Veronica Sanchez vs.

The Collector of Internal

Revenue
Plaintiff, appellant
Padilla, Sol.
Cansino ,Jr

defendant, appellee ( Solicitor Ambrosio

Esmeraldo Umali and Roman

Ponente : Reyes, JB
Nature: An appeal from a judgment of the Court of First Instance of
Manila
Facts: Veronica Sanchez constructed her 4 door accessoria
purposely for rent or profit; that she had been continuously leasing the
same to third persons since its construction in 1947; that she
manages her property herself; and that said leased holding appears to
her main source of livelihood; she is engaged in the leasing of real
estate, and she is a real estate dealer.
The building has an assessed value of 21,540, and the land
assessed at 7,980; a total of 29,540. In 1949, she derived an income of
7,540 annually, She runs a small dry good store in Pasay market with
an income of 1, 300 annually.
In early part of 1951, CIR made a demanded upon the
appellant for the payment of 163.51 as income tax for the yr
1950, and 637as real estate dealers tax for the year 1946 to
1950 , plus the sum of 50 pesos as compromise. The appellant paid
the taxes demanded under protest. Oct 16, 1951 she filed and action
against CIR in the court of first instance.
Issue:
1. Whether Veronica Sanchez is a real estate dealer.
2. Whether she is entitled for a refund of the taxes she paid.
Ruling of CFI:
1. after trial the court found the appellant to be such an
estate dealer as defined by section194 of National Internal
Revenue Code, amended by RA 42 and 588, and declared

the collection of taxes in question is legal and in

accordance with the said provisions.
CTA
The appellant claims a refund of the amount of 825.00
allegedly paid by her to CIR as real estate tax., it appears that the
sum of 163.31 corresponds to her income tax for the yr 1949, so the
amount actually involved herein is only 637, paid by Sanchez as real
estate tax dealer by the yr 1946-1950.
RA No. 588 took effect only on Sept 22, 1950, while the tax in
question by the appellant for the year 1946- 1950.
Ruling:
Considering, therefore, that the appellant constructed her 4 door
accessoria purposely for rent or profit, that she continuously leasing
the same for the third persons since its construction in 1947; that she
manages her property by herself; and that said leased holding appears
to be her main source of livelihood, she is engaged in the leasing of
real estate, and is a real estate dealer as defined by section
194 of the IRC, as amended by RA 42.
Real estate dealers includes all the persons who for their own
account engaged in the sale of lands, buildings or interest
therein or in leasing real estate. RA 42
Appellant Contention:
That she is already paying real estate tax on her property, as well
as income tax on the income derive therefrom, so that to further
subject its rental to the real estate tax , amount to double taxation.
Ruling: in the case of Pp cvs. Mendaros
It is well settled rule that a license tax may be levied
upon a business or occupation although the land or property
used therein subject to property tax, and that the state may
collect an ad valorem tax on property used in a calling, and at
the same time impose a license tax on the pursuit on a latter
kind of tax being in a sense of double tax.

The evidence shows that the apartment house was constructed

1947, real estate tax was paid from 1946 to 1950, wherefore
the appellant is entitled to a refund for the year 1946,
amounting to 37.50 pesos, decision with modification, ordering
the CIR to refund the Veronica Sanchez the amount of 37.50
pesos.

CIR vs. Domingo de Lara, ancillary administrator

of the estate Hugo Miller Deceased and CTA
respondent
Nature: Petition for review by certiorari of the decision of the
Court of Tax
Appeals

Decision of Tax Court: Ancillary Administrator was ordered to

pay the amount of 2,047.22, representing his estate tax due,
together with interest and other increments.

Facts:

Hugo Miller, an America citizen, was born in Sta Cruz,

California, USA in 1883. In 1905, he came to the Phil. From 1906 to
1917, he was connected with the public school system, first as a
teacher and later as a division superintendent in schools, later retiring
under Osmena Retirement Act. After his retirement, Miller accepted
an executive position on the local branch of Ginn & Co., book publisher
with principal offices in N.Y. & Boston,USA. From 1922 up to December
of 1941, he was stationed in the Phil. As well as China and Japan s
Oriental representative, he lived in Manila Hotel and used to visit his
wife in California. He never lived in any residential house in the Phil.
After the death of his wife in 1931, he transferred from Manila
Hotel to the Army Navy Club where he was staying during the
outbreak of Pacific war and Ginn & Co. was closed.

January 17, 1941, he executed his last will and testament in Sta Cruz,
California and declared he was of Sta. Cruz, California. He then joined
the Board of Censors of the US Navy. During the war he was taken
as prisoner by the Japanese forces in Leyte. In January 1944,
he was transferred in Catbalogan, Samar where he was
executed by the said forces on March 11, 1944 at the time of
his death in 1944, Miller owned the following properties:
Real property in Sta Cruz, California valued
Real property in Burlingame, California valued
Tangible personal property
Cash in Bank USA
Accts receivables from various person + notes
36,062.74
Stocks USA Corp + US savings bonds
123,637.16
Shares of stocks in Phil corp

Php 5,000
Php 16, 200
Php 2,140
Php 21,178.20
Php
Php
Php 51,906.45

Testate proceedings were instituted in court of California and admitted

to probate on May 10, 1946, and said court order and decree of
settlement of final account and distribution and found that he is a
resident of California, at the time of his death. Thereafter, ancillary
proceedings were filed by the executors of the will before the FI in
Manila. On July 1949, The Bank of America, Trust and Savings Asso. of,
California, co -executor named in Millers will, filed an estate and
inheritance tax return with the collector, covering only the stock
issued by the Phil corps . reporting a liability of P269.43 for
estate taxes and P230.27 for inheritance taxes and it was
protested. The collector assessment for the liability for estate
and inheritance taxes, including penalties and other
increments at P77,300.92 as of January 16, 1954.

Issue:

1. whether the decedent (Miller) was a resident or nonresident of the Phil at the time of his death.
2. Whether the decedent was exempted from estate and
inheritance taxes.

Ruling CTA:

1. At the time that the national internal revenue code was

promulgated in 1939, the prevailing construction given
by the courts to the term residence was synonymous
with domicile, and the two were used interchangeably.
(Velilla vs. Posadas).
The incidence of estate and succession taxes has
historically been determined by the domicile and situs and not
by the fact of actual residence. (Bowring vs. Bowers).
At the time of his death, Miller had his residence or
domicile in Sta Cruz, California. During his long stay in this country,
Miller never acquired a house for residential purposes for he stayed at
manila Hotel and later on Army and Navy Club. It is clear that as a
non-resident of the Phil, the only properties of his estate and
inheritance taxes are those shares of stock issued by Phil corp,
valued 51,906.45.
General rule that personal property, like shares of stock in the
Phil., is taxable at the domicile of the owner (Miller) under the
doctrine of mobilia sucuuntur persona.
2. The decedent, being a non resident of the Phil. The only
property subject to estate and inheritance taxes are those
shares of stock issued by Phil. Corps.
Under the Tax Code section 122, the decedent is entitled to
tax exemption granted to non0 residents under the provision of
multiple taxation, which otherwise subject the decedents
intangible property to the inheritance tax, on in his place of
residence and domicile and the place where those properties
are found.
3. Republic Act No. 1253; When estate of decedent entitled to
benefits of the act.- In as much the decedent not only suffered
deprivations of the war, but was killed by the Japanese military
forces, his estate is entitled to the benefits of RA 153, which
passed for the benefit of veterans, guerillas, or victims of
Japanese atrocities. Consequently, the interest and other
increments imposed on the decedents estate should not be
paid.

SC:
The interest and other increments provided in the appealed
judgment should not be paid by his estate. With the above
modification, the appealed decision of the CTA is hereby affirmed.