G.R. No. 120880 June 5, 1997 FERDINAND R. MARCOS II, petitioner, vs. COURT OF APPEALS, T E COMMISSIONER OF T E !

UREAU OF INTERNAL RE"ENUE #n$ ERMINIA D. DE GU%MAN, respondents. F#&'() Herein petitioner Ferdinand R. Marcos II, the eldest son of the former president Ferdinand Marcos, questions the actuations of the respondent Commissioner of Internal Revenue in assessing, and collecting through the summary remedy of Levy on Real Properties, estate and income ta delinquencies upon the estate and properties of his father, despite the pendency of the proceedings on pro!ate of the "ill of the late president. #he facts as found !y the appellate court are undisputed, and are here!y adopted$ %n &eptem!er '(, )(*(, former President Ferdinand Marcos died in Honolulu, Ha"aii, +&,. %n -une '., )((/, a &pecial #a ,udit #eam "as created to conduct investigations and e aminations of the ta lia!ilities and o!ligations of the late president, as "ell as that of his family, associates and 0cronies0. #he investigation disclosed that the Marcoses failed to file a "ritten notice of the death of the decedent, an estate ta returns, as "ell as several income ta returns covering the years )(*' to )(*1, all in violation of the 2ational Internal Revenue Code 32IRC4. &u!sequently, criminal charges "ere filed against Mrs. Imelda R. Marcos for violations of &ections *', *5 and *6 of the 2ational Internal Revenue Code 32IRC4. %n -uly '1, )((), the 7IR issued 8eficiency estate ta assessment against the estate of the late president Ferdinand Marcos9 deficiency income ta assessment against the &pouses Ferdinand and Imelda Marcos representing deficiency income ta for the years )(*: and )(*19 deficiency income ta assessment against petitioner Ferdinand 07ong!ong0 Marcos II representing his deficiency income ta es for the years )(*' to )(*:. #he Commissioner of Internal Revenue avers that copies of the deficiency estate and income ta assessments "ere all personally and constructively served upon Mrs. Imelda Marcos through her careta;er Mr. Martine< at her last ;no"n address. Li;e"ise, copies of the deficiency ta assessments issued against petitioner Ferdinand 07ong!ong0 Marcos II "ere also personally and constructively served upon him through his careta;er at his last ;no"n address. #hereafter, Formal ,ssessment notices "ere served on %cto!er '/, )((', upon Mrs. Marcos c=o petitioner, at his office, House of Representatives, 7atasan Pam!ansa, >ue<on City. Moreover, a notice to#a payer inviting Mrs. Marcos, to a conference, "as furnished the counsel of Mrs. Marcos, !ut to no avail. #he deficiency ta assessments "ere not protested administratively, !y Mrs. Marcos and the other heirs of the late president, "ithin 5/ days from service of said assessments. #hereafter, 2otices of Levy on real property against certain parcels of land o"ned !y the Marcoses "ere issued to satisfy the alleged estate ta and deficiency income ta es of &pouses Marcos. 2otices of sale at pu!lic auction "ere posted on May '1, )((5, at the lo!!y of the City Hall of #aclo!an City. #he pu!lic auction for the sale of the eleven 3))4 parcels of land too; place on -uly :, )((5. #here !eing no !idder, the lots "ere declared forfeited in favor of the government. %n -une ':, )((5, petitioner Ferdinand 07ong!ong0 Marcos II filed the instant petition for certiorari and prohi!ition under Rule 1: of the Rules of Court, "ith prayer for temporary restraining order and=or "rit of preliminary in?unction. I((ue() ). @hether or not the 7ureau of Internal Revenue has the authority to collect !y the summary remedy of levying upon, and sale of real properties of the decedent, estate ta deficiencies, "ithout the cognition and authority of the court sitting in pro!ate over the supposed "ill of the deceased. '. @hether or not the manner and method in "hich the assessment of ta es is enforced may !e questioned separately, and irrespective of its finality. e*$) ). In the Philippine e perience, the enforcement and collection of estate ta , is e ecutive in character, as the legislature has seen it fit to ascri!e this tas; to the 7ureau of Internal Revenue.

#hus, it "as in Vera vs. Fernandez that the court recogni<ed the li!eral treatment of claims for ta es charged against the estate of the decedent. &uch ta es, "ere e empted from the application of the statute of nonAclaims, and this is ?ustified !y the necessity of government funding, immortali<ed in the ma im that ta es are the life!lood of the government. &uch li!eral treatment of internal revenue ta es in the pro!ate proceedings e tends so far, even to allo"ing the enforcement of ta o!ligations against the heirs of the decedent, even after distri!ution of the estateBs properties. From the foregoing, it is discerni!le that the approval of the court, sitting in pro!ate, or as a settlement tri!unal over the deceased is not a mandatory requirement in the collection of estate ta es. It cannot therefore !e argued that the #a 7ureau erred in proceeding "ith the levying and sale of the properties allegedly o"ned !y the late President, on the ground that it "as required to see; first the pro!ate courtBs sanction. #here is nothing in the #a Code, and in the pertinent remedial la"s that implies the necessity of the pro!ate or estate settlement courtBs approval of the stateBs claim for estate ta es, !efore the same can !e enforced and collected. %n the contrary, under &ection *. of the 2IRC, it is the pro!ate or settlement court "hich is !idden not to authori<e the e ecutor or ?udicial administrator of the decedentBs estate to deliver any distri!utive share to any party interested in the estate, unless it is sho"n a Certification !y the Commissioner of Internal Revenue that the estate ta es have !een paid. #his provision disproves the petitionerBs contention that it is the pro!ate court "hich approves the assessment and collection of the estate ta . '. Petitioner su!mits, ho"ever, that 0"hile the assessment of ta es may have !een validly underta;en !y the Covernment, collection thereof may have !een done in violation of the la". #hus, the manner and method in "hich the latter is enforced may !e questioned separately, and irrespective of the finality of the former, !ecause the Covernment does not have the un!ridled discretion to enforce collection "ithout regard to the clear provision of la".0 Petitioner specifically points out that applying Memorandum Circular 2o. 5*A1*, implementing &ections 5)* and 5'6 of the old ta code 3Repu!lic ,ct :'/54, the 7IRBs 2otices of Levy on the Marcos properties, "ere issued !eyond the allo"ed period, and are therefore null and void. @e hold other"ise. #he 2otices of Levy upon real property "ere issued "ithin the prescriptive period and in accordance "ith the provisions of the present #a Code. #he deficiency ta assessment, having already !ecome final, e ecutory, and demanda!le, the same can no" !e collected through the summary remedy of distraint or levy pursuant to &ection '/: of the 2IRC. #he applica!le provision in regard to the prescriptive period for the assessment and collection of ta deficiency in this instance is ,rticle ''5 of the 2IRC., "hich provides that in the case of a false or fraudulent return "ith intent to evade ta or of a failure to file a return, the ta may !e assessed, or a proceeding in court for the collection of such ta may !e !egun "ithout assessment, at any time "ithin ten 3)/4 years after the discovery of the falsity, fraud, or omission$ Provided, #hat, in a fraud assessment "hich has !ecome final and e ecutory, the fact of fraud shall !e ?udicially ta;en cogni<ance of in the civil or criminal action for the collection thereof 3c4 ,ny internal revenue ta "hich has !een assessed "ithin the period of limitation a!ove prescri!ed, may !e collected !y distraint or levy or !y a proceeding in court "ithin three years follo"ing the assessment of the ta . #he omission to file an estate ta return, and the su!sequent failure to contest or appeal the assessment made !y the 7IR is fatal to the petitionerBs cause, as under the a!oveAcited provision, in case of failure to file a return, the ta may !e assessed at any time "ithin ten years after the omission, and any ta so assessed may !e collected !y levy upon real property "ithin three years follo"ing the assessment of the ta . &ince the estate ta assessment had !ecome final and unappeala!le !y the petitionerBs default as regards protesting the validity of the said assessment, there is no" no reason "hy the 7IR cannot continue "ith the collection of the said ta . ,ny o!?ection against the assessment should have !een pursued follo"ing the avenue paved in &ection ''( of the 2IRC on protests on assessments of internal revenue ta es.