THE COLLECTOR OF INTERNAL REVENUE, Petitioner,

vs. ANTONIO CAMPOS RUEDA, Respondent.

Office of the Solicitor General for petitioner.

Ramirez and Ortigas for respondent.

RESOLUTION

PAREDES, J.: chanrobles virt ual law library

Do�a Maria de la Estrella Soriano Vda. de Cerdeira, (Maria

Cerdeira, for short), died in Tangier, (North Africa), on
January 2, 1955. At the time of her demise, she was married
to a Spanish Citizen and a permanent resident of Tangier from
1931 up to her death, on January 2, 1955. She left properties
in Tangier as well as in the Philippines. Among the properties
in the Philippines are several parcels of land and many shares
of stock, accounts receivable and other intangible personal
properties. The real estate situated in the Philippines had a
market value of P1,109,483.50 and her personal properties
also in the Philippines had a value of P396,308.90. On the real
estate, the respondent Antonio Campos Rueda, as
administrator of her 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 her 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. The Collector of Internal Revenue in a decision 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 Cerdeira. On appeal the Court of Tax
Appeals reversed the decision of the Collector, without costs,
who elevated the case to Us for review, alleging that the Court
of Tax Appeals erred in holding that -

(1) The testate estate of Maria Cerdeira is not liable

for the payment of deficiency estate and
inheritance taxes in the sum of P161,874.95; chanrobles virt ual law library
 (2) The international zone of Tangier, even if it is
not recognized by the Philippine Government as a
state, could avail of the reciprocal provisions of our
Tax Code; chanrobles virt ual law library

(3) The term "foreign country" in Section 122 of the

Tax Code, refers to a foreign government
competent to levy taxes without any consideration
for the international status of said government; chanrobles virtu al law library

(4) There exists reciprocity between Tangier and

Philippine Laws on the matter of death taxes on
intangible personal property; chanrobles virt ual law library

(5) The certification Exhibits D-1, G-1, Q-1, and T,

considered together, are sufficient proof on the
non-liability of movable property located in Tangier
for inheritance tax properties.

The pertinent portion of section 122, of the Tax Code, as

amended by section 6, Rep. Act No. 83, recites as follows:

SEC. 122. Definitions. - . . . . Provided, however,

That in the case of a resident, the transmission or
transfer of any intangible personal property,
regardless of its location, is subject to the taxes
prescribed in this Title; And provided, further, 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 the foreign
country, or (b) if the laws of the foreign country of
which the decedent was a resident at the time of his
death allow a similar exemption from transfer taxes
or death taxes of every character in respect of
intangible personal property owned by citizens of
the Philippines not residing in that foreign country.

xxx xxx xxx

In order to show the status of the law on the subject, in force
or existing in Tangier at the time of Maria Cerdeira's death in
1955, the respondent submitted certificates, the contents of
which are quoted hereunder -

Que las transmisiones hereditarias de bienes

muebles situados en Tanger, no estan sujetas a
ningun impuesto sucesorio conforme al Dahir del
15 de Mayo de 1925 y Ley del 30 de Enero de 1932,
vigentes en la Zona Internacional de Tanger, sea
cualquiera la nacionalidad de los intersesados en la
sucesion (Exh. "d-1"). chanrobles virtualawl ibrary chanrobles virtu al law library

Que conforme la ley del 30 de Enero de 1932, en

relacion con el Dahir de 15 de Mayo de 1925, al
preceptuarse, que "quedan sujetos al pago del
impuesto de derechos reales, establecido para las
donaciones entre vivos, las transmisiones de
inmuebles por causa de muerte acontecida a partir
del 10 de Enero de 1932" deja como actos no
sujetos a ningun impuesto sucesorio, las
transmisiones hereditarias de bienes muebles
radicantes en Tanger, sea cualquiera la
nacionalidad de los interesados en la sucesion (Exh.
"G-1").chanrobles virtualawl ibrarychanrobles virtu al law library

Praise be to God, The undersigned do hereby

certify that neither Moroccan nor foreign legatees
at Tangier and its province, in the Sherifian State,
are subject to any tax on movables, with exception
of real estate which is liable to inheritance tax by
virtue of the law of January 10, 1932, published in
Official Bulletin No. 72 (Exh. "Q-1"). chanrobles virtualawl ibrary chanrobles virt ual law library

The law of January 30, 1932 modifying the Dahir of

May 15, 1925 subjecting the transfer of real estate
through deaths to the payment of registration
taxes, as of January 1, 1932, subjects to no
inheritance tax the successional transfers of
movable property, whatever may be the nationality
of those interested in the succession (Exh. "I").
Exhibit D-1 is certified by the Register of Properties and Chief
of the Bureau of Taxes at Tangier; Exh. Q-1 by the Acting
Administrator and Lands Registrar at Tangier; Exhibit Q-1 by
the Judge of the International Court at Tangier and Exhibit T,
by the Governor at the Province of Tangier.. chanrobles virtualawl ibrarychanrobles virtu al law library

While section 122 of the Philippine Tax Code aforequoted

speaks of "intangible personal property" in both subdivisions
(a) and (b); the alleged laws of Tangier refer to "bienes
muebles situados en Tanger", "bienes muebles radicantes en
Tanger" "movables" and "movable property". In order that
this Court may be able to determine whether the alleged laws
of Tangier grant the reciprocal tax exemptions required by
Section 122 of the Tax Code, and without, for the time being,
going into the merits of the issues raised by the
petitioner-appellant, the case is REMANDED to the Court of
Tax Appeals for the reception of evidence or proofs on
whether or not the words "bienes muebles", "movables" and
"movable property" as used in the Tangier laws, include or
embrace "intangible personal property", as used in the Tax
Code. No costs.