G.R. No.

120880 June 5, 1997

FERDINAND R. MARCOS II, petitioner,
vs.
COURT OF APPEALS, TE COMMISSIONER OF TE !UREAU OF INTERNAL
RE"ENUE #n$ ERMINIA D. DE GU%MAN, respondents.
F#&'()
Herein petitioner Ferdinand R. Marcos II, the eldest son of the former president
Ferdinand Marcos, questions the actuations of the respondent Commissioner of Internal
Revenue in assessing, and collecting through the summary remedy of Levy on Real
Properties, estate and income ta delinquencies upon the estate and properties of his
father, despite the pendency of the proceedings on pro!ate of the "ill of the late
president.
#he facts as found !y the appellate court are undisputed, and are here!y adopted$
%n &eptem!er '(, )(*(, former President Ferdinand Marcos died in Honolulu, Ha"aii,
+&,. %n -une '., )((/, a &pecial #a ,udit #eam "as created to conduct
investigations and eaminations of the ta lia!ilities and o!ligations of the late president,
as "ell as that of his family, associates and 0cronies0. #he investigation disclosed that
the Marcoses failed to file a "ritten notice of the death of the decedent, an estate ta
returns, as "ell as several income ta returns covering the years )(*' to )(*1, all in
violation of the 2ational Internal Revenue Code 32IRC4. &u!sequently, criminal charges
"ere filed against Mrs. Imelda R. Marcos for violations of &ections *', *5 and *6 of the
2ational Internal Revenue Code 32IRC4. %n -uly '1, )((), the 7IR issued 8eficiency
estate ta assessment against the estate of the late president Ferdinand Marcos9
deficiency income ta assessment against the &pouses Ferdinand and Imelda Marcos
representing deficiency income ta for the years )(*: and )(*19 deficiency income ta
assessment against petitioner Ferdinand 07ong!ong0 Marcos II representing his
deficiency income taes for the years )(*' to )(*:. #he Commissioner of Internal
Revenue avers that copies of the deficiency estate and income ta assessments "ere
all personally and constructively served upon Mrs. Imelda Marcos through her careta;er
Mr. Martine< at her last ;no"n address. Li;e"ise, copies of the deficiency ta
assessments issued against petitioner Ferdinand 07ong!ong0 Marcos II "ere also
personally and constructively served upon him through his careta;er at his last ;no"n
address. #hereafter, Formal ,ssessment notices "ere served on %cto!er '/, )((',
upon Mrs. Marcos c=o petitioner, at his office, House of Representatives, 7atasan
Pam!ansa, >ue<on City. Moreover, a notice to#apayer inviting Mrs. Marcos, to a
conference, "as furnished the counsel of Mrs. Marcos, !ut to no avail. #he deficiency
ta assessments "ere not protested administratively, !y Mrs. Marcos and the other
heirs of the late president, "ithin 5/ days from service of said assessments. #hereafter,
2otices of Levy on real property against certain parcels of land o"ned !y the Marcoses
"ere issued to satisfy the alleged estate ta and deficiency income taes of &pouses
Marcos. 2otices of sale at pu!lic auction "ere posted on May '1, )((5, at the lo!!y of
the City Hall of #aclo!an City. #he pu!lic auction for the sale of the eleven 3))4 parcels
of land too; place on -uly :, )((5. #here !eing no !idder, the lots "ere declared
forfeited in favor of the government. %n -une ':, )((5, petitioner Ferdinand 07ong!ong0
Marcos II filed the instant petition for certiorari and prohi!ition under Rule 1: of the
Rules of Court, "ith prayer for temporary restraining order and=or "rit of preliminary
in?unction.
I((ue()
). @hether or not the 7ureau of Internal Revenue has the authority to collect !y the
summary remedy of levying upon, and sale of real properties of the decedent, estate ta
deficiencies, "ithout the cognition and authority of the court sitting in pro!ate over the
supposed "ill of the deceased.
'. @hether or not the manner and method in "hich the assessment of taes is enforced
may !e questioned separately, and irrespective of its finality.
e*$)
). In the Philippine eperience, the enforcement and collection of estate ta, is
eecutive in character, as the legislature has seen it fit to ascri!e this tas; to the 7ureau
of Internal Revenue.
#hus, it "as in Vera vs. Fernandez that the court recogni<ed the li!eral treatment of
claims for taes charged against the estate of the decedent. &uch taes, "ere
eempted from the application of the statute of nonAclaims, and this is ?ustified !y the
necessity of government funding, immortali<ed in the maim that taes are the life!lood
of the government.
&uch li!eral treatment of internal revenue taes in the pro!ate proceedings etends so
far, even to allo"ing the enforcement of ta o!ligations against the heirs of the
decedent, even after distri!ution of the estateBs properties.
From the foregoing, it is discerni!le that the approval of the court, sitting in pro!ate, or
as a settlement tri!unal over the deceased is not a mandatory requirement in the
collection of estate taes. It cannot therefore !e argued that the #a 7ureau erred in
proceeding "ith the levying and sale of the properties allegedly o"ned !y the late
President, on the ground that it "as required to see; first the pro!ate courtBs sanction.
#here is nothing in the #a Code, and in the pertinent remedial la"s that implies the
necessity of the pro!ate or estate settlement courtBs approval of the stateBs claim for
estate taes, !efore the same can !e enforced and collected.
%n the contrary, under &ection *. of the 2IRC, it is the pro!ate or settlement court
"hich is !idden not to authori<e the eecutor or ?udicial administrator of the decedentBs
estate to deliver any distri!utive share to any party interested in the estate, unless it is
sho"n a Certification !y the Commissioner of Internal Revenue that the estate taes
have !een paid. #his provision disproves the petitionerBs contention that it is the pro!ate
court "hich approves the assessment and collection of the estate ta.
'. Petitioner su!mits, ho"ever, that 0"hile the assessment of taes may have !een
validly underta;en !y the Covernment, collection thereof may have !een done in
violation of the la". #hus, the manner and method in "hich the latter is enforced may !e
questioned separately, and irrespective of the finality of the former, !ecause the
Covernment does not have the un!ridled discretion to enforce collection "ithout regard
to the clear provision of la".0
Petitioner specifically points out that applying Memorandum Circular 2o. 5*A1*,
implementing &ections 5)* and 5'6 of the old ta code 3Repu!lic ,ct :'/54, the 7IRBs
2otices of Levy on the Marcos properties, "ere issued !eyond the allo"ed period, and
are therefore null and void.
@e hold other"ise. #he 2otices of Levy upon real property "ere issued "ithin the
prescriptive period and in accordance "ith the provisions of the present #a Code. #he
deficiency ta assessment, having already !ecome final, eecutory, and demanda!le,
the same can no" !e collected through the summary remedy of distraint or levy
pursuant to &ection '/: of the 2IRC.
#he applica!le provision in regard to the prescriptive period for the assessment and
collection of ta deficiency in this instance is ,rticle ''5 of the 2IRC., "hich provides
that in the case of a false or fraudulent return "ith intent to evade ta or of a failure to
file a return, the ta may !e assessed, or a proceeding in court for the collection of such
ta may !e !egun "ithout assessment, at any time "ithin ten 3)/4 years after the
discovery of the falsity, fraud, or omission$ Provided, #hat, in a fraud assessment "hich
has !ecome final and eecutory, the fact of fraud shall !e ?udicially ta;en cogni<ance of
in the civil or criminal action for the collection thereof 3c4 ,ny internal
revenue ta "hich has !een assessed "ithin the period of limitation a!ove prescri!ed,
may !e collected !y distraint or levy or !y a proceeding in court "ithin three years
follo"ing the assessment of the ta.
#he omission to file an estate ta return, and the su!sequent failure to contest or appeal
the assessment made !y the 7IR is fatal to the petitionerBs cause, as under the a!oveA
cited provision, in case of failure to file a return, the ta may !e assessed at any time
"ithin ten years after the omission, and any ta so assessed may !e collected !y levy
upon real property "ithin three years follo"ing the assessment of the ta. &ince the
estate ta assessment had !ecome final and unappeala!le !y the petitionerBs default as
regards protesting the validity of the said assessment, there is no" no reason "hy the
7IR cannot continue "ith the collection of the said ta. ,ny o!?ection against the
assessment should have !een pursued follo"ing the avenue paved in &ection ''( of
the 2IRC on protests on assessments of internal revenue taes.