PABLO LORENZO, as trustee of the estate of Thomas It appears that on May 27, 1922, one Thomas Hanley died

Hanley, deceased, plaintiff-appellant, in Zamboanga, Zamboanga, leaving a will (Exhibit 5) and

vs. considerable amount of real and personal properties. On
JUAN POSADAS, JR., Collector of Internal june 14, 1922, proceedings for the probate of his will and
Revenue, defendant-appellant. the settlement and distribution of his estate were begun in
the Court of First Instance of Zamboanga. The will was
Pablo Lorenzo and Delfin Joven for plaintiff-appellant. admitted to probate. Said will provides, among other
Office of the Solicitor-General Hilado for defendant- things, as follows:
appellant.
4. I direct that any money left by me be given to my
LAUREL, J.: nephew Matthew Hanley.

On October 4, 1932, the plaintiff Pablo Lorenzo, in his 5. I direct that all real estate owned by me at the
capacity as trustee of the estate of Thomas Hanley, time of my death be not sold or otherwise disposed
deceased, brought this action in the Court of First of for a period of ten (10) years after my death,
Instance of Zamboanga against the defendant, Juan and that the same be handled and managed by the
Posadas, Jr., then the Collector of Internal Revenue, for executors, and proceeds thereof to be given to my
the refund of the amount of P2,052.74, paid by the nephew, Matthew Hanley, at Castlemore,
plaintiff as inheritance tax on the estate of the deceased, Ballaghaderine, County of Rosecommon, Ireland, and
and for the collection of interst thereon at the rate of 6 that he be directed that the same be used only for
per cent per annum, computed from September 15, 1932, the education of my brother's children and their
the date when the aforesaid tax was [paid under protest. descendants.
The defendant set up a counterclaim for P1,191.27 alleged
to be interest due on the tax in question and which was not 6. I direct that ten (10) years after my death my
included in the original assessment. From the decision of property be given to the above mentioned Matthew
the Court of First Instance of Zamboanga dismissing both Hanley to be disposed of in the way he thinks most
the plaintiff's complaint and the defendant's counterclaim, advantageous.
both parties appealed to this court.
xxx xxx xxx
 8. I state at this time I have one brother living, granted. On September 15, 1932, the plaintiff paid said
named Malachi Hanley, and that my nephew, amount under protest, notifying the defendant at the same
Matthew Hanley, is a son of my said brother, time that unless the amount was promptly refunded suit
Malachi Hanley. would be brought for its recovery. The defendant
overruled the plaintiff's protest and refused to refund the
The Court of First Instance of Zamboanga considered it said amount hausted, plaintiff went to court with the
proper for the best interests of ther estate to appoint a result herein above indicated.
trustee to administer the real properties which, under the
will, were to pass to Matthew Hanley ten years after the In his appeal, plaintiff contends that the lower court
two executors named in the will, was, on March 8, 1924, erred:
appointed trustee. Moore took his oath of office and gave
bond on March 10, 1924. He acted as trustee until I. In holding that the real property of Thomas
February 29, 1932, when he resigned and the plaintiff Hanley, deceased, passed to his instituted heir,
herein was appointed in his stead. Matthew Hanley, from the moment of the death of
the former, and that from the time, the latter
During the incumbency of the plaintiff as trustee, the became the owner thereof.
defendant Collector of Internal Revenue, alleging that the
estate left by the deceased at the time of his death II. In holding, in effect, that there was deliquency
consisted of realty valued at P27,920 and personalty valued in the payment of inheritance tax due on the estate
at P1,465, and allowing a deduction of P480.81, assessed of said deceased.
against the estate an inheritance tax in the amount of
P1,434.24 which, together with the penalties for deliquency III. In holding that the inheritance tax in question
in payment consisting of a 1 per cent monthly interest from be based upon the value of the estate upon the
July 1, 1931 to the date of payment and a surcharge of 25 death of the testator, and not, as it should have
per cent on the tax, amounted to P2,052.74. On March 15, been held, upon the value thereof at the expiration
1932, the defendant filed a motion in the testamentary of the period of ten years after which, according to
proceedings pending before the Court of First Instance of the testator's will, the property could be and was to
Zamboanga (Special proceedings No. 302) praying that the be delivered to the instituted heir.
trustee, plaintiff herein, be ordered to pay to the
Government the said sum of P2,052.74. The motion was
 IV. In not allowing as lawful deductions, in the Has there been deliquency in the payment of the
determination of the net amount of the estate inheritance tax? If so, should the additional interest
subject to said tax, the amounts allowed by the claimed by the defendant in his appeal be paid by the
court as compensation to the "trustees" and paid to estate? Other points of incidental importance, raised by
them from the decedent's estate. the parties in their briefs, will be touched upon in the
course of this opinion.
V. In not rendering judgment in favor of the
plaintiff and in denying his motion for new trial. (a) The accrual of the inheritance tax is distinct from the
obligation to pay the same. Section 1536 as amended, of
The defendant-appellant contradicts the theories of the the Administrative Code, imposes the tax upon "every
plaintiff and assigns the following error besides: transmission by virtue of inheritance, devise, bequest,
giftmortis causa, or advance in anticipation of
The lower court erred in not ordering the plaintiff inheritance,devise, or bequest." The tax therefore is upon
to pay to the defendant the sum of P1,191.27, transmission or the transfer or devolution of property of a
representing part of the interest at the rate of 1 decedent, made effective by his death. (61 C. J., p. 1592.)
per cent per month from April 10, 1924, to June 30, It is in reality an excise or privilege tax imposed on the
1931, which the plaintiff had failed to pay on the right to succeed to, receive, or take property by or under a
inheritance tax assessed by the defendant against will or the intestacy law, or deed, grant, or gift to become
the estate of Thomas Hanley. operative at or after death. Acording to article 657 of the
Civil Code, "the rights to the succession of a person are
The following are the principal questions to be decided by transmitted from the moment of his death." "In other
this court in this appeal: (a) When does the inheritance tax words", said Arellano, C. J., ". . . the heirs succeed
accrue and when must it be satisfied? (b) Should the immediately to all of the property of the deceased
inheritance tax be computed on the basis of the value of ancestor. The property belongs to the heirs at the moment
the estate at the time of the testator's death, or on its of the death of the ancestor as completely as if the
value ten years later? (c) In determining the net value of ancestor had executed and delivered to them a deed for
the estate subject to tax, is it proper to deduct the the same before his death." (Bondad vs. Bondad, 34 Phil.,
compensation due to trustees? (d) What law governs the 232. See also, Mijares vs. Nery, 3 Phil., 195; Suilong & Co.,
case at bar? Should the provisions of Act No. 3606 vs. Chio-Taysan, 12 Phil., 13; Lubrico vs. Arbado, 12 Phil.,
favorable to the tax-payer be given retroactive effect? (e) 391; Innocencio vs. Gat-Pandan, 14 Phil., 491; Aliasas
vs.Alcantara, 16 Phil., 489; Ilustre vs. Alaras Frondosa, 17 herencia o del legado, transcurra mucho o poco tiempo,
Phil., 321; Malahacan vs. Ignacio, 19 Phil., 434; Bowa vs. pues la adquisicion ha de retrotraerse al momento de la
Briones, 38 Phil., 27; Osario vs. Osario & Yuchausti muerte, y asi lo ordena el articulo 989, que debe
Steamship Co., 41 Phil., 531; Fule vs. Fule, 46 Phil., 317; Dais considerarse como complemento del presente." (5 Manresa,
vs. Court of First Instance of Capiz, 51 Phil., 396; Baun vs. 305; see also, art. 440, par. 1, Civil Code.) Thomas Hanley
Heirs of Baun, 53 Phil., 654.) Plaintiff, however, asserts having died on May 27, 1922, the inheritance tax accrued
that while article 657 of the Civil Code is applicable to as of the date.
testate as well as intestate succession, it operates only in
so far as forced heirs are concerned. But the language of From the fact, however, that Thomas Hanley died on May
article 657 of the Civil Code is broad and makes no 27, 1922, it does not follow that the obligation to pay the
distinction between different classes of heirs. That article tax arose as of the date. The time for the payment on
does not speak of forced heirs; it does not even use the inheritance tax is clearly fixed by section 1544 of the
word "heir". It speaks of the rights of succession and the Revised Administrative Code as amended by Act No. 3031,
transmission thereof from the moment of death. The in relation to section 1543 of the same Code. The two
provision of section 625 of the Code of Civil Procedure sections follow:
regarding the authentication and probate of a will as a
necessary condition to effect transmission of property SEC. 1543. Exemption of certain acquisitions and
does not affect the general rule laid down in article 657 of transmissions. — The following shall not be taxed:
the Civil Code. The authentication of a will implies its due
execution but once probated and allowed the transmission (a) The merger of the usufruct in the owner
is effective as of the death of the testator in accordance of the naked title.
with article 657 of the Civil Code. Whatever may be the
time when actual transmission of the inheritance takes (b) The transmission or delivery of the
place, succession takes place in any event at the moment of inheritance or legacy by the fiduciary heir or
the decedent's death. The time when the heirs legally legatee to the trustees.
succeed to the inheritance may differ from the time when
(c) The transmission from the first heir,
the heirs actually receive such inheritance. "Poco importa",
legatee, or donee in favor of another
says Manresa commenting on article 657 of the Civil Code,
beneficiary, in accordance with the desire of
"que desde el falleimiento del causante, hasta que el
the predecessor.
heredero o legatario entre en posesion de los bienes de la
In the last two cases, if the scale of taxation A certified of all letters testamentary or of
appropriate to the new beneficiary is greater than admisitration shall be furnished the Collector of
that paid by the first, the former must pay the Internal Revenue by the Clerk of Court within thirty
difference. days after their issuance.

SEC. 1544. When tax to be paid. — The tax fixed in It should be observed in passing that the word "trustee",
this article shall be paid: appearing in subsection (b) of section 1543, should read
"fideicommissary" or "cestui que trust". There was an
(a) In the second and third cases of the next obvious mistake in translation from the Spanish to the
preceding section, before entrance into English version.
possession of the property.
The instant case does fall under subsection (a), but under
(b) In other cases, within the six months subsection (b), of section 1544 above-quoted, as there is
subsequent to the death of the predecessor; here no fiduciary heirs, first heirs, legatee or donee.
but if judicial testamentary or intestate Under the subsection, the tax should have been paid
proceedings shall be instituted prior to the before the delivery of the properties in question to P. J. M.
expiration of said period, the payment shall Moore as trustee on March 10, 1924.
be made by the executor or administrator
before delivering to each beneficiary his (b) The plaintiff contends that the estate of Thomas
share. Hanley, in so far as the real properties are concerned, did
not and could not legally pass to the instituted heir,
If the tax is not paid within the time hereinbefore Matthew Hanley, until after the expiration of ten years
prescribed, interest at the rate of twelve per from the death of the testator on May 27, 1922 and, that
centum per annum shall be added as part of the tax; the inheritance tax should be based on the value of the
and to the tax and interest due and unpaid within estate in 1932, or ten years after the testator's death.
ten days after the date of notice and demand The plaintiff introduced evidence tending to show that in
thereof by the collector, there shall be further 1932 the real properties in question had a reasonable value
added a surcharge of twenty-five per centum. of only P5,787. This amount added to the value of the
personal property left by the deceased, which the plaintiff
admits is P1,465, would generate an inheritance tax which,
excluding deductions, interest and surcharge, would amount system, we find upon examination of cases and authorities
only to about P169.52. that New York has varied and now requires the immediate
appraisal of the postponed estate at its clear market value
If death is the generating source from which the power of and the payment forthwith of the tax on its out of
the estate to impose inheritance taxes takes its being and the corpus of the estate transferred. (In re Vanderbilt,
if, upon the death of the decedent, succession takes place 172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App.
and the right of the estate to tax vests instantly, the tax Div., 458; 83 N. Y. Supp., 769; Estate of Tracy, 179 N. Y.,
should be measured by the vlaue of the estate as it stood 501; 72 N. Y., 519; Estate of Brez, 172 N. Y., 609; 64 N. E.,
at the time of the decedent's death, regardless of any 958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp.,
subsequent contingency value of any subsequent increase or 1079. Vide also, Saltoun vs. Lord Advocate, 1 Peter. Sc.
decrease in value. (61 C. J., pp. 1692, 1693; 26 R. C. L., p. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas., 888.)
232; Blakemore and Bancroft, Inheritance Taxes, p. California adheres to this new rule (Stats. 1905, sec. 5, p.
137. See also Knowlton vs. Moore, 178 U.S., 41; 20 Sup. Ct. 343).
Rep., 747; 44 Law. ed., 969.) "The right of the state to an
inheritance tax accrues at the moment of death, and hence But whatever may be the rule in other jurisdictions, we
is ordinarily measured as to any beneficiary by the value at hold that a transmission by inheritance is taxable at the
that time of such property as passes to him. Subsequent time of the predecessor's death, notwithstanding the
appreciation or depriciation is immaterial." (Ross, postponement of the actual possession or enjoyment of the
Inheritance Taxation, p. 72.) estate by the beneficiary, and the tax measured by the
value of the property transmitted at that time regardless
Our attention is directed to the statement of the rule in of its appreciation or depreciation.
Cyclopedia of Law of and Procedure (vol. 37, pp. 1574,
1575) that, in the case of contingent remainders, taxation (c) Certain items are required by law to be deducted from
is postponed until the estate vests in possession or the the appraised gross in arriving at the net value of the
contingency is settled. This rule was formerly followed in estate on which the inheritance tax is to be computed (sec.
New York and has been adopted in Illinois, Minnesota, 1539, Revised Administrative Code). In the case at bar, the
Massachusetts, Ohio, Pennsylvania and Wisconsin. This defendant and the trial court allowed a deduction of only
rule, horever, is by no means entirely satisfactory either to P480.81. This sum represents the expenses and
the estate or to those interested in the property (26 R. C. disbursements of the executors until March 10, 1924,
L., p. 231.). Realizing, perhaps, the defects of its anterior among which were their fees and the proven debts of the
deceased. The plaintiff contends that the compensation compensation of a trustee, earned, not in the
and fees of the trustees, which aggregate P1,187.28 administration of the estate, but in the management
(Exhibits C, AA, EE, PP, HH, JJ, LL, NN, OO), should also thereof for the benefit of the legatees or devises, does
be deducted under section 1539 of the Revised not come properly within the class or reason for exempting
Administrative Code which provides, in part, as follows: "In administration expenses. . . . Service rendered in that
order to determine the net sum which must bear the tax, behalf have no reference to closing the estate for the
when an inheritance is concerned, there shall be deducted, purpose of a distribution thereof to those entitled to it,
in case of a resident, . . . the judicial expenses of the and are not required or essential to the perfection of the
testamentary or intestate proceedings, . . . ." rights of the heirs or legatees. . . . Trusts . . . of the
character of that here before the court, are created for
A trustee, no doubt, is entitled to receive a fair the the benefit of those to whom the property ultimately
compensation for his services (Barney vs. Saunders, 16 passes, are of voluntary creation, and intended for the
How., 535; 14 Law. ed., 1047). But from this it does not preservation of the estate. No sound reason is given to
follow that the compensation due him may lawfully be support the contention that such expenses should be taken
deducted in arriving at the net value of the estate subject into consideration in fixing the value of the estate for the
to tax. There is no statute in the Philippines which requires purpose of this tax."
trustees' commissions to be deducted in determining the
net value of the estate subject to inheritance tax (61 C. J., (d) The defendant levied and assessed the inheritance tax
p. 1705). Furthermore, though a testamentary trust has due from the estate of Thomas Hanley under the
been created, it does not appear that the testator provisions of section 1544 of the Revised Administrative
intended that the duties of his executors and trustees Code, as amended by section 3 of Act No. 3606. But Act
should be separated. (Ibid.; In re Vanneck's Estate, 161 N. No. 3606 went into effect on January 1, 1930. It,
Y. Supp., 893; 175 App. Div., 363; In re Collard's Estate, therefore, was not the law in force when the testator died
161 N. Y. Supp., 455.) On the contrary, in paragraph 5 of on May 27, 1922. The law at the time was section 1544
his will, the testator expressed the desire that his real above-mentioned, as amended by Act No. 3031, which took
estate be handled and managed by his executors until the effect on March 9, 1922.
expiration of the period of ten years therein provided.
Judicial expenses are expenses of administration (61 C. J., It is well-settled that inheritance taxation is governed by
p. 1705) but, in State vs. Hennepin County Probate Court the statute in force at the time of the death of the
(112 N. W., 878; 101 Minn., 485), it was said: ". . . The decedent (26 R. C. L., p. 206; 4 Cooley on Taxation, 4th ed.,
p. 3461). The taxpayer can not foresee and ought not to be why he applied Act No. 3606 instead of Act No. 3031.
required to guess the outcome of pending measures. Of Indeed, under Act No. 3606, (1) the surcharge of 25 per
course, a tax statute may be made retroactive in its cent is based on the tax only, instead of on both the tax
operation. Liability for taxes under retroactive legislation and the interest, as provided for in Act No. 3031, and (2)
has been "one of the incidents of social life." (Seattle vs. the taxpayer is allowed twenty days from notice and
Kelleher, 195 U. S., 360; 49 Law. ed., 232 Sup. Ct. Rep., 44.) demand by rthe Collector of Internal Revenue within which
But legislative intent that a tax statute should operate to pay the tax, instead of ten days only as required by the
retroactively should be perfectly clear. (Scwab vs. Doyle, old law.
42 Sup. Ct. Rep., 491; Smietanka vs. First Trust & Savings
Bank, 257 U. S., 602; Stockdale vs. Insurance Co., 20 Wall., Properly speaking, a statute is penal when it imposes
323; Lunch vs. Turrish, 247 U. S., 221.) "A statute should punishment for an offense committed against the state
be considered as prospective in its operation, whether it which, under the Constitution, the Executive has the power
enacts, amends, or repeals an inheritance tax, unless the to pardon. In common use, however, this sense has been
language of the statute clearly demands or expresses that enlarged to include within the term "penal statutes" all
it shall have a retroactive effect, . . . ." (61 C. J., P. 1602.) status which command or prohibit certain acts, and
Though the last paragraph of section 5 of Regulations No. establish penalties for their violation, and even those
65 of the Department of Finance makes section 3 of Act which, without expressly prohibiting certain acts, impose a
No. 3606, amending section 1544 of the Revised penalty upon their commission (59 C. J., p. 1110). Revenue
Administrative Code, applicable to all estates the laws, generally, which impose taxes collected by the means
inheritance taxes due from which have not been paid, Act ordinarily resorted to for the collection of taxes are not
No. 3606 itself contains no provisions indicating legislative classed as penal laws, although there are authorities to the
intent to give it retroactive effect. No such effect can contrary. (See Sutherland, Statutory Construction, 361;
begiven the statute by this court. Twine Co. vs. Worthington, 141 U. S., 468; 12 Sup. Ct., 55;
Rice vs. U. S., 4 C. C. A., 104; 53 Fed., 910; Com. vs.
The defendant Collector of Internal Revenue maintains, Standard Oil Co., 101 Pa. St., 150; State vs. Wheeler, 44 P.,
however, that certain provisions of Act No. 3606 are more 430; 25 Nev. 143.) Article 22 of the Revised Penal Code is
favorable to the taxpayer than those of Act No. 3031, that not applicable to the case at bar, and in the absence of
said provisions are penal in nature and, therefore, should clear legislative intent, we cannot give Act No. 3606 a
operate retroactively in conformity with the provisions of retroactive effect.
article 22 of the Revised Penal Code. This is the reason
(e) The plaintiff correctly states that the liability to pay a equitable estate, and with sufficient certainty designate
tax may arise at a certain time and the tax may be paid the beneficiaries, their interest in the ttrust, the purpose
within another given time. As stated by this court, "the or object of the trust, and the property or subject matter
mere failure to pay one's tax does not render one delinqent thereof. Stated otherwise, to constitute a valid
until and unless the entire period has eplased within which testamentary trust there must be a concurrence of three
the taxpayer is authorized by law to make such payment circumstances: (1) Sufficient words to raise a trust; (2) a
without being subjected to the payment of penalties for definite subject; (3) a certain or ascertain object; statutes
fasilure to pay his taxes within the prescribed period." (U. in some jurisdictions expressly or in effect so providing."
S. vs. Labadan, 26 Phil., 239.) (69 C. J., pp. 705,706.) There is no doubt that the testator
intended to create a trust. He ordered in his will that
The defendant maintains that it was the duty of the certain of his properties be kept together undisposed
executor to pay the inheritance tax before the delivery of during a fixed period, for a stated purpose. The probate
the decedent's property to the trustee. Stated otherwise, court certainly exercised sound judgment in appointment a
the defendant contends that delivery to the trustee was trustee to carry into effect the provisions of the will
delivery to the cestui que trust, the beneficiery in this (see sec. 582, Code of Civil Procedure).
case, within the meaning of the first paragraph of
subsection (b) of section 1544 of the Revised P. J. M. Moore became trustee on March 10, 1924. On that
Administrative Code. This contention is well taken and is date trust estate vested in him (sec. 582 in relation to sec.
sustained. The appointment of P. J. M. Moore as trustee 590, Code of Civil Procedure). The mere fact that the
was made by the trial court in conformity with the wishes estate of the deceased was placed in trust did not remove
of the testator as expressed in his will. It is true that the it from the operation of our inheritance tax laws or
word "trust" is not mentioned or used in the will but the exempt it from the payment of the inheritance tax. The
intention to create one is clear. No particular or technical corresponding inheritance tax should have been paid on or
words are required to create a testamentary trust (69 C. before March 10, 1924, to escape the penalties of the laws.
J., p. 711). The words "trust" and "trustee", though apt for This is so for the reason already stated that the delivery
the purpose, are not necessary. In fact, the use of these of the estate to the trustee was in esse delivery of the
two words is not conclusive on the question that a trust is same estate to the cestui que trust, the beneficiary in this
created (69 C. J., p. 714). "To create a trust by will the case. A trustee is but an instrument or agent for thecestui
testator must indicate in the will his intention so to do by que trust (Shelton vs. King, 299 U. S., 90; 33 Sup. Ct. Rep.,
using language sufficient to separate the legal from the 689; 57 Law. ed., 1086). When Moore accepted the trust
and took possesson of the trust estate he thereby taxes rests not upon the privileges enjoyed by, or the
admitted that the estate belonged not to him but to protection afforded to, a citizen by the government but
his cestui que trust (Tolentino vs. Vitug, 39 Phil.,126, cited upon the necessity of money for the support of the state
in 65 C. J., p. 692, n. 63). He did not acquire any beneficial (Dobbins vs. Erie Country, supra). For this reason, no one is
interest in the estate. He took such legal estate only as allowed to object to or resist the payment of taxes solely
the proper execution of the trust required (65 C. J., p. because no personal benefit to him can be pointed out.
528) and, his estate ceased upon the fulfillment of the (Thomas vs. Gay, 169 U. S., 264; 18 Sup. Ct. Rep., 340; 43
testator's wishes. The estate then vested absolutely in the Law. ed., 740.) While courts will not enlarge, by
beneficiary (65 C. J., p. 542). construction, the government's power of taxation (Bromley
vs. McCaughn, 280 U. S., 124; 74 Law. ed., 226; 50 Sup. Ct.
The highest considerations of public policy also justify the Rep., 46) they also will not place upon tax laws so loose a
conclusion we have reached. Were we to hold that the construction as to permit evasions on merely fanciful and
payment of the tax could be postponed or delayed by the insubstantial distictions. (U. S. vs. Watts, 1 Bond., 580;
creation of a trust of the type at hand, the result would be Fed. Cas. No. 16,653; U. S. vs. Wigglesirth, 2 Story, 369;
plainly disastrous. Testators may provide, as Thomas Fed. Cas. No. 16,690, followed in Froelich & Kuttner vs.
Hanley has provided, that their estates be not delivered to Collector of Customs, 18 Phil., 461, 481; Castle Bros., Wolf
their beneficiaries until after the lapse of a certain period & Sons vs. McCoy, 21 Phil., 300; Muñoz & Co. vs. Hord, 12
of time. In the case at bar, the period is ten years. In Phil., 624; Hongkong & Shanghai Banking Corporation vs.
other cases, the trust may last for fifty years, or for a Rafferty, 39 Phil., 145; Luzon Stevedoring Co. vs. Trinidad,
longer period which does not offend the rule against 43 Phil., 803.) When proper, a tax statute should be
petuities. The collection of the tax would then be left to construed to avoid the possibilities of tax evasion.
the will of a private individual. The mere suggestion of this Construed this way, the statute, without resulting in
result is a sufficient warning against the accpetance of the injustice to the taxpayer, becomes fair to the government.
essential to the very exeistence of government. (Dobbins
vs. Erie Country, 16 Pet., 435; 10 Law. ed., 1022; Kirkland That taxes must be collected promptly is a policy deeply
vs. Hotchkiss, 100 U. S., 491; 25 Law. ed., 558; Lane County intrenched in our tax system. Thus, no court is allowed to
vs. Oregon, 7 Wall., 71; 19 Law. ed., 101; Union Refrigerator grant injunction to restrain the collection of any internal
Transit Co. vs. Kentucky, 199 U. S., 194; 26 Sup. Ct. Rep., revenue tax ( sec. 1578, Revised Administrative Code;
36; 50 Law. ed., 150; Charles River Bridge vs. Warren Sarasola vs. Trinidad, 40 Phil., 252). In the case of Lim Co
Bridge, 11 Pet., 420; 9 Law. ed., 773.) The obligation to pay Chui vs. Posadas (47 Phil., 461), this court had occassion to
demonstrate trenchment adherence to this policy of the provisions cases is mandatory (see and cf. Lim Co Chui vs.
law. It held that "the fact that on account of riots Posadas, supra), and neither the Collector of Internal
directed against the Chinese on October 18, 19, and 20, Revenuen or this court may remit or decrease such
1924, they were prevented from praying their internal interest, no matter how heavily it may burden the
revenue taxes on time and by mutual agreement closed taxpayer.
their homes and stores and remained therein, does not
authorize the Collector of Internal Revenue to extend the To the tax and interest due and unpaid within ten days
time prescribed for the payment of the taxes or to accept after the date of notice and demand thereof by the
them without the additional penalty of twenty five per Collector of Internal Revenue, a surcharge of twenty-five
cent." (Syllabus, No. 3.) per centum should be added (sec. 1544, subsec. (b), par. 2,
Revised Administrative Code). Demand was made by the
". . . It is of the utmost importance," said the Supreme Deputy Collector of Internal Revenue upon Moore in a
Court of the United States, ". . . that the modes adopted communiction dated October 16, 1931 (Exhibit 29). The
to enforce the taxes levied should be interfered with as date fixed for the payment of the tax and interest was
little as possible. Any delay in the proceedings of the November 30, 1931. November 30 being an official holiday,
officers, upon whom the duty is developed of collecting the the tenth day fell on December 1, 1931. As the tax and
taxes, may derange the operations of government, and interest due were not paid on that date, the estate became
thereby, cause serious detriment to the public." (Dows vs. liable for the payment of the surcharge.
Chicago, 11 Wall., 108; 20 Law. ed., 65, 66; Churchill and
Tait vs. Rafferty, 32 Phil., 580.) In view of the foregoing, it becomes unnecessary for us to
discuss the fifth error assigned by the plaintiff in his
It results that the estate which plaintiff represents has brief.
been delinquent in the payment of inheritance tax and,
therefore, liable for the payment of interest and We shall now compute the tax, together with the interest
surcharge provided by law in such cases. and surcharge due from the estate of Thomas Hanley
inaccordance with the conclusions we have reached.
The delinquency in payment occurred on March 10, 1924,
the date when Moore became trustee. The interest due At the time of his death, the deceased left real properties
should be computed from that date and it is error on the valued at P27,920 and personal properties worth P1,465, or
part of the defendant to compute it one month later. The a total of P29,385. Deducting from this amount the sum of
P480.81, representing allowable deductions under secftion As the plaintiff has already paid the sum of P2,052.74,
1539 of the Revised Administrative Code, we have only the sums of P1,581.69 is legally due from the estate.
P28,904.19 as the net value of the estate subject to This last sum is P390.42 more than the amount demanded
inheritance tax. by the defendant in his counterclaim. But, as we cannot
give the defendant more than what he claims, we must hold
The primary tax, according to section 1536, subsection (c), that the plaintiff is liable only in the sum of P1,191.27 the
of the Revised Administrative Code, should be imposed at amount stated in the counterclaim.
the rate of one per centum upon the first ten thousand
pesos and two per centum upon the amount by which the The judgment of the lower court is accordingly modified,
share exceed thirty thousand pesos, plus an additional two with costs against the plaintiff in both instances. So
hundred per centum. One per centum of ten thousand pesos ordered.
is P100. Two per centum of P18,904.19 is P378.08. Adding
to these two sums an additional two hundred per centum,
or P965.16, we have as primary tax, correctly computed by
the defendant, the sum of P1,434.24.

To the primary tax thus computed should be added the

sums collectible under section 1544 of the Revised
Administrative Code. First should be added P1,465.31 which
stands for interest at the rate of twelve per centum per
annum from March 10, 1924, the date of delinquency, to
September 15, 1932, the date of payment under protest, a
period covering 8 years, 6 months and 5 days. To the tax
and interest thus computed should be added the sum of
P724.88, representing a surhcarge of 25 per cent on both
the tax and interest, and also P10, the compromise sum
fixed by the defendant (Exh. 29), giving a grand total of
P3,634.43.