Benefit-Received Principle LORENZO VS. POSADAS G.R. No.

43082 June 13, 1987 FACTS Thomas Hanley died in 1922 leaving a will which states that his estate shall not be sold or otherwise disposed of for a period of 10 years from his death and consequently, his estate shall be delivered to his nephew. His will was admitted to probate in the CFI of Zamboanga. In 1924, the CFI appointed P. Moore as executor in the will who served as trustee until February 1932 thus, plaintiff was appointed. During plaintiffs incumbency as trustee, Collector of Internal Revenue Juan Posadas alleging the estate of Hanley valued at P 29,385 allowed a deduction of 480.81, assessed against the inheritance tax in the amount of P1,434.24 with the penalties for delinquency and surcharges which amounted to P2,052.74. Posadas filed a motion in the testamentary proceedings before the CFI praying that plaintiff be ordered to pay the amount of P 2.052.74 which plaintiff paid under protest that unless the amount be refunded he will bring suit for its recovery. Posadas refused to refund the amount and set up a counterclaim for P1,191.27 as interest on the tax which was not included in the original assessment. CFI dismissed both complaint and counterclaim thus, plaintiff filed an appeal raising the issue that aside from the deduction of P480.81 consisting of the expenses and disbursements of executors as their fees and proven debts of the deceased, the compensation and fees of trustees in the amount of P1,187 should also be deducted under Sec. 1539 of the Revised Administrative Code as follows: In order to determine the net sum which must bear the tax, when an inheritance is concerned, there shall be deducted, in case of resident, the judicial expenses of the testamentary or intestate proceedings. ISSUES May the plaintiffs compensation as a trustee be lawfully deducted from the net value of the estate subject to inheritance tax? Does the estate of a deceased placed in trust relieves it from payment of inheritance tax? RULING No. It is true that a trustee is entitled to receive a fair compensation for his services. However, it does not follow that the compensation due him may be lawfully deducted in arriving at the net value of the estate subject to tax. There is no statute which requires trustees commissions to be deducted in fixing the value of the estate for the purpose of tax. The mere fact that the estate of the deceased was placed in

trust did not remove it from the operation of our inheritance tax laws or exempt it from the payment of inheritance tax. Judicial expenses are expenses of administration but in State vs. Hennepin County Probate Court, it was held that The compensation of a trustee earned, not in the administration of the estate, but in the management thereof for the benefit of the legatees or devisees, does not come properly within the class or reason for exempting administration expenses. Trusts are created for the benefit of those to whom the property ultimately passes and intended for the preservation of the estate. Moreover, a trustee takes possession of the estate for the proper execution of trust without acquiring any beneficial interest in the estate. If we were to hold that the payment of tax could be postponed or delayed by the creation of trust, the collection of tax would then be left to the will of a private individual which is detrimental to the premise that taxes are essential to the very existence of the government. Under the benefit-received principle, the obligation to pay taxes rests not upon the privileges enjoyed by, or the protection afforded to, a citizen by the government, but upon the necessity of money for the support of the state. For this reason, no one is allowed to object or resist the payment of taxes solely because no personal benefit to him can be pointed out. Whether or not he perceives a direct benefit from the inheritance tax, he still derives from the enjoyment and privilege of living in an organized and protected society by the devotion of taxes to public purposes. Delegation to the President GARCIA VS. EXECUTIVE SECRETARY G.R. No. 101273 July 3, 1992 FACTS In 1990, the President issued E.O. No. 438 which imposed an additional duty of 5% ad valorem across the board, on all imported articles, including crude oil and other oil products into the Philippines. This additional duty was subsequently increased from 5% ad valorem to 9% ad valorem by the promulgation of E.O. No. 443 on January 1991. The Tariff Commission conducted a public hearing regarding the imposition of a specific levy on crude oil and other petroleum products. Meanwhile, the President issued E.O.. No. 475 was issued by the President, reducing the rate of additional duty on all imported articles from 9% to 5% ad valorem, except in the cases of crude oil and other oil products which continued to be subject to the additional duty of nine percent (9%) ad valorem. Upon completion of the public hearing, the tariff Commission submitted to the President a "Report on Special Duty on Crude Oil and Oil Products" for consideration and appropriate

action. Consequently, the President issued E.O. No. 478, which levied a special duty of P0.95 per liter or P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products. The present Petition for Certiorari, Prohibition and Mandamus assails the validity of E.O. Nos. 475 and 478 for being violative of Section 24, Article VI of the 1987 Constitution. Petitioner contends that since the Constitution vests the authority to enact revenue bills in Congress, the President may not assume such power by issuing the EOs which are in the nature of revenuegenerating measures. ISSUE Is the Presidents act of issuing the assailed Executive Orders constitutes a valid delegation of taxing power to the President? RULING Yes. Under Section 24, Article VI of the Constitution, the enactment of appropriation, revenue and tariff bills, like all other bills is, of course, within the province of the Legislative rather than the Executive Department. It does not follow, however, that therefore Executive Orders Nos. 475 and 478, assuming they may be characterized as revenue measures, are prohibited to the President, that they must be enacted instead by the Congress of the Philippines. Section 28(2) of Article VI of the Constitution provides as follows: (2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. Therefore, there is an explicit constitutional permission to Congress to authorize the President "subject to such limitations and restrictions is [Congress] may impose" to fix "within specific limits" "tariff rates . . . and other duties or imposts . . ."