Marcos v. CA

G.R. No. 120880, June 5, 1997

FACTS: Former President Ferdinand Marcos died in Honolulu, Hawaii, USA. A Special Tax Audit Team was created to conduct investigations and examinations of the tax liabilities and obligations of the late president, as well as that of his family, associates and "cronies". The investigation disclosed that the Marcoses failed to file a written notice of the death of the decedent, an estate tax returns, as well as several income tax returns covering the years 1982 to 1986, - all in violation of the NIRC.

The Commissioner of Internal Revenue thereby caused the preparation and filing of the Estate Tax Return for the estate of the late president, the Income Tax Returns of the Spouses Marcos for the years 1985 to 1986, and the Income Tax Returns of petitioner Bongbong Marcos for the years 1982 to 1985. Then, the BIR issued 3 tax assessments representing his deficiency income taxes for the years 1982 to 1985.

The Commissioner of Internal Revenue avers that copies of the deficiency estate and income tax assessments were all personally and constructively served within the period provided by law upon Mrs. Imelda Marcos through her caretaker Mr. Martinez at her last known address and to petitioner Bongbong Marcos him through his caretaker on the allowed period at his last known address. The deficiency tax assessments were not protested administratively within 30 days from service of said assessments.

 The BIR Commissioner issued a total of 30  notices of levy on real property against certain parcels of land owned by the Marcoses - to satisfy the alleged estate tax and deficiency income taxes of Spouses Marcos. The foregoing tax remedies were resorted to pursuant to Sections 205 and 213 of the National Internal Revenue Code (NIRC).

Notices of sale at public auction for the sale of the eleven (11) parcels of land took place on July 5, 1993. There being no bidder, the lots were declared forfeited in favor of the government.

Then, petitioner filed with the respondent Court of Appeals a Petition for Certiorari and Prohibition with an application for writ of preliminary injunction and/or temporary restraining order

The Court of Appeals ruled that the deficiency assessments for estate and income tax made upon the petitioner and the estate of the deceased President Marcos have already become final and unappealable, and may thus be enforced by the summary remedy of levying upon the properties of the late President, as was done by the respondent Commissioner of Internal Revenue.

Unperturbed, petitioner the instant petition for certiorari and prohibition under Rule 65 of the Rules of Court, with prayer for temporary restraining order and/or writ of preliminary injunction.

ISSUES/RULING:

1. Whether the approval of the court, sitting in probate, or as a settlement tribunal over the deceased is a mandatory requirement in the collection of estate taxes. 

No. The assessment of an inheritance tax does not directly involve the administration of a decedent's estate, although it may be viewed as an incident to the complete settlement of an estate, and, under some statutes, it is made the duty of the probate court to make the amount of the inheritance tax a part of the final decree of distribution of the estate. It is not against the property of decedent, nor is it a claim against the estate as such, but it is against the interest or property right which the heir, legatee, devisee, etc., has in the property formerly held by decedent.

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.

2. Whether the assessment of the estate tax and their issuance of the Notices of Levy and Sale are premature, confiscatory and oppressive.

No. The deficiency tax assessment, having already become final, executory, and demandable, the same can now be collected through the summary remedy of distraint or levy pursuant to Section 205 of the NIRC. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is now no reason why the BIR cannot continue with the collection of the said tax. Any objection against the assessment should have been pursued following the avenue paved in Section 229 of the NIRC on protests on assessments of internal revenue taxes.

3. Numerous pending court cases questioning the late President's ownership or interests in several properties renders the estate tax incapable of exact pecuniary determination.

No. The mere fact that the decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax assessments over the properties indubitably included in his estate.

4. Whether the Notices of Levy on Real Property were issued beyond the period provided in the Revenue Memorandum Circular No. 38-68.

No. In the case of notices of levy issued to satisfy the delinquent estate tax, the delinquent taxpayer is the Estate of the decedent, and not necessarily, and exclusively, the petitioner as heir of the deceased. In the same vein, in the matter of income tax delinquency of the late president and his spouse, petitioner is not the taxpayer liable. Thus, it follows that service of notices of levy in satisfaction of these tax delinquencies upon the petitioner is not required by law, as under Section 213 of the NIRC, which pertinently states that written notice of the levy shall be mailed to or served upon the Register of Deeds of the province or city where the property is located and upon the delinquent taxpayer, or if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none, to the occupant of the property in question.

5. Whether there is impropriety on the assessments made because the BIR's total assessment deviates from the findings of the Department of Justice's Panel of Prosecutors.

It is not the Department of Justice which is the government agency tasked to determine the amount of taxes due upon the subject estate, but the Bureau of Internal Revenue, whose determinations and assessments are presumed correct and made in good faith. The taxpayer has the duty of proving otherwise. In the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed.