21.

Lorenzo vs Posadas FACTS: Thomas Hanley died in Zamboanga, Zamboanga, leaving a will and considerable amount of real and personal properties. Proceedings for the probate of his will and the settlement and distribution of his estate were begun in the Court of First Instance of Zamboanga. The will was admitted to probate. The Court of First Instance of Zamboanga considered it proper for the best interests of ther estate to appoint a trustee to administer the real properties. The two executors named in the will, was, on March 8, 1924, appointed trustee. Moore took his oath of office and gave bond on March 10, 1924. He acted as trustee until February 29, 1932, when he resigned and the plaintiff herein was appointed in his stead. During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue assessed against the estate an inheritance tax in the amount of P1,434.24 which, together with the penalties for deliquency in payment amounted to P2,052.74. On March 15, 1932, the defendant filed a motion in the testamentary proceedings pending before the Court of First Instance of Zamboanga (Special proceedings No. 302) praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of P2,052.74. The motion was granted. On September 15, 1932, the plaintiff paid said amount under protest, notifying the defendant at the same time that unless the amount was promptly refunded suit would be brought for its recovery. The defendant overruled the plaintiff's protest and refused to refund the said amount hausted. ISSUE: Whether or not the lower court erred in holding that there was deliquency in the payment of inheritance tax due on the estate of said deceased and that the inheritance tax in question be based upon the value of the estate upon the death of the testator HELD: The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536 as amended, of the Administrative Code, imposes the tax upon "every transmission by virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of inheritance,devise, or bequest." The tax therefore is upon transmission or the transfer or devolution of property of a decedent, made effective by his death. It is in reality an excise or privilege tax imposed on the right to succeed to, receive, or take property by or under a will or the intestacy law, or deed, grant, or gift to become operative at or after death. Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of the date. If death is the generating source from which the power of the estate to impose inheritance taxes takes its being and if, upon the death of the decedent, succession takes place and the right of the estate to tax vests instantly, the tax should be measured by the vlaue of the estate as it stood at the time of the decedent's death. The right of the state to an inheritance tax accrues at the moment of death, and hence is ordinarily measured as to any beneficiary by the value at that time of such property as passes to him.

22. Roxas vs Court of Tax Appeals FACTS: The Roxas brothers owned agricultural lands with a total area of 19,000 hectares. To manage the above-mentioned property, the Roxas brothers formed a partnership called Roxas y Compania. At the end of the second world war, the tenants expressed their desire to purchase from the brothers the parcels which they actually occupy. For its part, the government, in consonance with the constitutional mandate to acquire big landed estate and apportion them among landless tenants, persuaded the brothers to part with their landholdings. However, the government did not have the funds to cover the purchase price,and so a special arrangement was made for the Rehabilitation Finance Corporation to advance to Roxas y Cia the amount of P1,500,000.00 as loan. Under the arrangement, Roxas y Cia. allowed the farmers to buy the lands for the same price but by installment, and contracted with the Rehabilitation Finance Corporation to pay its loan from the proceeds of the yearly amortizations paid by the farmers. Subsequently, the CIR demanded that the brothers to pay real estate dealers tax for the sale of the said land. ISSUE: Is Roxas y Cia. liable for the payment of the fixed tax on real estate dealers? HELD: The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg". And, in order to maintain the general public's trust and confidence in the Government this power must be used justly and not treacherously. It does not conform with Our sense of justice in the instant case for the Government to persuade the taxpayer to lend it a helping hand and later on to penalize him for duly answering the urgent call. In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in question.