MARCOS II vs.

CIR (Estate Tax)

FACTS:
1. Following Pres. Marcos (PM) death, a special tax audit team investigated his tax
liabilities. They found that the Marcoses violated the NIRC by failing to file a written
notice of Pres. Marcos death, an estate tax return and income tax returns of Spouses
Marcos (SM) and Bongbong (BB).

2. CIR filed the ETR for PMs estate (served on Imelda) and ITR for the SM (served
on Imelda) and BB (served on him). None of the partied protested.

3. The CIT then issued notices of levy for parcels of land owned by the Marcoses, the
auction proceed, and the lots were forfeited in favor of the government (because no
bidder).

4. BB filed the instant petition for certiorari alleging that the levy and sale of the
properties made by the BIR were void because the assessments should have first
been presented as claim before the probate court which could then order for their
payment within the period fixed by the PC for payment of all the debts of the
decedent.

5. BIR maintains that the pendency of probate proceedings over the estate of the
deceased does not preclude the assessment and collection, through summary
remedies, of estate taxes over the same. States authority to collect taxes is
paramount.

Issue: Does the BIR have authority to collect by the summary remedy of levying
upon, and sale of real properties of the decedent, estate tax deficiencies, without the
authority of the probate court?

Ruling: YES. 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 levying and sale of the properties allegedly owned by 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.
On the contrary, under Section 87 of the NIRC, it is the probate or settlement
court which is bidden not to authorize the executor or judicial administrator of the
decedent's estate to deliver any distributive share to any party interested in the
estate, unless it is shown a Certification by the Commissioner of Internal Revenue
that the estate taxes have been paid. This provision disproves the petitioner's
contention that it is the probate court which approves the assessment and collection
of the estate tax.
RP vs. GUZMAN (Donors Tax)

FACTS:
1. Respondent is a natural born American citizen. He acquired lands in the
Philippines by virtue of hereditary succession, of his deceased fathers estate, and
the other was conveyed to him via 2 deeds of quitclaim executed by his only co-
heir, his mother.

2. The RP govt filed a petition of escheat against Respondent with respect to the
conveyed via quitclaim from his mother, Helen. It contends that the quitclaim was
not among the exceptions enumerated in the PH constitution on alien ownership of
lands because the quitclaims constitute a donation.

ISSUE: Did the quitclaims constitute a donation of land to aliens in violation of the
constitutional proscription?

RULING: No donation.

Element of intent to do an act of liberality is absent. A perusal of the two (2)

deeds of quitclaim reveals that Helen intended to convey to her son David certain
parcels of land located in the Philippines, and to re-affirm the quitclaim she
executed in 1981 which likewise declared a waiver and renunciation of her rights
over the parcels of land. The language of the deed of quitclaim is clear that Helen
merely contemplated a waiver of her rights, title and interest over the lands in favor
of David, and not a donation. It appears that foremost in Helens mind was the
preservation of the Bulacan realty within the bloodline of Simeon from where they
originated, over and above the benefit that would accrue to David by reason of her
renunciation.

Acceptance in the form required by law was not complied with. The two (2)
quitclaim deeds set out the conveyance of the parcels of land by Helen in favor of
David but its acceptance by David does not appear in the deeds, nor in the Special
Power of Attorney. Further, the records reveal no other instrument that evidences
such acceptance and notice thereof to the donor in an authentic manner. It is well-
settled that if the notification and notation are not complied with, the donation is
void. Therefore, the provisions of the law not having been complied with, there was
no effective conveyance of the parcels of land by way of donation inter vivos.

*In case Maam asks, the two quitclaim deeds were still held to be without force and
effect (not a valid repudiation) because Helen already accepted the inheritance. The
invalidity however did not ipso fact convert the parcels of land to res nullius and
subject to escheat, instead it should revert to private owner, Helen.
CIR vs. PILIPINAS SHELL (Excise Tax)

FACTS:

1. Respondent is engaged in the business of processing, treating and refining

petroleum for the purpose of producing marketable products and the subsequent
sale thereof. It applied for tax credit with the BIR for the excise taxes it allegedly
paid on sales and deliveries of gas and fuel oils to various international carrier.

2. Since BIR failed to take action, respondent petitioned for review before the
CTA. The CTAs First Division and En Banc ruled that respondent is entitled to the
refund of excise taxes relying on its previous rulings where the it granted
respondents claim for refund on the basis of excise tax exemption for petroleum
products sold to international carriers of foreign registry for their use or
consumption outside the Philippines.

3. SC reversed the CTA decisions and ruled that the Respondent failed to establish a
tax exemption in its favor under Section 135(a) of the NIRC because the provision
only exempts international carriers and not manufacturers. The instant case is the
result of the MR filed by respondent.

4. Respondent asserts that Section 135(a) intended the tax exemption to apply to
petroleum products at the point of production and that the exemption could only
refer to the imposition of the tax on the statutory seller, in this case the respondent,
because when a tax paid by the statutory seller is passed on to the buyer it is no
longer in the nature of a tax but an added cost to the purchase price of the product
sold.

5. The Solicitor General underscored the statutory basis of this SCs previous ruling
that the exemption under Section 135 does not attach to the products citing cases
which held that the excise tax, when passed on to the purchaser, becomes part of the
purchase price.

ISSUE: Should petroleum manufacturers be exempt under Sec. 135 (a) of the NIRC
from payment of excise tax on petroleum products sold to international carriers?

RULING: YES. The SC maintains that Section 135 (a), in fulfillment of international
agreement and practice to exempt aviation fuel from excise tax and other
impositions, prohibits the passing of the excise tax to international carriers who
buys petroleum products from local manufacturers/sellers such as respondent.
However, we agree that there is a need to reexamine the effect of denying the
domestic manufacturers/sellers claim for refund of the excise taxes they already
paid on petroleum products sold to international carriers, and its serious
implications on PH Governments commitment to the goals and objectives of the
Chicago Convention.
With the prospect of declining sales of aviation jet fuel sales to international carriers
on account of major domestic oil companies' unwillingness to shoulder the burden
of excise tax, or of petroleum products being sold to said carriers by local
manufacturers or sellers at still high prices , the practice of "tankering" would not be
discouraged. This scenario does not augur well for the Philippines' growing
economy and the booming tourism industry. Worse, our Government would be
risking retaliatory action under several bilateral agreements with various countries.
Evidently, construction of the tax exemption provision in question should give
primary consideration to its broad implications on our commitment under
international agreements.

CIR vs. PAL

FACTS:
1. PAL was granted under PD 1590 a franchise to operate air transport services
domestically and internationally. Under Section 13 of the franchise PAL, during the
lifetime of its franchise, shall pay the government either basic corporate income tax
or franchise tax based on revenues and/or the rate defined in the provision,
whichever is lower and the taxes thus paid under either scheme shall be in lieu of all
other taxes, duties and other fees.
2. On January 1, 2005, RA 9334 took effect amending Sec. 131 of the 1997 NIRC
where imported products including cigarettes, distilled spirits, fermented liquors
and wines even if destined for tax and duty-free shops, shall be subject to all
applicable taxes, duties, charges, including excise taxes due thereon.
3. After being assessed for excise taxes on importation of cigarettes and alcoholic
drinks for its commissary supplies used in its international flights, PAL filed
separate administrative claims for refund before the BIR for the alleged excise taxes
it erroneously paid on said dates.

ISSUE: Can PAL claim its exemption under its franchise from paying excise taxes
under Sec. 131 of the NIRC?

RULING: Yes. SC ruled that the tax privilege of PAL provided in Sec. 13 of PD 1590
has not been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec. 6 of RA
9334. Thus, based on the Sec. 13, PALs payment of either the basic corporate
income tax or franchise tax, whichever is lower, shall be in lieu of all other taxes,
duties, royalties, registration, license, and other fees and charges, except only real
property tax.
The phrase "in lieu of all other taxes" includes but is not limited to taxes that are
"directly due from or imposable upon the purchaser or the seller, producer,
manufacturer, or importer of said petroleum products but are billed or passed on
the grantee either as part of the price or cost thereof or by mutual agreement or
other arrangement."
In other words, in view of PALs payment of either the basic corporate income tax or
franchise tax, whichever is lower, PAL is exempt from paying: (a) taxes directly due
from or imposable upon it as the purchaser of the subject petroleum products; and
(b) the cost of the taxes billed or passed on to it by the seller, producer,
manufacturer, or importer of the said products either as part of the purchase price
or by mutual agreement or other arrangement.