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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-9456 and L-9481

January 6, 1958

THE COLLECTOR OF INTERNAL REVENUE, petitioner,


vs.
DOMINGO DE LARA, as ancilliary administrator of the estate of HUGO H. MILLER (Deceased),
and the COURT OF TAX APPEALS, respondents.
Allison J. Gibbs, Zafra, De Leon and Veneracion for Domingo E. de Lara.
Assistant Solicitor General Ramon L. Avancena and Cezar L. Kierulf for the Collector of Internal
Revenue.
MONTEMAYOR, J.:
These are two separate appeals, one by the Collector of Internal Revenue, later on referred to as the
Collector, and the other by Domingo de Lara as Ancilliary Administrator of the estate of Hugo H.
Miller, from the decision of the Court of Tax Appeals of June 25, 1955, with the following dispositive
part:
WHEREFORE, respondent's assessment for estate and inheritance taxes upon the estate of
the decedent Hugo H. Miller is hereby modified in accordance with the computation attached
as Annex "A" of this decision. Petitioner is hereby ordered to pay the amount of P2,047.22
representing estate taxes due, together with the interests and other increments. In case of
failure to pay the amount of P2,047.22 within thirty (30) days from the time this decision has
become final, the 5 per cent surcharge and the corresponding interest due thereon shall be
paid as a part of the tax.
The facts in the case gathered from the record and as found by the Court of Tax Appeals may be
briefly stated as follows: Hugo H. Miller, an American citizen, was born in Santa Cruz, California,
U.S.A., in 1883. In 1905, he came to the Philippines. From 1906 to 1917, he was connected with the
public school system, first as a teacher and later as a division superintendent of schools, later
retiring under the Osmeiia Retirement Act. After his retirement, Miller accepted an executive position
in the local branch of Ginn & Co., book publishers with principal offices in New York and Boston,
U.S.A., up to the outbreak of the Pacific War. From 1922 up to December 7, 1941, he was stationed
in the Philippines as Oriental representative of Ginn & Co., covering not only the Philippines, but also
China and Japan. His principal work was selling books specially written for Philippine schools. In or
about the year 1922, Miller lived at the Manila Hotel. His wife remained at their home in BenLomond, Santa Cruz, California, but she used to come to the Philippines for brief visits with Miller,
staying three or four months. Miller also used to visit his wife in California. He never lived in any
residential house in the Philippines. After the death of his wife in 1931, he transferred from the
Manila Hotel to the Army and Navy Club, where he was staying at the outbreak of the Pacific War.
On January 17, 1941, Miller executed his last will and testament in Santa Cruz, California, in which
he declared that he was "of Santa Cruz, California". On December 7, 1941, because of the Pacific
War, the office of Ginn & Co. was closed, and Miller joined the Board of Censors of the United States
Navy. 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 on March 11, 1944, and since then, nothing has been heard from him. At the time of his death
in 1944, Miller owned the following properties:

Real Property situated in Ben-Lomond, Santa Cruz,


California valued
at ......................................................................

P
5,000.00

Real property situated in Burlingame, San Mateo,


California valued
at ..............................................................................
..........
16,200.00

Tangible Personal property,


worth.............................................

2,140.00

Cash in the banks in the United


States....................................

21,178.20

Accounts Receivable from various persons in the


United States including
notes ...............................................................

36,062.74

Stocks in U.S. Corporations and U.S. Savings


Bonds, valued
at .............................................................................. 123,637.1
..........
6

Shares of stock in Philippine Corporations, valued


at ..........

51,906.45

Testate proceedings were instituted before the Court of California in Santa Cruz County, in the
course of which Miller's will of January 17, 1941 was admitted to probate on May 10, 1946. Said
court subsequently 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. Thereafter ancilliary proceedings were filed by the executors of the will
before the Court of First Instance of Manila, which court by order of November 21, 1946, 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. On July 29, 1949, the 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.
After due investigation, the Collector assessed estate and inheritance taxes, which was received by
the said executor on April 3, 1950. The estate of Miller protested the assessment of the liability for
estate and inheritance taxes, including penalties and other increments at P77,300.92, as of January
16, 1954. This assessment was appealed by De Lara as Ancilliary Administrator before the Board of
Tax Appeals, which appeal was later heard and decided by the Court of Tax Appeals.
In determining the "gross estate" of a decedent, under Section 122 in relation to section 88 of our
Tax Code, it is first necessary to decide whether the decedent was a resident or a non-resident of
the Philippines at the time of his death. 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 no reference whatsoever is made to domicile except in Section 93 (d)
of the Tax Code; that Miller during his long stay in the Philippines had required a "residence" in this
country, and was a resident thereof at the time of his death, and consequently, his intangible
personal properties situated here as well as in the United States were subject to said taxes. The
Ancilliary Administrator, however, equally maintains that for estate and inheritance tax purposes, the
term "residence" is synonymous with the term domicile.
We agree with the Court of Tax Appeals that at the time that The National Internal Revenue Code
was promulgated in 1939, the prevailing construction given by the courts to the "residence" was
synonymous with domicile. and that the two were used intercnangeabiy. Cases were cited in support
of this view, paricularly that of Velilla vs. Posadas, 62 Phil. 624, wherein this Tribunal used the terms
"residence" and "domicile" interchangeably and without distinction, the case involving the application
of the term residence employed in the inheritance tax law at the time (section 1536- 1548 of the
Revised Administrative Code), and that consequently, it will be presumed that in using the term
residence or resident in the meaning as construed and interpreted by the Court. Moreover, there is
reason to believe that the Legislature adopted the American (Federal and State) estate and
inheritance tax system (see e.g. Report to the Tax Commision of the Philippines, Vol. II, pages 122124, cited in I Dalupan, National Internal Revenue Code Annotated, p. 469-470). In the United
States, for estate tax purposes, a resident is considered one who at the time of his death had his
domicile in the United States, and in American jurisprudence, for purposes of estate and taxation,
"residence" is interpreted as synonymous with domicile, and that
The incidence of estate and succession has historically been determined by domicile and
situs and not by the fact of actual residence. (Bowring vs. Bowers, (1928) 24 F 2d 918, at
921, 6 AFTR 7498, cert. den (1928) 272 U.S.608).
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. Except this wife
never stayed in the Philippines. The bulk of his savings and properties were in the United States. To
his home in California, he had been sending souvenirs, such as carvings, curios and other similar
collections from the Philippines and the Far East. In November, 1940, Miller took out a property
insurance policy and indicated therein his address as Santa Cruz, California, this aside from the fact
that Miller, as already stated, executed his will in Santa Cruz, California, wherein he stated that he
was "of Santa Cruz, California". 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, valued at P51,906.45. It is true, as stated by the Tax
Court, that while it may be the general rule that personal property, like shares of stock in the
Philippines, is taxable at the domicile of the owner (Miller) under the doctrine of mobilia secuuntur
persona, nevertheless, when he during his life time,

. . . extended his activities with respect to his intangibles, so as to avail himself of the
protection and benefits of the laws of the Philippines, in such a way as to bring his person or
property within the reach of the Philippines, the reason for a single place of taxation no
longer obtains- protection, benefit, and power over the subject matter are no longer confined
to California, but also to the Philippines (Wells Fargo Bank & Union Trust Co. vs. Collector
(1940), 70 Phil. 325). In the instant case, the actual situs of the shares of stock is in the
Philippines, the corporation being domiciled herein: and besides, the right to vote the
certificates at stockholders' meetings, the right to collect dividends, and the right to dispose
of the shares including the transmission and acquisition thereof by succession, all enjoy the
protection of the Philippines, so that the right to collect the estate and inheritance taxes
cannot be questioned (Wells Fargo Bank & Union Trust Co. vs. Collector supra). It is
recognized that the state may, consistently with due process, impose a tax upon transfer by
death of shares of stock in a domestic corporation owned by a decedent whose domicile was
outside of the state (Burnett vs. Brooks, 288 U.S. 378; State Commission vs. Aldrich, (1942)
316 U.S. 174, 86 L. Ed. 1358, 62 ALR 1008)." (Brief for the Petitioner, p. 79-80).
The Ancilliary Administrator for purposes of exemption invokes the proviso in Section 122 of the Tax
Code, which provides as follows:
. . ."And Provided, however, That no tax shall be collected under this Title in respect of
intangible personal property (a) if the decedent at the time of his death was a resident of a
foreign country which at the time of his death did not impose a transfer tax or death tax of
any character in respect of intangible personal property of citizens of the Philippines not
residing in that country, or (b) if the laws of the foreign country of which the decedent was
resident at the tune of his death allow a similar exemption from transfer taxes or death taxes
of every character in respect of intangible personal property owned by citizen, of the
Philippine not residing in that foreign country.
The Ancilliary Administrator bases his claim of exemption on (a) the exemption of non-residents from
the California inheritance taxes with respect to intangibles, and (b) the exemption by way of
reduction of P4,000 from the estates of non-residents, under the United States Federal Estate Tax
Law. Section 6 of the California Inheritance Tax Act of 1935, now reenacted as Section 13851,
California Revenue and Taxation Code, reads as follows:
SEC. 6. The following exemption from the tax are hereby allowed:
xxx

xxx

xxx.

(7) The tax imposed by this act in respect of intangible personal property shall not be
payable if decedent is a resident of a State or Territory of the United States or a foreign state
or country which at the time of his death imposed a legacy, succession of death tax in
respect of intangible personal property within the State or Territory or foreign state or country
of residents of the States or Territory or foreign state or country of residence of the decedent
at the time of his death contained a reciprocal provision under which non-residents were
exempted from legacy or succession taxes or death taxes of every character in respect of
intangible personal property providing the State or Territory or foreign state or country of
residence of such non-residents allowed a similar exemption to residents of the State,
Territory or foreign state or country of residence of such decedent.
Considering the State of California as a foreign country in relation to section 122 of Our Tax Code we
beleive and hold, as did the Tax Court, that the Ancilliary Administrator is entitled to exemption from
the tax on the intangible personal property found in the Philippines. Incidentally, this exemption

granted to non-residents under the provision of Section 122 of our Tax Code, was to reduce the
burden of multiple taxation, which otherwise would subject a decedent's intangible personal property
to the inheritance tax, both in his place of residence and domicile and the place where those
properties are found. As regards the exemption or reduction of P4,000 based on the reduction under
the Federal Tax Law in the amount of $2,000, we agree with the Tax Court that the amount of $2,000
allowed under the Federal Estate Tax Law is in the nature of deduction and not of an exemption.
Besides, as the Tax Court observes--.
. . . this exemption is allowed on all gross estate of non-residents of the United States, who
are not citizens thereof, irrespective of whether there is a corresponding or similar exemption
from transfer or death taxes of non-residents of the Philippines, who are citizens of the
United States; and thirdly, because this exemption is allowed on all gross estates of nonresidents irrespective of whether it involves tangible or intangible, real or personal property;
so that for these reasons petitioner cannot claim a reciprocity. . .
Furthermore, in the Philippines, there is already a reduction on gross estate tax in the amount of
P3,000 under section 85 of the Tax Code, before it was amended, which in part provides as follows:
SEC. 85. Rates of estate tax.There shall be levied, assessed, collected, and paid upon the
transfer of the net estate of every decedent, whether a resident or non-resident of the
Philippines, a tax equal to the sum of the following percentages of the value of the net estate
determined as provided in sections 88 and 89:
One per centrum of the amount by which the net estate exceeds three thousand pesos and
does not exceed ten thousand pesos;. . .
It will be noticed from the dispositive part of the appealed decision of the Tax Court that the Ancilliary
Administrator was ordered to pay the amount of P2,047.22, representing estate taxes due, together
with interest and other increments. Said Ancilliary Administrator invokes the provisions of Republic
Act No. 1253, which was passed for the benefit of veterans, guerrillas or victims of Japanese
atrocities who died during the Japanese occupation. The provisions of this Act could not be invoked
during the hearing before the Tax Court for the reason that said Republic Act was approved only on
June 10, 1955. We are satisfied that inasmuch as Miller, not only suffered deprivation of the war, but
was killed by the Japanese military forces, his estate is entitled to the benefits of this Act.
Consequently, the interests and other increments provided in the appealed judgment should not be
paid by his estate.
With the above modification, the appealed decision of the Court of Tax Appeals is hereby affirmed.
We deem it unnecessary to pass upon the other points raised in the appeal. No costs.
Bengzon, Paras, C.J., Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,
Endencia, and Felix, JJ., concur.

SECOND DIVISION
[G.R. No. 43314. December 19, 1935.]
A. L. VELILLA, administrator of the estate of Arthur Graydon Moody, PlaintiffAppellant, v. JUAN POSADAS, JR., Collector of Internal Revenue, DefendantAppellee.

Ohnick & Opisso for Appellant.


Solicitor-General Hilado for Appellee.
SYLLABUS
1. INHERITANCE TAX; DOMICILE OF TAXPAYER. To effect the abandonment
of ones domicile, there must be a deliberate and provable choice of a new domicile,
coupled with actual residence in the place chosen, with a declared or provable intent
that it should be ones fixed and permanent place of abode, ones home. There is a
complete dearth of evidence in the record that M ever established a new domicile in a
foreign country.
2. INHERITANCE AND INCOME TAXES. As Ms legal domicile at the time of
his death was the Philippine Islands and his estate had its situs here, the inheritance
and income taxes here involved were lawfully collected.
DECISION
BUTTE, J.:
This is an appeal from a judgment of the Court of First Instance of Manila in an action
to recover from the defendant-appellee as Collector of Internal Revenue the sum of
P77,018,39 as inheritance taxes and P13,001.41 as income taxes assessed against the
estate of Arthur G. Moody, deceased.
The parties submitted to the court an agreed statement of facts as follows:

jgc:chanrobles.com.ph

"I. That Arthur Graydon Moody died in Calcutta, India, on February 18, 1931.
"II. That Arthur Graydon Moody executed in the Philippine Islands a will, certified
copy of which marked Exhibit AA is hereto attached and made a part hereof, by virtue
of which will, he bequeathed all his property to his only sister, Ida M. Palmer, who
then was and still is a citizen and resident of the State of New York, United States of
America.
"III. That on February 24, 1931, a petition for appointment of special administrator of
the estate of the deceased Arthur Graydon Moody was filed by W. Maxwell Thebaut

with the Court of First Instance of Manila, the same being designated as case No.
39113 of said court. Copy of said petition marked Exhibit BB is hereto attached and
made a part hereof.
"IV. That subsequently or on April 10, 1931, a petition was filed by Ida M. Palmer,
asking for the probate of said will of the deceased Arthur Graydon Moody, and the
same was, after hearing, duly probated by the court in a decree dated May 5, 1931.
Copies of the petition and of the decree marked Exhibits CC and DD, respectively, are
hereto attached and made parts hereof.
"V. That on July 14, 1931, Ida M. Palmer was declared to be the sole and only heiress
of the deceased Arthur Graydon Moody by virtue of an order issued by the court in
said case No. 39113, copy of which marked Exhibit EE is hereto attached and made a
part hereof; and that during the hearing for the declaration of heirs, Ida M. Palmer
presented as evidence a letter dated February 28, 1925, and addressed to her by Arthur
Graydon Moody, copy of which marked Exhibit FF is hereto attached and made a part
hereof.
"VI. That the property left by the late Arthur Graydon Moody consisted principally of
bonds and shares of stock of corporations organized under the laws of the Philippine
Islands, bank deposits and other personal properties, as are more fully shown in the
inventory of April 17, 1931, filed by the special administrator with the court in said
case No. 39113, certified copy of which inventory marked Exhibit GG is hereto
attached and made a part hereof. This stipulation does not, however, cover the
respective values of said properties for the purpose of the inheritance tax.
"VII. That on July 22, 1931, the Bureau of Internal Revenue prepared for the estate of
the late Arthur Graydon Moody an inheritance tax return, certified copy of which
marked Exhibit HH is hereto attached and made a part hereof.
"VIII. That on September 9, 1931, an income tax return for the fractional period from
January 1, 1931 to June 30, 1931, certified copy of which marked Exhibit II is hereto
attached and made a part hereof, was also prepared by the Bureau of Internal Revenue
for the estate of the said deceased Arthur Graydon Moody.
"IX. That on December 3, 1931, the committee on claims and appraisals filed with the
court its report, certified copy of which marked Exhibit KK is hereto attached and
made a part hereof.
"X. That on September 15, 1931, the Bureau of Internal Revenue addressed to the
attorney for the administratrix Ida M. Palmer a letter, copy of which marked Exhibit

LL is hereto attached and made a part hereof.


"XI. That on October 15, 1931, the attorney for Ida M. Palmer answered the letter of
the Collector of Internal Revenue referred to in the preceding paragraph. Said answer
marked Exhibit MM is hereto attached and made a part hereof.
"XII. That on November 4, 1931, and in answer to the letter mentioned in the
preceding paragraph, the Bureau of Internal Revenue addressed to the attorney for Ida
M. Palmer another letter, copy of which marked Exhibit NN is hereto attached and
made a part hereof.
"XIII. That on December 7, 1931, the attorney for Ida M. Palmer again replied in a
letter, marked Exhibit OO, hereto attached and made a part hereof.
"XIV. That the estate of the late Arthur Graydon Moody paid under protest the sum of
P50,000 on July 22, 1931, and the other sum of P40,019,75 on January 19, 1932,
making a total of P90,019,75, of which P77,018.39 covers the assessment for
inheritance tax and the sum of P13,001.41 covers the assessment for income tax
against said estate.
"XV. That on January 21, 1932, the Collector of Internal Revenue overruled the
protest made by Ida M. Palmer through her attorney.
"XVI. The parties reserve their right to introduce additional evidence at the hearing of
the present case.
"Manila, August 15, 1933."

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In addition to the foregoing agreed statement of facts, both parties introduced oral and
documentary evidence from which it appears that Arthur G. Moody, an American
citizen, came to the Philippine Islands in 1902 or 1903 and engaged actively in
business in these Islands up to the time of his death in Calcutta, India, on February 18,
1931. He had no business elsewhere and at the time of his death left an estate
consisting principally of bonds and shares of stock of corporations organized under
the laws of the Philippine Islands, bank deposits and other intangibles and personal
property valued by the commissioners of appraisal and claims at P609,767.58 and by
the Collector of Internal Revenue for the purposes of inheritance tax at P653,657.47.
All of said property at the time of his death was located and had its situs within the
Philippine Islands. So far as this record shows, he left no property of any kind located
anywhere else. In his will, Exhibit AA, executed without date in Manila in accordance
with the formalities of the Philippine law, in which he bequeathed all his property to

his sister, Ida M. Palmer, he stated:

jgc:chanrobl es.com.ph

"I, Arthur G. Moody, a citizen of the United States of America, residing in the
Philippine Islands, hereby publish and declare the following as my last Will and
Testament . . . ."
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The substance of the plaintiffs cause of action is stated in paragraph 7 of his


complaint as follows:
jgc:chanrobles.com.ph

"That there is no valid law or regulation of the Government of the Philippine Islands
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 the Philippine Islands, and the levy and collection by defendant of
inheritance tax computed upon the value of said stocks, bonds, credits and other
intangible properties as aforesaid constituted and constitutes the taking and
deprivation of property without due process of law contrary to the Bill of Rights and
organic law of the Philippine Islands."
cral aw virtua1aw library

Section 1536 of the Revised Administrative Code (as amended) provides as follows:
"SEC. 1536. Conditions and rate of taxation. Every transmission by virtue of
inheritance, devise, bequest, gift mortis causa or advance in anticipation of
inheritance, devise, or bequest of real property located in the Philippine Islands and
real rights in such property; of any franchise which must be exercised in the
Philippine Islands; 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; of any shares or rights in any partnership, business or industry
established in the Philippine Islands or of any personal property located in the
Philippine Islands shall be subject to the following tax:"
x

It is alleged in the complaint that at the time of his death, Arthur G. Moody was a
"non-resident of the Philippine Islands." The answer, besides the general denial, sets
up as a special defense that "Arthur G. Moody, now deceased, was and prior to the
date of his death, a resident in the City of Manila, Philippine Islands, where he was
engaged actively in business." Issue was thus joined on the question: Where was the
legal domicile of Arthur G. Moody at the time of his death?
The Solicitor-General raises a preliminary objection to the consideration of any

jgc:chanrobles.com.ph

evidence that Moodys domicile was elsewhere than in Manila at the time of his death
based on the proposition that as no such objection was made before the Collector of
Internal Revenue as one of the grounds of the protest against the payment of the tax,
this objection cannot be considered in a suit against the Collector to recover the taxes
paid under protest. He relies upon the decision in the case of W. C. Tucker v. A. C.
Alexander, Collector (15 Fed. [2], 356). We call attention, however, to the fact that
this decision was reversed in 275 U. S., 232; 72 Law. ed., 256, and the case remanded
for trial on the merits on the ground that the requirement that the action shall be based
upon the same grounds, and only such, as were presented in the protest had been
waived by the collector. In the case before us no copy of the taxpayers protest is
included in the record and we have no means of knowing its contents. We think,
therefore, the preliminary objection made on behalf of the appellee does not lie.
We proceed, therefore, to the consideration of the question on the merits as to whether
Arthur G. Moody was legally domiciled in the Philippine Islands on the day of his
death. 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 in the Philippine Islands. 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, under the following circumstances: He was afflicted
with leprosy in an advanced stage and had been informed by Dr. Wade that he would
be reported to the Philippine authorities for confinement in the Culion Leper Colony
as required by the law. Distressed at the thought of being thus segregated and in
violation of his promise to Dr. Wade that he would voluntarily go to Culion, he
surreptitiously left the Islands the latter part of February, 1928, under cover of night,
on a freighter, without ticket, passport or tax clearance certificate. The record does not
show where Moody was during the remainder of the year 1928. He lived with a friend
in Paris, France, during the months of March and April of the year 1929 where he was
receiving treatment for leprosy at the Pasteur Institute. The record does not show
where Moody was in the interval between April, 1929, and November 26, 1930, on
which latter date he wrote a letter, Exhibit B, to Harry Wendt of Manila, offering to
sell him his interest in the Camera Supply Company, a Philippine corporation, in
which Moody owned 599 out of 603 shares. In this letter, among other things, he
states: "Certainly Ill never return there to live or enter business again." In this same
letter he says:
jgc:chanrobles.com.ph

"I wish to know as soon as possible now (as to the purchase) for I have very recently
decided either to sell or put in a line of school or office supplies . . . before I go to the
necessary investments in placing any side lines. I concluded to get your definite reply
to this . . . I have given our New York buying agent a conditional order not to be
executed until March and this will give you plenty of time . . . anything that kills a

business is to have it peddled around as being for sale and this is what I wish to
avoid." He wrote letters dated December 12, 1930, and January 3, 1931, along the
same line to Wendt. As Moody died of leprosy less than two months after these letters
were written, there can be no doubt that he would have been immediately segregated
in the Culion Leper Colony had he returned to the Philippine Islands. He was,
therefore, a fugitive, not from justice, but from confinement in the Culion Leper
Colony in accordance with the law of the Philippine Islands.
There is no statement of Moody, oral or written, in the record that he had adopted a
new domicile while he was absent from Manila. Though he was physically present for
some months in Calcutta prior to the date of his death there, the appellant does not
claim that Moody had a domicile there although it was precisely from Calcutta that he
wrote and cabled that he wished to sell his business in Manila and that he had no
intention to live there again. Much less plausible, it seems to us, is the claim that he
established a legal domicile in Paris in February, 1929. The record contains no writing
whatever of Moody from Paris. There is no evidence as to where in Paris he had any
fixed abode that he intended to be his permanent home. There is no evidence that he
acquired any property in Paris or engaged in any settled business on his own account
there. There is no evidence of any affirmative factors that prove the establishment of a
legal domicile there. The negative evidence that he told Cooley that he did not intend
to return to Manila does not prove that he had established a domicile in Paris. His
short stay of three months in Paris is entirely consistent with the view that he was a
transient in Paris for the purpose of receiving treatments at the Pasteur Institute. The
evidence in the record indicates clearly that Moodys continued absence from his legal
domicile in the Philippines was due to and reasonably accounted for by the same
motive that caused his surreptitious departure, namely, to evade confinement in the
Culion Leper Colony; for he doubtless knew that on his return he would be
immediately confined, because his affliction became graver while he was absent than
it was on the day of his precipitous departure and he could not conceal himself in the
Philippines where he was well known, as he might do in foreign parts.
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 this unfortunate man, whom appellant describes as a "fugitive" and
"outcast", 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. To effect the abandonment of ones domicile, there must
be a deliberate and provable choice of a new domicile, coupled with actual residence
in the place chosen, with a declared or provable intent that it should be ones fixed and
permanent place of abode, ones home. There is a complete dearth of evidence in the
record that Moody ever established a new domicile in a foreign country.

The contention under the appellants third assignment of error that the defendant
collector illegally assessed an income tax of P13,001.41 against the Moody estate is,
in our opinion, untenable. The grounds for this assessment, stated by the Collector of
Internal Revenue in his letter, Exhibit NN, appear to us to be sound. That the amount
of P259,986.69 was received by the estate of Moody as dividends declared out of
surplus by the Camera Supply Company is clearly established by the evidence. The
appellant contends that this assessment involves triple taxation: First, because the
corporation paid income tax on the same amount during the years it was accumulated
as surplus; second, that an inheritance tax on the same amount was assessed against
the estate, and third, the same amount is assessed as income of the estate. As to the
first, it appears from the collectors assessment, Exhibit II, that the collector allowed
the estate a deduction of the normal income tax on said amount because it had already
been paid at the source by the Camera Supply Company. The only income tax
assessed against the estate was the additional tax or surtax that had not been paid by
the Camera Supply Company for which the estate, having actually received the
income, is clearly liable. As to the second alleged double taxation, it is clear that the
inheritance tax and the additional income tax in question are entirely distinct. They are
assessed under different statutes and we are not convinced by the appellants argument
that the estate which received these dividends should not be held liable for the
payment of the income tax thereon because the operation was simply the conversion
of the surplus of the corporation into the property of the individual stockholders. (Cf.
U. S. v. Phellis, 257 U. S., 171, and Taft v. Bowers, 278 U. S., 460.) Section 4 of Act
No. 2833 as amended, which is relied on by the appellant, plainly provides that the
income from exempt property shall be included as income subject to tax.
Finding no merit in any of the assignments of error of the appellant, we affirm the
judgment of the trial court, first, because the property in the estate of Arthur G.
Moody at the time of his death was located and had its situs within the Philippine
Islands and, second, because his legal domicile up to the time of his death was within
the Philippine Islands. Costs against the Appellant.
Malcolm, Villa-Real, and Imperial, JJ., concur.

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