G.R. No. 48122 ; October 29, 1948
A. W. BEAM, et al. vs. A. L. YATCO, Collector of Internal Revenue

FACTS

Plaintiffs, the surviving spouse and children of the deceased Lydia McKee Beam, sought a refund of inheritance tax paid to the defendant Collector of Internal Revenue. The tax was assessed on properties in the Philippines, including shares in domestic corporations and a bank deposit, which the Collector included in the gross estate of Lydia McKee Beam. The plaintiffs contended that the deceased was a citizen and resident of California, U.S.A., at the time of her death, and that under applicable law, the properties were not part of her estate subject to Philippine inheritance tax. The parties stipulated on the facts, including the ownership of the properties and the payment of tax under protest.

ISSUE

Whether the properties in the Philippines (specifically shares in domestic corporations and a deposit) form part of the estate of Lydia McKee Beam subject to Philippine inheritance tax.

RULING

Yes. The Supreme Court affirmed the dismissal of the complaint and held the inheritance tax was properly levied. The Court found that the deceased and her husband had established domicile in California as early as 1923, making California law applicable to determine the nature of the conjugal property under Article 10 of the Civil Code. In the absence of proof to the contrary, California law was presumed to be the same as Philippine law, under which the properties acquired during the marriage would be part of the conjugal estate. Furthermore, Section 1536 of the Revised Administrative Code expressly subjects shares issued by corporations organized in the Philippines to inheritance tax. The situs of the shares is the Philippines, as the certificates were located there and corporate rights were exercised through a local attorney-in-fact. Thus, the properties were correctly included in the taxable estate.

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