Collector vs campos rueda Maria Cerdeira died in Tangier, (an international zone [foreign country] in North Africa), on January

2, 1955. At the time of her demise, she was married to a Spanish Citizen and a permanent resident of Tangier from 1931 up to her death, on January 2, 1955. She left properties in Tangier as well as in the Philippines. Among the properties in the Philippines are several parcels of land and many shares of stock, accounts receivable and other intangible personal properties. On the real estate the respondent Antonio Campos Rueda, as administrator of her estate, paid the sum of P111,582.00 as estate tax and the sum of P151,791.48 as inheritance tax, on the transfer of her real properties in the Philippines, but refused to pay the corresponding deficiency estate and inheritance taxes due on the transfer of her intangible personal properties, claiming that the estate is exempt from the payment of said taxes pursuant to section 122 of the Tax Code and that he could avail of the reciprocal provisions of our Tax Code. The Collector of Internal Revenue in a decision assessed the estate of the deceased, as deficiency estate and inheritance taxes, the sum of P161,874.95 including interest and penalties, on the transfer of intangible personal properties of Maria Cerdeira.. is now ripe for adjudication. The Court of Tax Appeals answeredthe question in the negative. Facts: Collector of Internal Revenue held Antonio Campos Rueda, as administrator of the estate of the late EstrellaSoriano Vda. de Cerdeira, liable for the stun of P161,974.95 as deficiency estate and inheritance taxes for thetransfer of intangible personal properties in the Philippines, the deceased, a Spanish national having been aresident of Tangier, Morocco from 1931 up to the time of her death in 1955. Ruedas request for exemption was denied on the ground that the law of Tangier is not reciprocal to Section122 of the National Internal Revenue Code. Rueda requested for the reconsideration of the decision denying the claim for tax exemption. However,respondent denied this request on the grounds that there was no reciprocity [with Tangier, which wasmoreover] a mere principality, not a foreign country. Court of Tax Appeals ruled that the expression 'foreign country,' used in the last proviso of Section 122 of theNational Internal Revenue Code, refers to a government of that foreign power which, although not aninternational person in the sense of international law, does not impose transfer or death taxes upon intangiblepersonal properties of our citizens not residing therein, or whose law allows a similar exemption from suchtaxes. It is, therefore, not necessary that Tangier should have been recognized by our Government in order toentitle the petitioner to the exemption benefits of the last proviso of Section 122 of our Tax Code. Issue: Whether or not the requisites of statehood, or at least so much thereof as may be necessary for the acquisition of aninternational personality, must be satisfied for a "foreign country" to fall within the exemption of Section 122 of theNational Internal Revenue Code Held: Supreme Court affirmed Court of tax Appeals Ruling. If a foreign country is to be identified with a state, it is required in line with Pound's formulation that it be apolitically organized sovereign community independent of outside control bound by ties of nationhood, legallysupreme

ISSUE: Whether or not Rueda is rightfully assessed those taxes. HELD: Foreign Country used in Sec 122 of the National Internal Revenue Code, refers to a government of that foreign power which although not an international person in the sense of international law, DOES NOT impose transfer of death taxes upon intangible personal properties of citizens not residing therein. Or whose law allows a similar exemption from such taxes. It is not necessary that Tangier should have been recognized by our government in order to entitle the petitioner to the exemption benefits provided by our Tax Law. But since such law has not been alleged, this case is to remanded to the lower court for further trial THE COLLECTOR OF INTERNAL REVENUE, petitioner, VS. ANTONIO CAMPOS RUEDA,respondent. The basic issue posed by petitioner Collector of Internal Revenue in this appeal from a decision of the Court of TaxAppeals as to whether or not the requisites of statehood, or at least so much thereof as may be necessary for theacquisition of an international personality, must be satisfied for a "foreign country" to fall within the exemption of Section 122 of the National Internal Revenue Code 1

within its territory, acting through a government functioning under a regime of law. it is thus a sovereign person with the people composing it viewed as an organized corporate society under agovernment with the legal competence to exact obedience to its commands. The stress is on its being a nation, its people occupying a definite territory, politically organized, exercising bymeans of its government its sovereign will over the individuals within it and maintaining its separateinternational personality. State is a territorial society divided into government and subjects, claiming within its allotted area asupremacy over all other institutions. Moreover, similarly would point to the power entrusted to its governmentto maintain within its territory the conditions of a legal order and to enter into international relations. With thelatter requisite satisfied, international law does not exact independence as a condition of statehood. Collector of Internal Revenue v. De Lara: There can be no doubt that California as a state in the AmericanUnion was lacking in the alleged requisite of international personality. Nonetheless, it was held to be a foreigncountry within the meaning of Section 122 of the National Internal Revenue Code. This Court did commit itself to the doctrine that even a tiny principality, that of Liechtenstein, hardlyan international personality in the traditional sense, did fall under this exempt category.

ISSUE: Can the Government require Pineda to pay the full amount of the taxes assessed? RULING: Yes. Pineda is liable for the assessment as an heir and as a holdertransferee of property belonging to the estate/taxpayer. As a holder of property belonging to the estate, Pineda is liable for the tax up to the amount of the property in his possession. The reason is that the Government has a lien on what he received from the estate as his share in the inheritance for unpaid income taxes for which said estate is liable. By virtue of such lien, the Government has the right to subject the property in Pineda's possession, i.e., the P2,500.00, to satisfy the income tax assessment in the sum of P760.28. After such payment, Pineda will have a right of contribution from his co-heirs, to achieve an adjustment of the proper share of each heir in the distributable estate. The Government has two ways of collecting the tax in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. The reason why a case suit is filed against all the heirs for the tax due from the estate is to achieve thereby two results: first, payment of the tax; and second, adjustment of the shares of each heir in the distributed estate as lessened by the tax. Another remedy is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due. This second remedy is the very avenue the Government took in this case to collect the tax. The BIR should be giventhe necessary discretion to avail itself of the most expeditious way to collect the tax because taxes are the lifeblood of government and their prompt and certain availability is an imperious need. The adjustment of the respective shares due to the heirs from the inheritance, as lessened by the tax, is left to await the suit for contribution by the heir from whom the Government recovered said tax.

G.R. No. L-22734, September 15, 1967 CIR vs. PINEDA Estate proceedings were had to settle the estate of Atanasio Pineda. After the estate proceedings were closed, the BIR found out that the income tax liability of the estate during the pendency of the estate proceedings were not paid. The Court of Tax Appeals rendered judgment holding Manuel B. Pineda, the eldest son of the deceased, liable for the payment corresponding to his share of the estate. The Commissioner of Internal Revenue has appealed to SC and has proposed to hold Manuel B. Pineda liable for the payment of all the taxes found by the Tax Court to be due from the estate instead of only for the amount of taxes corresponding to his share in the estate.