LORENZO vs. POSADAS JR.

G.R. No. L-43082

June 18, 1937

FACTS: On May 27, 1922, Thomas Hanley died, leaving a will and a considerable
amount of real and personal properties. He directed that all his money left will be given
to his nephew Matthew Hanley and his properties were to pass to the latter after ten
years.
On June 14, 1922, the proceedings for the probate of his will and the settlement
and distribution of his estate begun in the Court of First Instance of Zamboanga. The
CFI appointed a trustee to administer the real properties until the lapse of ten years
where ownership will transfer to his nephew. The two executors named in the will was
appointed trustee. Moore acted as trustee until he resigned, and the plaintiff Lorenzo
herein was appointed in his stead.
During the incumbency of the plaintiff as trustee, the defendant Collector of
Internal Revenue (Posadas) assessed against the estate an inheritance tax, together
with the penalties for delinquency in payment amounting P2,052.74. Lorenzo paid said
amount under protest, notifying Posadas that unless the amount was promptly refunded
suit would be brought for its recovery. Posadas overruled Lorenzo’s protest and refused
to refund the said amount. Plaintiff went to court. The CFI dismissed Lorenzo’s
complaint and Posadas’ counterclaim. Both parties appealed to this court.

ISSUES: Whether there been delinquency in the payment of the inheritance tax?

RULING: Yes. The defendant contends that delivery to the trustee was delivery to the
cestui que trust, the beneficiary in this case, within the meaning of the first paragraph of
subsection (b) of section 1544 of the Revised Administrative Code. P. J. M. Moore
became trustee on March 10, 1924. On that date the trust estate vested in him (sec.
582 in relation to sec. 590, Code of Civil Procedure). The corresponding inheritance tax
should have been paid on or before March 10, 1924, to escape the penalties of the law.