G.R. No. 125346 - La Suerte Cigar and Cigarette Factory vs. Court of Appeals

Charles Marvin Romig, an American national, died intestate in the Philippines on November 20, 2011, and was a resident of Puerto Galera, Oriental Mindoro at death.
Maricel Narciso Romig, the decedent's sole heir, executed an Affidavit of Self-Adjudication on March 13, 2012, adjudicating to herself the properties of the decedent, including a dollar deposit held at the Foreign Currency Deposit Unit (FCDU) of HSBC Premiere-Makati Branch.

The Estate filed an Estate Tax Return and initially paid PHP 26,152 on May 18, 2012.
On the same day, the Estate requested from the BIR a confirmatory ruling that the HSBC USD Savings Account was exempt from estate tax under Section 6 of Republic Act No. 6426 (Foreign Currency Deposit Act), as amended.
Subsequently, on June 30, 2015, the Estate filed an Amended Estate Tax Return and paid an additional PHP 4,565,349.07 estate tax covering the HSBC USD Savings Account.

On June 28, 2017, the Estate filed an administrative claim for refund with the BIR in the morning and, later the same day, a Petition for Review before the Court of Tax Appeals (CTA) at 4:47 p.m., claiming refund on the allegedly erroneously paid estate tax on the foreign currency deposit.
The Commissioner of Internal Revenue (CIR) defended the case contending that 1) the Estate was not entitled to refund, 2) the decedent’s foreign currency deposits were subject to estate tax since they were not exempted, 3) the tax exemption under the Foreign Currency Deposit Act pertained only to income taxes, 4) no administrative remedies were exhausted, among other points.

The case underwent pre-trial conferences and trial wherein the Estate presented evidence.
The case was initially raffled to the First Division and later transferred to the Second Division of the CTA.
On September 2, 2019, the CTA Second Division granted the Estate's petition, ordering a refund or issuance of a tax credit certificate for PHP 4,565,349.07.
The Second Division held that the two-year prescriptive period for refund claims under the 1997 NIRC was complied with and that the tax exemption under the Foreign Currency Deposit Act was still in force.
The CIR moved for reconsideration which was denied.
The CIR appealed to the CTA En Banc.

On October 28, 2021, the CTA En Banc affirmed the Second Division's ruling, with the required vote to reverse the decision unmet, thereby granting the refund claim.
However, the CTA En Banc opined that the foreign currency deposit was not exempt from estate tax, rejecting reliance on the Foreign Currency Deposit Act as controlling for estate tax.
Notwithstanding this opinion, since only three justices concurred, the ruling of the Second Division stood affirmed.
Upon the CIR’s motion for reconsideration, on July 19, 2022, the CTA En Banc reversed its position, holding that the Foreign Currency Deposit Act governs the exemption from estate tax and the 1997 NIRC did not repeal it.
This affirmed the Estate's right to refund for the estate tax erroneously paid on the foreign currency deposit.

The CIR filed a Petition for Review before the Supreme Court contesting the CTA En Banc ruling.

Whether the Estate complied with the two-year period under the 1997 NIRC to file its administrative and judicial claims for refund of erroneously paid estate tax.
Whether the decedent’s foreign currency deposit with HSBC is exempt from estate tax.