Dizon Vs. Ca-estate Tax

Death Valuation Rule
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    December 1969
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RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator o the Estate o the deceased JOSE !. FERNANDEZ, !etitioner "s. #O$R% OF %A& A!!EALS and #O''ISSIONER OF IN%ERNAL RE(EN$E J. Nachura. 3rd Division Facts) On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition for the probate of his i!! as fi!ed ith "ran#h $1 of the %e&iona! Tria! 'o(rt (%T') of )ani!a (probate #o(rt). The probate #o(rt then appointed retired *(preme 'o(rt J(sti#e +rsenio P. ,izon (J(sti#e ,izon) and petitioner, +tt-. %afae! +rsenio P. ,izon (petitioner) as *pe#ia! and +ssistant *pe#ia! +dministrator, respe#tive!-, of the .state of Jose (.state). /n a !etter dated O#tober 10, 1988, J(sti#e ,izon informed respondent 'ommissioner of the "(rea( of /nterna! %even(e ("/%) of the spe#ia! pro#eedin&s for the .state. +fter severa! e1tensions, on +pri! 17, 1992, +tt-. 3onza!es rote a !etter addressed to the "/% %e&iona! ,ire#tor for *an Pab!o 'itand fi!ed the estate ta1 ret(rn ith the same "/% %e&iona! Offi#e, sho in& therein a N/4 estate ta1 !iabi!it-. + 'ertifi#ation statin& that the ta1es d(e on the transfer of rea! and persona! properties of Jose had been f(!!- paid and said properties ma- be transferred to his heirs as iss(ed. *ometime in +(&(st 1992, J(sti#e ,izon passed a a-. Th(s, on O#tober 55, 1992, the probate #o(rt appointed petitioner as the administrator of the .state. Petitioner re6(ested the probate #o(rt7s a(thorit- to se!! severa! properties formin& part of the .state, for the p(rpose of pa-in& its #reditors, name!-8 .6(itab!e "an9in& 'orporation, "an6(e de 47/ndo#hine et. de *(ez, )ani!a "an9in& 'orporation and *tate /nvestment :o(se, /n#. Petitioner manifested that )ani!a "an9, a ma;or #reditor of the .state as not in#!(ded, as it did not fi!e a #!aim ith the probate #o(rt sin#e it had se#(rit- over severa! rea! estate properties formin& part of the .state. :o ever, on November 5<, 1991, the +ssistant 'ommissioner for 'o!!e#tion of the "/%, Themisto#!es )onta!ban, iss(ed .state Ta1 +ssessment Noti#e demandin& the pa-ment of P<<,970,98$.=2 as defi#ien#- estate ta1. The petition for revie as denied b- 'T+. Neverthe!ess, the 'T+ did not f(!!- adopt the assessment made b- the "/% and it #ame (p ith its o n #omp(tation of the defi#ien#- estate ta1. '+ affirmed 'T+>s r(!in&. Issues) ?hether the a#t(a! #!aims of the aforementioned #reditors ma- be f(!!a!!o ed as ded(#tions from the &ross estate of Jose despite the fa#t that the said #!aims ere red(#ed or #ondoned thro(&h #ompromise a&reements entered into bthe .state ith its #reditors. *eld8 @es. A'!aims a&ainst the estate,B as a!!o ab!e ded(#tions from the &ross estate (nder *e#tion 79 of the Ta1 'ode, are basi#a!!- a reprod(#tion of the ded(#tions a!!o ed (nder *e#tion 89 (a) (1) (') and (.) of 'ommon ea!th +#t No. =<< ('+ =<<), other ise 9no n as the Nationa! /nterna! %even(e 'ode of 1909, and hi#h as the first #odifi#ation of Phi!ippine ta1 !a s. Phi!ippine ta1 !a s ere, in t(rn, based on the federa! ta1 !a s of the Cnited *tates. Th(s, p(rs(ant to estab!ished r(!es of stat(tor- #onstr(#tion, the de#isions of +meri#an #o(rts #onstr(in& the federa! ta1 #ode are entit!ed to &reat ei&ht in the interpretation of o(r o n ta1 !a s. /t is note orth- that even in the Cnited *tates, there is some disp(te as to hether the ded(#tib!e amo(nt for a #!aim a&ainst the estate is fi1ed as of the de#edent7s death hi#h is the &enera! r(!e, or the same sho(!d be ad;(sted to ref!e#t postDdeath deve!opments, s(#h as here a sett!ement bet een the parties res(!ts in the red(#tion of the amo(nt a#t(a!!- paid. On one hand, the C.*. #o(rt r(!ed that the appropriate ded(#tion is the Ava!(eB that the #!aim had at the date of the de#edent7s death. +!so, as he!d in Propstra v. U.S., here a !ien #!aimed a&ainst the estate as #ertain and enfor#eab!e on the date of the de#edent7s death, the fa#t that the #!aimant s(bse6(ent!- sett!ed for !esser amo(nt did not pre#!(de the estate from ded(#tin& the entire amo(nt of the #!aim for estate ta1 p(rposes. These prono(n#ements essentia!!- #onfirm the &enera! prin#ip!e that postDdeath deve!opments are not materia! in determinin& the amo(nt of the ded(#tion. The Propstra #ase app!ied the /tha#a Tr(st dateDofDdeath va!(ation prin#ip!e to enfor#eab!e #!aims a&ainst the estate. ?e e1press o(r a&reement ith the dateDofDdeath va!(ation r(!e, made p(rs(ant to the r(!in& of the C.*. *(preme 'o(rt in /tha#a Tr(st 'o. v. Cnited *tates. First. There is no !a , nor do e dis#ern an- !e&is!ative intent in o(r ta1 !a s, hi#h disre&ards the dateDofDdeath va!(ation prin#ip!e and parti#(!ar!- provides that postD death deve!opments m(st be #onsidered in determinin& the net va!(e of the estate. /t bears emphasis that ta1 b(rdens are not to be imposed, nor pres(med to be imposed, be-ond hat the stat(te e1press!- and #!ear!- imports, ta1 stat(tes bein& #onstr(ed stri#tissimi ;(ris a&ainst the &overnment. +n- do(bt on hether a person, arti#!e or a#tivit- is ta1ab!e is &enera!!- reso!ved a&ainst ta1ation. *e#ond. *(#h #onstr(#tion finds re!evan#e and #onsisten#- in o(r %(!es on *pe#ia! Pro#eedin&s herein the term E#!aimsE re6(ired to be presented a&ainst a de#edent7s estate is &enera!!- #onstr(ed to mean debts or demands of a pe#(niar- nat(re hi#h #o(!d have been enfor#ed a&ainst the de#eased in his !ifetime, or !iabi!it- #ontra#ted bthe de#eased before his death. Therefore, the #!aims e1istin& at the time of death are si&nifi#ant to, and sho(!d be made the basis of, the determination of a!!o ab!e ded(#tions. ?:.%.FO%., the instant Petition is 3%+NT.,. +##ordin&!-, the assai!ed ,e#ision dated +pri! 02, 1999 and the %eso!(tion dated November 0, 1999 of the 'o(rt of +ppea!s in '+D3.%. *.P. No. =<9=7 are %.F.%*., and *.T +*/,.. The "(rea( of /nterna! %even(e7s defi#ien#- estate ta1 assessment a&ainst the .state of Jose P. Fernandez is hereb- NC44/F/.,. No #osts. %*IRD DI(ISION #O''ISSIONER OF IN%ERNAL RE(EN$E, petitioner, "s. #O$R% OF A!!EALS, #O$R% OF %A& A!!EALS and JOSEFINA !. !AJONAR, as Administratri+ o the Estate o !edro !. !a,onar, respondents. RESOL$%ION -ONZA-A.RE/ES, J.) Facts) Pedro Pa;onar, a member of the Phi!ippine *#o(t, "ataan 'ontin&ent, d(rin& the se#ond ?or!d ?ar, as a part of the infamo(s ,eath )ar#h b- reason of hi#h he s(ffered sho#9 and be#ame insane. :is sister Josefina Pa;onar be#ame the &(ardian over his person, hi!e his propert- as p!a#ed (nder the &(ardianship of the Phi!ippine Nationa! "an9 (PN") b- the %e&iona! Tria! 'o(rt of ,(ma&(ete 'it-, "ran#h 01, in *pe#ia! Pro#eedin&s No. 15$=. :e died on Jan(ar- 12, 1988. :e as s(rvived b- his t o brothers /sidro P. Pa;onar and 3re&orio Pa;onar, his sister Josefina Pa;onar, nephe s 'on#ordio Jando& and )ario Jando& and nie#e 'on#hita Jando&. On )a- 11, 1988, the PN" fi!ed an a##o(ntin& of the de#edent7s propert(nder &(ardianship va!(ed at P0,207,<75.29 in *pe#ia! Pro#eedin&s No. 15$=. :o ever, the PN" did not fi!e an estate ta1 ret(rn, instead it advised Pedro Pa;onar7s heirs to e1e#(te an e1tra;(di#ia! sett!ement and to pa- the ta1es on his estate. On +pri! $, 1988, p(rs(ant to the assessment b- the "(rea( of /nterna! %even(e ("/%), the estate of Pedro Pa;onar paid ta1es in the amo(nt of P5,$$7. On )a- 19, 1988, Josefina Pa;onar fi!ed a petition ith the %e&iona! Tria! 'o(rt of ,(ma&(ete 'it- for the iss(an#e in her favor of !etters of administration of the estate of her brother. The #ase as do#9eted as *pe#ia! Pro#eedin&s No. 5099. On J(!- 18, 1988, the tria! #o(rt appointed Josefina Pa;onar as the re&(!ar administratri1 of Pedro Pa;onar7s estate. On ,e#ember 19, 1988, p(rs(ant to a se#ond assessment b- the "/% for defi#ien#- estate ta1, the estate of Pedro Pa;onar paid estate ta1 in the amo(nt of P1,$57,792.98. Josefina Pa;onar, in her #apa#it- as administratri1 and heir of Pedro Pa;onar7s estate, fi!ed a protest on Jan(ar- 11, 1989 ith the "/% pra-in& that the estate ta1 pa-ment in the amo(nt of P1,$57,792.98, or at !east some portion of it, be ret(rned to the heirs. :o ever, on +(&(st 1$, 1989, itho(t aitin& for her protest to be reso!ved b- the "/%, Josefina Pa;onar fi!ed a petition for revie ith the 'o(rt of Ta1 +ppea!s ('T+), pra-in& for the ref(nd of P1,$57,792.98, or in the a!ternative, P8=2,525.2<, as erroneo(s!- paid estate ta1. The 'T+ ordered the 'ommissioner of /nterna! %even(e to ref(nd Josefina Pa;onar the amo(nt of P5$5,$8$.$9, representin& erroneo(s!- paid estate ta1 for the -ear 1988. +mon& the ded(#tions from the &ross estate a!!o ed b- the 'T+ ere the amo(nts of P<2,7$0 representin& the notaria! fee for the .1tra;(di#ia! *ett!ement and the amo(nt of P$2,222 as the attorne-7s fees in *pe#ia! Pro#eedin&s No. 15$= for &(ardianship. On J(ne 1$, 1990, the 'ommissioner of /nterna! %even(e fi!ed a motion for re#onsideration of the 'T+7s )a- <, 1990 de#ision assertin&, amon& others, that the notaria! fee for the .1tra;(di#ia! *ett!ement and the attorne-7s fees in the &(ardianship pro#eedin&s are not ded(#tib!e e1penses. On J(ne 7, 199=, the 'T+ iss(ed the assai!ed %eso!(tion 8 orderin& the 'ommissioner of /nterna! %even(e to ref(nd Josefina Pa;onar, as administratri1 of the estate of Pedro Pa;onar, the amo(nt of P7<,$25.=5 representin& erroneo(s!paid estate ta1 for the -ear 1988. +!so, the 'T+ (phe!d the va!idit- of the ded(#tion of the notaria! fee for the .1tra;(di#ia! *ett!ement and the attorne-7s fees in the &(ardianship pro#eedin&s. On J(!- $, 199=, the 'ommissioner of /nterna! %even(e fi!ed ith the 'o(rt of +ppea!s a petition for revie of the 'T+7s )a- <, 1990 ,e#ision and its J(ne 7, 199= %eso!(tion, 6(estionin& the va!idit- of the abovementioned ded(#tions. On ,e#ember 51, 199$, the 'o(rt of +ppea!s denied the 'ommissioner7s petition. Issue) 0hether the notarial ee paid or the e+tra,udicial settlement in the amount o !12,345 and the attorney6s ees in the 7uardianship proceedin7s in the amount o !42,222 may 8e allo9ed as deductions rom the 7ross estate o decedent in order to arri"e at the "alue o the net estate. *eld) @es. . +!tho(&h the Ta1 'ode spe#ifies E;(di#ia! e1penses of the testamentaror intestate pro#eedin&s,E there is no reason h- e1penses in#(rred in the administration and sett!ement of an estate in e1tra;(di#ia! pro#eedin&s sho(!d not be a!!o ed. :o ever, ded(#tion is !imited to s(#h administration e1penses as are a#t(a!!- and ne#essari!- in#(rred in the #o!!e#tion of the assets of the estate, pa-ment of the debts, and distrib(tion of the remainder amon& those entit!ed thereto. *(#h e1penses ma- in#!(de e1e#(tor7s or administrator7s fees, attorne-7s fees, #o(rt fees and #har&es, appraiser7s fees, #!er9 hire, #osts of preservin& and distrib(tin& the estate and storin& or maintainin& it, bro9era&e fees or #ommissions for se!!in& or disposin& of the estate, and the !i9e. ,ed(#tib!e attorne-7s fees are those in#(rred b- the e1e#(tor or administrator in the sett!ement of the estate or in defendin& or prose#(tin& #!aims a&ainst or d(e the estate. /t is #!ear then that the e1tra;(di#ia! sett!ement as for the p(rpose of pa-ment of ta1es and the distrib(tion of the estate to the heirs. The e1e#(tion of the e1tra;(di#ia! sett!ement ne#essitated the notarization of the same. :en#e the 'ontra#t of 4e&a! *ervi#es of )ar#h 58, 1988 entered into bet een respondent Josefina Pa;onar and #o(nse! as presented in eviden#e for the p(rpose of sho in& that the amo(nt of P<2,7$0.22 as for the notarization of the .1tra;(di#ia! *ett!ement. /t fo!!o s then that the notaria! fee of P<2,7$0.22 as in#(rred primari!to sett!e the estate of the de#eased Pedro Pa;onar. *aid amo(nt sho(!d then be #onsidered an administration e1penses a#t(a!!- and ne#essari!- in#(rred in the #o!!e#tion of the assets of the estate, pa-ment of debts and distrib(tion of the remainder amon& those entit!ed thereto. Th(s, the notaria! fee of P<2,7$0 in#(rred for the .1tra;(di#ia! *ett!ement sho(!d be a!!o ed as a ded(#tion from the &ross estate. +ttorne-7s fees, on the other hand, in order to be ded(#tib!e from the &ross estate m(st be essentia! to the sett!ement of the estate. The amo(nt of P$2,222.22 as in#(rred as attorne-7s fees in the &(ardianship pro#eedin&s. Petitioner #ontends that said amo(nt are not e1penses of the testamentar- or intestate pro#eedin&s as the &(ardianship pro#eedin& as instit(ted d(rin& the !ifetime of the de#edent hen there as -et no estate to be sett!ed. +&ain, this #ontention m(st fai!. The &(ardianship pro#eedin& in this #ase as ne#essar- for the distrib(tion of the propert- of the de#eased. The PN" as appointed &(ardian over the assets of the de#eased, and that ne#essari!- the assets of the de#eased formed part of his &ross estate. The ded(#tions from the &ross estate permitted (nder se#tion 79 of the Ta1 'ode basi#a!!- reprod(#ed the ded(#tions a!!o ed (nder 'ommon ea!th +#t No. =<< ('+ =<<), other ise 9no n as the Nationa! /nterna! %even(e 'ode of 1909, 1< and hi#h as the first #odifi#ation of Phi!ippine ta1 !a s. *e#tion 89 (a) (1) (") of '+ =<< a!so provided for the ded(#tion of the E;(di#ia! e1penses of the testamentar- or intestate pro#eedin&sE for p(rposes of determinin& the va!(e of the net estate. Phi!ippine ta1 !a s ere, in t(rn, based on the federa! ta1 !a s of the Cnited *tates. /n a##ord ith estab!ished r(!es of stat(tor- #onstr(#tion, the de#isions of +meri#an #o(rts #onstr(in& the federa! ta1 #ode are entit!ed to &reat ei&ht in the interpretation of o(r o n ta1 !a s. J(di#ia! e1penses are e1penses of administration. +dministration e1penses, as an a!!o ab!e ded(#tion from the &ross estate of the de#edent for p(rposes of arrivin& at the va!(e of the net estate, have been #onstr(ed b- the federa! and state #o(rts of the Cnited *tates to in#!(de a!! e1penses Eessentia! to the #o!!e#tion of the assets, pa-ment of debts or the distrib(tion of the propert- to the persons entit!ed to it.E /n other ords, the e1penses m(st be essentia! to the proper sett!ement of the estate. .1pendit(res in#(rred for the individ(a! benefit of the heirs, devisees or !e&atees are not ded(#tib!e. This distin#tion has been #arried over to o(r ;(risdi#tion. Th(s, in 4orenzo v. Posadas 55 the 'o(rt #onstr(ed the phrase E;(di#ia! e1penses of the testamentar- or intestate pro#eedin&sE as not in#!(din& the #ompensation paid to a tr(stee of the de#edent7s estate hen it appeared that s(#h tr(stee as appointed for the p(rpose of mana&in& the de#edent7s rea! estate for the benefit of the testamentar- heir. /n another #ase, the 'o(rt disa!!o ed the premi(ms paid on the bond fi!ed b- the administrator as an e1pense of administration sin#e the &ivin& of a bond is in the nat(re of a 6(a!ifi#ation for the offi#e, and not ne#essar- in the sett!ement of the estate. Neither ma- attorne-7s fees in#ident to !iti&ation in#(rred b- the heirs in assertin& their respe#tive ri&hts be #!aimed as a ded(#tion from the &ross estate. 'omin& to the #ase at bar, the notaria! fee paid for the e1tra;(di#ia! sett!ement is #!ear!- a ded(#tib!e e1pense sin#e s(#h sett!ement effe#ted a distrib(tion of Pedro Pa;onar7s estate to his !a f(! heirs. *imi!ar!-, the attorne-7s fees paid to PN" for a#tin& as the &(ardian of Pedro Pa;onar7s propert- d(rin& his !ifetime sho(!d a!so be #onsidered as a ded(#tib!e administration e1pense. PN" provided a detai!ed a##o(ntin& of de#edent7s propert- and &ave advi#e as to the proper sett!ement of the !atter7s estate, a#ts hi#h #ontrib(ted to ards the #o!!e#tion of de#edent7s assets and the s(bse6(ent sett!ement of the estate. SE#OND DI(ISION -.R. No. :;2<<2 June 4, :==3 FERDINAND R. 'AR#OS II, petitioner, "s. #O$R% OF A!!EALS, %*E #O''ISSIONER OF %*E >$REA$ OF IN%ERNAL RE(EN$E and *ER'INIA D. DE -$Z'AN, respondents. %ORRES, JR., J.) Facts) Petitioner Ferdinand %. )ar#os //, the e!dest son of the de#edent, 6(estions the a#t(ations of the respondent 'ommissioner of /nterna! %even(e in assessin&, and #o!!e#tin& thro(&h the s(mmar- remed- of 4ev- on %ea! Properties, estate and in#ome ta1 de!in6(en#ies (pon the estate and properties of his father, despite the penden#- of the pro#eedin&s on probate of the i!! of the !ate president. Petitioner had fi!ed ith the respondent 'o(rt of +ppea!s a Petition for 'ertiorari and Prohibition ith an app!i#ation for rit of pre!iminar- in;(n#tion andGor temporar- restrainin& order on J(ne 58, 1990, see9in& to8 /. +nn(! and set aside the Noti#es of 4ev- on rea! propert- dated Febr(ar- 55, 1990 and )a- 52, 1990, iss(ed b- respondent 'ommissioner of /nterna! %even(eH //. +nn(! and set aside the Noti#es of *a!e dated )a- 5<, 1990H ///. .n;oin the :ead %even(e .1e#(tive +ssistant ,ire#tor // ('o!!e#tion *ervi#e), from pro#eedin& ith the +(#tion of the rea! properties #overed b- Noti#es of *a!e. The 'o(rt of +ppea!s r(!ed that the defi#ien#- assessments for estate and in#ome ta1 made (pon the petitioner and the estate of the de#eased President )ar#os have a!read- be#ome fina! and (nappea!ab!e, and ma- th(s be enfor#ed b- the s(mmarremed- of !ev-in& (pon the properties of the !ate President, as as done b- the respondent 'ommissioner of /nterna! %even(e. :en#e the instant petition. Petitioner s(bmits that the probate #o(rt is not pre#!(ded from den-in& a re6(est b- the &overnment for the immediate pa-ment of ta1es, and sho(!d order the pa-ment of the same on!- ithin the period fi1ed b- the probate #o(rt for the pa-ment of a!! the debts of the de#edent. On the other hand, it is ar&(ed b- the "/%, that the state7s a(thorit- to #o!!e#t interna! reven(e ta1es is paramo(nt. Th(s, the penden#- of probate pro#eedin&s over the estate of the de#eased does not pre#!(de the assessment and #o!!e#tion, thro(&h s(mmar- remedies, of estate ta1es over the same. +##ordin& to the respondent, #!aims for pa-ment of estate and in#ome ta1es d(e and assessed after the death of the de#edent need not be presented in the form of a #!aim a&ainst the estate. These #an and sho(!d be paid immediate!-. The probate #o(rt is not the &overnment a&en#- to de#ide hether an estate is !iab!e for pa-ment of estate of in#ome ta1es. ?e!!Dsett!ed is the r(!e that the probate #o(rt is a #o(rt ith spe#ia! and !imited ;(risdi#tion. Issue) 0ON the >ureau o Internal Re"enue has the authority to collect 8y the summary remedy o le"yin7 upon, and sale o real properties o the decedent, estate ta+ de iciencies, 9ithout the co7nition and authority o the court sittin7 in pro8ate o"er the supposed 9ill o the deceased. *eld) @es. *tri#t!- spea9in&, the assessment of an inheritan#e ta1 does not dire#t!invo!ve the administration of a de#edent7s estate, a!tho(&h it ma- be vie ed as an in#ident to the #omp!ete sett!ement of an estate, and, (nder some stat(tes, it is made the d(t- of the probate #o(rt to ma9e the amo(nt of the inheritan#e ta1 a part of the fina! de#ree of distrib(tion of the estate. /t is not a&ainst the propert- of de#edent, nor is it a #!aim a&ainst the estate as s(#h, b(t it is a&ainst the interest or propert- ri&ht hi#h the heir, !e&atee, devisee, et#., has in the propert- former!he!d b- de#edent. F(rther, (nder some stat(tes, it has been he!d that it is not a s(it or #ontrovers- bet een the parties, nor is it an adversar- pro#eedin& bet een the state and the person ho o es the ta1 on the inheritan#e. :o ever, (nder other stat(tes it has been he!d that the hearin& and determination of the #ash va!(e of the assets and the determination of the ta1 are adversar- pro#eedin&s. The pro#eedin& has been he!d to be ne#essari!- a pro#eedin& in rem. Ta1es assessed a&ainst the estate of a de#eased person, after administration is opened, need not be s(bmitted to the #ommittee on #!aims in the ordinar- #o(rse of administration. /n the e1er#ise of its #ontro! over the administrator, the #o(rt madire#t the pa-ment of s(#h ta1es (pon motion sho in& that the ta1es have been assessed a&ainst the estate. *(#h !ibera! treatment of interna! reven(e ta1es in the probate pro#eedin&s e1tends so far, even to a!!o in& the enfor#ement of ta1 ob!i&ations a&ainst the heirs of the de#edent, even after distrib(tion of the estate7s properties. '!aims for ta1es, hether assessed before or after the death of the de#eased, #an be #o!!e#ted from the heirs even after the distrib(tion of the properties of the de#edent. The- are e1empted from the app!i#ation of the stat(te of nonD#!aims. The heirs sha!! be !iab!e therefor, in proportion to their share in the inheritan#e. From the fore&oin&, it is dis#ernib!e that the approva! of the #o(rt, sittin& in probate, or as a sett!ement trib(na! over the de#eased is not a mandatorre6(irement in the #o!!e#tion of estate ta1es. /t #annot therefore be ar&(ed that the Ta1 "(rea( erred in pro#eedin& ith the !ev-in& and sa!e of the properties a!!e&ed!o ned b- the !ate President, on the &ro(nd that it as re6(ired to see9 first the probate #o(rt7s san#tion. There is nothin& in the Ta1 'ode, and in the pertinent remedia! !a s that imp!ies the ne#essit- of the probate or estate sett!ement #o(rt7s approva! of the state7s #!aim for estate ta1es, before the same #an be enfor#ed and #o!!e#ted. On the #ontrar-, (nder *e#tion 87 of the N/%', it is the probate or sett!ement #o(rt hi#h is bidden not to a(thorize the e1e#(tor or ;(di#ia! administrator of the de#edent7s estate to de!iver an- distrib(tive share to an- part- interested in the estate, (n!ess it is sho n a 'ertifi#ation b- the 'ommissioner of /nterna! %even(e that the estate ta1es have been paid. This provision disproves the petitioner7s #ontention that it is the probate #o(rt hi#h approves the assessment and #o!!e#tion of the estate ta1. /f there is an- iss(e as to the va!idit- of the "/%7s de#ision to assess the estate ta1es, this sho(!d have been p(rs(ed thro(&h the proper administrative and ;(di#ia! aven(es provided for b- !a . Section 229 of the NIRC tells us how: *e#. 559. Protestin& of assessment. ?hen the 'ommissioner of /nterna! %even(e or his d(!- a(thorized representative finds that proper ta1es sho(!d be assessed, he sha!! first notif- the ta1pa-er of his findin&s. ?ithin a period to be pres#ribed bimp!ementin& re&(!ations, the ta1pa-er sha!! be re6(ired to respond to said noti#e. /f the ta1pa-er fai!s to respond, the 'ommissioner sha!! iss(e an assessment based on his findin&s. *(#h assessment ma- be protested administrative!- b- fi!in& a re6(est for re#onsideration or reinvesti&ation in s(#h form and manner as ma- be pres#ribed b- imp!ementin& re&(!ations ithin (02) da-s from re#eipt of the assessmentH other ise, the assessment sha!! be#ome fina! and (nappea!ab!e. /f the protest is denied in ho!e or in part, the individ(a!, asso#iation or #orporation adverse!- affe#ted b- the de#ision on the protest ma- appea! to the 'o(rt of Ta1 +ppea!s ithin thirt- (02) da-s from re#eipt of said de#isionH other ise, the de#ision sha!! be#ome fina!, e1e#(tor- and demandab!e. (+s inserted b- P.,. 1770) +part from fai!in& to fi!e the re6(ired estate ta1 ret(rn ithin the time re6(ired for the fi!in& of the same, petitioner, and the other heirs never 6(estioned the assessments served (pon them, a!!o in& the same to !apse into fina!it-, and promptin& the "/% to #o!!e#t the said ta1es b- !ev-in& (pon the properties !eft bPresident )ar#os. Issue o !rescription) Petitioner spe#ifi#a!!- points o(t that app!-in& )emorand(m 'ir#(!ar No. 08D<8, imp!ementin& *e#tions 018 and 05= of the o!d ta1 #ode (%ep(b!i# +#t $520), the "/%7s Noti#es of 4ev- on the )ar#os properties, ere iss(ed be-ond the a!!o ed period, and are therefore n(!! and void. Notices o Le"y 9ere issued only on ;; Fe8ruary :==5 and ;2 'ay :==5 hen at !east seventeen (17) months had a!read- !apsed from the !ast servi#e of ta1 assessment on 15 *eptember 1991. +s no noti#es of distraint of persona! propert- ere first iss(ed b- respondents, the !atter sho(!d have #omp!ied ith %even(e )emorand(m 'ir#(!ar No. 08D<8 and iss(ed these Noti#es of 4ev- not ear!ier than three (0) months nor !ater than si1 (<) months from 15 *eptember 1991. /n a##ordan#e ith the 'ir#(!ar, respondents only had until :; 'arch :==; ?the last day o the si+th month@ ithin hi#h to iss(e these Noti#es of 4ev-. The Noti#es of 4ev-, havin& been iss(ed be-ond the period a!!o ed b- !a , are th(s void and of no effe#t. S# Rulin7) The Noti#es of 4ev- (pon rea! propert- ere iss(ed ithin the pres#riptive period and in a##ordan#e ith the provisions of the present Ta1 'ode. The defi#ien#- ta1 assessment, havin& a!read- be#ome fina!, e1e#(tor-, and demandab!e, the same #an no be #o!!e#ted thro(&h the s(mmar- remed- of distraint or !ev- p(rs(ant to *e#tion 52$ of the N/%'. *e#. 550. .1#eptions as to a period of !imitation of assessment and #o!!e#tion of ta1es.(a) /n the #ase of a fa!se or fra(d(!ent ret(rn ith intent to evade ta1 or of a fai!(re to fi!e a ret(rn, the ta1 ma- be assessed, or a pro#eedin& in #o(rt for the #o!!e#tion of s(#h ta1 ma- be be&(n itho(t assessment, at an- time ithin ten (12) -ears after the dis#over- of the fa!sit-, fra(d, or omission8 Provided, That, in a fra(d assessment hi#h has be#ome fina! and e1e#(tor-, the fa#t of fra(d sha!! be ;(di#ia!!- ta9en #o&nizan#e of in the #ivi! or #rimina! a#tion for the #o!!e#tion thereof. (#) +n- interna! reven(e ta1 hi#h has been assessed ithin the period of !imitation above pres#ribed, ma- be #o!!e#ted b- distraint or !ev- or b- a pro#eedin& in #o(rt ithin three -ears fo!!o in& the assessment of the ta1. The omission to fi!e an estate ta1 ret(rn, and the s(bse6(ent fai!(re to #ontest or appea! the assessment made b- the "/% is fata! to the petitioner7s #a(se, as (nder the aboveD#ited provision, in #ase of fai!(re to fi!e a ret(rn, the ta1 ma- be assessed at an- time ithin ten -ears after the omission, and an- ta1 so assessed ma- be #o!!e#ted b- !ev- (pon rea! propert- ithin three -ears fo!!o in& the assessment of the ta1. *in#e the estate ta1 assessment had be#ome fina! and (nappea!ab!e b- the petitioner7s defa(!t as re&ards protestin& the va!idit- of the said assessment, there is no no reason h- the "/% #annot #ontin(e ith the #o!!e#tion of the said ta1. +n- ob;e#tion a&ainst the assessment sho(!d have been p(rs(ed fo!!o in& the aven(e paved in *e#tion 559 of the N/%' on protests on assessments of interna! reven(e ta1es. Petitioner further argues that "the numerous pending court cases questioning the late president's ownership or interests in several properties (both real and personal ma!e the total value of his estate" and the consequent estate ta# due" incapable of e#act pecuniar$ determination at this time. %hus" respondents' assessment of the estate ta# and their issuance of the Notices of &ev$ and sale are premature and oppressive." Petitioner also e#presses his reservation as to the propriet$ of the '()'s total assessment of P*3"*+*",-.",3/.--" stating that this amount deviates from the findings of the Department of Justice's Panel of Prosecutors as per its resolution of *- 0eptember 1++1. S#) /t is not the ,epartment of J(sti#e hi#h is the &overnment a&en#tas9ed to determine the amo(nt of ta1es d(e (pon the s(b;e#t estate, b(t the "(rea( of /nterna! %even(e, hose determinations and assessments are pres(med #orre#t and made in &ood faith. The ta1pa-er has the d(t- of provin& other ise. /n the absen#e of proof of an- irre&(!arities in the performan#e of offi#ia! d(ties, an assessment i!! not be dist(rbed. .ven an assessment based on estimates is prima fa#ie va!id and !a f(! here it does not appear to have been arrived at arbitrari!- or #apri#io(s!-. The b(rden of proof is (pon the #omp!ainin& part- to sho #!ear!- that the assessment is erroneo(s. Fai!(re to present proof of error in the assessment i!! ;(stif- the ;(di#ia! affirman#e of said assessment. /n this instan#e, petitioner has not pointed o(t one sin&!e provision in the )emorand(m of the *pe#ia! +(dit Team hi#h &ave rise to the 6(estioned assessment, hi#h bears a tra#e of fa!sit-. /ndeed, the petitioner7s atta#9 on the assessment bears main!- on the a!!e&ed improbab!e and (n#ons#ionab!e amo(nt of the ta1es #har&ed. Petitioner argues that all the questioned Notices of &ev$" however" must be nullified for having been issued without validl$ serving copies thereof to the petitioner. 2s a mandator$ heir of the decedent" petitioner avers that he has an interest in the sub3ect estate" and notices of lev$ upon its properties should have been served upon him. S#) /n the #ase of noti#es of !ev- iss(ed to satisf- the de!in6(ent estate ta1, the de!in6(ent ta1pa-er is the .state of the de#edent, and not ne#essari!-, and e1#!(sive!-, the petitioner as heir of the de#eased. /n the same vein, in the matter of in#ome ta1 de!in6(en#- of the !ate president and his spo(se, petitioner is not the ta1pa-er !iab!e. Th(s, it fo!!o s that servi#e of noti#es of !ev- in satisfa#tion of these ta1 de!in6(en#ies (pon the petitioner is not re6(ired b- !a , as (nder *e#tion 510 of the N/%', hi#h pertinent!- states8 111 111 111 . . . 4ev- sha!! be effe#ted b- ritin& (pon said #ertifi#ate a des#ription of the propert- (pon hi#h !ev- is made. +t the same time, ritten noti#e of the !ev- sha!! be mai!ed to or served (pon the %e&ister of ,eeds of the provin#e or #it- here the propert- is !o#ated and (pon the de!in6(ent ta1pa-er, or if he be absent from the Phi!ippines, to his a&ent or the mana&er of the b(siness in respe#t to hi#h the !iabi!it- arose, or if there be none, to the o##(pant of the propert- in 6(estion. IN (IE0 0*EREOF, the #ourt RESOL(ED to DEN/ the present petition. %he Decision o the #ourt o Appeals dated No"em8er ;=, :==A is here8y AFFIR'ED in all respects. SE#OND DI(ISION %*E ES%A%E OF *ILARIO '. R$IZ, ED'OND R$IZ, E+ecutor, petitioner, "s. %*E #O$R% OF A!!EALS ?Former Special Si+th Di"ision@, 'ARIA !ILAR R$IZ.'ON%ES, 'ARIA #A%*R/N R$IZ, #ANDI#E AL>ER%INE R$IZ, 'ARIA AN-ELINE R$IZ and %*E !RESIDIN- J$D-E OF %*E RE-IONAL %RIAL #O$R% OF !ASI-, respondents. !$NO, J.) Facts) On J(ne 57, 1987, :i!ario ). %(iz e1e#(ted a ho!o&raphi# i!! namin& as his heirs his on!- son, .dmond %(iz, his adopted da(&hter, private respondent )aria Pi!ar %(iz )ontes, and his three &randda(&hters, private respondents )aria 'athr-n, 'andi#e +!bertine and )aria +n&e!ine, a!! #hi!dren of .dmond %(iz. The testator be6(eathed to his heirs s(bstantia! #ash, persona! and rea! properties and named .dmond %(iz e1e#(tor of his estate. On +pri! 15, 1988, :i!ario %(iz died. /mmediate!- thereafter, the #ash #omponent of his estate as distrib(ted amon& .dmond %(iz and private respondents in a##ordan#e ith the de#edent7s i!!. For (nbe9no n reasons, .dmond, the named e1e#(tor, did not ta9e an- a#tion for the probate of his father7s ho!o&raphi# i!!. On J(ne 59, 1995, fo(r -ears after the testator7s death, it as private respondent )aria Pi!ar %(iz )ontes ho fi!ed, a petition for the probate and approva! of :i!ario %(iz7s i!! and for the iss(an#e of !etters testamentar- to .dmond %(iz. .dmond opposed the petition on the &ro(nd that the i!! as e1e#(ted (nder (nd(e inf!(en#e. On November 5, 1995, one of the properties of the estate the ho(se and !ot at No. 5 O!iva *treet, Fa!!e Ferde /F, Pasi& hi#h the testator be6(eathed to )aria 'athr-n, 'andi#e +!bertine and )aria +n&e!ine as !eased o(t b- .dmond to third persons. On Jan(ar- 19, 1990, the probate #o(rt ordered .dmond to deposit ith the "ran#h '!er9 of 'o(rt the renta! deposit and pa-ments tota!!in& P$=2,222.22 representin& the oneD-ear !ease of the Fa!!e Ferde propert-. .dmond t(rned over the amo(nt of P0=8,$80.$<, representin& the ba!an#e of the rent after ded(#tin& P191,=1<.1= for repair and maintenan#e e1penses on the estate. /n )ar#h 1990, .dmond moved for the re!ease of P$2,222.22 to pa- the rea! estate ta1es on the rea! properties of the estate. The probate #o(rt approved the re!ease of P7,755.22. On )a- 1=, 1990, .dmond ithdre his opposition to the probate of the i!!. 'onse6(ent!-, the probate #o(rt, on )a- 18, 1990, admitted the i!! to probate and ordered the iss(an#e of !etters testamentar- to .dmond #onditioned (pon the fi!in& of a bond in the amo(nt of P$2,222.22. The !etters testamentar- ere iss(ed on J(ne 50, 1990. On J(!- 58, 1990, petitioner Testate .state of :i!ario %(iz, ith .dmond %(iz as e1e#(tor, fi!ed an E.1DParte )otion for %e!ease of F(nds.E /t pra-ed for the re!ease of the rent pa-ments deposited ith the "ran#h '!er9 of 'o(rt. %espondent )ontes opposed the motion and #on#(rrent!- fi!ed a E)otion for %e!ease of F(nds to 'ertain :eirsE and E)otion for /ss(an#e of 'ertifi#ate of +!!o an#e of Probate ?i!!.E )ontes pra-ed for the re!ease of the said rent pa-ments to )aria 'athr-n, 'andi#e +!bertine and )aria +n&e!ine and for the distrib(tion of the testator7s properties, spe#ifi#a!!- the Fa!!e Ferde propert- and the "!(e %id&e apartments, in a##ordan#e ith the provisions of the ho!o&raphi# i!!. On +(&(st 5<, 1990, the probate #o(rt denied petitioner7s motion for re!ease of f(nds b(t &ranted respondent )ontes7 motion in vie of petitioner7s !a#9 of opposition. /t th(s ordered the re!ease of the rent pa-ments to the de#edent7s three &randda(&hters. /t f(rther ordered the de!iver- of the tit!es to and possession of the properties be6(eathed to the three &randda(&hters and respondent )ontes (pon the fi!in& of a bond of P$2,222.22. Petitioner moved for re#onsideration a!!e&in& that he a#t(a!!- fi!ed his opposition to respondent )ontes7s motion for re!ease of rent pa-ments hi#h opposition the #o(rt fai!ed to #onsider. Petitioner !i9e ise reiterated his previo(s motion for re!ease of f(nds. On November 50, 1990, petitioner, thro(&h #o(nse!, manifested that he as ithdra in& his motion for re!ease of f(nds in vie of the fa#t that the !ease #ontra#t over the Fa!!e Ferde propert- had been rene ed for another -ear. ,espite petitioner7s manifestation, the probate #o(rt, on ,e#ember 55, 1990, ordered the re!ease of the f(nds to .dmond b(t on!- Es(#h amo(nt as ma- be ne#essar- to #over the e1penses of administration and a!!o an#es for s(pportE of the testator7s three &randda(&hters s(b;e#t to #o!!ation and ded(#tib!e from their share in the inheritan#e. The #o(rt, ho ever, he!d in abe-an#e the re!ease of the tit!es to respondent )ontes and the three &randda(&hters (nti! the !apse of si1 months from the date of first p(b!i#ation of the noti#e to #reditors. On appea!, '+ affirmed probate #o(rt>s de#ision, hen#e the instant petition. Issue) ?hether the probate #o(rt, after admittin& the i!! to probate b(t before pa-ment of the estate7s debts and ob!i&ations, has the a(thorit-8 (1) to &rant an a!!o an#e from the f(nds of the estate for the s(pport of the testator7s &rand#hi!drenH (5) to order the re!ease of the tit!es to #ertain heirsH and (0) to &rant possession of a!! properties of the estate to the e1e#(tor of the i!!. *eld) 1) The &rand#hi!dren are not entit!ed to provisiona! s(pport from the f(nds of the de#edent7s estate. The !a #!ear!- !imits the a!!o an#e to E ido and #hi!drenE and does not e1tend it to the de#eased7s &rand#hi!dren, re&ard!ess of their minorit- or in#apa#it-. /t as error, therefore, for the appe!!ate #o(rt to s(stain the probate #o(rt7s order &rantin& an a!!o an#e to the &rand#hi!dren of the testator pendin& sett!ement of his estate. 5) The probate #o(rt erred hen the- ordered the re!ease of the tit!es of the be6(eathed properties to private respondents si1 months after the date of first p(b!i#ation of noti#e to #reditors. +n order re!easin& tit!es to properties of the estate amo(nts to an advan#e distrib(tion of the estate hi#h is a!!o ed on!- (nder the fo!!o in& #onditions8 Sec. ;. Ad"ance distri8ution in special proceedin7s. Noth ithstandin& a pendin& #ontrovers- or appea! in pro#eedin&s to sett!e the estate of a de#edent, the #o(rt ma-, in its dis#retion and (pon s(#h terms as it ma- deem proper and ;(st, permit that s(#h part of the estate as ma- not be affe#ted b- the #ontrovers- or appea! be distrib(ted amon& the heirs or !e&atees, (pon #omp!ian#e ith the #onditions set forth in %(!e 92 of these %(!es. +nd %(!e 92 provides that8 Sec. :. 0hen order or distri8ution o residue made. ?hen the debts, f(nera! #har&es, and e1penses of administration the a!!o an#e to the ido , and inheritan#e ta1 if an-, #har&eab!e to the estate in a##ordan#e ith !a , have been paid, the #o(rt, on the app!i#ation of the e1e#(tor or administrator, or of a person interested in the estate, and after hearin& (pon noti#e sha!! assi&n the resid(e of the estate to the persons entit!ed to the sameI /n sett!ement of estate pro#eedin&s, the distrib(tion of the estate properties #an on!- be made8 (1) after a!! the debts, f(nera! #har&es, e1penses of administration, a!!o an#e to the ido , and estate ta1 have been paidH or (5) before pa-ment of said ob!i&ations on!- if the distrib(tees or an- of them &ives a bond in a s(m fi1ed b- the #o(rt #onditioned (pon the pa-ment of said ob!i&ations ithin s(#h time as the #o(rt dire#ts, or hen provision is made to meet those ob!i&ations. /n the #ase at bar, the probate #o(rt ordered the re!ease of the tit!es to the Fa!!e Ferde propert- and the "!(e %id&e apartments to the private respondents after the !apse of si1 months from the date of first p(b!i#ation of the noti#e to #reditors. The 6(estioned order spea9s of Enoti#eE to #reditors, not pa-ment of debts and ob!i&ations. :i!ario %(iz a!!e&ed!- !eft no debts hen he died b(t the ta1es on his estate had not hitherto been paid, m(#h !ess as#ertained. The estate ta1 is one of those ob!i&ations that m(st be paid before distrib(tion of the estate. /f not -et paid, the r(!e re6(ires that the distrib(tees post a bond or ma9e s(#h provisions as to meet the said ta1 ob!i&ation in proportion to their respe#tive shares in the inheritan#e. Notab!-, at the time the order as iss(ed the properties of the estate had not -et been inventoried and appraised. /t as a!so too ear!- in the da- for the probate #o(rt to order the re!ease of the tit!es si1 months after admittin& the i!! to probate. The probate of a i!! is #on#!(sive as to its d(e e1e#(tion and e1trinsi# va!idit- and sett!es on!- the 6(estion of hether the testator, bein& of so(nd mind, free!- e1e#(ted it in a##ordan#e ith the forma!ities pres#ribed b- !a . J(estions as to the intrinsi# va!idit- and effi#a#- of the provisions of the i!!, the !e&a!it- of an- devise or !e&a#- ma- be raised even after the i!! has been a(thenti#ated. 0) Petitioner #annot #orre#t!- #!aim that the assai!ed order deprived him of his ri&ht to ta9e possession of a!! the rea! and persona! properties of the estate. The ri&ht of an e1e#(tor or administrator to the possession and mana&ement of the rea! and persona! properties of the de#eased is not abso!(te and #an on!- be e1er#ised Eso !on& as it is ne#essar- for the pa-ment of the debts and e1penses of administration,E *e#tion 0 of %(!e 8= of the %evised %(!es of 'o(rt e1p!i#it!provides8 *e#. 0. .1e#(tor or administrator to retain ho!e estate to pa- debts, and to administer estate not i!!ed. +n e1e#(tor or administrator sha!! have the ri&ht to the possession and mana&ement of the rea! as e!! as the persona! estate of the de#eased so !on& as it is ne#essar- for the pa-ment of the debts and e1penses for administration. Petitioner m(st be reminded that his ri&ht of o nership over the properties of his father is mere!- in#hoate as !on& as the estate has not been f(!!- sett!ed and partitioned. 02 +s e1e#(tor, he is a mere tr(stee of his father7s estate. :e #annot (ni!atera!!- assi&n to himse!f and possess a!! his parents7 properties and the fr(its thereof itho(t first s(bmittin& an inventor- and appraisa! of a!! rea! and persona! properties of the de#eased, renderin& a tr(e a##o(nt of his administration, the e1penses of administration, the amo(nt of the ob!i&ations and estate ta1, a!! of hi#h are s(b;e#t to a determination b- the #o(rt as to their vera#it-, propriet- and ;(stness. !A>LO LORENZO, as trustee o the estate o !OSADAS, JR., #ollector o Internal Re"enue %homas *anley "s. J$AN Facts) On )a- 57, 1955, Thomas :an!e- died. :e !eft a i!!. The pro#eedin&s for its probate and the sett!ement and distrib(tion of the estate be&(n on J(ne 1=, 1955. The i!! provides that8 a. The mone- !eft sha!! be &iven to de#eased>s nephe , )atthe b. The rea! estate sha!! be so!d 12 -ears after death, hi#h sha!! be hand!es b- the e1e#(tors and pro#eeds thereof sha!! be &iven to )atthe , hi#h pro#eeds sha!! be (sed for the ed(#ation of his brother>s ()a!a#hi :an!e-) #hi!dren and des#endants. #. The other propert- ma- be disposed of in the a- most advanta&eo(s b)atthe 12 -ears after de#eased>s death. The 'F/DKamboan&a #onsidered it proper for the best interests of the estate to appoint a tr(stee to administer the rea! properties. :en#e, )oore, one of the t o e1e#(tors named in the i!! as appointed as tr(stee. )oore too9 his oath of offi#e and &ave bond on )ar#h 12, 195=. :e resi&ned on Jan(ar- 59, 1905 and so, 4orenzo rep!a#ed him. ,(rin& 4orenzo>s in#(mben#-, Posadas, assessed an inheritan#e ta1, ith pena!ties for de!in6(en#-, #onsistin& of 1L interest from J(!- 1, 1901, and a s(r#har&e of 5$L on the ta1. 4orenzo paid the amo(nt of P5,2$5.7= (nder protest. 4orenzo no #!aims for ref(nd. The tria! #o(rt dismissed the #omp!aint. :en#e the appea!. ISS$ES) 1. ?hen does the inheritan#e ta1 a##r(e and hen it m(st be satisfiedM 5. ?GN the inheritan#e ta1 be based (pon the va!(e of the estate (pon the death of the testator or (pon the va!(e of the estate at the e1piration of the 12 -ears. 0. ?GN the #ompensation of the tr(stee is a !a f(! ded(#tion. =. ?hat ta1 !a &overns the #ase at barM $. ?as there an- de!in6(en#-M *ELD) 1. The a##r(a! of the inheritan#e ta1 is distin#t from the ob!i&ation to pa- the same. The propert- be!on&s to the heirs at the moment of the death of the an#estor as #omp!ete!- as if the an#estor had e1e#(ted and de!ivered to them a deed for the same before his death. From the fa#t that Thomas :an!e- died on )a- 57, 1955, it does not fo!!o that the ob!i&ation to pa- the ta1 arose as of that date. The time for the pa-ment of inheritan#e ta1 is #!ear!- fi1ed b- se#tion 1$== of the %evised +dministrative 'ode, as amended b- +#t No. 0201, in re!ation to *e#. 1$==. *e#. 1$== provides that, the ta1 sho(!d be paid ithin si1 months s(bse6(ent to the death of the prede#essorH b(t if ;(di#ia! testamentar- or intestate pro#eedin&s sha!! be instit(ted prior to the e1piration of said period, the pa-ment sha!! be made bthe e1e#(tor or administrator before de!iverin& to ea#h benefi#iar- his share. Therefore, the tax shoul have !een pai !efore the eliver" of the properties to #oore as trustee on #arch $%, $92&. 5. ,eath is the &eneratin& so(r#e from hi#h the po er of the state to impose inheritan#e ta1es ta9es its bein&. Cpon the death of the de#edent, s(##ession ta9es p!a#e and the ri&ht of the state to ta1 vests instant!-, not ithstandin& the postponement of the a#t(a! possession or en;o-ment of the estate b- the benefi#iar-. :en#e, the ta1 sho(!d be meas(red b- the va!(e of the estate at the time of the de#edent>s death re&ard!ess of an- appre#iation or depre#iation. 0. No. The #ontention that the tr(stee>s #ompensation is a ;(di#ia! e1pense is (ntenab!e. There is no !a a!!o in& the tr(stee>s #ompensation to be ded(#ted in determinin& the net estate s(b;e#t to inheritan#e ta1. F(rthermore, tho(&h a testamentar- tr(st has been #reated, it does not appear that the testator intended that the d(ties of his e1e#(tors and tr(stees sho(!d be separated. J(di#ia! e1penses are e1penses of administration. :o ever, the #ompensation of a tr(stee, earned not in the administration of the estate b(t in the mana&ement thereof, for the benefit of the !e&atees or devisees does not #ome proper!- ithin the #!ass or reason for e1emptin& administration e1penses. *ervi#es rendered in that beha!f have no referen#e to #!osin& the estate for the p(rpose of a distrib(tion thereof to those entit!ed to it and are not re6(ired or essentia! to the perfe#tion of the ri&hts of the heirs or !e&atees. =. The !a in for#e at the time of the death of testator, hi#h is *e#. 1$== of %evised +dministrative 'ode as amended b- +#t No. 0201. +#t. No. 0<2<, hi#h too9 effe#t on Jan(ar- 1, 1902 #annot be &iven retroa#tive effe#t, as there as no !e&is!ative intent to that effe#t. Posadas> #ontention is (ntenab!e, hen he said that the provisions of +#t No. 0<2< is favorab!e to the ta1pa-er, sin#e (a) the s(r#har&e of 5$L is based on the ta1 on!-, instead of on both ta1 and interest provided for b+#t 0201 and (b) the ta1pa-er is &iven 52 da-s from noti#e and demand to painstead of 12 da-s in +#t 0201. Ta1 !a s &enera!!- are not pena! !a s. $. @es. The mere fa#t that the estate of the de#eased as p!a#ed in tr(st did not remove it from the operation of o(r inheritan#e ta1. The #orrespondin& inheritan#e ta1 sho(!d have been paid on or before )ar#h 12, 195= to es#ape the pena!ties of the !a . This is be#a(se the de!iver- of the estate to the tr(stee is a de!iver- to the benefi#iar-. + tr(stee is an a&ent for the benefi#iar-. :en#e the estate vested abso!(te!- to the benefi#iar-. The 'o(rt reasoned that if it o(!d be a!!o ed that the pa-ment of the ta1 be after 12 -ears, then the #o!!e#tion o(!d then be !eft to the i!! of the private individ(a!. This o(!d be disastro(s as ta1es are essentia! to the ver- e1isten#e of the &overnment.