Marcos v. CA | G.R. No. 120880 | June 5, 1997 | Torres, Jr., J.

[Re: Tax return filing and tax payment]

Facts:

 Sep 29, 1989 – Former President Ferdinand Marcos died in Honolulu, Hawaii, USA
 June 27, 1990 – A Special Tax Audit Team was created, which found that the Marcoses failed to file a written notice of
the decedent’s death, an estate tax return, and several income tax returns from 1982-1986
 Criminal charges were filed against Imelda Marcos before the RTC Quezon City
- Violations of Secs. 82, 83, 84 of NIRC
 Commissioner of Internal Revenue prepared and filed the Estate Tax Return for the decedent’s estate, the Income Tax
Returns of the Spouses Marcos from 1985-1986, and the Income Tax Returns of petitioner Ferdinand ‘Bongbong’
Marcos II from 1982-1985
 July 26, 1991 – BIR issued a deficiency estate tax assessment against the decedent’s estate, and deficiency income tax
assessments against the Spouses Marcos and Bongbong
- Not protested administratively by any of the Marcoses within 30 days from service
 Feb 22, 1993 – BIR Commissioner issued 22 notices of levy on real property against parcels of land owned by the
Marcoses to satisfy the deficiencies; 8 more were issued in May of the same year
 May 26 – Notices of sale at public auction were posted at the lobby of the Tacloban City Hall
 June 25 – Petitioner Bongbong Marcos filed the instant petition for certiorari and prohibition under Rule 65, seeking
to:
1. Annul and set aside Notices of Levy on real property
2. Annul and set aside Notices of Sale
3. Enjoin Collection Service from proceeding with the Auction
 July 5, 1993 - Public auction for the sale of 11 parcels of land took place; there being no bidder, lots were declared
forfeited in favor of the government
 CA: Dismissed the petition
- Deficiency assessments for estate and income tax upon the estate have become final and unappealable, and may
be enforced by the summary remedy of levying upon the decedent’s properties

ISSUES:

1. W/N BIR properly assessed and collected on the Marcoses’ tax obligations – YES
 Petitioner: notices and sale are null and void for disregarding the established procedure for the enforcement of taxes
upon the estate of the deceased
- Domingo vs. Garlitos: ordinary procedure…is for claimant to present a claim before the probate court so that said
court may order the administrator to pay the amount therefor…and cannot be effected through any other means
- Probate court not precluded from denying a request by the government for immediate payment of taxes; should
order payment only within a period fixed by the probate court for payment of all the debts of the decedent
 BIR: state’s authority to collect internal revenue taxes is paramount
- Pendency of probate proceedings does not preclude assessment and collection
- Probate court not the agency to decide whether an estate is liable for payment
 Court: nature of the process of estate tax collection has been described as follows:
- "Strictly speaking, the assessment of an inheritance tax does not directly involve the administration of a decedent's
estate, although it may be viewed as an incident to the complete settlement of an estate, and, under some
statutes, it is made the duty of the probate court to make the amount of the inheritance tax a part of the final
decree of distribution of the estate. It is not against the property of decedent, nor is it a claim against the estate
as such, but it is against the interest or property right which the heir, legatee, devisee, etc., has in the property
formerly held by decedent. Further, under some statutes, it has been held that it is not a suit or controversy
between the parties, nor is it an adversary proceeding between the state and the person who owes the tax on the
inheritance. However, under other statutes it has been held that the hearing and determination of the cash value
 of the assets and the determination of the tax are adversary proceedings. The proceeding has been held to be
necessarily a proceeding in rem.
 In the Philippine experience, the enforcement and collection of estate tax, is executive in character, as the legislature
has seen it fit to ascribe this task to the Bureau of Internal Revenue (Sec 3, NIRC)
- Vera vs Fernandez: “Taxes assessed against the estate of a deceased person, after administration is opened, need
not be submitted to the committee of claims in the ordinary course of administration. In the exercise of its control
over the administrator, the court may direct the payment of such taxes upon motion showing that the taxes have
been assessed against the estate.”
- Such liberal treatment of internal revenue taxes in the probate proceedings extends so far, even to allowing the
enforcement of tax obligations against the heirs of the decedent, even after distribution of the estate's properties.
 The approval of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory
requirement in the collection of estate taxes.
- There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or
estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and
collected.
- Sec. 87, NIRC: it is the probate or settlement court which is bidden not to authorize the executor or judicial
administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless
it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid.

 If there is any issue as to the validity of the BIR's decision to assess the estate taxes, this should have been pursued
through the proper administrative and judicial avenues

- Sec 229, NIRC: Protesting of assessment. - When the Commissioner of Internal Revenue or his duly authorized
representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings. Within
a period to be prescribed by implementing regulations, the taxpayer shall be required to respond to said notice. If
the taxpayer fails to respond, the Commissioner shall issue an assessment based on his findings.

Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in
such form and manner as may be prescribed by implementing regulations within (30) days from receipt of the
assessment; otherwise, the assessment shall become final and unappealable.

If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the
decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of said decision;
otherwise, the decision shall become final, executory and demandable.

 Apart from failing to file the required estate tax return within the time required for the filing, petitioner and the other
heirs never questioned the assessments served upon them, allowing the same to lapse into finality, and prompting the
BIR to collect by levying upon the properties

2. W/N notices of levy were issued within the time allowed – YES

 Petitioner: Applying Memorandum Circular No. 38-68, BIR's Notices of Levy on the Marcos properties, were issued
beyond the allowed period
 Court: Proper period; The deficiency tax assessment, having already become final, executory, and demandable, the
same can now be collected through the summary remedy of distraint or levy pursuant to Section 205 of the NIRC

- Applicable provision in regard to the prescriptive period for the assessment and collection of tax deficiency is Art.
223, NIRC:
 Sec. 223. Exceptions as to a period of limitation of assessment and collection of taxes.- (a) In the case of a false or
fraudulent return with intent to evade tax or of a failure to file a return, the tax may be assessed, or a proceeding
in court for the collection of such tax may be begun without assessment, at any time within ten (10) years after
the discovery of the falsity, fraud, or omission: Provided, That, in a fraud assessment which has become final and
executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection
thereof.

- xxx

(c) Any internal revenue tax which has been assessed within the period of limitation above prescribed, may be
collected by distraint or levy or by a proceeding in court within three years following the assessment of the tax.

3. W/N assessment and issuances are premature and oppressive – NO

 Petitioner: numerous pending proceedings questioning decedent’s ownership or interests in several properties make
the total value of his estate, and the estate tax due, incapable of exact pecuniary determination at the time
 Court: petitioner did not allege whether the properties levied were among those in cases pending at the Sandiganbayan

- Mere fact that decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax
assessments over properties indubitably included in his estate

4. W/N assessment was improper for deviating from findings of DOJ Panel of Prosecutors – NO

 Court: BIR is tasked to determine taxes due upon the estate, not DOJ

5. W/N objections were properly raised by Certiorari – NO

 Objections to assessments should have been raised with the Bureau of Internal Revenue and the Court of Tax Appeals

- course of action taken by the petitioner reflects his disregard or even repugnance of the established institutions
for governance in the scheme of a well-ordered society
- assessments having become final, executory and enforceable, the same can no longer be contested by means of a
disguised protest
- Certiorari may not be used as a substitute for a lost appeal or remedy

6. W/N notices of levy must be nullified for having been issued without validly serving copies to petitioner – NO

 Court: Service of notices of levy in satisfaction of these tax delinquencies upon the petitioner is not required by law

- Sec 213, NIRC: Levy shall be effected by writing upon said certificate a description of the property upon which levy
is made. At the same time, written notice of the levy shall be mailed to or served upon the Register of Deeds of
the province or city where the property is located and upon the delinquent taxpayer, or if he be absent from the
Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none,
to the occupant of the property in question.
- Regardless, the record shows that notices of warrants of distraint and levy of sale were furnished the counsel of
petitioner

DISPOSITIVE: The Court RESOLVED to DENY the present petition. The Decision of the Court of Appeals dated November 29, 1994
is hereby AFFIRMED in all respects.