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Title: Collector of Internal Revenue vs Campos Rueda

42 SCRA 23
October 29, 1971

Petitioner: Collector of Internal Revenue

Respondent: Antonio Campos Rueda
Ponente: Fernando J.
Nature: Appeal

Maria Cerderia, a Spanish national (Filipina married to a Spanish citizen) who

lived in Tangier, Morroco from 1931 until the time of her death in 1955, left the
respondent Antonio Campos Rueda to administer her intangible properties.
Rueda filed a provisional estate and inheritance tax return on all the properties
of Maria Cerderia.
On the real estate the respondent, as administrator of Cerderias estate, paid the
sum of P111,582.00 as estate tax and the sum of P151,791.48 as inheritance tax,
on the transfer of the real properties in the Philippines, but refused to pay the
corresponding deficiency estate and inheritance taxes due on the transfer of her
intangible personal properties, claiming that the estate is exempt from the
payment of said taxes pursuant to section 122 of the Tax Code and that he could
avail of the reciprocal provisions of our Tax Code.
The Collector of Internal Revenue denied the exemption of the said taxes on the
grounds that there is no reciprocity because Tangier is a mere principality not a
foreign country. In a decision CIR assessed the estate of the deceased, as
deficiency estate and inheritance taxes, the sum of P161,874.95 including
interest and penalties, on the transfer of intangible personal properties of Maria
The matter was elevated to the Court of Tax Appeals. CTA affirmed the
exemption of taxes of Rueda in accordance with Tangier law.
The cas was elevated to the Supreme Court and was brought back to CTA for


Whether or not the requisites of statehood, or at least so much

thereof as may be necessary for the acquisition of an international
personality, must be satisfied for a "foreign country" to fall within the
exemption of Section 122 of the National Internal Revenue Code


Foreign Country used in Sec 122 of the National Internal Revenue Code, refers
to a government of that foreign power which although not an international
person in the sense of international law, DOES NOT impose transfer of death
taxes upon intangible personal properties of citizens not residing therein. Or
whose law allows a similar exemption from such taxes. It is not necessary that
Tangier should have been recognized by our government in order to entitle the
petitioner to the exemption benefits provided by our Tax Law.
Collector of Internal Revenue v. De Lara, 16 it was specifically held by us:
Considering the State of California as a foreign country in relation to section 122
of our Tax Code we believe and hold, as did the Tax Court, that the Ancilliary
Administrator is entitled the exemption from the inheritance tax on the
intangible personal property found in the Philippines. 17 There can be no doubt
that California as a state in the American Union was in the alleged requisite of
international personality. Nonetheless, it was held to be a foreign country within
the meaning of Section 122 of the National Internal Revenue Code.

Hence, the decision of the Court of Tax Appeals is affirmed.