Marcos vs Sandiganbayan (273 SCRA 47)

Marcos vs Sandiganbayan
273 SCRA 47 [GR No. 120880 June 5, 1997]

Facts: On September 29, 1989, former President Ferdinand Marcos died in Honolulu, Hawaii, USA. On June 27, 1990, a special tax audit team was created to conduct investigations and examinations of the tax liabilities and obligations of the late President, as well as that of his family, associates and “cronies.” Said audit team concluded its investigation with a memorandum dated July 26, 1991. The investigation disclosed that the Marcoses failed to file a written notice of death of the decdent, an estate tax return, as well as several income tax returns covering the years 1982 to 1986 – all in violation of the National Internal Revenue Code (NIRC). Subsequently, criminal charges were filed against Mrs. Marcos and the Commissioner of Internal Revenue thereby caused the preparation and filing of the estate tax return of the late president. and herein petitioner’s income tax return. On July 26, 1991, the BIR issued assessment for the deficiency taxes of the Marcoses and the same were constructively delivered at each last known addresses where their caretaker received the same. A notice to taxpayer inviting Mrs. Marcos to a conference was also sent to her lawyer. Despite all notices, no protest were received from the Marcoses causing the BIR’s assessment to become final and a notice to levy on several real properties were sent to petitioner’s office.

Issue: Whether or not the BIR has authority to collect by the summary remedy of levying upon, and sale of real property of the decedent, estate tax deficiencies, without the cognition and authority of the court sitting in a probate over the supposed will of the deceased.

Held: Yes. The government has two ways of collecting the taxes in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. Another remedy, pursuant to the lien created by section 315 of the tax code upon all the property and rights property belong to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due the estate.

From the foregoing it is discernible that the approval of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the tax bureau erred in proceeding with the late president, on the ground that it was required to seek first the probate court’s sanction. There is nothing in the tax code, and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court’s approval of the state’s claim for estate taxes, before the same can be enforced and collected.

Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by implementing regulations within 30 days from receipt of the assessment; otherwise, the assessment shall become final and unappealable.

If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within 30 days from receipt of said decision; otherwise, the decision shall become final, executory, and demandable.

The notices of levy upon real property were issued within the prescriptive period and in accordance with the provisions of the present tax code. The deficiency tax assessment, having already become final, executory and demandable, the same can now be collected through the summary remedy of distraint or levy pursuant to section 205 of the NIRC.

The omission to file an estate tax return, and the subsequent foreclosure to contest or appeal the assessment made by the BIR is fatal to the petitioner’s cause, as under the above cited provision, in case of failure to file a return, the tax may be assessed at any time within 10 years after the omission, and any tax so assessed may be collected by levy upon real property within 3 years following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner’s default as regards protesting the validity of said assessment, there is now no reason why the BIR cannot continue with the collection of the said tax. Any objection against the assessment should have been pursued following the avenue paved in section 229 of the NIRC or protest on assessment of internal revenue taxes.

In the absence of proof of any irregularities in the performance of the official duties, an assessment will not be disturbed. Even an assessment based on estimates is prima facie valid and lawful where it does not appear to have been arrived at arbitrarily or capriciously.

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