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58 PHIL 108
Plaintiffs Concepcion Vidal de Roces and her husband, as well as one Elvira
Richards, received as donation several parcels of land from Esperanza Tuazon. They took
possession of the lands thereafter and likewise obtained the respective transfer
certificates. The donor died a year after without leaving any forced heir. In her will,
which was admitted to probate, she bequeathed to each of the donees the sum of P5,000.
After the distribution of the estate but before the delivery of their shares, the CIR
(appellee) ruled that plaintiffs as donees and legatees should pay inheritance taxes. The
plaintiffs paid the taxes under protest. CIR filed a demurrer on ground that the facts
alleged were not sufficient to constitute a cause of action. The court sustained the
demurrer and ordered the amendment of the complaint but the appellants failed to do so.
Hence, the trial court dismissed the action on ground that plaintiffs, herein appellants, did
not really have a right of action. Plaintiffs (appellant) contend that Sec. 1540 of the
Administrative Code does not include donation inter vivos and if it does, it is
unconstitutional, null and void for violating SEC. 3 of the Jones Law (providing that no
law shall embrace more than one subject and that the subject should be expressed in its
titles ; that the Legislature has no authority to tax donation inter vivos; finally, that said
provision violates the rule on uniformity of taxation. CIR however contends that the word
'all gifts' refer clearly to donation inter vivos and cited the doctrine in Tuason v. Posadas.
Whether or not the donations should be subjected to inheritance tax
YES. Donation inter vivos takes effect immediately or during the lifetime of the
donor, but made in consideration of the death of the decedent. Those donations not made
in contemplation of the decedent's death are not included as it would be equivalent to
imposing a direct tax on property and not on its transmissio

57 PHIL 465
Don Luis W. Dison was the legitimate and only child of Don Felipe Dison. Felix
Dison executed a deed of gift in favor of his son on April 9, 1928. On April 21, 1928,
Don Felix Dison died. Don Felix made a gift inter vivos in favor of the plaintiff Luis W.
Dison of all his property according to a deed of gift which includes all the property of
Don Felix Dizon. Meanwhile, the plaintiff did not receive property of any kind of Don
Felix Dison upon the death of the latter.
Does section 1540 of the Administrative Code subject the plaintiff-appellant to the
payment of an inheritance tax?
Construing the conveyance here in question, the facts presented, as an advance
made by Felix Dison to his only child, we hold the Collector of Internal Revenue has
properly assessed Section 1540 to be applicable and the tax. The judgment is affirmed
with costs against the appellant.

83 SCRA 256
Felix Guzman died and was survived by eight children. One of the properties he
left was a residential house located in the Poblacion. In conformity with his last will, that
house and the lot on which it stands were adjudicated to his eight children, each being
given a one-eighth pro indiviso. The administrator submitted four accounting reports for
the period from June 16, 1964 to September, 1967. Three of the heirs Crispina de
Guzmans-Carillo Honorata de Guzman-Mendiola and Arsenio de Guzman interposed
objections to the administrator's disbursements in the total sum of P13, 610.48.
Whether or not the expenses incurred by the administrator are deductible.
YES. According to NIRC Estate Tax;
Expenses for the renovation and improvement of the family
residence P10, 399.59. These expenses consisted of
disbursements for the repair of the terrace and interior of the
family home, the renovation of the bathroom, and the
construction of a fence.
Irrigation fee was properly allowed as a legitimate expense of
1. Expenses incurred by Librada de Guzman as occupant of the
family residence without paying rent These were
PERSONAL expenses of Librada de Guzman, inuring to her
benefit. Those expenses, not being reasonable administration
expenses incurred by the administrator, should not be charged
against the income of the estate. Librada de Guzman, as an heir,
is entitled to share in the net income of the estate. She occupied
the house without paying rent. She should use her income for
her living expenses while occupying the family residence. The
disallowed. They have no connection with the care, management
and settlement of the decedent's estate (Nicolas vs. Nicolas 63
Phil 332). The other expenses, namely, P19.30 for the lawyer's
subsistence and P144 as the cost of the gift to the physician who
attended to the testator during his last s are allowable expenses.

79 SCRA 408
Elsie M. Gaches died on March 9, 1966 without a child. The deceased left a last
will and testament in which she made relevant disposition of her estate. On March 11,
1966, respondent Judge Bienvenido Tan, Sr., filed a petition for the probate. On June 3,
1966, Judge Tan informed the Commissioner that the testate estate was worth about
P10,000,00 pesos and that the estate and inheritance taxes due thereon were about
P9,500,000.00 On July 9, 1966, Judge Tan filed with the probate court a motion praying
for authority to make the following additional advance payments-(1) To Abanto and
Eribal, P150,000.00; (2) To Bess Lauer, $75,000.00; (3) To Judge Tan as advance
attorneys fees, P50,000.00; and (4) To Attys. Medina and Bienvenido Tan,Jr., P75,000.00
each as advance attorneys fees.
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?
Are the respondent heirs 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.
Does the assignment of a certificate of time deposit to the Commissioner of
Internal Revenue for the purpose of paying the hereby the estate tax constitute payment
of such tax?
Should the herein respondent heirs be held liable for the payment of surcharge and
interest on the amount (P700,00.00) representatives the face value of time deposit
certificates assigned to the Commissioner which could not be converted into cash?
What should be the reasonable attorneys fees?
There is no evidence on record that would show that the probate court ever made
a serious attempt to the values of the different assets the correctness of that such
properties shall be preserved for the satisfaction of those case. In the third place that main
of pesos taxes were being called by the Bureau of Internal Revenue, the last reasonable
thing that the probate court should have done was to require the heirs to deposit the
amount of inheritance tax being claimed in a suitable institution or to authorize the sale of
non-cash assets under the courts control and supervision.
The liability of the herein respondents Eribal and Abanto to pay the inheritance tax
corresponding to the share of Bess Lauer in the inheritance must be negated.
And the effect of the indorsement of the time deposit certificates to the Commission, the
same cannot be held to have extinguished the estates liability for the estate tax.

The estate of Elsie M. Gaches is likewise liable for the payment of the interest and
surcharged on the said amount of P700,000.00 imposed under Section 101 (a) (1) and (c),
respectively, of the Tax Code.
The amount of P50,000.00 as attorneys fees was rendered reasonable.

64 PHIL 353
On 27 May 1922, Thomas Hanley died in Zamboanga, leaving a will and
considerable amount of real and personal properties. Hanleys will provides the
following: his money will be given to his nephew, Matthew Hanley, as well as the real
estate owned by him. It further provided that the property will only be given ten years
after Thomas Hanleys death. Thus, in the testamentary proceedings, the Court of First
Instance of Zamboanga appointed P.J.M. Moore as trustee of the estate. Moore took oath
of office on March 10, 1924, and resigned on Feb. 29, 1932. Pablo Lorenzo was
appointed in his stead. Juan Posadas, Collector of Internal Revenue, assessed inheritance
tax against the estate amounting to P2,057.74 which includes penalty and surcharge. He
filed a motion in the testamentary proceedings so that Lorenzo will be ordered to pay the
amount due. Lorenzo paid the amount in protest after CFI granted Posadas motion. He
claimed that the inheritance tax should have been assessed after 10 years. He asked for a
refund but Posadas declined to do so. The latter counterclaimed for the additional amount
of P1,191.27 which represents interest due on the tax and which was not included in the
original assessment. However, CFI dismissed this counterclaim. It also denied Lorenzos
claim for refund against Posadas. Hence, both appealed.
Whether the estate was delinquent in paying the inheritance tax and therefore
liable for the P1,191.27 that Posadas is asking for?
Yes. Even though there was no express mention of the word trust in the will, the
court of first instance was correct in appointing a trustee because no particular or
technical words are required to create a testamentary trust (69 C.J.,p. 711). The requisites
of a valid testamentary trust are: 1) sufficient words to raise a trust, 2) a definite subject,
3) a certain or ascertained object. There is no doubt that Hanley intended to create a trust
since he ordered in his will that certain of his properties be kept together undisposed
during a fixed period or for a stated purpose.


55 PHIL 13
On February 27, 1920, Florentino Pamintuan, represented by J.V. Ramirez or his
attorney-in-fact charged with the administration of his property, filed income-tax return
for the year 1919, paying the amount of P672.99 on the basis of said return, and the
additional sum of P151.01 as a result of a subsequent assessment received from the
Collector of Internal Revenue. On April 24, 1925, Florentino Pamintuan died in
Washington, D.C., U.S.A., leaving the defendants herein as his heirs. On April 28, 1925,
the Court of First Instance of Manila appointed Maximo de la Paz and Candido Ilagan
commissioners of appraisal left by the deceased Pamintuan. During the pendency of the
intestate proceedings, the administrator filed income-tax returns for the estate of the
deceased corresponding to the years 1925 and 1926. The plaintiff discovered the fact that
the deceased Florentino Pamintuan has not paid the amount of four hundred and sixtytwo pesos as additional income tax and surcharge for the calendar year 1919, on account
of the sale made by him on November 14, 1919.
Whether or not the defendants can refuse the payment of income tax either in full
or in part.
Wherefore, let the defendants pay the plaintiff the sum of P462, with 1 per centum
monthly interest from August 19, 1927 until fully paid, as follows: Tomasa Centeno
0.0571 per cent, and each one of the other defendants 0.0784 per cent, with cost against
the appellees.

18 SCRA 757
Matias Yusay, a resident of Pototan, Iloilo, died intestate on May 13, 1948,
leaving two heirs, namely, Jose S. Yusay, a legitimate child, and Lilia Yusay Gonzales, an
acknowledged natural child. Jose S. Yusay was therein appointed administrator. On May
11, 1949, Jose S. Yusay filed with the Bureau of Internal Revenue an estate and
inheritance tax return. However, the return mentioned no heir. The fair market value of
the real properties was computed by increasing the assessed value by forty percent. On
January 25, 1955 the Bureau of Internal Revenue increased the assessment of the estate
tax and the inheritance tax plus delinquency interest and demanded payment thereof on or
before February 28, 1955.
On March 3, 1955 Jose S. Yusay requested an extension of time within which to
pay the tax. However, the request was denied. On November 17, 1959, Lilia Yusay
disputed the legality of the assessment dated February 13, 1958. She claimed that the
right to make the same had prescribed. She therefore requested that the assessment be
declared invalid and without force and effect.
1. Was the petition for review in the Court of Tax Appeals within the 30-day period
provided for in Section 11 of Republic Act 1125?
2. Could the Court of Tax Appeals take cognizance of Lilia Yusays appeal despite
the pendency of the Proof of Claim and Motion for Allowance of Claim and
for an Order of Payment of Taxes filed by the Commissioner of Internal Revenue
in Special Proceedings No. 459 before the Court of First Instance of Iloilo?
3. Has the right of the Commissioner of Internal Revenue to assess the estate and
inheritance taxes in question prescribed?
1. The counting of the thirty days within which to institute an appeal in the Court of
Tax Appeals should commence from the date of receipt of the decision of the
Commissioner on the disputed assessment, not from the date of assessment was
2. The settlement court, where the Commissioner would wish Lilia Yusay to contest
the assessment, is of limited jurisdiction. And under the Rules, its authority relates
only to matters having to do with the settlement of estates and probate of wills of
deceased persons. Said Court has no jurisdiction to adjudicate the contentions in
3. The conclusion, however, that the return filed by Jose. S. Yusay was sufficient to
commence the running of the prescriptive period under Section 331 of the Tax
Code rests on no solid ground.
WHEREFORE, the judgment appealed from is set aside and another entered
affirming the assessment of the Commissioner of Internal Revenue dated February
13, 1958. Lilia Yusay Gonzales as administratix of the intestate estate of Matias

Yusay, is hereby ordered to pay the sums of P16, 246.04 and P39, 178.12 as estate
and inheritance taxes, plus interest and surcharge for delinquency in accordance with
Section 101 of the National Internal Revenue Code.