GR 43314; (December, 1935) (Digest)
G.R. No. 43314 , December 19, 1935
A.L. VELILLA, administrator of the estate of Arthur Graydon Moody, plaintiff-appellant, vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.
FACTS
Arthur Graydon Moody, an American citizen, died in Calcutta, India, on February 18, 1931. He had resided and actively engaged in business in the Philippine Islands since 1902/1903. By will executed in Manila, he bequeathed all his property to his sister, Ida M. Palmer, a citizen and resident of New York, USA. His estate, consisting principally of bonds, shares of stock in Philippine corporations, bank deposits, and other personal properties, was located entirely within the Philippines. The Collector of Internal Revenue assessed inheritance and income taxes against the estate. The administrator paid under protest and filed an action for recovery, arguing that the inheritance tax on intangible personal property of a person not domiciled in the Philippines lacked legal basis and constituted deprivation of property without due process.
ISSUE
Whether the Philippine government may validly levy inheritance and income taxes on the estate of Arthur G. Moody.
RULING
Yes. The Supreme Court affirmed the judgment of the trial court, upholding the tax assessments.
First, the property in Moody’s estate at the time of his death was located and had its situs within the Philippine Islands. Section 1536 of the Revised Administrative Code subjects to inheritance tax the transmission of shares issued by corporations organized in the Philippines and personal property located therein, regardless of the decedent’s domicile.
Second, the evidence established that Moody’s legal domicile up to the time of his death was within the Philippine Islands. He declared himself a U.S. citizen “residing in the Philippine Islands” in his will and had his sole business interests here.
Regarding the income tax assessment on dividends representing corporate surplus distributed to the estate, the Court found no double taxation. The inheritance tax and the additional income tax (surtax) are distinct levies under different statutes. The estate properly owed the surtax on the income it actually received, as the normal tax had already been paid at the source by the corporation.
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