Case Digest (G.R. No. 262092)
Facts:
Commissioner of Internal Revenue v. Estate of Mr. Charles Marvin Romig, G.R. No. 262092, October 09, 2024, Supreme Court First Division, Hernando, J., writing for the Court.
Respondent Estate of Mr. Charles Marvin Romig, represented by sole heir Maricel Narciso Romig (the Estate), is the sole heir of Charles Marvin Romig, an American national who died intestate in the Philippines on November 20, 2011 and was a resident of Puerto Galera, Oriental Mindoro at the time of death. The Estate executed an Affidavit of Self-Adjudication on March 13, 2012, adjudicating among other assets a dollar deposit in the Foreign Currency Deposit Unit (FCDU) of HSBC (HSBC USD Savings Account). On May 18, 2012 the Estate filed an estate tax return and paid PHP 26,152.00; it later filed an Amended Estate Tax Return on June 30, 2015 and paid additional tax of PHP 4,565,349.07 attributable to the HSBC USD account.
On June 28, 2017 the Estate filed an administrative claim for refund with the Bureau of Internal Revenue (BIR) at 8:00 a.m. for the PHP 4,565,349.07, and that same day at 4:47 p.m. filed a judicial claim (Petition for Review) with the Court of Tax Appeals (CTA); the filings were two days before the two-year prescriptive period under the 1997 NIRC expired. The Commissioner of Internal Revenue (CIR) answered, contending among others that (1) the Estate was not entitled to refund, (2) the decedent being a Philippine resident rendered all his properties subject to estate tax, (3) foreign currency deposits are not allowable deductions under Section 86(A) nor listed as exempt under Section 87 of the 1997 NIRC, (4) the Estate’s reliance on Section 6 of Republic Act No. 6426 (Foreign Currency Deposit Act) was misplaced, and (5) the Petition should be dismissed for failure to exhaust administrative remedies.
At the CTA, pre-trial and trial proceeded: parties submitted joint stipulations, the Estate presented testimony and documentary evidence, the case was transferred to the Second Division, and memoranda were submitted. On September 2, 2019 the CTA Second Division granted the Estate’s petition and ordered the CIR to refund or issue a tax credit certificate for PHP 4,565,349.07, holding that (a) the administrative and judicial claims were timely filed under Sections 204 and 229 of the 1997 NIRC, and (b) the tax exemption for FCDU deposits under Section 6 of RA 6426 remained effective and had not been impliedly repealed by the 1997 NIRC. The CIR’s motion for reconsideration to the Second Division was denied on December 27, 2019.
The CIR appealed to the CTA En Banc, which in a Decision dated October 28, 2021 concluded that the required five affirmative votes to reverse a Division decision under Section 2 of RA No. 1125, as amended by RA No. 9503, in relation to Section 3, Rule 2 of the RRCTA, were not obtained; consequently the Division decision stood affirmed. The En Banc opinion, however, stated that the HSBC USD account was not exempt from estate tax because RA 6426 pertains to income tax and does not cover estate tax—yet the En Banc nonetheless affirmed the Division’s rulings by operation of the voting rule. The CIR’s motion for reconsideration to the En Banc was denied in a July 19, 2022 Res...(Pro-only)
Issues:
- Did the Estate comply with the two-year prescriptive period under the 1997 NIRC for filing administrative and judicial claims for refund of erroneously paid estate tax?
- Is the decedent’s foreign currency deposit with HSBC exempt from estate tax under Section 6 of Republic Act No. 6426 as amended, or was that exemption impliedly ...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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