RAFAEL ARSENIO S.

DIZON, in his capacity as the Judicial Administrator

o the Estate o the deceased JOSE !. FERNANDEZ, !etitioner "s. #O$R%
OF %A& A!!EALS and #O''ISSIONER OF IN%ERNAL RE(EN$E
J. Nachura. 3
rd
Division
Facts) On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition
for the probate of his i!! as "!ed ith #ran$h %1 of the &e'iona! Tria! (o)rt
(&T() of *ani!a (probate $o)rt). The probate $o)rt then appointed retired
+)preme (o)rt J)sti$e ,rsenio P. -izon (J)sti$e -izon) and petitioner, ,tt.. &afae!
,rsenio P. -izon (petitioner) as +pe$ia! and ,ssistant +pe$ia! ,dministrator,
respe$tive!., of the /state of Jose (/state). 0n a !etter dated O$tober 11, 1988,
J)sti$e -izon informed respondent (ommissioner of the #)rea) of 0nterna!
&even)e (#0&) of the spe$ia! pro$eedin's for the /state. ,fter severa! e2tensions,
on ,pri! 17, 1993, ,tt.. 4onza!es rote a !etter addressed to the #0& &e'iona!
-ire$tor for +an Pab!o (it. and "!ed the estate ta2 ret)rn ith the same #0&
&e'iona! O5i$e, shoin' therein a N06 estate ta2 !iabi!it.. , (erti"$ation statin'
that the ta2es d)e on the transfer of rea! and persona! properties of Jose had been
f)!!. paid and said properties ma. be transferred to his heirs as iss)ed. +ometime
in ,)')st 1993, J)sti$e -izon passed aa.. Th)s, on O$tober 77, 1993, the probate
$o)rt appointed petitioner as the administrator of the /state.
Petitioner re8)ested the probate $o)rt9s a)thorit. to se!! severa! properties
formin' part of the /state, for the p)rpose of pa.in' its $reditors, name!.:
/8)itab!e #an;in' (orporation, #an8)e de 690ndo$hine et. de +)ez, *ani!a
#an;in' (orporation and +tate 0nvestment <o)se, 0n$. Petitioner manifested that
*ani!a #an;, a ma=or $reditor of the /state as not in$!)ded, as it did not "!e a
$!aim ith the probate $o)rt sin$e it had se$)rit. over severa! rea! estate
properties formin' part of the /state.
<oever, on November 7>, 1991, the ,ssistant (ommissioner for (o!!e$tion
of the #0&, Themisto$!es *onta!ban, iss)ed /state Ta2 ,ssessment Noti$e
demandin' the pa.ment of P>>,971,98%.?3 as de"$ien$. estate ta2.
The petition for revie as denied b. (T,. Neverthe!ess, the (T, did not
f)!!. adopt the assessment made b. the #0& and it $ame )p ith its on
$omp)tation of the de"$ien$. estate ta2. (, a5irmed (T,@s r)!in'.
Issues) Ahether the a$t)a! $!aims of the aforementioned $reditors ma. be f)!!.
a!!oed as ded)$tions from the 'ross estate of Jose despite the fa$t that the said
$!aims ere red)$ed or $ondoned thro)'h $ompromise a'reements entered into b.
the /state ith its $reditors.
*eld: Bes. C(!aims a'ainst the estate,D as a!!oab!e ded)$tions from the 'ross
estate )nder +e$tion 79 of the Ta2 (ode, are basi$a!!. a reprod)$tion of the
ded)$tions a!!oed )nder +e$tion 89 (a) (1) (() and (/) of (ommonea!th ,$t No.
?>> ((, ?>>), otherise ;non as the Nationa! 0nterna! &even)e (ode of 1919,
and hi$h as the "rst $odi"$ation of Phi!ippine ta2 !as. Phi!ippine ta2 !as
ere, in t)rn, based on the federa! ta2 !as of the Enited +tates. Th)s, p)rs)ant to
estab!ished r)!es of stat)tor. $onstr)$tion, the de$isions of ,meri$an $o)rts
$onstr)in' the federa! ta2 $ode are entit!ed to 'reat ei'ht in the interpretation of
o)r on ta2 !as.

0t is noteorth. that even in the Enited +tates, there is some disp)te as to
hether the ded)$tib!e amo)nt for a $!aim a'ainst the estate is "2ed as of the
de$edent9s death hi$h is the 'enera! r)!e, or the same sho)!d be ad=)sted to
reFe$t postGdeath deve!opments, s)$h as here a sett!ement beteen the parties
res)!ts in the red)$tion of the amo)nt a$t)a!!. paid. On one hand, the E.+. $o)rt
r)!ed that the appropriate ded)$tion is the Cva!)eD that the $!aim had at the date of
the de$edent9s death. ,!so, as he!d in Propstra v. U.S., here a !ien $!aimed a'ainst
the estate as $ertain and enfor$eab!e on the date of the de$edent9s death, the fa$t
that the $!aimant s)bse8)ent!. sett!ed for !esser amo)nt did not pre$!)de the
estate from ded)$tin' the entire amo)nt of the $!aim for estate ta2 p)rposes.
These prono)n$ements essentia!!. $on"rm the 'enera! prin$ip!e that postGdeath
deve!opments are not materia! in determinin' the amo)nt of the ded)$tion. The
Propstra $ase app!ied the 0tha$a Tr)st dateGofGdeath va!)ation prin$ip!e to
enfor$eab!e $!aims a'ainst the estate.
Ae e2press o)r a'reement ith the dateGofGdeath va!)ation r)!e, made
p)rs)ant to the r)!in' of the E.+. +)preme (o)rt in 0tha$a Tr)st (o. v. Enited
+tates. First. There is no !a, nor do e dis$ern an. !e'is!ative intent in o)r ta2
!as, hi$h disre'ards the dateGofGdeath va!)ation prin$ip!e and parti$)!ar!.
provides that postGdeath deve!opments m)st be $onsidered in determinin' the net
va!)e of the estate. 0t bears emphasis that ta2 b)rdens are not to be imposed, nor
pres)med to be imposed, be.ond hat the stat)te e2press!. and $!ear!. imports,
ta2 stat)tes bein' $onstr)ed stri$tissimi =)ris a'ainst the 'overnment. ,n. do)bt
on hether a person, arti$!e or a$tivit. is ta2ab!e is 'enera!!. reso!ved a'ainst
ta2ation. +e$ond. +)$h $onstr)$tion "nds re!evan$e and $onsisten$. in o)r &)!es
on +pe$ia! Pro$eedin's herein the term H$!aimsH re8)ired to be presented a'ainst
a de$edent9s estate is 'enera!!. $onstr)ed to mean debts or demands of a
pe$)niar. nat)re hi$h $o)!d have been enfor$ed a'ainst the de$eased in his
!ifetime, or !iabi!it. $ontra$ted b. the de$eased before his death. Therefore, the
$!aims e2istin' at the time of death are si'ni"$ant to, and sho)!d be made the basis
of, the determination of a!!oab!e ded)$tions.
A</&/FO&/, the instant Petition is 4&,NT/-. ,$$ordin'!., the
assai!ed -e$ision dated ,pri! 13, 1999 and the &eso!)tion dated November 1,
1999 of the (o)rt of ,ppea!s in (,G4.&. +.P. No. ?>9?7 are &/I/&+/- and +/T
,+0-/. The #)rea) of 0nterna! &even)e9s de"$ien$. estate ta2 assessment a'ainst
the /state of Jose P. Fernandez is hereb. NE660F0/-. No $osts.
%*IRD DI(ISION
#O''ISSIONER OF IN%ERNAL RE(EN$E, petitioner, "s. #O$R% OF
A!!EALS, #O$R% OF %A& A!!EALS and JOSEFINA !. !AJONAR, as
Administratri+ o the Estate o !edro !. !a,onar, respondents.
R E S O L $ % I O N
-ONZA-A.RE/ES, J.)
Facts) Pedro Pa=onar, a member of the Phi!ippine +$o)t, #ataan (ontin'ent, d)rin'
the se$ond Aor!d Aar, as a part of the infamo)s -eath *ar$h b. reason of hi$h
he s)5ered sho$; and be$ame insane. <is sister Jose"na Pa=onar be$ame the
')ardian over his person, hi!e his propert. as p!a$ed )nder the ')ardianship of
the Phi!ippine Nationa! #an; (PN#) b. the &e'iona! Tria! (o)rt of -)ma')ete (it.,
#ran$h 11, in +pe$ia! Pro$eedin's No. 17%?. <e died on Jan)ar. 13, 1988. <e as
s)rvived b. his to brothers 0sidro P. Pa=onar and 4re'orio Pa=onar, his sister
Jose"na Pa=onar, nephes (on$ordio Jando' and *ario Jando' and nie$e (on$hita
Jando'.
On *a. 11, 1988, the PN# "!ed an a$$o)ntin' of the de$edent9s propert.
)nder ')ardianship va!)ed at P1,317,>77.39 in +pe$ia! Pro$eedin's No. 17%?.
<oever, the PN# did not "!e an estate ta2 ret)rn, instead it advised Pedro
Pa=onar9s heirs to e2e$)te an e2tra=)di$ia! sett!ement and to pa. the ta2es on his
estate. On ,pri! %, 1988, p)rs)ant to the assessment b. the #)rea) of 0nterna!
&even)e (#0&), the estate of Pedro Pa=onar paid ta2es in the amo)nt of P7,%%7.
On *a. 19, 1988, Jose"na Pa=onar "!ed a petition ith the &e'iona! Tria!
(o)rt of -)ma')ete (it. for the iss)an$e in her favor of !etters of administration
of the estate of her brother. The $ase as do$;eted as +pe$ia! Pro$eedin's No.
7199. On J)!. 18, 1988, the tria! $o)rt appointed Jose"na Pa=onar as the re')!ar
administratri2 of Pedro Pa=onar9s estate.
On -e$ember 19, 1988, p)rs)ant to a se$ond assessment b. the #0& for
de"$ien$. estate ta2, the estate of Pedro Pa=onar paid estate ta2 in the amo)nt of
P1,%77,793.98. Jose"na Pa=onar, in her $apa$it. as administratri2 and heir of Pedro
Pa=onar9s estate, "!ed a protest on Jan)ar. 11, 1989 ith the #0& pra.in' that the
estate ta2 pa.ment in the amo)nt of P1,%77,793.98, or at !east some portion of it,
be ret)rned to the heirs.
<oever, on ,)')st 1%, 1989, itho)t aitin' for her protest to be reso!ved
b. the #0&, Jose"na Pa=onar "!ed a petition for revie ith the (o)rt of Ta2
,ppea!s ((T,), pra.in' for the ref)nd of P1,%77,793.98, or in the a!ternative,
P8?3,737.3>, as erroneo)s!. paid estate ta2.
The (T, ordered the (ommissioner of 0nterna! &even)e to ref)nd Jose"na
Pa=onar the amo)nt of P7%7,%8%.%9, representin' erroneo)s!. paid estate ta2 for
the .ear 1988. ,mon' the ded)$tions from the 'ross estate a!!oed b. the (T,
ere the amo)nts of P>3,7%1 representin' the notaria! fee for the /2tra=)di$ia!
+ett!ement and the amo)nt of P%3,333 as the attorne.9s fees in +pe$ia!
Pro$eedin's No. 17%? for ')ardianship.
On J)ne 1%, 1991, the (ommissioner of 0nterna! &even)e "!ed a motion for
re$onsideration of the (T,9s *a. >, 1991 de$ision assertin', amon' others, that
the notaria! fee for the /2tra=)di$ia! +ett!ement and the attorne.9s fees in the
')ardianship pro$eedin's are not ded)$tib!e e2penses.
On J)ne 7, 199?, the (T, iss)ed the assai!ed &eso!)tion 8 orderin' the
(ommissioner of 0nterna! &even)e to ref)nd Jose"na Pa=onar, as administratri2 of
the estate of Pedro Pa=onar, the amo)nt of P7>,%37.?7 representin' erroneo)s!.
paid estate ta2 for the .ear 1988. ,!so, the (T, )phe!d the va!idit. of the ded)$tion
of the notaria! fee for the /2tra=)di$ia! +ett!ement and the attorne.9s fees in the
')ardianship pro$eedin's.
On J)!. %, 199?, the (ommissioner of 0nterna! &even)e "!ed ith the (o)rt
of ,ppea!s a petition for revie of the (T,9s *a. >, 1991 -e$ision and its J)ne 7,
199? &eso!)tion, 8)estionin' the va!idit. of the abovementioned ded)$tions. On
-e$ember 71, 199%, the (o)rt of ,ppea!s denied the (ommissioner9s petition.
Issue) 0hether the notarial ee paid or the e+tra,udicial settlement in the
amount o !12,345 and the attorney6s ees in the 7uardianship proceedin7s
in the amount o !42,222 may 8e allo9ed as deductions rom the 7ross
estate o decedent in order to arri"e at the "alue o the net estate.
*eld) Bes. . ,!tho)'h the Ta2 (ode spe$i"es H=)di$ia! e2penses of the testamentar.
or intestate pro$eedin's,H there is no reason h. e2penses in$)rred in the
administration and sett!ement of an estate in e2tra=)di$ia! pro$eedin's sho)!d not
be a!!oed. <oever, ded)$tion is !imited to s)$h administration e2penses as are
a$t)a!!. and ne$essari!. in$)rred in the $o!!e$tion of the assets of the estate,
pa.ment of the debts, and distrib)tion of the remainder amon' those entit!ed
thereto. +)$h e2penses ma. in$!)de e2e$)tor9s or administrator9s fees, attorne.9s
fees, $o)rt fees and $har'es, appraiser9s fees, $!er; hire, $osts of preservin' and
distrib)tin' the estate and storin' or maintainin' it, bro;era'e fees or
$ommissions for se!!in' or disposin' of the estate, and the !i;e. -ed)$tib!e
attorne.9s fees are those in$)rred b. the e2e$)tor or administrator in the
sett!ement of the estate or in defendin' or prose$)tin' $!aims a'ainst or d)e the
estate.
0t is $!ear then that the e2tra=)di$ia! sett!ement as for the p)rpose of
pa.ment of ta2es and the distrib)tion of the estate to the heirs. The e2e$)tion of
the e2tra=)di$ia! sett!ement ne$essitated the notarization of the same. <en$e the
(ontra$t of 6e'a! +ervi$es of *ar$h 78, 1988 entered into beteen respondent
Jose"na Pa=onar and $o)nse! as presented in eviden$e for the p)rpose of shoin'
that the amo)nt of P>3,7%1.33 as for the notarization of the /2tra=)di$ia!
+ett!ement. 0t fo!!os then that the notaria! fee of P>3,7%1.33 as in$)rred
primari!. to sett!e the estate of the de$eased Pedro Pa=onar. +aid amo)nt sho)!d
then be $onsidered an administration e2penses a$t)a!!. and ne$essari!. in$)rred in
the $o!!e$tion of the assets of the estate, pa.ment of debts and distrib)tion of the
remainder amon' those entit!ed thereto. Th)s, the notaria! fee of P>3,7%1 in$)rred
for the /2tra=)di$ia! +ett!ement sho)!d be a!!oed as a ded)$tion from the 'ross
estate.
,ttorne.9s fees, on the other hand, in order to be ded)$tib!e from the 'ross
estate m)st be essentia! to the sett!ement of the estate. The amo)nt of P%3,333.33
as in$)rred as attorne.9s fees in the ')ardianship pro$eedin's. Petitioner
$ontends that said amo)nt are not e2penses of the testamentar. or intestate
pro$eedin's as the ')ardianship pro$eedin' as instit)ted d)rin' the !ifetime of
the de$edent hen there as .et no estate to be sett!ed. ,'ain, this $ontention
m)st fai!. The ')ardianship pro$eedin' in this $ase as ne$essar. for the
distrib)tion of the propert. of the de$eased. The PN# as appointed ')ardian over
the assets of the de$eased, and that ne$essari!. the assets of the de$eased formed
part of his 'ross estate.
The ded)$tions from the 'ross estate permitted )nder se$tion 79 of the Ta2
(ode basi$a!!. reprod)$ed the ded)$tions a!!oed )nder (ommonea!th ,$t No.
?>> ((, ?>>), otherise ;non as the Nationa! 0nterna! &even)e (ode of 1919, 1>
and hi$h as the "rst $odi"$ation of Phi!ippine ta2 !as. +e$tion 89 (a) (1) (#) of
(, ?>> a!so provided for the ded)$tion of the H=)di$ia! e2penses of the
testamentar. or intestate pro$eedin'sH for p)rposes of determinin' the va!)e of
the net estate. Phi!ippine ta2 !as ere, in t)rn, based on the federa! ta2 !as of
the Enited +tates. 0n a$$ord ith estab!ished r)!es of stat)tor. $onstr)$tion, the
de$isions of ,meri$an $o)rts $onstr)in' the federa! ta2 $ode are entit!ed to 'reat
ei'ht in the interpretation of o)r on ta2 !as.
J)di$ia! e2penses are e2penses of administration. ,dministration e2penses,
as an a!!oab!e ded)$tion from the 'ross estate of the de$edent for p)rposes of
arrivin' at the va!)e of the net estate, have been $onstr)ed b. the federa! and
state $o)rts of the Enited +tates to in$!)de a!! e2penses Hessentia! to the $o!!e$tion
of the assets, pa.ment of debts or the distrib)tion of the propert. to the persons
entit!ed to it.H 0n other ords, the e2penses m)st be essentia! to the proper
sett!ement of the estate. /2pendit)res in$)rred for the individ)a! bene"t of the
heirs, devisees or !e'atees are not ded)$tib!e. This distin$tion has been $arried
over to o)r =)risdi$tion. Th)s, in 6orenzo v. Posadas 77 the (o)rt $onstr)ed the
phrase H=)di$ia! e2penses of the testamentar. or intestate pro$eedin'sH as not
in$!)din' the $ompensation paid to a tr)stee of the de$edent9s estate hen it
appeared that s)$h tr)stee as appointed for the p)rpose of mana'in' the
de$edent9s rea! estate for the bene"t of the testamentar. heir. 0n another $ase, the
(o)rt disa!!oed the premi)ms paid on the bond "!ed b. the administrator as an
e2pense of administration sin$e the 'ivin' of a bond is in the nat)re of a
8)a!i"$ation for the o5i$e, and not ne$essar. in the sett!ement of the estate.
Neither ma. attorne.9s fees in$ident to !iti'ation in$)rred b. the heirs in assertin'
their respe$tive ri'hts be $!aimed as a ded)$tion from the 'ross estate.
(omin' to the $ase at bar, the notaria! fee paid for the e2tra=)di$ia!
sett!ement is $!ear!. a ded)$tib!e e2pense sin$e s)$h sett!ement e5e$ted a
distrib)tion of Pedro Pa=onar9s estate to his !af)! heirs. +imi!ar!., the attorne.9s
fees paid to PN# for a$tin' as the ')ardian of Pedro Pa=onar9s propert. d)rin' his
!ifetime sho)!d a!so be $onsidered as a ded)$tib!e administration e2pense. PN#
provided a detai!ed a$$o)ntin' of de$edent9s propert. and 'ave advi$e as to the
proper sett!ement of the !atter9s estate, a$ts hi$h $ontrib)ted toards the
$o!!e$tion of de$edent9s assets and the s)bse8)ent sett!ement of the estate.
SE#OND DI(ISION
-.R. No. :;2<<2 June 4, :==3
FERDINAND R. 'AR#OS II, petitioner, "s.
#O$R% OF A!!EALS, %*E #O''ISSIONER OF %*E >$REA$ OF
IN%ERNAL RE(EN$E and *ER'INIA D. DE -$Z'AN, respondents.
%ORRES, JR., J.)
Facts) Petitioner Ferdinand &. *ar$os 00, the e!dest son of the de$edent, 8)estions
the a$t)ations of the respondent (ommissioner of 0nterna! &even)e in assessin',
and $o!!e$tin' thro)'h the s)mmar. remed. of 6ev. on &ea! Properties, estate and
in$ome ta2 de!in8)en$ies )pon the estate and properties of his father, despite the
penden$. of the pro$eedin's on probate of the i!! of the !ate president.
Petitioner had "!ed ith the respondent (o)rt of ,ppea!s a Petition for (ertiorari
and Prohibition ith an app!i$ation for rit of pre!iminar. in=)n$tion andJor
temporar. restrainin' order on J)ne 78, 1991, see;in' to:
0. ,nn)! and set aside the Noti$es of 6ev. on rea! propert. dated Febr)ar. 77,
1991 and *a. 73, 1991, iss)ed b. respondent (ommissioner of 0nterna! &even)eK
00. ,nn)! and set aside the Noti$es of +a!e dated *a. 7>, 1991K
000. /n=oin the <ead &even)e /2e$)tive ,ssistant -ire$tor 00 ((o!!e$tion +ervi$e),
from pro$eedin' ith the ,)$tion of the rea! properties $overed b. Noti$es of +a!e.
The (o)rt of ,ppea!s r)!ed that the de"$ien$. assessments for estate and in$ome
ta2 made )pon the petitioner and the estate of the de$eased President *ar$os
have a!read. be$ome "na! and )nappea!ab!e, and ma. th)s be enfor$ed b. the
s)mmar. remed. of !ev.in' )pon the properties of the !ate President, as as done
b. the respondent (ommissioner of 0nterna! &even)e. <en$e the instant petition.
Petitioner s)bmits that the probate $o)rt is not pre$!)ded from den.in' a re8)est
b. the 'overnment for the immediate pa.ment of ta2es, and sho)!d order the
pa.ment of the same on!. ithin the period "2ed b. the probate $o)rt for the
pa.ment of a!! the debts of the de$edent. On the other hand, it is ar')ed b. the
#0&, that the state9s a)thorit. to $o!!e$t interna! reven)e ta2es is paramo)nt. Th)s,
the penden$. of probate pro$eedin's over the estate of the de$eased does not
pre$!)de the assessment and $o!!e$tion, thro)'h s)mmar. remedies, of estate
ta2es over the same. ,$$ordin' to the respondent, $!aims for pa.ment of estate
and in$ome ta2es d)e and assessed after the death of the de$edent need not be
presented in the form of a $!aim a'ainst the estate. These $an and sho)!d be paid
immediate!.. The probate $o)rt is not the 'overnment a'en$. to de$ide hether an
estate is !iab!e for pa.ment of estate of in$ome ta2es. Ae!!Gsett!ed is the r)!e that
the probate $o)rt is a $o)rt ith spe$ia! and !imited =)risdi$tion.
Issue) 0ON the >ureau o Internal Re"enue has the authority to collect 8y
the summary remedy o le"yin7 upon, and sale o real properties o the
decedent, estate ta+ de?ciencies, 9ithout the co7nition and authority o
the court sittin7 in pro8ate o"er the supposed 9ill o the deceased.
*eld) Bes. +tri$t!. spea;in', the assessment of an inheritan$e ta2 does not dire$t!.
invo!ve the administration of a de$edent9s estate, a!tho)'h it ma. be vieed as an
in$ident to the $omp!ete sett!ement of an estate, and, )nder some stat)tes, it is
made the d)t. of the probate $o)rt to ma;e the amo)nt of the inheritan$e ta2 a
part of the "na! de$ree of distrib)tion of the estate. 0t is not a'ainst the propert. of
de$edent, nor is it a $!aim a'ainst the estate as s)$h, b)t it is a'ainst the interest
or propert. ri'ht hi$h the heir, !e'atee, devisee, et$., has in the propert. former!.
he!d b. de$edent. F)rther, )nder some stat)tes, it has been he!d that it is not a s)it
or $ontrovers. beteen the parties, nor is it an adversar. pro$eedin' beteen the
state and the person ho oes the ta2 on the inheritan$e. <oever, )nder other
stat)tes it has been he!d that the hearin' and determination of the $ash va!)e of
the assets and the determination of the ta2 are adversar. pro$eedin's. The
pro$eedin' has been he!d to be ne$essari!. a pro$eedin' in rem.
Ta2es assessed a'ainst the estate of a de$eased person, after administration
is opened, need not be s)bmitted to the $ommittee on $!aims in the ordinar.
$o)rse of administration. 0n the e2er$ise of its $ontro! over the administrator, the
$o)rt ma. dire$t the pa.ment of s)$h ta2es )pon motion shoin' that the ta2es
have been assessed a'ainst the estate. +)$h !ibera! treatment of interna! reven)e
ta2es in the probate pro$eedin's e2tends so far, even to a!!oin' the enfor$ement
of ta2 ob!i'ations a'ainst the heirs of the de$edent, even after distrib)tion of the
estate9s properties. (!aims for ta2es, hether assessed before or after the death of
the de$eased, $an be $o!!e$ted from the heirs even after the distrib)tion of the
properties of the de$edent. The. are e2empted from the app!i$ation of the stat)te
of nonG$!aims. The heirs sha!! be !iab!e therefor, in proportion to their share in the
inheritan$e.
From the fore'oin', it is dis$ernib!e that the approva! of the $o)rt, sittin' in
probate, or as a sett!ement trib)na! over the de$eased is not a mandator.
re8)irement in the $o!!e$tion of estate ta2es. 0t $annot therefore be ar')ed that the
Ta2 #)rea) erred in pro$eedin' ith the !ev.in' and sa!e of the properties
a!!e'ed!. oned b. the !ate President, on the 'ro)nd that it as re8)ired to see;
"rst the probate $o)rt9s san$tion. There is nothin' in the Ta2 (ode, and in the
pertinent remedia! !as that imp!ies the ne$essit. of the probate or estate
sett!ement $o)rt9s approva! of the state9s $!aim for estate ta2es, before the same
$an be enfor$ed and $o!!e$ted.
On the $ontrar., )nder +e$tion 87 of the N0&(, it is the probate or
sett!ement $o)rt hi$h is bidden not to a)thorize the e2e$)tor or =)di$ia!
administrator of the de$edent9s estate to de!iver an. distrib)tive share to an. part.
interested in the estate, )n!ess it is shon a (erti"$ation b. the (ommissioner of
0nterna! &even)e that the estate ta2es have been paid. This provision disproves the
petitioner9s $ontention that it is the probate $o)rt hi$h approves the assessment
and $o!!e$tion of the estate ta2.
0f there is an. iss)e as to the va!idit. of the #0&9s de$ision to assess the
estate ta2es, this sho)!d have been p)rs)ed thro)'h the proper administrative and
=)di$ia! aven)es provided for b. !a.
Section 229 of the NIRC tells us how:
+e$. 779. Protestin' of assessment. Ahen the (ommissioner of 0nterna! &even)e
or his d)!. a)thorized representative "nds that proper ta2es sho)!d be assessed,
he sha!! "rst notif. the ta2pa.er of his "ndin's. Aithin a period to be pres$ribed b.
imp!ementin' re')!ations, the ta2pa.er sha!! be re8)ired to respond to said noti$e.
0f the ta2pa.er fai!s to respond, the (ommissioner sha!! iss)e an assessment based
on his "ndin's.
+)$h assessment ma. be protested administrative!. b. "!in' a re8)est for
re$onsideration or reinvesti'ation in s)$h form and manner as ma. be pres$ribed
b. imp!ementin' re')!ations ithin (13) da.s from re$eipt of the assessmentK
otherise, the assessment sha!! be$ome "na! and )nappea!ab!e.
0f the protest is denied in ho!e or in part, the individ)a!, asso$iation or
$orporation adverse!. a5e$ted b. the de$ision on the protest ma. appea! to the
(o)rt of Ta2 ,ppea!s ithin thirt. (13) da.s from re$eipt of said de$isionK
otherise, the de$ision sha!! be$ome "na!, e2e$)tor. and demandab!e. (,s inserted
b. P.-. 1771)
,part from fai!in' to "!e the re8)ired estate ta2 ret)rn ithin the time
re8)ired for the "!in' of the same, petitioner, and the other heirs never 8)estioned
the assessments served )pon them, a!!oin' the same to !apse into "na!it., and
promptin' the #0& to $o!!e$t the said ta2es b. !ev.in' )pon the properties !eft b.
President *ar$os.
Issue o !rescription) Petitioner spe$i"$a!!. points o)t that app!.in'
*emorand)m (ir$)!ar No. 18G>8, imp!ementin' +e$tions 118 and 17? of the o!d
ta2 $ode (&ep)b!i$ ,$t %731), the #0&9s Noti$es of 6ev. on the *ar$os properties,
ere iss)ed be.ond the a!!oed period, and are therefore n)!! and void.
Notices o Le"y 9ere issued only on ;; Fe8ruary :==5 and ;2 'ay
:==5 hen at !east seventeen (17) months had a!read. !apsed from the !ast servi$e
of ta2 assessment on 17 +eptember 1991. ,s no noti$es of distraint of persona!
propert. ere "rst iss)ed b. respondents, the !atter sho)!d have $omp!ied ith
&even)e *emorand)m (ir$)!ar No. 18G>8 and iss)ed these Noti$es of 6ev. not
ear!ier than three (1) months nor !ater than si2 (>) months from 17 +eptember
1991. 0n a$$ordan$e ith the (ir$)!ar, respondents only had until :; 'arch
:==; @the last day o the si+th monthA ithin hi$h to iss)e these Noti$es of
6ev.. The Noti$es of 6ev., havin' been iss)ed be.ond the period a!!oed b. !a,
are th)s void and of no e5e$t.
S# Rulin7) The Noti$es of 6ev. )pon rea! propert. ere iss)ed ithin the
pres$riptive period and in a$$ordan$e ith the provisions of the present Ta2 (ode.
The de"$ien$. ta2 assessment, havin' a!read. be$ome "na!, e2e$)tor., and
demandab!e, the same $an no be $o!!e$ted thro)'h the s)mmar. remed. of
distraint or !ev. p)rs)ant to +e$tion 73% of the N0&(.
+e$. 771. /2$eptions as to a period of !imitation of assessment and $o!!e$tion
of ta2es.(a) 0n the $ase of a fa!se or fra)d)!ent ret)rn ith intent to evade ta2 or of
a fai!)re to "!e a ret)rn, the ta2 ma. be assessed, or a pro$eedin' in $o)rt for the
$o!!e$tion of s)$h ta2 ma. be be')n itho)t assessment, at an. time ithin ten
(13) .ears after the dis$over. of the fa!sit., fra)d, or omission: Provided, That, in a
fra)d assessment hi$h has be$ome "na! and e2e$)tor., the fa$t of fra)d sha!! be
=)di$ia!!. ta;en $o'nizan$e of in the $ivi! or $rimina! a$tion for the $o!!e$tion
thereof.
($) ,n. interna! reven)e ta2 hi$h has been assessed ithin the
period of !imitation above pres$ribed, ma. be $o!!e$ted b. distraint or !ev. or b. a
pro$eedin' in $o)rt ithin three .ears fo!!oin' the assessment of the ta2.
The omission to "!e an estate ta2 ret)rn, and the s)bse8)ent fai!)re to $ontest or
appea! the assessment made b. the #0& is fata! to the petitioner9s $a)se, as )nder
the aboveG$ited provision, in $ase of fai!)re to "!e a ret)rn, the ta2 ma. be assessed
at an. time ithin ten .ears after the omission, and an. ta2 so assessed ma. be
$o!!e$ted b. !ev. )pon rea! propert. ithin three .ears fo!!oin' the assessment of
the ta2. +in$e the estate ta2 assessment had be$ome "na! and )nappea!ab!e b. the
petitioner9s defa)!t as re'ards protestin' the va!idit. of the said assessment, there
is no no reason h. the #0& $annot $ontin)e ith the $o!!e$tion of the said ta2.
,n. ob=e$tion a'ainst the assessment sho)!d have been p)rs)ed fo!!oin' the
aven)e paved in +e$tion 779 of the N0&( on protests on assessments of interna!
reven)e ta2es.
Petitioner further argues that "the numerous pending court cases
questioning the late president's ownership or interests in several
properties (both real and personal ma!e the total value of his estate" and
the consequent estate ta# due" incapable of e#act pecuniar$ determination
at this time. %hus" respondents' assessment of the estate ta# and their
issuance of the Notices of &ev$ and sale are premature and oppressive."
Petitioner also e#presses his reservation as to the propriet$ of the '()'s
total assessment of P*3"*+*",-.",3/.--" stating that this amount deviates
from the 0ndings of the Department of Justice's Panel of Prosecutors as
per its resolution of *- 1eptember 2++2.
S#) 0t is not the -epartment of J)sti$e hi$h is the 'overnment a'en$.
tas;ed to determine the amo)nt of ta2es d)e )pon the s)b=e$t estate, b)t the
#)rea) of 0nterna! &even)e, hose determinations and assessments are pres)med
$orre$t and made in 'ood faith. The ta2pa.er has the d)t. of provin' otherise. 0n
the absen$e of proof of an. irre')!arities in the performan$e of o5i$ia! d)ties, an
assessment i!! not be dist)rbed. /ven an assessment based on estimates is prima
fa$ie va!id and !af)! here it does not appear to have been arrived at arbitrari!.
or $apri$io)s!.. The b)rden of proof is )pon the $omp!ainin' part. to sho $!ear!.
that the assessment is erroneo)s. Fai!)re to present proof of error in the
assessment i!! =)stif. the =)di$ia! a5irman$e of said assessment. 0n this instan$e,
petitioner has not pointed o)t one sin'!e provision in the *emorand)m of the
+pe$ia! ,)dit Team hi$h 'ave rise to the 8)estioned assessment, hi$h bears a
tra$e of fa!sit.. 0ndeed, the petitioner9s atta$; on the assessment bears main!. on
the a!!e'ed improbab!e and )n$ons$ionab!e amo)nt of the ta2es $har'ed.
Petitioner argues that all the questioned Notices of &ev$" however" must be
nulli0ed for having been issued without validl$ serving copies thereof to
the petitioner. 3s a mandator$ heir of the decedent" petitioner avers that
he has an interest in the sub4ect estate" and notices of lev$ upon its
properties should have been served upon him.
S#) 0n the $ase of noti$es of !ev. iss)ed to satisf. the de!in8)ent estate ta2, the
de!in8)ent ta2pa.er is the /state of the de$edent, and not ne$essari!., and
e2$!)sive!., the petitioner as heir of the de$eased. 0n the same vein, in the matter
of in$ome ta2 de!in8)en$. of the !ate president and his spo)se, petitioner is not the
ta2pa.er !iab!e. Th)s, it fo!!os that servi$e of noti$es of !ev. in satisfa$tion of
these ta2 de!in8)en$ies )pon the petitioner is not re8)ired b. !a, as )nder
+e$tion 711 of the N0&(, hi$h pertinent!. states:
222 222 222
. . . 6ev. sha!! be e5e$ted b. ritin' )pon said $erti"$ate a des$ription of the
propert. )pon hi$h !ev. is made. ,t the same time, ritten noti$e of the !ev. sha!!
be mai!ed to or served )pon the &e'ister of -eeds of the provin$e or $it. here the
propert. is !o$ated and )pon the de!in8)ent ta2pa.er, or if he be absent from the
Phi!ippines, to his a'ent or the mana'er of the b)siness in respe$t to hi$h the
!iabi!it. arose, or if there be none, to the o$$)pant of the propert. in 8)estion.
IN (IE0 0*EREOF, the #ourt RESOL(ED to DEN/ the present petition.
%he Decision o the #ourt o Appeals dated No"em8er ;=, :==B is here8y
AFFIR'ED in all respects.
SE#OND DI(ISION
%*E ES%A%E OF *ILARIO '. R$IZ, ED'OND R$IZ, E+ecutor, petitioner,
"s.
%*E #O$R% OF A!!EALS @Former Special Si+th Di"isionA, 'ARIA !ILAR
R$IZ.'ON%ES, 'ARIA #A%*R/N R$IZ, #ANDI#E AL>ER%INE R$IZ,
'ARIA AN-ELINE R$IZ and %*E !RESIDIN- J$D-E OF %*E RE-IONAL
%RIAL #O$R% OF !ASI-, respondents.
!$NO, J.)
Facts) On J)ne 77, 1987, <i!ario *. &)iz e2e$)ted a ho!o'raphi$ i!! namin' as his
heirs his on!. son, /dmond &)iz, his adopted da)'hter, private respondent *aria
Pi!ar &)iz *ontes, and his three 'randda)'hters, private respondents *aria
(athr.n, (andi$e ,!bertine and *aria ,n'e!ine, a!! $hi!dren of /dmond &)iz. The
testator be8)eathed to his heirs s)bstantia! $ash, persona! and rea! properties and
named /dmond &)iz e2e$)tor of his estate.
On ,pri! 17, 1988, <i!ario &)iz died. 0mmediate!. thereafter, the $ash
$omponent of his estate as distrib)ted amon' /dmond &)iz and private
respondents in a$$ordan$e ith the de$edent9s i!!. For )nbe;non reasons,
/dmond, the named e2e$)tor, did not ta;e an. a$tion for the probate of his father9s
ho!o'raphi$ i!!.
On J)ne 79, 1997, fo)r .ears after the testator9s death, it as private
respondent *aria Pi!ar &)iz *ontes ho "!ed, a petition for the probate and
approva! of <i!ario &)iz9s i!! and for the iss)an$e of !etters testamentar. to
/dmond &)iz. /dmond opposed the petition on the 'ro)nd that the i!! as
e2e$)ted )nder )nd)e inF)en$e.
On November 7, 1997, one of the properties of the estate the ho)se and !ot
at No. 7 O!iva +treet, Ia!!e Ierde 0I, Pasi' hi$h the testator be8)eathed to *aria
(athr.n, (andi$e ,!bertine and *aria ,n'e!ine as !eased o)t b. /dmond to third
persons.
On Jan)ar. 19, 1991, the probate $o)rt ordered /dmond to deposit ith the
#ran$h (!er; of (o)rt the renta! deposit and pa.ments tota!!in' P%?3,333.33
representin' the oneG.ear !ease of the Ia!!e Ierde propert.. /dmond t)rned over
the amo)nt of P1?8,%81.%>, representin' the ba!an$e of the rent after ded)$tin'
P191,?1>.1? for repair and maintenan$e e2penses on the estate.
0n *ar$h 1991, /dmond moved for the re!ease of P%3,333.33 to pa. the rea!
estate ta2es on the rea! properties of the estate. The probate $o)rt approved the
re!ease of P7,777.33.
On *a. 1?, 1991, /dmond ithdre his opposition to the probate of the
i!!. (onse8)ent!., the probate $o)rt, on *a. 18, 1991, admitted the i!! to
probate and ordered the iss)an$e of !etters testamentar. to /dmond $onditioned
)pon the "!in' of a bond in the amo)nt of P%3,333.33. The !etters testamentar.
ere iss)ed on J)ne 71, 1991.
On J)!. 78, 1991, petitioner Testate /state of <i!ario &)iz, ith /dmond
&)iz as e2e$)tor, "!ed an H/2GParte *otion for &e!ease of F)nds.H 0t pra.ed for the
re!ease of the rent pa.ments deposited ith the #ran$h (!er; of (o)rt. &espondent
*ontes opposed the motion and $on$)rrent!. "!ed a H*otion for &e!ease of F)nds
to (ertain <eirsH and H*otion for 0ss)an$e of (erti"$ate of ,!!oan$e of Probate
Ai!!.H *ontes pra.ed for the re!ease of the said rent pa.ments to *aria (athr.n,
(andi$e ,!bertine and *aria ,n'e!ine and for the distrib)tion of the testator9s
properties, spe$i"$a!!. the Ia!!e Ierde propert. and the #!)e &id'e apartments, in
a$$ordan$e ith the provisions of the ho!o'raphi$ i!!.
On ,)')st 7>, 1991, the probate $o)rt denied petitioner9s motion for re!ease
of f)nds b)t 'ranted respondent *ontes9 motion in vie of petitioner9s !a$; of
opposition. 0t th)s ordered the re!ease of the rent pa.ments to the de$edent9s three
'randda)'hters. 0t f)rther ordered the de!iver. of the tit!es to and possession of
the properties be8)eathed to the three 'randda)'hters and respondent *ontes
)pon the "!in' of a bond of P%3,333.33.
Petitioner moved for re$onsideration a!!e'in' that he a$t)a!!. "!ed his
opposition to respondent *ontes9s motion for re!ease of rent pa.ments hi$h
opposition the $o)rt fai!ed to $onsider. Petitioner !i;eise reiterated his previo)s
motion for re!ease of f)nds.
On November 71, 1991, petitioner, thro)'h $o)nse!, manifested that he as
ithdrain' his motion for re!ease of f)nds in vie of the fa$t that the !ease
$ontra$t over the Ia!!e Ierde propert. had been reneed for another .ear.
-espite petitioner9s manifestation, the probate $o)rt, on -e$ember 77, 1991,
ordered the re!ease of the f)nds to /dmond b)t on!. Hs)$h amo)nt as ma. be
ne$essar. to $over the e2penses of administration and a!!oan$es for s)pportH of
the testator9s three 'randda)'hters s)b=e$t to $o!!ation and ded)$tib!e from their
share in the inheritan$e. The $o)rt, hoever, he!d in abe.an$e the re!ease of the
tit!es to respondent *ontes and the three 'randda)'hters )nti! the !apse of si2
months from the date of "rst p)b!i$ation of the noti$e to $reditors.
On appea!, (, a5irmed probate $o)rt@s de$ision, hen$e the instant petition.
Issue) Ahether the probate $o)rt, after admittin' the i!! to probate b)t before
pa.ment of the estate9s debts and ob!i'ations, has the a)thorit.: (1) to 'rant an
a!!oan$e from the f)nds of the estate for the s)pport of the testator9s
'rand$hi!drenK (7) to order the re!ease of the tit!es to $ertain heirsK and (1) to 'rant
possession of a!! properties of the estate to the e2e$)tor of the i!!.
*eld)
1) The 'rand$hi!dren are not entit!ed to provisiona! s)pport from the f)nds of the
de$edent9s estate. The !a $!ear!. !imits the a!!oan$e to Hido and $hi!drenH and
does not e2tend it to the de$eased9s 'rand$hi!dren, re'ard!ess of their minorit. or
in$apa$it.. 0t as error, therefore, for the appe!!ate $o)rt to s)stain the probate
$o)rt9s order 'rantin' an a!!oan$e to the 'rand$hi!dren of the testator pendin'
sett!ement of his estate.
7) The probate $o)rt erred hen the. ordered the re!ease of the tit!es of the
be8)eathed properties to private respondents si2 months after the date of "rst
p)b!i$ation of noti$e to $reditors. ,n order re!easin' tit!es to properties of the
estate amo)nts to an advan$e distrib)tion of the estate hi$h is a!!oed on!.
)nder the fo!!oin' $onditions:
Sec. ;. Ad"ance distri8ution in special proceedin7s. Nothithstandin' a
pendin' $ontrovers. or appea! in pro$eedin's to sett!e the estate of a de$edent,
the $o)rt ma., in its dis$retion and )pon s)$h terms as it ma. deem proper and
=)st, permit that s)$h part of the estate as ma. not be a5e$ted b. the $ontrovers.
or appea! be distrib)ted amon' the heirs or !e'atees, )pon $omp!ian$e ith the
$onditions set forth in &)!e 93 of these &)!es. ,nd &)!e 93 provides that:
Sec. :. 0hen order or distri8ution o residue made. Ahen the debts, f)nera!
$har'es, and e2penses of administration the a!!oan$e to the ido, and
inheritan$e ta2 if an., $har'eab!e to the estate in a$$ordan$e ith !a, have been
paid, the $o)rt, on the app!i$ation of the e2e$)tor or administrator, or of a person
interested in the estate, and after hearin' )pon noti$e sha!! assi'n the resid)e of
the estate to the persons entit!ed to the sameL
0n sett!ement of estate pro$eedin's, the distrib)tion of the estate properties $an
on!. be made: (1) after a!! the debts, f)nera! $har'es, e2penses of administration,
a!!oan$e to the ido, and estate ta2 have been paidK or (7) before pa.ment of
said ob!i'ations on!. if the distrib)tees or an. of them 'ives a bond in a s)m "2ed
b. the $o)rt $onditioned )pon the pa.ment of said ob!i'ations ithin s)$h time as
the $o)rt dire$ts, or hen provision is made to meet those ob!i'ations.
0n the $ase at bar, the probate $o)rt ordered the re!ease of the tit!es to the Ia!!e
Ierde propert. and the #!)e &id'e apartments to the private respondents after the
!apse of si2 months from the date of "rst p)b!i$ation of the noti$e to $reditors. The
8)estioned order spea;s of Hnoti$eH to $reditors, not pa.ment of debts and
ob!i'ations. <i!ario &)iz a!!e'ed!. !eft no debts hen he died b)t the ta2es on his
estate had not hitherto been paid, m)$h !ess as$ertained. The estate ta2 is one of
those ob!i'ations that m)st be paid before distrib)tion of the estate. 0f not .et paid,
the r)!e re8)ires that the distrib)tees post a bond or ma;e s)$h provisions as to
meet the said ta2 ob!i'ation in proportion to their respe$tive shares in the
inheritan$e. Notab!., at the time the order as iss)ed the properties of the estate
had not .et been inventoried and appraised.
0t as a!so too ear!. in the da. for the probate $o)rt to order the re!ease of the
tit!es si2 months after admittin' the i!! to probate. The probate of a i!! is
$on$!)sive as to its d)e e2e$)tion and e2trinsi$ va!idit. and sett!es on!. the
8)estion of hether the testator, bein' of so)nd mind, free!. e2e$)ted it in
a$$ordan$e ith the forma!ities pres$ribed b. !a. M)estions as to the intrinsi$
va!idit. and e5i$a$. of the provisions of the i!!, the !e'a!it. of an. devise or
!e'a$. ma. be raised even after the i!! has been a)thenti$ated.
1) Petitioner $annot $orre$t!. $!aim that the assai!ed order deprived him of his
ri'ht to ta;e possession of a!! the rea! and persona! properties of the estate. The
ri'ht of an e2e$)tor or administrator to the possession and mana'ement of the rea!
and persona! properties of the de$eased is not abso!)te and $an on!. be e2er$ised
Hso !on' as it is ne$essar. for the pa.ment of the debts and e2penses of
administration,H +e$tion 1 of &)!e 8? of the &evised &)!es of (o)rt e2p!i$it!.
provides:
+e$. 1. /2e$)tor or administrator to retain ho!e estate to pa. debts, and to
administer estate not i!!ed. ,n e2e$)tor or administrator sha!! have the ri'ht to
the possession and mana'ement of the rea! as e!! as the persona! estate of the
de$eased so !on' as it is ne$essar. for the pa.ment of the debts and e2penses for
administration.
Petitioner m)st be reminded that his ri'ht of onership over the properties of his
father is mere!. in$hoate as !on' as the estate has not been f)!!. sett!ed and
partitioned. 13 ,s e2e$)tor, he is a mere tr)stee of his father9s estate. <e $annot
)ni!atera!!. assi'n to himse!f and possess a!! his parents9 properties and the fr)its
thereof itho)t "rst s)bmittin' an inventor. and appraisa! of a!! rea! and persona!
properties of the de$eased, renderin' a tr)e a$$o)nt of his administration, the
e2penses of administration, the amo)nt of the ob!i'ations and estate ta2, a!! of
hi$h are s)b=e$t to a determination b. the $o)rt as to their vera$it., propriet. and
=)stness.
!A>LO LORENZO, as trustee o the estate o %homas *anley "s. J$AN
!OSADAS, JR., #ollector o Internal Re"enue
Facts) On *a. 77, 1977, Thomas <an!e. died. <e !eft a i!!. The pro$eedin's for
its probate and the sett!ement and distrib)tion of the estate be')n on J)ne 1?,
1977. The i!! provides that:
a. The mone. !eft sha!! be 'iven to de$eased@s nephe, *atthe
b. The rea! estate sha!! be so!d 13 .ears after death, hi$h sha!! be hand!es
b. the e2e$)tors and pro$eeds thereof sha!! be 'iven to *atthe, hi$h pro$eeds
sha!! be )sed for the ed)$ation of his brother@s (*a!a$hi <an!e.) $hi!dren and
des$endants.
$. The other propert. ma. be disposed of in the a. most advanta'eo)s b.
*atthe 13 .ears after de$eased@s death.
The (F0GNamboan'a $onsidered it proper for the best interests of the estate to
appoint a tr)stee to administer the rea! properties. <en$e, *oore, one of the to
e2e$)tors named in the i!! as appointed as tr)stee. *oore too; his oath of o5i$e
and 'ave bond on *ar$h 13, 197?. <e resi'ned on Jan)ar. 79, 1917 and so,
6orenzo rep!a$ed him.
-)rin' 6orenzo@s in$)mben$., Posadas, assessed an inheritan$e ta2, ith pena!ties
for de!in8)en$., $onsistin' of 1O interest from J)!. 1, 1911, and a s)r$har'e of
7%O on the ta2. 6orenzo paid the amo)nt of P7,3%7.7? )nder protest. 6orenzo no
$!aims for ref)nd. The tria! $o)rt dismissed the $omp!aint. <en$e the appea!.
ISS$ES)
1. Ahen does the inheritan$e ta2 a$$r)e and hen it m)st be satis"edP
7. AJN the inheritan$e ta2 be based )pon the va!)e of the estate )pon the death of
the testator or )pon the va!)e of the estate at the e2piration of the 13 .ears.
1. AJN the $ompensation of the tr)stee is a !af)! ded)$tion.
?. Ahat ta2 !a 'overns the $ase at barP
%. Aas there an. de!in8)en$.P
*ELD)
1. The a$$r)a! of the inheritan$e ta2 is distin$t from the ob!i'ation to pa. the same.
The propert. be!on's to the heirs at the moment of the death of the an$estor as
$omp!ete!. as if the an$estor had e2e$)ted and de!ivered to them a deed for the
same before his death. From the fa$t that Thomas <an!e. died on *a. 77, 1977, it
does not fo!!o that the ob!i'ation to pa. the ta2 arose as of that date. The time for
the pa.ment of inheritan$e ta2 is $!ear!. "2ed b. se$tion 1%?? of the &evised
,dministrative (ode, as amended b. ,$t No. 1311, in re!ation to +e$. 1%??. +e$.
1%?? provides that, the ta2 sho)!d be paid ithin si2 months s)bse8)ent to the
death of the prede$essorK b)t if =)di$ia! testamentar. or intestate pro$eedin's sha!!
be instit)ted prior to the e2piration of said period, the pa.ment sha!! be made b.
the e2e$)tor or administrator before de!iverin' to ea$h bene"$iar. his share.
Therefore, the tax shoul have !een pai !efore the eliver" of the properties to
#oore as trustee on #arch $%, $92&.
7. -eath is the 'eneratin' so)r$e from hi$h the poer of the state to impose
inheritan$e ta2es ta;es its bein'. Epon the death of the de$edent, s)$$ession ta;es
p!a$e and the ri'ht of the state to ta2 vests instant!., notithstandin' the
postponement of the a$t)a! possession or en=o.ment of the estate b. the
bene"$iar.. <en$e, the ta2 sho)!d be meas)red b. the va!)e of the estate at the
time of the de$edent@s death re'ard!ess of an. appre$iation or depre$iation.
1. No. The $ontention that the tr)stee@s $ompensation is a =)di$ia! e2pense is
)ntenab!e. There is no !a a!!oin' the tr)stee@s $ompensation to be ded)$ted in
determinin' the net estate s)b=e$t to inheritan$e ta2. F)rthermore, tho)'h a
testamentar. tr)st has been $reated, it does not appear that the testator intended
that the d)ties of his e2e$)tors and tr)stees sho)!d be separated.
J)di$ia! e2penses are e2penses of administration. <oever, the
$ompensation of a tr)stee, earned not in the administration of the estate b)t in the
mana'ement thereof, for the bene"t of the !e'atees or devisees does not $ome
proper!. ithin the $!ass or reason for e2emptin' administration e2penses.
+ervi$es rendered in that beha!f have no referen$e to $!osin' the estate for the
p)rpose of a distrib)tion thereof to those entit!ed to it and are not re8)ired or
essentia! to the perfe$tion of the ri'hts of the heirs or !e'atees.
?. The !a in for$e at the time of the death of testator, hi$h is +e$. 1%?? of
&evised ,dministrative (ode as amended b. ,$t No. 1311. ,$t. No. 1>3>, hi$h
too; e5e$t on Jan)ar. 1, 1913 $annot be 'iven retroa$tive e5e$t, as there as no
!e'is!ative intent to that e5e$t. Posadas@ $ontention is )ntenab!e, hen he said that
the provisions of ,$t No. 1>3> is favorab!e to the ta2pa.er, sin$e (a) the s)r$har'e
of 7%O is based on the ta2 on!., instead of on both ta2 and interest provided for b.
,$t 1311 and (b) the ta2pa.er is 'iven 73 da.s from noti$e and demand to pa.
instead of 13 da.s in ,$t 1311. Ta2 !as 'enera!!. are not pena! !as.
%. Bes. The mere fa$t that the estate of the de$eased as p!a$ed in tr)st did not
remove it from the operation of o)r inheritan$e ta2. The $orrespondin' inheritan$e
ta2 sho)!d have been paid on or before *ar$h 13, 197? to es$ape the pena!ties of
the !a. This is be$a)se the de!iver. of the estate to the tr)stee is a de!iver. to the
bene"$iar.. , tr)stee is an a'ent for the bene"$iar.. <en$e the estate vested
abso!)te!. to the bene"$iar.. The (o)rt reasoned that if it o)!d be a!!oed that
the pa.ment of the ta2 be after 13 .ears, then the $o!!e$tion o)!d then be !eft to
the i!! of the private individ)a!. This o)!d be disastro)s as ta2es are essentia! to
the ver. e2isten$e of the 'overnment.