PINEDA, ET AL. vs.

COURT OF FIRST INSTANCE OF TAYABAS and

COLLECTOR OF INTERNAL REVENUE
G.R. No. L-30921, February 16, 1929
EN BANC

FACTS:

Before his death, the decedent, Felix Villadiego, had submitted to the Collector of
Internal Revenue the returns corresponding to his income tax for the years 1925 and
1926;

He had also, before his death, paid the taxes which the Collector of Internal Revenue had
estimated to be due upon said returns in 1925 and 1926 .

After the death of the said Felix Villadiego on May 7, 1927, intestate proceedings were
duly opened in the matter of his estate, and the petitioners herein were appointed as his
administratrixes.

While said proceedings were pending, the Collector of Internal Revenue made a revision
of the assessment of the income tax due from the deceased for the years 1925 and 1926,
with the result that he found that the tax for said years was underassessed to the extent
of P111.30 for the year 1925 and P128.96 for the year 19326, making a total for the two
years of P240.26.

In view of this fact the provincial fiscal of Tayabas, on behalf of the Government, filed a
motion before the respondent judge in the intestate proceedings aforesaid, showing that
the deceased Felix Villadiego was indebted to the Government of the Philippine Islands,
upon the account above indicated, to the extent of P240.26, and asking that, in the
adjudication to be made concerning the property of the deceased in the aforesaid
proceedings, this additional tax should be declared to constitute a preferential charge in
favor of the Government.

Accompanying this motion was Exhibit A, showing to alleged true status of the tax of the
deceased for the years stated, as reliquidated by the Collector.

On December 8th, thereafter, the respondent judge made the order which is the subject of
complaint in this petition,ordering the administratrixes to pay the tax as stated in the
first, and declaring that, in case of their failure so to do, the claim should constitute a
preferred charge in favor of the Government.

ISSUES:

1. Whether of not it was proper for the Collector of Internal Revenue to correct and
revise the tax assessment even after the death of the taxpayer

RULING:

Yes. It was proper. if the original assessment was incorrect, the Government was not
concluded thereby, and it was clearly within the power of the Collector to reassess and
collect any additional tax due upon the returns for said years, even after the death of the
taxpayer. The Government is never estopped by mistake or error on the part of its agents.
It follows that, in so far as this record shows, the petitioners have not made it appear that
the additional tax claimed by the Collector is not in fact due and collectible. The
assessment of the tax by the Collector creates, it must be rendered, a charge that is at least
prima facie valid.
2. Whether or not the court had jurisdiction to order the payment of the claim in
question without the presentation of the same for allowance in usual course to the
committee on claims

RULING:

Yes. The court had jurisdiction. The act of the court in directing the petitioners to pay this
tax does not have the effect of depriving the petitioners of the remedy, open to every
taxpayer, of paying the tax under the protest and bringing an action to recover the money;
and assuming that leave of the court might properly be required for the institution of such
action, it is to be assumed that such leave would be granted if the petitioners should be
able to show to the court any plausible ground for concluding that the tax had been
improperly collected.
 THE GOVERNMENT OF THE PHILIPPINE ISLANDS vs. JOSE MA.
PAMINTUAN, ET AL.
G.R. No. L-33139, October 11, 1930
EN BANC

FACTS:

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 P 672.99 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 24, 1925, intestate proceedings were instituted in the Court of First Instance of
Manila in civil case No. 27948, intestate of the late Florentino Pamintuan.

On June 12, 1926, Jose V. Ramirez, the duly appointed judicial administrator of the estate
of the deceased Florentino Pamintuan presented a proposed partition of the decedent's
estate which proposed partition was approved by the court on July 6,1926, the court
ordering the delivery to the heirs, the defendants herein, of their respective shares of the
inheritance after paying the corresponding inheritance taxes which were duly paid on
September 2, 1926, in the amount of P25,047.19 as appears on the official receipt No.
4421361.

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 intestate proceedings in civil case No. 27948 were definitely closed on October
27, 1926, by order of the court of the same date.

Subsequent to the distribution of the decedent's estate to the defendants herein, that is,
on February 16, 1927, the plaintiff discovered the fact that the deceased Florentino
Pamintuan has not paid the amount of four hundred and sixty-two pesos (P462) as
additional income tax and surcharge for the calendar year 1919, on account of the sale
made by him on November 14, 1919, of his house and lot located at 922 M. H. del Pilar,
Manila, from which sale he realized a net profit or income of P11,000, which was not
included in his income-tax return filed for said year 1919.

The defendants cannot disprove that the deceased Florentino Pamintuan made a profit of
P11,000 in the sale of the house because they have destroyed the voluminous records and
evidences regarding the sale in question and other similar transactions which might show
repairs on the house, commissions, and other expenses tending to reduce the profit
obtained as mentioned above.

The demand for the payment of the income tax referred to herein was made on February
24, 1927, on the defendants but they refused and still refuse to pay the same either in full
or in part.

ISSUE:
Whether or not even after the partition of an estate, heirs and distributees are liable
individually for the payment of all lawful outstanding claims against the estate such as an
unpaid income tax on account of a sale of property by the deceased

RULING:

Heirs are not required to respond with their own property for the debts of their deceased
ancestors. But even after the partition of an estate, heirs and distributees are liable
individually for the payment of all lawful outstanding claims against the estate in
proportion to the amount or value of the property they have respectively received from
the estate. The hereditary property consists only of that part which remains after the
settlement of all lawful claims against the estate, for the settlement of which the entire
estate is first liable. The heirs cannot, by any act of their own or by agreement among
themselves, reduce the creditors' security for the payment of their claims.

Claims for income taxes need not be filed with the committee on claims and appraisals
appointed in the course of testate proceedings and may be collected even after the
distribution of the decedent's estate among his heirs, who shall be liable therefor in
proportion to their share in the inheritance.
 COMMISSIONER OF INTERNAL REVENUE vs. MANUEL B. PINEDA, as one
of the heirs of deceased ATANASIO PINEDA
G.R. No. L-22734, September 15, 1967
EN BANC

FACTS:

Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15 children, the eldest
of whom is Atty. Manuel Pineda. Estate proceedings were had in Court so that the estate
was divided among and awarded to the heirs. Atty Pineda's share amounted to about
P2,500.00. After the estate proceedings were closed, the BIR investigated the income tax
liability of the estate for the years 1945, 1946, 1947 and 1948 and it found that the
corresponding income tax returns were not filed. Thereupon, the representative of the
Collector of Internal Revenue filed said returns for the estate issued an assessment and
charged the full amount to the inheritance due to Atty. Pineda who argued that he is liable
only to extent of his proportional share in the inheritance.

ISSUE:

Whether or not the State the can require Manuel B. Pineda to pay the full amount of the
taxes assessed instead of only individually answerable for the part of the tax
proportionate to the share he received from the inheritance

RULING:

Yes. As a holder of property belonging to the estate, Pineda is liable for he tax up to the
amount of the property in his possession. The reason is that the Government has a lien on
the P2,500.00 received by him from the estate as his share in the inheritance, for unpaid
income taxes4a for which said estate is liable, pursuant to the last paragraph of Section
315 of the Tax Code, which we quote hereunder:

If any person, corporation, partnership, joint-account (cuenta en participacion),

association, or insurance company liable to pay the income tax, neglects or
refuses to pay the same after demand, the amount shall be a lien in favor of the
Government of the Philippines from the time when the assessment was made by
the Commissioner of Internal Revenue until paid with interest, penalties, and
costs that may accrue in addition thereto upon all property and rights to property
belonging to the taxpayer: . . .

By virtue of such lien, the Government has the right to subject the property in
Pineda's possession, i.e., the P2,500.00, to satisfy the income tax assessment in the
sum of P760.28. After such payment, Pineda will have a right of contribution from
his co-heirs, to achieve an adjustment of the proper share of each heir in the
distributable estate.

All told, the Government has two ways of collecting the tax 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. This remedy was adopted in
Government of the Philippine Islands v. Pamintuan, supra.

In said case, the Government filed an action against all the heirs for the collection of the
tax. This action rests on the concept that hereditary property consists only of that part
which remains after the settlement of all lawful claims against the estate, for the
settlement of which the entire estate is first liable.
The reason why in case suit is filed against all the heirs the tax due from the estate is
levied proportionately against them is to achieve thereby two results: first, payment of the
tax; and second, adjustment of the shares of each heir in the distributed estate as lessened
by the tax.

Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all
property and rights to property belonging 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. This second remedy is the very avenue the
Government took in this case to collect the tax. The Bureau of Internal Revenue should
be given, in instances like the case at bar, the necessary discretion to avail itself of the
most expeditious way to collect the tax as may be envisioned in the particular provision
of the Tax Code above quoted, because taxes are the lifeblood of government and their
prompt and certain availability is an imperious need.

And as afore-stated in this case the suit seeks to achieve only one objective: payment of
the tax. The adjustment of the respective shares due to the heirs from the inheritance, as
lessened by the tax, is left to await the suit for contribution by the heir from whom the
Government recovered said tax.
 INTERPROVINCIAL AUTOBUS CO., INC. vs. COLLECTOR OF INTERNAL
REVENUE
G.R. No. L-6741, January 31, 1956

FACTS:

Plaintiff is a common carrier engaged in transporting passengers and freight by means of

TPU buses in Misamis Occidental and Northern Zamboanga.

Sometime in the year 1941 the provincial revenue agent for Misamis Occidental
examined the stubs of the freight receipts that had been issued by the Plaintiff.

He found that the stubs of the receipts issued during the years 1936 to 1938 were not
preserved; those for the years 1939 to 1940 were available. By referring, however, to the
conductors’ daily reports for 1936 to 1938, he was able to ascertain the number of
receipts for those years and these, together with those for 1939 to 1940, gave a total
during the 5-year period from 1936 to 1940, of 194,406 freight receipts issued.

Both the said daily reports of Plaintiff’s conductors and the available stubs did not state
the value of the goods transported thereunder. Pursuant, however, to sections 121 and 127
of the Revised Documentary Stamp Tax Regulations of the Department of Finance
promulgated on September 16, 1924, he assumed that the value of the goods covered by
each of the above- mentioned freight receipts amounted to more than P5, and assessed a
documentary stamp tax of P0.04 on each of the 194,406 receipts.

The tax thus assessed amounted to P7,776.24, which was collected from the deposit of
the Plaintiff in the Misamis Occidental branch of the Philippine National Bank.

Plaintiff demanded the refund of the amount, and upon refusal of the Defendant, Plaintiff
filed the action. The Court of First Instance of Misamis Occidental having rendered
judgment in favor of the Plaintiff, the Defendant appealed to the Court of Appeals. This
court reversed the decision appealed from and absolved the Defendant from the
complaint. Hence, an appeal was filed.

ISSUE:

Whether or not the provision of section 121 of the Revised Documentary Stamp Tax
Regulations, to the effect that if the bill of lading fails to state the value of the goods
shipped, it must be held that the tax is due, is illegal.

RULING:

(Did the Secretary of Finance infringe or violate any right of the taxpayer when he
directed that the tax is to be collected in all cases where the bill of lading or receipt does
not state that the shipment is worth P5 or less, or, in the language of the Petitioner-
Appellant, when he (Secretary) created a presumption of liability to the tax if the receipt
fails to state such value?)

It cannot be denied that the regulation is merely a directive to the tax officers; it does not
purport to change or modify the law; it does not create a liability to the stamp tax when
the value of the goods does not appear on the face of the receipt.

The practical usefulness of the directive becomes evident when account is taken of the
fact that tax officers are in no position to witness the issuance of receipts and check the
value of the goods for which they are issued. If tax officers were to assess or collect the
tax only when they find that the value of the goods covered by the receipts is more than
five pesos, the assessment and collection of the tax would be well-nigh impossible, as it
is impossible for tax collectors to determine from the receipts alone, if they do not
contain the value of the goods, whether the goods receipted for exceed P5, or not.

The regulation impliedly required the statement of the value of the goods in the receipts;
so that the collection of the tax can be enforced.

This is what the Petitioner Appellant failed to do and he now claims the unreasonableness
of the provision as a basis for his exemption. We find that the regulation is not only
useful, practical and necessary for the enforcement of the law on the tax on bills of lading
and receipts, but also reasonable in its provisions.

The regulation above quoted falls within the scope of the administrative power of the
Secretary of Finance, as authorized in Section 79 (B) of the Revised Administrative
Code, because it is essential to the strict enforcement and proper execution of the law
which it seeks to implement. Said regulations have the force and effect of law. Another
reason for sustaining the validity of the regulation may be found in the principle of
legislative approval by re-enactment. The regulations were approved on September 16,
1924. When the National Internal Revenue Code was approved on February 18, 1939, the
same provisions on stamp tax, bills of lading and receipts were reenacted. There is a
presumption that the Legislature reenacted the law on the tax with full knowledge of the
contents of the regulations then in force regarding bills of lading and receipts, and that it
approved or confirmed them because they carry out the legislative purpose.