MAGNO, VILMA A.

TAXATION 1 / SECTION A LORENZO vs. POSADAS, 64 PHIL 353 FACTS: Thomas Hanley died on May 27, 1922 and leaving a considerable amount of real and personal properties. The court appointed P. J. M. Moore as trustee on Mach 10, 1924. Until February 29, 1932 Moore resigned before the execution of condition that the testator stated in his will: the transmission of the inheritance to Matthew Hanley, nephew of the deceased, after 10 years upon the testators death. Moore succeeded by Lorenzo. During Lorenzo incumbency, Collector of Internal Revenue herein, defendant collecting inheritance tax to the estate plus interest and surcharges for non-payment thereof. With 12% per annum and 25% correspondingly as interest rate. March 15, 1932 the defendant filed a Motion in the testamentary proceedings praying for the collection of the said amount (Php 2,052.74) and it was granted. And it was paid by the trustee, plaintiff under protest and subsequently filing a refunded suit before the Court of First Instance of Zamboanga. But the latter, dismissed both complaint of the plaintiff and defendant. Hence, this APPEAL. ISSUE/S WHETHER OR NOT INHERITANCE TAX ACCRUED UPON THE DEATH OF THE TESTATOR. WHETHER OR NOT BENEFIT RECEIVED-PRINCIPLE IN TAXATION EXIST IN THE INSTANT CASE. RULING: The right of the state to an inheritance tax accrues at the moment of death of the decedent. A transmission by inheritance is taxable at the time of the predecessors death, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary. (Section 1536 as amended, of the Administrative Code)

THEORY AND BASIS OF TAXATION Benefit-Received Principle The obligation to pay taxes rest not upon the privileges enjoyed by, or the protection afforded to, a citizen by the government but upon the necessity of money for the support of the state. As it was held by the Supreme Court, no estate to be transferred to the beneficiary upon the completion of the period provided by the testator if no protection comes from the state. Hence, payment of corresponding inheritance tax is necessary to support the state.