CIR vs Campos Rueda (42 SCRA 238)

The Collector Of Internal Revenue vs Campos Rueda
42 SCRA 238 [
GR No. L-13250 October 29, 1971]

Facts: This is an appeal interposed by herein respondent Antonio Campos Rueda as administrator of the estate of the deceased Doña Maria de la Estrella Soriano Vda de Cedeira, from the decision of the petitioner, collector of internal revenue, assessing against and demanding from the former the sum of Php161,874.95 as deficiency estate and inheritance taxes, including interest therein and penalties, on the transfer of intangible personal properties situated in the Philippines and belonging to said Maria Cedeira. She is a spanish national, by reason of her marriage to a spanish citizen and was a resident of Tangier, Morocco from 1931 up to her death on January 2, 1955. At the time of her demise, she left among others, intangible personal properties in the Philippines. On September 29, 1955, respondent filed a provisional estate and inheritance tax return on all the properties of Maria Cedeira. On the same date, petitioner, pending investigation issued an assessment for estate and inheritance tax in the respective amounts of Php111,592.48 and Php 157,791.48 or a total of Php369,383.96 which tax liabilities were paid by respondent. On November 27, 1955, an amended return was filed wherein intangible personal properties with the value of Php396,308.90 were claimed as exempt from taxes. On November 23, 1955, petitioner issued another assessment for estate and inheritance taxes in the amounts of Php 202,262.40 and Php267,402.84 respectively or a total of Php469,665.24. In a letter dated January 11, 1956, respondent denied the request for the exemption on the ground that the law of Tangier is not reciprocal with section 122 of the National Internal Revenue Code. Hence, respondent demanded the payment of the sums of Php239,439.79 representing the deficiency estate and inheritance taxes including ad valorem penalties, surcharges, interest and compromise penalties. In a letter dated February 8, 1956, respondent requested for the reconsideration of the decision denying the claim for the tax exemption. However, the same was denied. The denial was premise on the ground that there was no reciprocity with Tangier, which was moreover a mere principality, not a foreign country.

Issue: Whether or not the intangible personal properties of Maria Cedeira are exempt from estate and inheritance tax.

Held: Yes. The controlling legal provision as noted is a proviso in section 122 of the NIRC. It reads thus:

that no tax shall be collected under this title in respect of intangible personal properties

  1. 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 properties of the Philippines not residing in that foreign country; or
  2. 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 properties owned by citizens of the Philippines not residing in that foreign country.

This court commit itself to the doctrine that even a tiny principality, hardly an international personality in the sense did fall under the exempt category.

The expression “foreign country,” was used in the last proviso of section 122 of NIRC refers to a government of that foreign power which although not an international person in the sense of international law does not impose transfer or death upon intangible person properties of our citizens not residing therein whose law allow a similar exemption from such taxes. It is therefore not necessary that Tangier should have been recognized by our government in order to entitle the respondent to the exemption benefits of the proviso of said section 122 of our tax code.


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