FERDINAND R.
MARCOS II, petitioner,
vs.
COURT OF APPEALS, THE
COMMISSIONER OF THE BUREAU OF
INTERNAL REVENUE and HERMINIA D.
DE GUZMAN, respondents.
FACTS:
On September 29, 1989, former President Ferdinand Marcos died in Honolulu, Hawaii, USA. On June
27, 1990, a Special Tax Audit Team was created to conduct investigations and examinations of the tax liabilities
and obligations of the late president, as well as that of his family, associates and "cronies". Said audit team
concluded its investigation with a Memorandum dated July 26, 1991. The investigation disclosed that the
Marcoses failed to file a written notice of the death of the decedent, an estate tax returns, as well as several
income tax returns covering the years 1982 to 1986, — all in violation of the National Internal Revenue Code
(NIRC). The Commissioner of Internal Revenue thereby caused the preparation and filing of the Estate Tax
Return for the estate of the late president, the Income Tax Returns of the Spouses Marcos for the years 1985 to
1986, and the Income Tax Returns of petitioner Ferdinand "Bongbong" Marcos II for the years 1982 to 1985.
On July 26, 1991, the BIR issued the following: (1) Deficiency estate tax assessment no. FAC-2-89- 91-
002464 (against the estate of the late president Ferdinand Marcos in the amount of P23, 293,607,638.00 Pesos);
(2) Deficiency income tax assessment no. FAC-1-85-91-002452 and Deficiency income tax assessment no. FAC-
1-86-91-002451 (against the Spouses Ferdinand and Imelda Marcos in the amounts of P149,551.70 and
P184,009,737.40 representing deficiency income tax for the years 1985 and 1986); (3) Deficiency income tax
assessment nos. FAC-1-82-91-002460 to FAC-1-85-91-002463 (against petitioner Ferdinand "Bongbong"
Marcos II in the amounts of P258.70 pesos; P9,386.40 Pesos; P4,388.30 Pesos; and P6,376.60 Pesos representing
his deficiency income taxes for the years 1982 to 1985).
The deficiency tax assessments were not protested administratively, by Mrs. Marcos and the other heirs
of the late president, within 30 days from service of said assessments. On February 22, 1993,
the BIR Commissioner issued twenty-two notices of levy on real property against certain parcels of land owned
by the Marcoses — to satisfy the alleged estate tax and deficiency income taxes of Spouses Marcos. On May 20,
1993, four more Notices of Levy on real property were issued for the purpose of satisfying the deficiency income
taxes. On May 26, 1993, additional four (4) notices of Levy on real property were again issued. The foregoing tax
remedies were resorted to pursuant to Sections 205 and 213 of the National Internal Revenue Code (NIRC). On
June 25, 1993, petitioner Ferdinand "Bongbong" Marcos II filed the instant petition for certiorari and prohibition
under Rule 65 of the Rules of Court, with prayer for temporary restraining order and/or writ of preliminary
injunction.
It has been repeatedly observed, and not without merit, that the enforcement of tax laws and the
collection of taxes, is of paramount importance for the sustenance of government.
ISSUE: HELD
Whether or not the proper avenues of No. Taxes are the lifeblood of the government and
assessment and collection of the said tax should be collected without unnecessary hindrance.
obligations were However, such collection should be made in
taken by the respondent Bureau? (NO) accordance with law as any arbitrariness will negate
the very reason for government itself. It is therefore
necessary to reconcile the apparently
conflicting interests of the authorities and the
taxpayers so that the real purpose of taxation, which is
the promotion of the common good, may be achieved.
The pivotal question the court is tasked to resolve
refers to the authority of the Bureau of Internal
Revenue to collect by the summary remedy of levying
upon, and sale of real properties of the decedent, estate
tax deficiencies, without the cognition and authority of
the court sitting in probate over the supposed will of
the deceased.
The 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.
Petitioner argues that all the questioned Notices of
Levy, however, must be nullified for having been
issued without validly serving copies thereof to the
petitioner. As a mandatory heir of the decedent,
petitioner avers that he has an interest in the subject
estate, and notices of levy upon its properties should
have been served upon him. We do not agree. In the
case of notices of levy issued to satisfy the delinquent
estate tax, the delinquent taxpayer is the Estate of the
decedent, and not necessarily, and exclusively, the
petitioner as heir of the deceased. In the same vein, in
the matter of income tax delinquency of the late
president and his spouse, petitioner is not the taxpayer
liable. Thus, it follows that service of notices of levy
in satisfaction of these tax delinquencies upon the
petitioner is not required by law.
The foregoing notwithstanding, the record
shows that notices of warrants of distraint and levy of
sale were furnished the counsel of petitioner on April
7, 1993, and June 10, 1993, and the petitioner himself
on April 12, 1993 at his office at the Batasang
Pambansa. We cannot therefore, countenance
petitioner's insistence that he was denied due process.
Where there was an opportunity to raise objections to
government action, and such opportunity was
disregarded, for no justifiable reason, the party
claiming oppression then becomes the oppressor of the
orderly functions of government. He who comes to
court must come with clean hands. Otherwise, he not
only taints his name, but ridicules the very structure of
established authority.
DOCTRINE:
Thus, the Government has two ways of collecting the taxes 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. Another remedy, pursuant to the lien created by Section 315 of the Tax
Code upon all property and rights to property belong to the taxpayer for unpaid income tax, 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 the estate.
Taxes are the lifeblood of the government and should be collected without unnecessary
hindrance. However, such collection should be made in accordance with law as any
arbitrariness will negate the very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real
purpose of taxation, which is the promotion of the common good, may be achieved.
