Domiciliary Theory

Domicile is that place where a person has certain

settled, fixed, legal relations because:

(a) it is assigned to him by the law AT THE MOMENT

OF BIRTH (domicile of origin); or

(b) it is assigned to him also by the law AFTER

BIRTH on account of a legal disability caused for
instance by minority, insanity, or marriage in the
case of a woman (constructive domicile or domicile
by operation of law); or

(c) because he has his home there — that to which

whenever he is absent, he intends to return
(domicile of choice).

‘Domicile’ Distinguished from ‘Citizenship’ or

‘Nationality’

Domicile speaks of one’s permanent place of abode,

in general; on the other hand, citizenship and
nationality indicate ties of allegiance and loyalty.
A person may be a citizen or national of one state,
without being a domiciliary thereof; conversely, one
may possess his domicile in one state without
necessarily being a citizen, or national thereof.
The Three Kinds of Domicile

As indicated in the definition, there are usually

three types or kinds of domicile classified
according to the manner it has come about: the
domicile of origin, the constructive domicile or the
domicile by operation of law, and the domicile of
choice.

(a) The domicile of origin is acquired at birth;

constructive domicile is given after birth.

(b) Domicile of origin applies only to infants;

constructive domicile refers to all those who lack
capacity to choose their own domicile: infants,
married women, idiots, and the insane. Legal
disabilities prevent their making a choice.

(c) Domicile of origin never changes; for a person

is born only once; constructive domicile may change
from time to time, depending upon circumstances
which will be subsequently discussed.

(d) While both the domicile of origin and the

constructive domicile are fixed by LAW, domicile of
choice is a result of the VOLUNTARY WILL AND ACTION
of the PERSON CONCERNED.
Rules for the Domicile of Origin (Domicilium
Originis)

The domicile of origin of:

(a) a legitimate child — is the domicile of choice

of his father at the moment of the birth of the
child. Example: If a Filipino child is born in
France at the time that his father is domiciled in
Japan, the domicile of origin of the child is in
Japan. However, if the child is a posthumous one
(born after the death of the father) its domicile of
origin is the domicile of choice of the mother.

(b) an illegitimate child — is the domicile of

choice of the mother at the time of the birth of the
child.

(c) a legitimated child (an illegitimate child who

subsequently is granted the status of a legitimate
child by the process called legitimation) — is the
domicile of the father at the time of the birth (not
the legitimation) of the child. This is so because
“legitimation shall take effect from the time of the
child’s birth.” (Art. 273, Civil Code).

(d) an adopted child — is not the domicile of the

adopter (for generally adoption takes place sometime
after the birth of the child) but the domicile of
the real parent or the parent by consanguinity.

(e) a foundling (an abandoned infant whose parents

are unknown) — is the country where it was found.

Rules for the Constructive Domicile (Domicilium

Necesarium)

(a) Rules for Infants:

1) If legitimate — the domicile of choice of
the father.
Example: If at the time the child is say six
years old, the domicile of choice of the father
is in the United States (California), then
California will be the constructive domicile of
the child at that age. If by the time the child
becomes eleven years old the father is already
domiciled in China, China will be the
constructive domicile of said child at the age
of eleven.
[NOTE: If the father is dead, the mother
generally exercises authority over the child;
hence, this time the constructive domicile is
the domicile of choice of the mother. The
following articles of the Civil Code are in
point: Art. 328. The mother who contracts a
subsequent marriage loses the parental
authority over her children, unless the
deceased husband, father of the latter, has
expressly provided in his will that his widow
might marry again, and has ordered that in such
case she should keep and exercise parental
authority over their children. Art. 333.
If the widowed mother who has contracted a
subsequent marriage should again become a
widow, she shall recover from this moment her
parental authority over all her unemancipated
children. It would seem, therefore, that in our
country the legitimate child follows the
domicile of whoever exercises parental
authority over him.] [NOTE: If both parents of
the legitimate child are dead, the constructive
domicile of the child will be that of the
parent who died later. (See Goodrich, Conflict
of Laws, p. 90).].
2) If illegitimate — the domicile of choice of
the mother (after all she is supposed to take
care of the child). (See Minor, Conflict of
Laws, pp. 92-93).
3) If adopted — the domicile of choice of the
adopter. (Restatement, Sec. 35).
 4) If a ward — the domicile of choice of the
guardian (over the person of the ward). (See
Beale, Vol. 1, Conflict of Laws, p. 220).
(b) Rules for Married Women: 1) If the marriage
is VALID — the constructive domicile of a wife
is the domicile of choice of her husband. The
reason is obvious: in general, the husband
fixes the residence or domicile of the family.
In certain instances, however, the wife is
allowed to have a separate domicile; in this
case, her domicile will not be a constructive
one any more; it will be her domicile of
choice. In the following instances, among
others, the wife may be allowed to have a
separate domicile:
a) If the husband lives abroad, except if
living abroad is in the service of the
Republic. (Art. 110, Civil Code).
b) If they are legally separated. (Art. 106,
par. 1, Civil Code).
c) If the husband forcibly ejects the wife from
the conjugal home so that he may have illicit
relations with another. (De la Vina v.
Villareal, 41 Phil. 13).
d) If there is a separation de facto of the
spouses. (See De la Vina v. Villareal, supra).
However, it must be noted that under Art. 221
(Par. 1) of the Civil Code, “any contract for
personal separation between husband and wife
shall be void and of no effect.” The reason for
the general rule has been well stated by our
Supreme Court in the following manner:
“It is true, as a general principle of law,
that the domicile of the wife follows that of
her husband. This rule is founded upon the
theoretic identity of person and interest
between the husband and the wife, and the
presumption that, from the nature of the
relation, the home of one is the home of the
other. It is intended to promote, strengthen,
and secure the interests in this relation, as
it ordinarily exists, where union and harmony
prevail. But the authorities are unanimous in
holding that this is not an absolute rule. When
married women as well as children subject to
parental authority live, with the acquiescence
of their husbands or fathers, in a place
distinct from where the latter live, they have
their own independent domicile, which should be
considered in determining jurisdiction in cases
of provisional support, guardianship of
persons, etc.
If the wife can acquire a separate residence
when her husband consents or acquiesces, we see
no reason why the law will not allow her to do
so when, as alleged in the present case, the
husband unlawfully ejects her from the conjugal
home in order that he may freely indulge in his
illicit relations with another woman. Under no
other circumstances could a wife be more
justified in establishing a separate residence
from that of her husband. For her to continue
living with him, even if he had permitted it,
would have been a condonation of his flagrant
breach of fidelity and marital duty.
Furthermore, in this case no longer was there
an identity of person and interest between the
husband and the wife. Therefore, the law
allowed her to acquire a separate residence.
For it would do violence to the plainest
principle of common sense and common justice to
call this residence of the guilty husband where
the wife is forbidden to come, the domicile of
the wife.’’ (De la Vina v. Villareal, 41 Phil.
13).
2) If the marriage is VOIDABLE, the marriage is
regarded as valid until annulled; therefore,
prior to annulment the constructive domicile of
the wife is the domicile of choice of the
husband, unless she is permitted under the
circumstances to select her own domicile of
choice. After the marriage is annulled, the
woman ceases to be a wife; hence, being no
longer under any legal disability, she no
longer has any constructive domicile. If she
decides to remain in the domicile of her former
husband, this would be her own freely selected
domicile of choice, not her constructive
domicile. (See Minor, Conflict of Laws, pp. 97-
105).
3) If the marriage is VOID, it is as if there
was no marriage, and the “wife” is not really
one. Hence, she is not laboring under any legal
disability; consequently, she has no
constructive domicile. Should she continue
being domiciled in the same place as where her
“husband” is a domiciliary, such place would
not be her constructive domicile, it would be
her domicile of choice.
(See Goodrich, Confl ict of Laws, p. 77).
If a marriage is null and void its existence
is generally not recognized at all by law (save
the fact that children conceived or born of
such marriage are considered as natural
children by legal fiction under Art. 89 of the
Civil Code); therefore, there is no necessity
of declaring such a marriage null and void.
(People v. Mendoza, L-5877, Sep. 28, 1954;
People v. Aragon, L-10016, Feb. 28, 1957).
However, in case damages are sought, it is
obvious that the void marriage must be declared
such by the courts. (See Art. 91, Civil Code).
(c) Rules for Idiots, Lunatics, and the Insane:
Idiots, lunatics, and the insane are generally
devoid of any intelligence that may enable them
to freely select their own domicile of choice;
hence, the law assigns to them their domicile:
1) If they are below the age of majority — they
are still considered infants under the law;
thus, the rules for infants are applicable to
them.
2) If they are above the age of majority a
distinction must be made: if they have
guardians over their persons, they have to
follow the domicile of choice of their
guardians; if they have no guardians over their
persons, their constructive domicile is in the
place where they had their domicile of choice
shortly before they became insane. It should be
remembered, however, that a voluntary domicile
of choice may be acquired by insane individuals
if at the time of the choice they were in their
lucid intervals. Furthermore, the choice of a
voluntary domicile does not require as much
intelligence as would normally be essential for
binding oneself in a CONTRACT; to enter into an
agreement respecting a contract, one must
possess capacity to assume a burden; on the
other hand, the choice of a domicile does not
necessarily carry with it the assumption of
obligations. As Goodrich so aptly puts it: “In
changing domicile, the actor merely subjects
himself to the operation of the legal system of
the new jurisdiction — a system that must be
presumed to guard rights and privileges and to
operate equally upon all. So that the test is
said to be whether the party had sufficient
reason and understanding to choose his place of
residence.’’ (Goodrich, Conflict of Laws, p.
94).
Query: If the husband is insane or otherwise
incapacitated, what is the constructive
domicile of his wife?
Answer: Prof. Minor believes that in a case
like this, the wife is free from all legal
disability insofar as domicile is concerned;
therefore, she is free to select her own
domicile of choice. (Minor, Conflict of Laws,
p. 100).

Rules for Domicile of Choice

Domicile of choice is that which is
voluntarily chosen by a sui juris — as his more
or less permanent home — that to which,
whenever he is absent, he intends to return.
(See Story Conflict of Laws, Sec. 41; See also
Uytengsu v. Republic, 50 O.G. 4781,Oct. 1954).
In the Civil Code, Art. 50 refers to what we
call the “domicile of choice.” Said Article
reads: “For the exercise of civil rights and
the fulfillment of civil obligations, the
domicile of natural persons is the place of
their habitual residence.” In the case of Corre
v. Tan Corre, L-10128, Nov. 13, 1956, the Court
had occasion to defi ne domicile of choice as
“the permanent home, the place to which
whenever absent for business or pleasure, one
intends to return, and depends on facts and
circumstances, in the sense that they disclose
intent.”

There are certain fundamental principles

governing domicile of choice:
(a) No natural person must ever be without a
domicile.
(b) No person can have two or more domiciles at
the same time, except for certain purposes and
from different legal viewpoints.
(c) Every sui juris may change his domicile.
(d) Once acquired, it remains the domicile
unless a new
one is obtained:
1) by a capacitated person;
2) with freedom of choice;
3) with actual physical presence in the place
chosen;
4) and a provable intent that it should be
one’s
fixed and permanent place of abode — one’s
home — that is, there should be “animus
manendi” (intent to remain) or “animus
nonrevertendi” (intent not to return to the
original abode).

CASE:
[G.R. No. 43314. December 19, 1935.]

A. L. VELILLA, administrator of the estate of

Arthur Graydon Moody, Plaintiff-Appellant, v.
JUAN POSADAS, JR., Collector of Internal
Revenue, Defendant-Appellee.
Ohnick & Opisso for Appellant.

Solicitor-General Hilado for Appellee.

SYLLABUS

1. INHERITANCE TAX; DOMICILE OF TAXPAYER. — To

effect the abandonment of one’s domicile, there
must be a deliberate and provable choice of a
new domicile, coupled with actual residence in
the place chosen, with a declared or provable
intent that it should be one’s fixed and
permanent place of abode, one’s home. There is
a complete dearth of evidence in the record
that M ever established a new domicile in a
foreign country.

2. INHERITANCE AND INCOME TAXES. — As M’s legal

domicile at the time of his death was the
Philippine Islands and his estate had its situs
here, the inheritance and income taxes here
involved were lawfully collected.
D E C I S I O N

BUTTE, J.:

This is an appeal from a judgment of the Court

of First Instance of Manila in an action to
recover from the defendant-appellee as
Collector of Internal Revenue the sum of
P77,018,39 as inheritance taxes and P13,001.41
as income taxes assessed against the estate of
Arthur G. Moody, deceased.

The parties submitted to the court an agreed

statement of facts as
follows:jgc:chanrobles.com.ph

"I. That Arthur Graydon Moody died in Calcutta,

India, on February 18, 1931.

"II. That Arthur Graydon Moody executed in the

Philippine Islands a will, certified copy of
which marked Exhibit AA is hereto attached and
made a part hereof, by virtue of which will, he
bequeathed all his property to his only sister,
Ida M. Palmer, who then was and still is a
citizen and resident of the State of New York,
United States of America.

"III. That on February 24, 1931, a petition for

appointment of special administrator of the
estate of the deceased Arthur Graydon Moody was
filed by W. Maxwell Thebaut with the Court of
First Instance of Manila, the same being
designated as case No. 39113 of said court.
Copy of said petition marked Exhibit BB is
hereto attached and made a part hereof.

"IV. That subsequently or on April 10, 1931, a

petition was filed by Ida M. Palmer, asking for
the probate of said will of the deceased Arthur
Graydon Moody, and the same was, after hearing,
duly probated by the court in a decree dated
May 5, 1931. Copies of the petition and of the
decree marked Exhibits CC and DD, respectively,
are hereto attached and made parts hereof.

"V. That on July 14, 1931, Ida M. Palmer was

declared to be the sole and only heiress of the
deceased Arthur Graydon Moody by virtue of an
order issued by the court in said case No.
39113, copy of which marked Exhibit EE is
hereto attached and made a part hereof; and
that during the hearing for the declaration of
heirs, Ida M. Palmer presented as evidence a
letter dated February 28, 1925, and addressed
to her by Arthur Graydon Moody, copy of which
marked Exhibit FF is hereto attached and made a
part hereof.

"VI. That the property left by the late Arthur

Graydon Moody consisted principally of bonds
and shares of stock of corporations organized
under the laws of the Philippine Islands, bank
deposits and other personal properties, as are
more fully shown in the inventory of April 17,
1931, filed by the special administrator with
the court in said case No. 39113, certified
copy of which inventory marked Exhibit GG is
hereto attached and made a part hereof. This
stipulation does not, however, cover the
respective values of said properties for the
purpose of the inheritance tax.
"VII. That on July 22, 1931, the Bureau of
Internal Revenue prepared for the estate of the
late Arthur Graydon Moody an inheritance tax
return, certified copy of which marked Exhibit
HH is hereto attached and made a part hereof.

"VIII. That on September 9, 1931, an income tax

return for the fractional period from January
1, 1931 to June 30, 1931, certified copy of
which marked Exhibit II is hereto attached and
made a part hereof, was also prepared by the
Bureau of Internal Revenue for the estate of
the said deceased Arthur Graydon Moody.

"IX. That on December 3, 1931, the committee on

claims and appraisals filed with the court its
report, certified copy of which marked Exhibit
KK is hereto attached and made a part hereof.

"X. That on September 15, 1931, the Bureau of

Internal Revenue addressed to the attorney for
the administratrix Ida M. Palmer a letter, copy
of which marked Exhibit LL is hereto attached
and made a part hereof.
"XI. That on October 15, 1931, the attorney for
Ida M. Palmer answered the letter of the
Collector of Internal Revenue referred to in
the preceding paragraph. Said answer marked
Exhibit MM is hereto attached and made a part
hereof.

"XII. That on November 4, 1931, and in answer

to the letter mentioned in the preceding
paragraph, the Bureau of Internal Revenue
addressed to the attorney for Ida M. Palmer
another letter, copy of which marked Exhibit NN
is hereto attached and made a part hereof.

"XIII. That on December 7, 1931, the attorney

for Ida M. Palmer again replied in a letter,
marked Exhibit OO, hereto attached and made a
part hereof.

"XIV. That the estate of the late Arthur

Graydon Moody paid under protest the sum of
P50,000 on July 22, 1931, and the other sum of
P40,019,75 on January 19, 1932, making a total
of P90,019,75, of which P77,018.39 covers the
assessment for inheritance tax and the sum of
P13,001.41 covers the assessment for income tax
against said estate.

"XV. That on January 21, 1932, the Collector of

Internal Revenue overruled the protest made by
Ida M. Palmer through her attorney.

"XVI. The parties reserve their right to

introduce additional evidence at the hearing of
the present case.

"Manila, August 15, 1933."cralaw virtua1aw

library

In addition to the foregoing agreed statement

of facts, both parties introduced oral and
documentary evidence from which it appears that
Arthur G. Moody, an American citizen, came to
the Philippine Islands in 1902 or 1903 and
engaged actively in business in these Islands
up to the time of his death in Calcutta, India,
on February 18, 1931. He had no business
elsewhere and at the time of his death left an
estate consisting principally of bonds and
shares of stock of corporations organized under
the laws of the Philippine Islands, bank
deposits and other intangibles and personal
property valued by the commissioners of
appraisal and claims at P609,767.58 and by the
Collector of Internal Revenue for the purposes
of inheritance tax at P653,657.47. All of said
property at the time of his death was located
and had its situs within the Philippine
Islands. So far as this record shows, he left
no property of any kind located anywhere else.
In his will, Exhibit AA, executed without date
in Manila in accordance with the formalities of
the Philippine law, in which he bequeathed all
his property to his sister, Ida M. Palmer, he
stated:jgc:chanrobles.com.ph

"I, Arthur G. Moody, a citizen of the United

States of America, residing in the Philippine
Islands, hereby publish and declare the
following as my last Will and
Testament . . . ."cralaw virtua1aw library

The substance of the plaintiff’s cause of

action is stated in paragraph 7 of his
complaint as follows:jgc:chanrobles.com.ph
"That there is no valid law or regulation of
the Government of the Philippine Islands under
or by virtue of which any inheritance tax may
be levied, assessed or collected upon transfer,
by death and succession, of intangible personal
properties of a person not domiciled in the
Philippine Islands, and the levy and collection
by defendant of inheritance tax computed upon
the value of said stocks, bonds, credits and
other intangible properties as aforesaid
constituted and constitutes the taking and
deprivation of property without due process of
law contrary to the Bill of Rights and organic
law of the Philippine Islands."cralaw virtua1aw
library

Section 1536 of the Revised Administrative Code

(as amended) provides as
follows:jgc:chanrobles.com.ph

"SEC. 1536. Conditions and rate of taxation. —

Every transmission by virtue of inheritance,
devise, bequest, gift mortis causa or advance
in anticipation of inheritance, devise, or
bequest of real property located in the
Philippine Islands and real rights in such
property; of any franchise which must be
exercised in the Philippine Islands; of any
shares, obligations, or bonds issued by any
corporation or sociedad anonima organized or
constituted in the Philippine Islands in
accordance with its laws; of any shares or
rights in any partnership, business or industry
established in the Philippine Islands or of any
personal property located in the Philippine
Islands shall be subject to the following tax:"

x x x

It is alleged in the complaint that at the time

of his death, Arthur G. Moody was a "non-
resident of the Philippine Islands." The
answer, besides the general denial, sets up as
a special defense that "Arthur G. Moody, now
deceased, was and prior to the date of his
death, a resident in the City of Manila,
Philippine Islands, where he was engaged
actively in business." Issue was thus joined on
the question: Where was the legal domicile of
Arthur G. Moody at the time of his death?

The Solicitor-General raises a preliminary

objection to the consideration of any evidence
that Moody’s domicile was elsewhere than in
Manila at the time of his death based on the
proposition that as no such objection was made
before the Collector of Internal Revenue as one
of the grounds of the protest against the
payment of the tax, this objection cannot be
considered in a suit against the Collector to
recover the taxes paid under protest. He relies
upon the decision in the case of W. C. Tucker
v. A. C. Alexander, Collector (15 Fed. [2],
356). We call attention, however, to the fact
that this decision was reversed in 275 U. S.,
232; 72 Law. ed., 256, and the case remanded
for trial on the merits on the ground that the
requirement that the action shall be based upon
the same grounds, and only such, as were
presented in the protest had been waived by the
collector. In the case before us no copy of the
taxpayer’s protest is included in the record
and we have no means of knowing its contents.
We think, therefore, the preliminary objection
made on behalf of the appellee does not lie.

We proceed, therefore, to the consideration of

the question on the merits as to whether Arthur
G. Moody was legally domiciled in the
Philippine Islands on the day of his death.
Moody was never married and there is no doubt
that he had his legal domicile in the
Philippine Islands from 1902 or 1903 forward
during which time he accumulated a fortune from
his business in the Philippine Islands. He
lived in the Elks’ Club in Manila for many
years and was living there up to the date he
left Manila the latter part of February, 1928,
under the following circumstances: He was
afflicted with leprosy in an advanced stage and
had been informed by Dr. Wade that he would be
reported to the Philippine authorities for
confinement in the Culion Leper Colony as
required by the law. Distressed at the thought
of being thus segregated and in violation of
his promise to Dr. Wade that he would
voluntarily go to Culion, he surreptitiously
left the Islands the latter part of February,
1928, under cover of night, on a freighter,
without ticket, passport or tax clearance
certificate. The record does not show where
Moody was during the remainder of the year
1928. He lived with a friend in Paris, France,
during the months of March and April of the
year 1929 where he was receiving treatment for
leprosy at the Pasteur Institute. The record
does not show where Moody was in the interval
between April, 1929, and November 26, 1930, on
which latter date he wrote a letter, Exhibit B,
to Harry Wendt of Manila, offering to sell him
his interest in the Camera Supply Company, a
Philippine corporation, in which Moody owned
599 out of 603 shares. In this letter, among
other things, he states: "Certainly I’ll never
return there to live or enter business again."
In this same letter he
says:jgc:chanrobles.com.ph

"I wish to know as soon as possible now (as to

the purchase) for I have very recently decided
either to sell or put in a line of school or
office supplies . . . before I go to the
necessary investments in placing any side
lines. I concluded to get your definite reply
to this . . . I have given our New York buying
agent a conditional order not to be executed
until March and this will give you plenty of
time . . . anything that kills a business is to
have it peddled around as being for sale and
this is what I wish to avoid." He wrote letters
dated December 12, 1930, and January 3, 1931,
along the same line to Wendt. As Moody died of
leprosy less than two months after these
letters were written, there can be no doubt
that he would have been immediately segregated
in the Culion Leper Colony had he returned to
the Philippine Islands. He was, therefore, a
fugitive, not from justice, but from
confinement in the Culion Leper Colony in
accordance with the law of the Philippine
Islands.

There is no statement of Moody, oral or

written, in the record that he had adopted a
new domicile while he was absent from Manila.
Though he was physically present for some
months in Calcutta prior to the date of his
death there, the appellant does not claim that
Moody had a domicile there although it was
precisely from Calcutta that he wrote and
cabled that he wished to sell his business in
Manila and that he had no intention to live
there again. Much less plausible, it seems to
us, is the claim that he established a legal
domicile in Paris in February, 1929. The record
contains no writing whatever of Moody from
Paris. There is no evidence as to where in
Paris he had any fixed abode that he intended
to be his permanent home. There is no evidence
that he acquired any property in Paris or
engaged in any settled business on his own
account there. There is no evidence of any
affirmative factors that prove the
establishment of a legal domicile there. The
negative evidence that he told Cooley that he
did not intend to return to Manila does not
prove that he had established a domicile in
Paris. His short stay of three months in Paris
is entirely consistent with the view that he
was a transient in Paris for the purpose of
receiving treatments at the Pasteur Institute.
The evidence in the record indicates clearly
that Moody’s continued absence from his legal
domicile in the Philippines was due to and
reasonably accounted for by the same motive
that caused his surreptitious departure,
namely, to evade confinement in the Culion
Leper Colony; for he doubtless knew that on his
return he would be immediately confined,
because his affliction became graver while he
was absent than it was on the day of his
precipitous departure and he could not conceal
himself in the Philippines where he was well
known, as he might do in foreign parts.

Our Civil Code (art. 40) defines the domicile

of natural persons as "the place of their usual
residence." The record before us leaves no
doubt in our minds that the "usual residence"
of this unfortunate man, whom appellant
describes as a "fugitive" and "outcast", was in
Manila where he had lived and toiled for more
than a quarter of a century, rather than in any
foreign country he visited during his
wanderings up to the date of his death in
Calcutta. To effect the abandonment of one’s
domicile, there must be a deliberate and
provable choice of a new domicile, coupled with
actual residence in the place chosen, with a
declared or provable intent that it should be
one’s fixed and permanent place of abode, one’s
home. There is a complete dearth of evidence in
the record that Moody ever established a new
domicile in a foreign country.

The contention under the appellant’s third

assignment of error that the defendant
collector illegally assessed an income tax of
P13,001.41 against the Moody estate is, in our
opinion, untenable. The grounds for this
assessment, stated by the Collector of Internal
Revenue in his letter, Exhibit NN, appear to us
to be sound. That the amount of P259,986.69 was
received by the estate of Moody as dividends
declared out of surplus by the Camera Supply
Company is clearly established by the evidence.
The appellant contends that this assessment
involves triple taxation: First, because the
corporation paid income tax on the same amount
during the years it was accumulated as surplus;
second, that an inheritance tax on the same
amount was assessed against the estate, and
third, the same amount is assessed as income of
the estate. As to the first, it appears from
the collector’s assessment, Exhibit II, that
the collector allowed the estate a deduction of
the normal income tax on said amount because it
had already been paid at the source by the
Camera Supply Company. The only income tax
assessed against the estate was the additional
tax or surtax that had not been paid by the
Camera Supply Company for which the estate,
having actually received the income, is clearly
liable. As to the second alleged double
taxation, it is clear that the inheritance tax
and the additional income tax in question are
entirely distinct. They are assessed under
different statutes and we are not convinced by
the appellant’s argument that the estate which
received these dividends should not be held
liable for the payment of the income tax
thereon because the operation was simply the
conversion of the surplus of the corporation
into the property of the individual
stockholders. (Cf. U. S. v. Phellis, 257 U. S.,
171, and Taft v. Bowers, 278 U. S., 460.)
Section 4 of Act No. 2833 as amended, which is
relied on by the appellant, plainly provides
that the income from exempt property shall be
included as income subject to tax.

Finding no merit in any of the assignments of

error of the appellant, we affirm the judgment
of the trial court, first, because the property
in the estate of Arthur G. Moody at the time of
his death was located and had its situs within
the Philippine Islands and, second, because his
legal domicile up to the time of his death was
within the Philippine Islands. Costs against
the Appellant.

Malcolm, Villa-Real, and Imperial, JJ., concur.

Separate Opinions

GODDARD, J., concurring:chanrob1es virtual 1aw

library

I concur in the result. I think the evidence

clearly establishes that Moody had permanently
abandoned his residence in the Philippine
Islands. But even so, his estate would be
 liable for the taxes which the plaintiff-
appellant seeks to recover in this action.
Section 1536 of the Revised Administrative Code
makes no distinction between the estates of
residents and of non-residents of the
Philippine Islands. The case of First National
Bank of Boston v. State of Maine (284 U. S.,
312; 76 Law. ed., 313), relied on by the
appellant is not in point because in that case
the estate of the deceased was actually taxed
in both the state of his domicile,
Massachusetts, and in the state where the
shares of stock had their situs, namely, the
State of Maine. But in the case before us there
is no evidence whatever that the estate of
Moody had been taxed anywhere but in the
Philippines. (Cf. Burnet, Commissioner, v.
Brooks, 288 U. S., 378.) .
Case Digest

[G.R. No. 43314. December 19, 1935.]

A. L. VELILLA, administrator of the estate of Arthur
Graydon Moody, Plaintiff-Appellant, v. JUAN POSADAS,
JR., Collector of Internal Revenue, Defendant-
Appellee.

Facts:
 This is an appeal from a judgment of the CFI of
Manila in an action to recover from the defendant-
appellee as Collector of Internal Revenue the sum of
P77,018,39 as inheritance taxes and P13,001.41 as
income taxes assessed against the estate of Arthur
G. Moody, deceased.
Arthur G. Moody, an American citizen, came to the
Philippine Islands in 1902 or 1903 and engaged
actively in business in these Islands up to the time
of his death in Calcutta, India, on February 18,
1931. He had no business elsewhere and at the time
of his death left an estate consisting principally
of bonds and shares of stock of corporations
organized under the laws of the Philippine Islands,
bank deposits and other intangibles and personal
property. All of said property at the time of his
death was located and had its situs within the
Philippine Islands. So far as this record shows, he
left no property of any kind located anywhere else.
He executed in the Philippine Islands a will
where he bequeathed all his property to his only
sister, Ida M. Palmer, who then was and still is a
citizen and resident of the State of New York, USA.
On February 24, 1931, a petition for appointment
of special administrator of the estate of the
deceased Arthur Graydon Moody was filed by W.
Maxwell. Subsequently or on April 10, 1931, a
petition was filed by Ida M. Palmer, asking for the
probate of said will of the deceased, and the same
was, after hearing, duly probated by the court and
it was declared that Ida Palmer is the sole and only
heiress of the deceased Moody.
 However, the will does not cover the respective
values of said properties for the purpose of the
inheritance tax. The BIR prepared for the estate of
the late Arthur Graydon Moody an inheritance tax
return.
The estate of the late Arthur Graydon Moody paid
under protest the sum of P50,000 on July 22, 1931,
and the other sum of P40,019,75 on January 19, 1932,
making a total of P90,019,75, of which P77,018.39
covers the assessment for inheritance tax and the
sum of P13,001.41 covers the assessment for income
tax against said estate. The protest was overruled
by the BIR.
The petitioner contends that that there is no
valid law or regulation of the Government of the
Philippine Islands under or by virtue of which any
inheritance tax may be levied, assessed or collected
upon transfer, by death and succession, of
intangible personal properties of a person not
domiciled in the Philippine Islands

Issue: Whether Arthur G. Moody was legally domiciled

in the Philippine Islands on the day of his death

Held: The Court ruled that Moody was domiciled in

the Philippines.
According to the Court, the fact that Moody
accumulated a fortune from his business in the
Philippines and that he lived in the Elks’ Club in
Manila for many years and was living there up to the
date he left Manila the latter part of February,
1928 proved that his domicile at the time of his
death was in the Philippines. And that the only
reason why he left the country was that he was
afflicted with leprosy in an advanced stage and had
been informed that he would be reported to the
Philippine authorities for confinement in the Culion
Leper Colony as required by the law. Distressed at
the thought of being thus segregated and in
violation of his promise to his doctor that he would
voluntarily go to Culion, he surreptitiously left
the Islands the latter part of February, 1928, under
cover of night, on a freighter, without ticket,
passport or tax clearance certificate.
He lived with a friend in Paris, France, during
the months of March and April of the year 1929 where
he was receiving treatment for leprosy at the
Pasteur Institute. There is no statement of Moody,
oral or written, in the record that he had adopted a
new domicile while he was absent from Manila. Though
he was physically present for some months in
Calcutta prior to the date of his death there, the
appellant does not claim that Moody had a domicile
there although it was precisely from Calcutta that
he wrote and cabled that he wished to sell his
business in Manila and that he had no intention to
live there again. Much less plausible is the claim
that he established a legal domicile in Paris in
February, 1929. The record contains no writing
whatever of Moody from Paris. There is no evidence
as to where in Paris he had any fixed abode that he
intended to be his permanent home. There is no
evidence that he acquired any property in Paris or
engaged in any settled business on his own account
there. There is no evidence of any affirmative
factors that prove the establishment of a legal
domicile there. His short stay of three months in
Paris is entirely consistent with the view that he
was a transient in Paris for the purpose of
receiving treatments at the Pasteur Institute.
The evidence in the record indicates clearly that
Moody’s continued absence from his legal domicile in
the Philippines was due to and reasonably accounted
for by the same motive that caused his surreptitious
departure, namely, to evade confinement in the
Culion Leper Colony.
Our Civil Code (art. 40) defines the domicile of
natural persons as "the place of their usual
residence." The record before us leaves no doubt in
our minds that the "usual residence" of this
unfortunate man, whom appellant describes as a
"fugitive" and "outcast", was in Manila where he had
lived and toiled for more than a quarter of a
century, rather than in any foreign country he
visited during his wanderings up to the date of his
death in Calcutta. To effect the abandonment of
one’s domicile, there must be a deliberate and
provable choice of a new domicile, coupled with
actual residence in the place chosen, with a
declared or provable intent that it should be one’s
fixed and permanent place of abode, one’s home.
There is a complete dearth of evidence in the record
that Moody ever established a new domicile in a
foreign country.

Summary of the case

Velilla v. Posadas 62 Phil. 624
FACTS: Mr. Moody lived and worked in Manila for more
than 25 years. However, he wandered around in
various countries until he died in Calcutta.
ISSUE: Where was his domicile at the time of death?
HELD: His domicile at the time of his death was in
the Philippines, because he never acquired any new
domicile in a foreign country, despite his
wanderings abroad. To effect the abandonment of
one’s domicile, there must be a deliberate and
provable choice of a new domicile, coupled with
actual residence in the place chosen, with a
declared or provable intent that it should be one’s
fixed and permanent place of abode, one’s home. This
was NOT proved.

References:
Definitions
Justice Edgardo L. Paras, Civil Code of the
Philippines annotated vol. 1 2021 edition.
https://lawphilreviewer.wordpress.com/2011/12/20/civ
il-law-conflict-of-laws-memory-
aid/#:~:text=Domiciliary%20Theory%20%E2%80%93%20in
%20general%2C%20the,resident%20defendant%20and%20the
%20forum.

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Case Digest
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vs-Posadas-Digest