G.R. No. L-47127. April 25, 1941.
ISABEL BIBBY VIUDA DE PADILLA, plaintiff-appellee; CONCEPCION PATERNO VIUDA DE PADILLA, intervenor-appellee, vs. BIBIANO L. MEER, as Administrator of Internal Revenue, defendant-appellant.

FACTS

Dr. Narciso A. Padilla died on February 14, 1934. Two wills were presented for probate. On March 30, 1935, the Court of First Instance of Manila legalized a will dated December 1933, instituting Isabel Vda. de Padilla as universal heiress. The estate was appraised at P261,713. On August 23, 1937, the defendant Collector of Internal Revenue filed an inheritance tax return based on the committee’s report, computing the tax on a net value of P134,949.61. On August 27, 1937, the Collector served Inheritance Tax Assessment Notice No. 22552 upon the special administratrix, Concepcion Vda. de Padilla, demanding payment of P8,693.09 in tax plus a P20 compromise fee by September 26, 1937. This amount included accrued interest of P1,654.15 for the period from September 13, 1935 (the supposed start of delinquency) to August 27, 1937. On October 16, 1937, counsel for the special administratrix, on behalf of the heirs, paid the full amount of P8,713.09 under protest. A request for a refund of the interest and compromise fee (P1,674.15) was denied by the Collector. The parties submitted a stipulation of facts, agreeing that the assessment notice of August 27, 1937, was the first and only one served, and that from the institution of testamentary proceedings (March 12, 1934) up to the date of the stipulation, no project or schedule of partition had been presented to or acted upon by the court. The probate court’s decision legalizing the will was appealed and was not decided until June 30, 1938. The Court of First Instance ordered the defendant to refund the sum of P1,674.15.

ISSUE

Whether the plaintiff (as heir and through the special administratrix) incurred delinquency, thereby justifying the imposition of the surcharge (interest) on the inheritance tax, for failing to submit the required return of taxable property within the 18-month period provided by law.

RULING

No. The plaintiff did not incur delinquency. The Court affirmed the lower court’s decision ordering the refund of the surcharge. Section 1544 of the Revised Administrative Code, which governs the case, does not declare a person in default for failing to submit the return of taxable property within 18 months and pay the corresponding tax within the period. Instead, it provides that in cases of omission by the interested parties to present the return, the Collector of Internal Revenue shall (shall) present it, and the tax shall be paid within twenty (20) days from the notice to that effect. The plaintiff complied with this legal mandate by paying the tax within the stated period. The defendant’s allegation that, under Article 25 of Regulations No. 42 as amended by Article 5 of Regulations No. 63, it was the plaintiff’s duty to file the return within 18 months, is not in harmony with the letter and spirit of Section 1544 of the Revised Administrative Code. In this case, as per the stipulation, no project of partition had been submitted in the testamentary proceedings. Furthermore, the decision legalizing the will was appealed and not finalized until June 30, 1938. Therefore, it was evident that the duty to present the return of taxable property in this instance belonged to the Collector of Internal Revenue, not the plaintiff. The appealed judgment was confirmed in all its parts, with the modification that no costs were awarded against the defendant, as it represented the Government.