[G.R. No. 120880.

June 5, 1997]
FERDINAND R. MARCOS II, petitioner, vs. COURT OF APPEALS, THE COMMISSIONER OF THE
BUREAU OF INTERNAL REVENUE and HERMINIA D. DE GUZMAN, respondents.
MARCOS II vs. CA
273 SCRA 47
GR No. 120880, June 5, 1997
"The approval of the court sitting in probate is not a mandatory requirement in the collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission."

FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to levy the
properties of the late Pres. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US.
The Marcos family was assessed by the BIR after it failed to file estate tax returns.
The investigation disclosed that the Marcoses failed to file a written notice of the death of the decedent, an estate tax
returns [sic], 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).

However the assessment were not protested administratively by Mrs. Marcos and the heirs of the late president so that
they became final and unappealable after the period for filing of opposition has prescribed. Marcos contends that the
properties could not be levied to cover the tax dues because they are still pending probate with the court, and
settlement of tax deficiencies could not be had, unless there is an order by the probate court or until the probate
proceedings are terminated.
Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on the Marcos
properties were issued beyond the allowed period, and are therefore null and void.

On the other hand, it is argued by the BIR, that the state's authority to collect internal revenue taxes is paramount. Thus,
the pendency of probate proceedings over the estate of the deceased does not preclude the assessment and collection,
through summary remedies, of estate taxes over the same. According to the respondent, claims for payment of estate
and income taxes due and assessed after the death of the decedent need not be presented in the form of a claim against
the estate. These can and should be paid immediately. The probate court is not the government agency to decide
whether an estate is liable for payment of estate of income taxes. Well-settled is the rule that the probate court is a
court with special and limited jurisdiction.

ISSUE: Whether or not the Bureau of Internal Revenue has the authority 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.

HELD:

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. [11]

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.
Section 3 of the National Internal Revenue Code attests to this:

"Sec. 3. Powers and duties of the Bureau.-The powers and duties of the Bureau of Internal Revenue shall comprehend the
assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures,
penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the
Court of Tax Appeals and the ordinary courts. Said Bureau shall also give effect to and administer the supervisory and
police power conferred to it by this Code or other laws."

It is discernible that the approval of the court, sitting in probate, or as a settlement tribunal over the deceased
is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the
Tax Bureau erred in proceeding with the levying and sale of the properties allegedly owned by the late President,
on the ground that it was required to seek first the probate court's sanction. There is nothing in the Tax Code,
and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's
approval of the state's claim for estate taxes, before the same can be enforced and collected.
Under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the
executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested
in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the
estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court
which approves the assessment and collection of the estate tax.

The deficiency income tax assessments and estate tax assessment are already final and unappealable -and-the
subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Section 213 and 218 of
the National Internal Revenue Code. This summary tax remedy is distinct and separate from the other tax remedies
(such as Judicial Civil actions and Criminal actions), and is not affected or precluded by the pendency of any other tax
remedies instituted by the government.
The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not a mandatory
requirement in the collection of estate taxes. On the contrary, under Section 87 of the NIRC, it is the probate or
settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to
deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner
of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is
the probate court which approves the assessment and collection of the estate tax.
On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to contest or appeal
the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a
return, the tax may be assessed at anytime within 10 years after the omission, and any tax so assessed may be collected
by levy upon real property within 3 years (now 5 years) following the assessment of the tax. Since the estate tax
assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said
assessment, there is no reason why the BIR cannot continue with the collection of the said tax.