Wells Fargo Bank and Union Co. vs CIR.

Note: The Philippines was part of the US commonwealth during this time.

Facts: Birdie Lillian Eye, died on September 16, 1932 at Los Angeles California, the place of
her alleged last residence and domicile.Among the properties she left was her one half conjugal
share in 70,000 shares of stock in Benguet Consolidated Mining Company, an anonymous
partnership organized and existing under the laws of the Philippines, with its principal office in
Manila. She left a will which was duly admitted to probate in California where her estate was
administered and settled.Petitioner is the trustee of the trust created by the will. The Federal
and State of Californias inheritance taxes due on said shares have been duly paid.

CFI and RTC held that inheritance tax was due. Hence, this petition for declaratory judgment
was instituted by plaintiff to ascertain whether the shares are still subject to inheritance tax.

Issue: May inheritance taxes be imposed on the said shares?

Held: Yes.

Originally the settled law in the US is that intangibles have only one situs for the purpose of
inheritance tax, and that such situs is in the domicile of the decedent at the time of his death.
But this rule has been relaxed due to (1) therecognition of the inherent power of each
government to taxpersons, properties and rights within its jurisdiction andenjoying thus, the
protection of its laws; and (2) upon theprinciple that as to intangibles, a single location in space
ishardly possible considering the multiple, distinct relationshipswhich may be entered into with
respect thereto.It is the identity or association of intangibles with the person of their owner at his
domicile which gives jurisdiction to tax. Butwhen the taxpayer extends his activities with respect
to hisintangibles, so as to avail himself of the protection and benefitof the laws of another state,
in such a way as to bring hisperson or property within the reach of the tax gatherer there,the
reason for a single place of taxation no longer obtains.In this case, the actual situs of the shares
of stock is in thePhilippines, the corporation being domiciled therein. The owner residing in
California has extended her activities with respect other intangibles so as to avail herself of the
protection and benefit of the Philippine laws. The jurisdiction of the Philippine Government to
impose tax must be upheld.