1. Lorenzo v Posadas Facts: 1.

Thomas Hanley died in Zamboanga leaving a will and considerable amount of real and personal prop 2. Probate proceeding begun. Will states: 1. Money left to be given to nephew 2. Real prop not tobe sold w/in 10 yrs from death. Same be handled by exec and proceeds given to Matthew and he be directed to use it for education of brothers children and descendants 3. 10 yrs after death, property iven to Matthew to be disposed of in a manner he deems advantageous 3. resp CIR went to the probate court praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of P2,052.74 4. Pet paid in protest asking CIR to refund the amount or suit to be brought. Overrued, refused to refund Issues: 1. When does inheritance tax accrue 2. what value to base the inheritance tax, from death or after 10 yrs? 3. deductible compensation due to trustees? 4. What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the tax-payer be given retroactive effect? 5. Has there been delinquency in the payment of the inheritance tax? Ruling: 1. Section 1536 as amended, of the Administrative Code, imposes the tax upon every transmission by virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of inheritance,devise, or bequest. The tax therefore is upon transmission or the transfer or devolution of property of a decedent, made effective by his death, which is the transfer to Moore, the trustee. Tax shall have been paid beofre such transfer 2. 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 3. 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 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 4. 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, which took effect on March 9, 1922. It is well-settled that inheritance taxation is governed by the statute in force at the time of the death of the decedent 5. 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. The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. The interest due should be computed from that date

2. Corre v Tan Corre Facts: 1. Plaintiff filed an action for legal separation from defendant and the placing of their minor children under the care and custody of a reputable womens dormitory or institution as the court may recommend. 2. Defendant moved for dismissal for improperly laid venue since she resides in Samar, plaintiff in US and action was filed in City of Manila. 3. The court upheld the contention of Defendant and, accordingly, dismissed the case without pronouncement as to costs.

Issue: W/N the court was correct in dismissing the case for improper venue Ruling: Section 1, Rule 5, of the Rules of Court provides that Civil actions in Courts of First Instance may be commenced and tried where the Defendant or any of the Defendants resides or may be found, or where the Plaintiff or any of the Plaintiffs resides, at the election of the Plaintiff. From this rule it may be inferred that Plaintiff can elect to file the action in the court he may choose if both the Plaintiff and the Defendant have their residence in the Philippines. Otherwise, the action can only be brought in the place where either one resides. Since plaintiff is a US resident, he has no choice other than to file the action in the court of first instance of the latter province. The fact that Defendant was sojourning in Pasay at the time he was served with summons does not make him a resident of that place for purposes of venue. Residence is the permanent home, the place to which, whenever absent for business or pleasure, one intends to return.

3. Velila v Posadas Facts: 1. Moody is a US citizen who came to PH in 1902/03 and actively engaged in buss here up to his death in 1931, gathering bonds and personal props valued by the commissioners of appraisal and claims at P609,767 and by the Collector of Internal Revenue for the purposes of inheritance tax at P653,657.47 Moody died in India, executed a will in te PH where he bequethed all his property to his only sister Ida M. Palmer who was then a US citizen and resident Maxwell Thebaut filed for appointment of special administrator of the estate before CFI Mla CFI Mla declared Palmer to be the sole and only heiress of the deceased and that during the declaration of heris, Palmer presented a letter by Moody to her Prop of Moody consisted principally of bonds and shares of stock of corporations organized under the laws of PH, bank deposits and other personal properties, as are more fully shown in the inventory filed by the special administrator with the court BIR praepared for an inheritance tax return for Moodys estate and later on a an income tax return for the fractional period Committee on claims and appraisals filed with the court its report Estate of Moody paid under protest the sum of P50,000 and P40K plus Protest overruled

2. 3. 4. 5.

6. 7. 8. 9.

10. The argument of plaintiff is that: a. there is no valid law in PH under or by virtue of which any inheritance tax may be levied, assessed or collected upon transfer, by death and succession, of intangible personal properties of a person not domiciled in PH the levy and collection by defendant of inheritance tax computed upon the value of said stocks, bonds, credits and other intangible properties constitues deprivation of prop w/o due process

b.

11. RAC: Every transmission by virtue of inheritance, devise, bequest, gift mortis causa or advance in anticipation of inheritance of any shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippine Islands in accordance with its laws shall be subject to the following tax 12. Plaintiff: Moody was non-resident at the time of his death; Answer: Moody was a resident of Mla before and at the time of his death who is actively engaged in buss here Issue: 1. 2. Ruling: 1. Moody was never married and there is no doubt that he had his legal domicile in the Philippine Islands from 1902 or 1903 forward during which time he accumulated a fortune from his business here. He lived in the Elks Club in Manila for many years and was living there up to the date he left Manila the latter part of February, 1928 when he was diagnosed with leprosy at the advanced stage. Since he was informed that he has to be confined in the Culion Leper Colony as required by law, he was distressed and escaped out of the country. He executed a letter to a person to whom he is selling his shares in a PH corp, stating that he had no intention to go back to PH. The negative evidence that he told Cooley that he did not intend to W/N Arthur G. Moody was legally domiciled in the Philippine Islands on the day of his death W/N double taxation lies as there is income tax and inheritance tax assessed on the dividends of Moody

return to Manila does not prove that he had established a domicile in Paris. Our Civil Code (art. 40) defines the domicile of natural persons as the place of their usual residence. The record before us leaves no doubt in our minds that the usual residence of Moody was in Manila where he had lived and toiled for more than a quarter of a century, rather than in any foreign country he visited during his wanderings up to the date of his death in Calcutta. 2. The contention under the appellants third assignment of error that the defenda nt collector illegally assessed an income tax of P13,001.41 against the Moody estate is, in our opinion, untenable. It is clear that the inheritance tax and the additional income tax in question are entirely distinct. They are assessed under different statutes.

4. Vidal v Posadas Facts: 1. 2. 3. 4. 5. 6. 7. Esperanza Tuazon, by means of public documents, donated certain parcels of land situated in Manila to the plaintiffs who accepted them ion pub docs and duly recorded in RD plaintiffs took possession of the said lands, received the fruits thereof and obtained the corresponding transfer certificates of title. Donor died leaving no forced heirs but in her will, she bequethed 5K each to the donees. CIR, ruled that the appellants, as donees and legatees, should pay as inheritance tax the sums of P16,673 and P13,951.45, Paid them under protest CIR filed a demurrer to complaint alleging there isno cause of action and the court dismissed the action Judgment appealed from was based on Sec 1540 of the Admin Code stating that after deduction have been made, the value of all gifts and advances by the deceased to among others, donees mortis causa shall be added to the resulting amount Appellants contend 1540 is not applicable to donations inter vivos and if it does, it is unconsitutional because a. that subject should be expressed in the title of the law b. that the Legislature has no authority to impose inheritance tax on donations inter vivos c. because a legal provision of this character contravenes the fundamental rule of uniformity of taxation. Appellees contend all gifts refer to donations inter vivos

8.

9.

Issue: W/N 1540 is applicable to the donations to appellants Ruling: The gifts referred to in section 1540 of the Revised Administration Code are, obviously, those donations inter vivos that take effect immediately or during the lifetime of the donor but are made in consideration or in contemplation of death, under which is classified the gifts received by the appellants. Gifts inter vivos, the transmission of which is not made in contemplation of the donor's death should not be understood as included within the said legal provision for the reason that it would amount to imposing a direct tax on property and not on the transmission thereof which is not covered by Article XI of Chapter 40 of the Administrative Code which deals expressly with the tax on inheritances, legacies and other acquisitions mortis causa. a. the constitutional provision cited should not be strictly construed as to make it necessary that the title contain a full index to all the contents of the law. It is sufficient if the language used therein is expressed in such a way that in case of doubt it would afford a means of determining the legislators intention. 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. It cannot be null and void on this ground because it equally subjects to the same tax all of those donees who later become heirs, legatees or donees mortis causa by the will of the donor.

b.

c.

5. CIR v De Lara Facts: Hugo Miller was an American citizen who came to the PH from 1906-1917, became a teacher and later supt of the schools. He retired under the Osmeiia Retirement Act. 2. After his retirement, accepted an executive position in the local branch of Ginn & Co., book publishers with principal offices in New York 3. From, 1922-1941 he was stationed in the Philippines as Oriental representative of Ginn & Co., covering not only the Philippines, but also China and Japan. He lived in Manila Hotel, never in a residential house in PH 4. He executed a will in 1941 in Sta Cruz, California and declared that he was "of Santa Cruz, California". 5. During the war, he was taken prisoner by the Japanese forces in Leyte, and in January, 1944, he was transferred to Catbalogan, Samar, where he was reported to have been executed by said forces in 1944 6. He owned real props in US, tangible props and cash in US banks and shares of stock corp in PH 7. California court instituted testate proceedings and issued an order and decree of settlement of final account and final distribution, wherein it found that Miller was a "resident of the County of Santa Cruz, State of California" at the time of his death in 1944. 8. ancilliary proceedings were filed by the executors of the will before CFI Manila and said court admitted to probate the will of Miller was probated in the California court, also found that Miller was a resident of Santa Cruz, California, at the time of his death. 9. Bank of America, National Trust and Savings Association of San Francisco California, co-executor named in Miller's will, filed an estate and inheritance tax return with the Collector, covering only the shares of stock issued by Philippines corporations, reporting a liability of P269.43 for taxes and P230.27 for inheritance taxes 10. The estate of Miller protested the assessment of the liability for estate and inheritance taxes by the CIR, including penalties and other increments at P77,300.92 11. The Collector maintains that under the tax laws, residence and domicile have different meanings; that tax laws on estate and inheritance taxes only mention resident and non-resident and that Miller has acquired residency here for staying long enough here, and consequently, his intangible personal properties situated here as well as in the United States were subject to said taxes. Issue: W/N estate of Miller is liable for tax in the PH (residence v domicile) Ruling: The National Internal Revenue Code was promulgated in 1939, the prevailing construction given by the courts to the "residence" was synonymous with domicile. In the United States, where we patterned our laws, for estate tax purposes, a resident is considered one who at the time of his death had his domicile in the United States and this determines the residence of the deceased, not the actual residence. We also agree with the Court of Tax Appeals that at the time of his death, Miller had his residence or domicile in Santa Cruz, California. During his country, Miller never acquired a house for residential purposes for he stayed at the Manila Hotel and later on at the Army and Navy Club. And most of his properties are located in the US. " From the foregoing, it is clear that as a non-resident of the Philippines, the only properties of his estate subject to estate and inheritance taxes are those shares of stock issued by Philippines corporations. Under the doctrine of mobilia secuuntur persona, if the decedent extended his activities in the PH so as to avail himself of the protection and benefits of the laws of the Philippines, the right of PH to collect the estate and inheritance taxes cannot be questioned. Court, in the end, exempted payment of tax by Millers estate for being a victim of Japanese hostility. 1.

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