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Liability to pay tax may arise at a certain time and the tax may
be paid within another given time. The
mere failure to pay ones tax does not render one delinquent
until and unless the entire period has
elapsed within which the taxpayer is authorized by law to make
such payments without being subjected
to the payment of penalties for failure to pay his taxes within
the prescribed period.
The mere fact that the estate of the deceased was placed in
trust did not remove it from the operation
of our inheritance tax law or exempt it from the payment of the
inheritance tax. The corresponding
inheritance tax should have been paid on or before March 10,
1924, to escape the penalties of the law.
This is so for the reason already stated that 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.
On the case of Lim Co Chui vs Posadas, the fact that riots
prevented the plaintiffs from paying their
internal revenue tax on time does not authorize the CIR to
extend time prescribed for the payment and
to accept them without the additional penalty. Modes adopted to
enforce the taxes levied should be
interfered with as little as possible.
Barrera,J.
Collector vs Fisher
Facts:
Walter G. Stevenson was born in the Philippines on to British
parents and married in Manila to Beatrice
Mauricia Stevenson, another British subject. He died on Feb. 22,
1951 in San Francisco, California where he and his
wife moved and established their permanent residence since May
10, 1945. He executed his will in San Francisco
which was duly probated in the Superior Court ofCalifornia. He
instituted his wife as the sole heiress to all the
properties they acquired while residing in the Philippines.
Ancillary administration proceedings were theninstituted in CFI
Manila for the settlement of Stevensons estate in the Philippines.
The CFI Manila probated
Stevensons will and Ian Murray Scott was appointed ancillary
administrator. Scott then paid the necessary estate
and inheritance taxes.
Scott then filed two amended estate and inheritance tax returns,
wherein he made claim for the following
deductions:
1) funeral expenses,
2) judicial expenses (administrators fee, attorneys fee,
judicial and administration expenses),
3) real estate tax for 1951 on Baguio real properties,
4) claims by creditors against the estate,
5) 4% interest per annum on the tax allegedly overpaid for the
period from Feb. 2 to 22, 1951,
6) deduction of P4000 from the gross estate of the decedent as
provided for in Section 861(4) of the US Federal
Internal Revenue Code; and
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7) exemption from the imposition of estate and inheritance taxes
on the 210,000 shares of stock in the Mindanao
other Lode Mines, Inc., in pursuance of reciprocity proviso of
Section 122 of the NIRC.
The Court of Tax Appeals exempted the 210,000 shares of stock
from taxation in accordance with the reciprocity
proviso. It also allowed the funeral and judicial expenses with
regard to the administration of the estate, but
disallowed the P4000 exemption in the computation of the estate
tax. Both parties appealed.
Issues:
y WON the estate can avail itself of the reciprocity proviso
granting exemption from the payment of estate andinheritance taxes
on the 210,000 shares of stock in the Mindanao Mother Lode - NO
y WON the estate is entitled to the deduction of P4000 allowed
in Sec. 861 of the US IRC vis--vis Sec 122 of theNIRC - NO
y WON estate entitled to deduction of judicial and
administration expenses, funeral expense, real estatetaxes, and the
amount of indebtedness allegedly incurred by the decedent during
his lifetime - YES
y WON estate entitled to the payment of interest on the amount
it claims to have overpaid the government andto be refundable to it
NO
The estate was made to pay tax on the expenses disallowed.
Rulings:
1. WRT to the reciprocity proviso, it is well-settled that
foreign laws do not prove themselves in our jurisdictionand our
courts are not authorized to take judicial notice of them. Like any
other fact, they must be alleged and
proved. Reading Sec. 122 of the NIRC vis--vis Sec. 13851 of the
California Inheritance Tax Law, the reciprocity
must be total, that is, the two states must both tax the same
subject. In this case, the US does not tax
intangible personal property of its residents, but the
Philippines does. If then a Californian is allowed to be
exempt from payment of income tax on his shares of stocks here
in the Philippines, but a Filipino is not
exempt, the Filipino is still taxed on his shares of stocks in
California, would result in a disadvantage for theFilipino.
2. The second issue has already been settled in Collector v.
Lara, where the court ruled that only exemptions,not deductions,
are subject to reciprocity claimed under Sec. 122 of theNIRC.
3. As to the third issue, the probate court allowed the named
expenses to be deducted, and the tax court foundno basis for
departing from the same. The SC sees no ground to reverse the
finding of fact of the two courts,
that indeed, the expenses were actually incurred.
4. Respondents claim for interest on the amount allegedly
overpaid, if any, actually results after arecomputation on the
basis of this decision is hereby denied. In Collector v. St. Pauls
Hospital, the Court held
that in the absence of statutory provision clearly or expressly
directing or authorizing such payment, andnone has been cited by
the respondents, the National Government cannot be required to pay
interest.
