. L-36770, November 4, 1932 FACTS: Luis Dison, son of decedent, received from his father before his death by a deed of gift inter vivos property which was duly accepted and registered before the death of his father. Dison filed suit for recovery of the inheritance tax amounting to P2,808.73 he paid under protest. ISSUE: Does Section 1540 of the Administrative Code subject to plaintiff-appellant to the payment of an inheritance tax? RULING: Yes. The facts warrant the inference that the transfer was an advance upon the inheritance that the donee as the sole and forced heir of the donor, would be entitled to receive upon the death of the donor. Section 1540 plainly does not tax gifts per se but only when those gifts are made to those who shall prove to be the heirs, devisees, legatees or donees mortis causa of the donor.

3. Vidal de Roces v Posadas GR No. 34937, March 13, 1933 FACTS: Sometime in 1925, plaintiffs Concepcion Vidal de Roces and her husband as well as Elvira Richards received as donation several parcels of land from Esperanza Tuazon. Tuazon died a year later with a will on which she bequeathed to each of the donees the sum of P5,000. After the distribution of the estate but before the delivery of their respective shares, the CIR ruled that the donees should pay inheritance tax. The same was paid under protest. The plaintiffs contend that Section 1540 of the Administrative Code which reads – “after 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, devisees, legatees or donees mortis causa.” ISSUE: Are the properties received by plaintiffs subject to inheritance tax? RULING: Yes. The Court referred to the allegations that the transmissions were effected in the month of March 1925, that the donor died in January 1926 and that the donees were instituted legatees in the donor’s will which was admitted to probate. It is from these allegations, especially the last that the Court infers a presumption juris tantum that the donations were made mortis causa and as such, are subject to the payment of inheritance taxes. The same was 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.

4. CIR v Fischer GR No. L-11622, 1/28/1961 FACTS: Walter Stevenson, decedent, a British national, was born and married in the Philippines. In his will, he instituted his wife Beatrice Stevenson as sole heiress to his real and personal properties acquired in the Philippines. The CIR and the administrator of the estate had different opinions regarding exemptions and deductions from the estate. ISSUES: (1) In determining the taxable net estate of the decedent, should ½ of the net estate be deducted as share of the surviving spouse in accordance with our law on conjugal partnership? (2) May the estate avail of the reciprocity proviso of the NIRC granting exemption from the payment of estate and inheritance taxes on the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc.? (3) Whether or not the estate is entitled to the deduction of P4,000 allowed by Sec 861 of the US Internal Revenue Code (4) Whether the real estate properties located in Baguio and the 210,000 shares of stocks in the Mindanao Mother Lode Mines, Inc. were correctly appraised by the lower court (5) Is the estate entitled to the following deductions: P 8,604 for judicial and administration expenses; P 2,087 for funeral expenses; P 653 for real estate taxes P 10,022 for representing the amount of indebtedness allegedly incurred by the decedent during his lifetime; (6) Is the estate entitled to the payment of interest on the amount it claims to have overpaid the government and to be refundable to it? RULING: (1) Yes. In the absence of proof, the doctrine of processual presumption applies. The Court is justified is presuming that the law of England on this matter is that same as our law. (2) Yes. The testimony of an attorney-at-law of San Francisco, California who quoted verbatim a section of the California Civil Code and stated that it was in force is sufficient evidence to establish the existence of said law. (3) No. Under the Federal Law, which is equally enforceable in California, a Filipino is bound to pay the same, there being no reciprocity recognized in respect thereto. (4) The appraisal of the land is presumed valid unless contrary is shows. As regards the stocks, the fair market value should be taxed on the basis of the price prevailing in our country. (5) Only the P10,000 indebtedness is disallowed. This was incurred outside the country and the value of the estate outside should have been reported in order to have proper computation of the deduction. (6) No. In the absence of contrary statutory provision, the National Government cannot be required to pay interest.

5. Wells Fargo Bank & Union Trust Company v CIR GR No. L-46720, June 28, 1940 FACTS: Birdie Lillian Eye died on September 16, 1932 at Los Angeles California, the place of her alleged last residence and domicile. Among the properties she left was her ½ conjugal shares of stock in the Benguet Consolidated Mining Co., an anonymous partnership, organized under the laws of the Philippines. She left a will duly admitted to probate in California where her estate was administered and settled. Wells Fargo was the duly appointed trustee. The Federal and California State’s inheritance taxes due thereon have been duly paid. The CIR in the Philippines, however, sought to subject the shares of stock to inheritance tax, to which Wells Fargo objected. ISSUE: Whether the shares of stock are subject to Philippine inheritance tax RULING: Yes. Originally, the settled law in the United States is that intangibles have only one situs for the purpose of inheritance tax and such situs is in the domicile the decedent at the time of his or her death. But, the rule has been relaxed. The maxim “mobilia sequunter personam” upon which the rule rests, has been decried as a mere fiction of law having its origin in considerations 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 and must yield to established fact of legal ownership, actual presence and control elsewhere, and cannot be applied if to do so would result in inescapable and patent injustice. This rests on either of two fundamental considerations: (1) Upon the recognition of the inherent power of each government to tax persons, properties and rights within its jurisdiction and enjoying, thus, the protection of its laws and (2) Upon the principle that as to intangibles, a single location in space is hardly possible, considering the multiple, distinct relationships that may be entered into with respect thereto. Herein, the actual situs of the shares of stock is in Philippines, the corporation being domiciled therein. Accordingly, the jurisdiction of the Philippine Government to tax must be upheld.

6. Velilla v Posadas, Jr. GR No. : L-43314, December 19, 1935 FACTS: Arthur Graydon Moody died in India. He executed a will in the Philippines, instituting his sister Ida Palmer as sole heir. The estate of Moody paid the inheritance tax under protest. It is alleged that Moody was a non-resident of the Philippine Island. ISSUE: Whether Arthur Moody was legally domiciled in the Philippine Islands on the day of his death RULING: Yes. Moody was never married and had his legal domicile in the Philippines from 1902 or 1903 forward during which time he accumulated a fortune from his business in the Philippines. There is no statement of Moody, oral or written, in the record that he had adopted a new domicile while he was absent from Manila. Moody’s continued absence was due to and reasonably accounted for. He knew that on his return he would be immediately confined in the Cullion Leper Colony.

7. CIR v De Lara GR Nos. L-9456 and L-9481, January 6, 1958 FACTS: Hugo Miller is an American citizen. In 1905, he came to the Philippines lived here until his death in 1931. He lived at the Manila Hotel but transferred from the Manila Hotel to the Army and Navy Club upon the death of his wife. He executed a will in which he declared that he was of Santa Cruz, California. He was taken prisoner by the Japanese forces and since then, nothing has been heard from him. The estate protested the assessment of liability for estate and inheritance taxes. ISSUE: Whether the decedent was a resident or a non-resident of the Philippines at the time of his death RULING: He is a non-resident. Miller had his domicile or residence at Santa Cruz, California. During his stay in the country, Miller never acquired a house for residential purpose. Also, his wife never stayed in the Philippines. The bulk of his savings and properties were in the US. Thus, the only properties of his estate subject to estate and inheritance taxes are those shares of stock issued by Philippine corporations valued at P 51,906.45. Residence and domicile are used interchangeably for tax purposes and without distinction. Also, considering the State of California as a foreign country in relation to Section 122 of our Tax Code, the Ancillary Administrator is entitled the exemption from the inheritance tax on the intangible personal property found in the Philippines.

8. Delpher Trades Corporation v IAC GR No L-69259, 1/26/1988 FACTS: Delfin and Pelagia Pacheco, siblings, were the owners of real estate that was leased to Construction Components International Inc. The latter’s right of first refusal were assigned to Hydro Pipes Philippines Inc. with the consent of the Pachecos. On 1976, a deed of exchange was executed between lessors Delfin and Pelagia Pacheco and Delpher where the leased property and another parcel of land for 2,500 shares of stock of Delpher Trades with a total value of P1,500,000. ISSUE: Whether the Deed of Exchange of the properties executed by the Pachecos and Delpher trade...