Dizon v CTA (Taxation)

Dizon v CTA G.R. No. 140944 April 30, 2008

FACTS:
On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition for the probate of his will was filed with Branch 51 of the Regional Trial Court (RTC) of Manila (probate court). The probate court then appointed retired Supreme Court Justice Arsenio P. Dizon (Justice Dizon) and petitioner, Atty. Rafael Arsenio P. Dizon (petitioner) as Special and Assistant Special Administrator, respectively, of the Estate of Jose (Estate). Petitioner alleged that several requests for extension of the period to file the required estate tax return were granted by the BIR since the assets of the estate, as well as the claims against it, had yet to be collated, determined and identified.

ISSUES:
1. Whether or not the CTA and the CA gravely erred in allowing the admission of the pieces of evidence which were not formally offered by the BIR; and

2. Whether the actual claims of the aforementioned creditors may be fully allowed as deductions from the gross estate of Jose despite the fact that the said claims were reduced or condoned through compromise agreements entered into by the Estate with its creditors Or Whether or not the CA erred in affirming the CTA in the latter's determination of the deficiency estate tax imposed against the Estate.

RULING:
1. Yes. While the CTA is not governed strictly by technical rules of evidence, as rules of procedure are not ends in themselves and are primarily intended as tools in the administration of justice, the presentation of the BIR's evidence is not a mere procedural technicality which may be disregarded considering that it is the only means by which the CTA may ascertain and verify the truth of BIR's claims against the Estate. The BIR's failure to formally offer these pieces of evidence, despite CTA's directives, is fatal to its cause

2. Yes. The claims existing at the time of death are significant to, and should be made the basis of, the determination of allowable deductions. Also, as held in Propstra v. U.S., where a lien claimed against the estate was certain and enforceable on the date of the decedent's death, the fact that the claimant subsequently settled for lesser amount did not preclude the estate from deducting the entire amount of the claim for estate tax purposes. This is called the date-of-death valuation rule.

Gonzales v CTA (Taxation)

Gonzales v CTA G.R. No. L-14532 May 26, 1965

FACTS:

Both petitioners Jose and Juana Gonzales are co-heirs and co-owners, (one-sixth each) of a tract of land of 871, [982.] square meters which they, along with four other co-heirs, inherited from their mother. So on November 15, 1956, Jose Leon Gonzales and Juana F. Gonzales submitted to the Court of Tax Appeals a joint petition seeking a refund, this time of the amount of P86,166.00 for each of the two petitioners.

ISSUES:
(1) Whether or not petitioners' claim for refund of the total of P86,166.00 may be properly entertained; and

(2) Whether or not the sum of P89,309.61 which each of the petitioners received as interest on the value of the land expropriated is taxable as ordinary income, and not as capital gain.

RULING:

1. No. the requirement of prior timely claim for refund of the sum of P86,166.00 had not been met in this case. The demand for refund must precede the suit, and this requirement is mandatory; so much so that non-compliance therewith bars the action

2. It is ordinary income."the acquisition by the Government of private properties through the exercise of the power of eminent domain, said properties being justly compensated, is embraced within the meaning of the term 'sale' or 'disposition of property'" and the definition of gross income laid down by Section 29 of the Tax Code of the Philippines. We also adhered to the view that the transfer of property through condemnation proceedings is a sale or exchange and that profit from the transaction constitutes capital gain.

In fact, the authorities support the conclusion that for income tax purposes, interest does not form part of the price paid by the Government in condemnation proceedings; and may not be treated as part of the capital gain.

Ruiz v CA (Taxation)

Estate of Hilario Ruiz v CA G.R. No. 118671. January 29, 1996

FACTS:
Hilario M. Ruiz executed a holographic will naming as his heirs his only son, Edmond Ruiz, his adopted daughter, private respondent Maria Pilar Ruiz Montes, and his three granddaughters,

On April 12, 1988, Hilario Ruiz died.

On June 29, 1992, four years after the testator’s death, it was private respondent Maria Pilar Ruiz Montes who filed before the Regional Trial Court, Branch 156, Pasig, a petition for the probate and approval of Hilario Ruiz’s will and for the issuance of letters testamentary to Edmond Ruiz

ISSUE:

whether the probate court, after admitting the will to probate but before payment of the estate’s debts and obligations, has the authority: (1) to grant an allowance from the funds of the estate for the support of the testator’s grandchildren; (2) to order the release of the titles to certain heirs; and (3) to grant possession of all properties of the estate to the executor of the will.

RULING:

1. No. Be that as it may, grandchildren are not entitled to provisional support from the funds of the decedent’s estate. The law clearly limits the allowance to “widow and children” and does not extend it to the deceased’s grandchildren, regardless of their minority or incapacity.

2. No. No distribution shall be allowed until the payment of the obligations above-mentioned has been made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs.

3. No. The right of an executor or administrator to the possession and management of the real and personal properties of the deceased is not absolute and can only be exercised “so long as it is necessary for the payment of the debts and expenses of administration, He cannot unilaterally assign to himself and possess all his parents’ properties and the fruits thereof without first submitting an inventory and appraisal of all real and personal properties of the deceased, rendering a true account of his administration, the expenses of administration, the amount of the obligations and estate tax, all of which are subject to a determination by the court as to their veracity, propriety and justness.

Ozaeta v Palanca (Taxation)

Ozaeta v Palanca G.R. No. L-9776 July 31, 1957 

FACTS:

On May 5, 1955, the special administrator filed a petition in court for authority to pay the accounting firm of Sycip, Gorres, Velayo & Co. the sum of P3,650, for services rendered in taking inventory of assets in 1950, tax consultations in 1950 to 1954, and preparation of income tax returns for 1953 and 1954. The court below denied this motion, on the ground that the services covered by the fees of the accounting firm were rendered to the former special administrator Philippine Trust Company

ISSUE:
whether the services rendered to the special administrator named in the will, previous to his actual appointment as such and at his instance, are chargeable against the estate.

RULING:

Yes.

Whoever may have contracted the services of the accountants, whether it was Mr. Ozaeta before his appointment or the Philippine Trust, such services were for the benefit of the estate and have redounded to the estate's benefit.

The general rule is that acts done by an executor in the interest of his trust, prior to his qualification as such, become binding on the estate upon his qualification

There is no question that the services rendered were for the benefit of the estate. The Rules require that the administrator should submit an inventory of the properties of the estate within three months from his appointment

Vera v Navarro (Taxation)

Vera v Navarro
G.R. No. L-27745 October 18, 1977

FACTS:
Elsie M. Gaches died on March 9, 1966 without a child. The deceased, however, left a last will and testament giving properties to several persons.

Judge Tan was appointed as executor of the testate estate of Elsie M. Gaches without a bond.

In a letter, dated June 3, 1966, Judge Tan informed the Commissioner that the testate estate was worth about ten million (P10 million) pesos and that the estate and inheritance taxes due thereon were about P9.5 million.
After several reassessments, the case ultimately came to the Supreme Court.

ISSUES:

(1) Should the herein respondent heirs be required to pay first the inheritance tax before the probate court may authorize the delivery of the hereditary share pertaining to each of them?

(2) Are the respondent heirs herein who are citizens and residents of the Philippines liable for the payment of the Philippine inheritance tax corresponding to the hereditary share of another heir who is a citizen and resident of the United States of America. said share of the latter consisting of personal (cash deposits and, shares) properties located in the mentioned court

(3) Does the assignment of a certificate of time deposit to the comissioner of Internal Revenue for the purpose of paying t I hereby the estate tax constitute payment of such tax?

(4) Should the herein respondent heirs be held liable for the payment of surcharge and interest on the amount (P700,000.00) representing the face value of time deposit certificates assigned to the Commissioner which could not be converted into cash?

RULING:
(1) No. the distribution of a decedent's assets may only be ordered under any of the following three circumstances, namely, (1) when the inheritance tax, among others, is paid; (2) who bond a suffered bond is given to meet the payment of the tax and all the other options of the nature enumerated in the above-cited provision; etc. This was not complied with

(2)   No.  An analysis of our tax statutes supplies no sufficient indication that the inheritance tax, as a rule, was meant to be the joint and solidary liability of the heirs of a decedent. the payment of the inheritance tax should be taken as'the individual responsibility, to the extent of the benefits received, of each heir.

3. No. a time deposit certificate is a mercantile document and is essentially a promissory note. 5 By the express terms of Article 1249 of the Civil Code of the Philippines, the use of this medium to clear an obligation will "produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired." Consequently, the value of the said certificates (P700,000.00) should still be considered outstanding.

4. Yes. The Interest charge for 1% per month imposed under Section 101 (a) (1) of the Tax Code is essentially a commotion to the State for delay in the payment of the tax due thereto

The estate cannot likewise be exempted from the payment of the 5% surcharge imposed by Section 101 (c) of the Tax Code