P525.
34 for estate tax
Collector v Fisher
Property Relations Between Spouses
January 28, 1961
Ponente: Barrera, J.
SUMMARY:
(Guys mejo mahaba yung facts and yung issues pero
ang mahalaga lang talaga etong part na to plus yung
first issue)
Walter and Beatrice Stevenson, both British citizens
were married in Manila where they lived until they
established permanent residence in California in 1945.
Walter died in 1951 and instituted his wife as sole
heiress to real and personal properties in the
Philippines, which were assessed for estate and
inheritance tax.
The issue was: WON in determining the taxable net
estate of the decedent, the net estate should be
deducted as the share of the surviving spouse in
accordance with our law on conjugal partnership
The court held that by PROCESSUAL PRESUMPTIONS
apply. Property relations of the Stevensons should be
determined by the rational laws of the husband. Under
Art 1325 OCC, one spouse is a foreigner and there is no
ante-nuptial agreement, it is the national law of the
husband that becomes the dominant law in
determining the property relations of such spouses. But
since both spouses are foreigners, it is British law that
should apply. However, as there is no proof of what the
law of England is in this matter and the court is justified
to indulge in processual presumption, that the law of
England on this matter is the same as our law.
So, taxable net estate should be deducted from net
estate. It is a well-known doctrine in our civil law that
in the absence of any ante-nuptial agreement, the
contracting parties are presumed to have adopted the
system of conjugal partnership as to the properties
acquired during their marriage.
ISSUES:
1. Whether or not in determining the taxable net
estate of the decedent, one-half of the net
estate should be deducted as the share of the
surviving spouse, in accordance with our law on
conjugal partnership
2. Whether or not the estate can avail itself of the
reciprocity provision in Sec 122 of the National
Internal Revenue Code
3. Whether or not the estate is entitled to the
deduction of P4000 allowed by Sec 861, US
Internal Revenue Code, in relation to Sec 122 of
the National Internal Revenue Code
4. Whether or not the real estate properties of the
decedent located in Baguio City and the 210,000
shares of stock in Mindanao Mother Lode Mines,
Inc. were correctly appraised
5. Whether or not the estate is entitled to the
following deductions: P8,604.39 for judicial and
administration expenses; P2,086.52 for funeral
expenses; P652.50 for real estate taxes; and
P10,022.47 representing the amount of
indebtedness allegedly incurred by the decedent
during his lifetime
6. Whether or not the estate is entitled to the
payment of interest on the amount it claims to
have overpaid the government and to be
refundable to it.
P238.06 for Inheritance tax and that,
as a consequence, it had overpaid the
government.
The refund of the amount of
P15,259.83, allegedly overpaid, was
accordingly requested by the estate.
CTA
"In fine, we are of the opinion and so
hold that: (a) the one-half (1/2) share
of the surviving spouse in the
conjugal partnership property as
diminished by the obligations properly
chargeable to such property should be
deducted from the net estate of the
deceased Walter G. Stevenson,
pursuant to Section 89-C of the
National Internal Revenue Code;
(b) the intangible personal property
belonging to the estate of said
Stevenson is exempt from inheritance
tax, pursuant to the proviso of section
122 of the National Internal Revenue
Code in relation to the California
Inheritance Tax Law but decedent's
estate is not entitled to an exemption
of P4,000.00 in the computation of
the estate tax;
(c) for purpose of estate and
inheritance taxation the Baguio real
estate of the spouses should be
valued at P52,200.00, and the 210,000
shares of stock in the Mindanao
Mother Lode Mines Inc. should be
appraised at P0.38 per share; and
(d) the estate shall be entitled to a
deduction of P2,000.00 for funeral
expenses and judicial expenses of
P8,604.39."

FACTS:
1. Walter Stevenson was born in the Philippines of
British parents and married Beatrice, another
British.
2. He then died in California where his family
resides permanently
3. He instituted Beatrice as his sole heiress to his
person properties acquired in the Philippines
4. Ian Statt was appointed the ancillary
administrator of the estate and filed a
preliminary estate and inheritance tax return to
secure the waiver of the Commission of Internal
Revenue on the inheritance tax on the Mines
share of the stock
5. The CIR then assessed all the taxes to be paid
and it was paid (look at page 693, nandun ung
figures)
6. After 6 months, Statt filed an amended estate
and inheritance tax reurn in pursuance of his
reservation of the right granted by Sec 91,
National Internal Revenue of Code or the
Reciprocity Provision and wanted to get a
refund of what he initially paid.
a. The Mindanao Mother Lode Mines Inc
was from P.38 to P.20 per share based
on the market quotation at the San
Francisco Stock Exchange
7. Meanwhile, Beatrice assigned all her rights and
interests in the estate to the spouses Fisher (the
respondents)
8. A second amended return was filed
a. Deduction of P4,000 from the gross
estate as provided for by Sec 861(4), US
Federal Internal Revenue Code
pursuant to the reciprocity provisio of
NIRC (Sec 122)
b. Exemption from the imposition of
inheritance and estate tax on Mine’s
shares
9. CIR denied the claim.
10. An action was commenced in the Court of First
Instance of Manila, and forwarded to the Court
of Tax Appeals.
11. Both the parties appealed from the decision of
the Court of Tax Appeals, hence this petition.
HOLDING:
1. Art 1325 of the Old Civil Code applies and not Art 124
of the New Civil Code because they were married
before the effectivity of the New Civil Code. Art 1325 of
the old Civil Code is limited only to marriages
contracted in a foreign land, and that it is only a mixed
marriage between a Filipino citizen and a foreigner.
However, in the present case, both spouses are
foreigners who married in the Philippines.
The law determinative of the property relation of
Stevenson, married in 1909, would be the English law
even if the marriage was celebrated here in the
Philippines, both of them being foreigners.
The court held that by PROCESSUAL PRESUMPTIONS
apply. Property relations of the Stevensons should be
determined by the national laws of the husband. Under
Art 1325 OCC, one spouse is a foreigner and there is no
ante-nuptial agreement, it is the national law of the
husband that becomes the dominant law in
determining the property relations of such spouses. But
since both spouses are foreigners, it is British law that
should apply. However, as there is no proof of what the
law of England is in this matter and the court is justified
to indulge in processual presumption, that the law of
England on this matter is the same as our law
Art 16 of the New Civil Code or Article 10 in the Old
Civil Code cannot apply because they do not govern the
question of property relations between spouses.
So, taxable net estate should be deducted from net
estate. It is a well-known doctrine in our civil law that
Other Details
Art 1325, Old Civil Code
Should the marriage be contracted in a
foreign country, between a Spaniard and a
foreign woman or between a foreigner
and a Spanish woman, and the contracting
parties should not make any statement or
stipulation with respect to their property, it
shall be understood, when the husband is a
Spaniard, that he marries under the system
of the legal conjugal partnership, and
when the wife is a Spaniard, that she
marries under the system of law in force in
the husband's country, all without
prejudice to the provisions of this code
with respect to real property.
Sec 122, National Internal Revenue Code
And, provided, further, That no tax shall be
collected under this Title in respect of
intangible personal property (a) if the
decedent at the time of his death was a
resident of a foreign country which at the
time of his death did not impose a transfer
tax or death tax of any character in respect
of intangible personal property of citizens
of the Philippines not residing in that
foreign country or (b) if the laws of the
foreign country of which the decedent was
a resident at the time of his death allow a
similar exemption from transfer taxes or
death taxes of every character in respect of
intangible personal property owned by
citizens of the Philippines not residing in
that foreign country."
Sec 89, National Internal Revenue Code
(d) Miscellaneous provisions.—(1)No
deductions shall be allowed in the case of a
non-resident not a citizen of the
Philippines unless the executor,
administrator or anyone of the heirs, as the
case may be, includes in the return
required to be filed under section 93 the
value at the time of his death of that part
of the gross estate of the non-resident not
situated in the Philippines.
in the absence of any ante-nuptial agreement, the
contracting parties are presumed to have adopted the
system of conjugal partnership as to the properties
acquired during their marriage.
2. Reciprocity must be total: There is no partial
reciprocity.
In the Philippines, estate and inheritance is taxed.
In California, there’s only estate tax, no reciprocity cause.
Therefore, the Filipino is always at a disadvantage, and
this is not the intent of the legislators.
Therefore, the recirpcoity provisio of Sec 122, NIRC
would not apply
3. No, because reciprocity is not authorized by Federal
Law.
4. Appraisal of the two lands in Baguio City – according
to Sec 91 of the NIRC properties are required to be
appraised at their fair market value and the assessed
value thereof shall be considered as the fair market
value only when evidence to the contrary has not been
shown. After a careful review of the record, we are
satisfied that such evidence exists to justify the valuation
made by the petitioner.
Appraisal for the Mindanao Mother Lode Mines, Inc. -
The situs of the shares of stock, for purposes of taxation,
being located here in the Philippines, as respondents
themselves concede, and considering that they are
sought to be taxed in this jurisdiction, consistent with
the exercise of our government's taxing authority, their
fair market value should be fixed on the basis of the
price prevailing in our country.
However, the court finds merit in respondents' other
contention that the said shares of stock commanded a
lesser value at the Manila Stock Exchange six months
after the death of Stevenson.
5. An evident oversight has involuntarily been made in
omitting the P2,000.00 for funeral expenses in the final
computation. This amount has been expressly allowed
by the lower court and there is no reason why it should
not be. (p. 707)
Respondents claim that pursuant to section 89 (b) (1) in
relation to section 89 (a) (1) (E) and section 89 (d),
National Internal Revenue Code, the amount of
P10,022.47 should have been allowed the estate as a
deduction, because it represented an indebtedness of
the decedent incurred during his lifetime.
Court does not uphold this for two reasons:
Firstly, the approval of the Philippine probate court of
this particular indebtedness of the decedent is necessary.
Second, is from provisions of Section 89, letter (d),
number (1), of the National Internal Revenue, requiring
a statement of the gross estate of the non-resident
Stevenson not situated in the Philippines. And in the
present case, no such statement was made.
6. Respondents' claim for interest on the amount
allegedly overpaid, if any actually results after a
recomputation on the basis of this decision, is hereby
denied in line with our recent decision in Collector of
Internal Revenue vs. St. Paul's Hospital (G. R. No.
L-12127, May 29, 1959) wherein we held that "in the
absence of a statutory provision clearly or expressly
directing or authorizing such payment, and none has
been cited by respondents, the National Government
cannot be required to pay interest."
RULING:
Decision of tax court affirmed with modifications. The
Supreme court declares that:
1. Only the one-half (½) share of the decedent
Stevenson in the conjugal partnership property
constitutes his
 hereditary estate subject to the estate and inheritance
taxes

2. The intangible personal property is not exempt from

inheritance tax, there existing no complete total
reciprocity as required in section 122 of the National
Internal Revenue Code, nor is the decedent's estate
entitled to an exemption of P4,000.00 in the
computation of the estate tax

3. For the purposes of estate and inheritance taxes, the

210,000 shares of stock in the Mindanao Mother Lode
Mines, Inc. are to be appraised at P0.325 per share;

4. The P2,000.00 for funeral expenses should be

deducted in the determination of the net estate of the
deceased Stevenson.

5. Claim for interest is denied.

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