PABLO LORENZO, as trustee of the estate of Thomas Hanley v.

JUAN POSADAS, JR., Collector of Internal Revenue. G.R. No. L-

43082. June 18, 1937
FACTS:

Thomas Hanley died, leaving a will and considerable amount of real and personal properties. The will
bequeathed Matthew Hanley, Thomas' nephew, the money and the real estate. Also stipulated was that
the property will only be given ten years after Thomas' death.

The CFI appointed PJM Moore as considered trustee to administer the real properties. Moore acted
as trustee until he resigned and Pablo Lorenzo was appointed in his stead.

Juan Posadas, the CIR, assessed inheritance tax against the estate amounting to P2,057.74. Lorenzo
paid the tax after he was ordered by the CFI due to the CIR's motion. Lorenzo claimed that the
inheritance tax should have been assessed after 10 years and asked for a refund.

The CIR denied the protest and reassessed Lorenzo of P1,191.27 which represents interest due on the
tax and which was not included in the original assessment. However, the CFI dismissed this
counterclaim and also denied Lorenzo’s claim for refund against the CIR, thus the case.

ISSUES :Whether the estate was delinquent in paying the inheritance.

Whether the inheritance tax be computed from its value ten years later.
Whether the compensation of the trustees should be part of the estate subject to tax.

RULING:

YES. The delinquency in payment occurred when Moore became trustee. The interest due should be
computed from that date and it is error of Lorenzo to compute it one month later. A surcharge 25 per
centum should be added to the tax and interest due and unpaid within ten days after the date of notice.
The CIR communicated with Moore and a date was fixed. As the tax and interest due were not paid on
that date, the estate became liable for the payment of the surcharge.

NO. The Court held that a transmission by inheritance is taxable at the time of the predecessor's death,
notwithstanding the postponement of the actual possession or enjoyment of the estate by the
beneficiary, and the tax measured by the value of the property transmitted at that time regardless of
its appreciation or depreciation.

NO. A trustee, no doubt, is entitled to receive a fair compensation for his services . But from this it
does not follow that the compensation due him may lawfully be deducted in arriving at the net value
of the estate subject to tax.