Estate and Inheritance Tax Case of the Estate of the Late Don Robinson

August 8, 1960 BIR RULING NO. 358-60 MEMORANDUM FOR The Chief, Income Tax Division (Thru the Revenue Operation Executive, Assessment) B.I.R. Manila This refers to the estate and inheritance tax case of the estate of the late Don Robinson. It appears that the decedent is a citizen of the United States at the time of his death on April 18, 1949. Around the year 1914, he came to the Philippines and got employed in the Bureau of Public Works. In 1917, he was living in his residential house at Lamitan, Basilan City and in 1921 he become the manager of the Yakan Plantation Co., Inc., a domestic corporation engaged in farming in that locality. His wife joined him in 1922 and since then lived with him until 1946 when she returned with her husband to the United States. After a brief vacation, Mr. Robinson returned to the Philippines but his wife was left in the U.S. on account of illness. About the end of 1948 he visited his wife and returned on February, 1949. On April of the same year he died. During his stay in this country the deceased acquired from the Government a homestead which was registered in his name. He also acquired 246 shares of stock at the par value of P100.00 each from the Yakan Plantation Co., Inc. which he transferred to his wife on various dates from March 9, 1915 to March 10, 1941. The spouses also purchased from the Government a tract of land having an area of 77 hectares, 24 ares and 48 centares which was however, registered in the name of the wife, Ann H. Robinson. After investigation, the examiners reported that there is due from the estate of the decedent the sum of P67,061.84 as estate and inheritance taxes, surcharge, and interest. Mrs. Ann H. Robinson, the surviving spouse and sole heir of the deceased, thru counsel, took exception to the findings of the examiners. Her objection is that the aforesaid 246 shares of stock and the land purchased from Government which was registered in her name are her exclusive properties and should therefore be excluded from the gross estate of the deceased. The question to be resolved therefore is whether the said parcel of land and shares of stock should be included or excluded from the gross estate of the decedent. Although the land in question stands in the name of the surviving spouse, it is a fact that it was acquired during marriage. It is therefore presumed to be conjugal unless proven otherwise. (Art. 1407 Old Civil Code, now Art, 160). cdll "Property acquired by the spouses during marriage pertains to the conjugal partnership even though the title thereto is taken in the name of one of them only." (Guinguing vs. Abuton, 48 Phil. 144) Clear, convincing and satisfactory proof is required to overthrow the presumption that property acquired during marriage is conjugal. (Ahern v. Julian, 39 Phil. 607). In the instant case, the assertion that the land in question belongs exclusively to the surviving spouse is supported by a photostat copy of the original certificate of title issued in the name of said spouse. Assuming this copy to be genuine, it is still insufficient to prove that the land covered by it is paraphernal property. As was held in the case of Commonwealth vs. Sandiko, 40 O.C. 722: "Appellant's claim to exclusive ownership of the parcels in question, as basis for exemption from inheritance taxes, rests on two grounds: (1) that the deeds of purchase thereof were in his name alone, and (2) the subsequent certificates of registration were also in his name alone. Neither of these two facts is a decisive test of exclusive ownership in the instant case. Settled is the rule that in the absence of affirmative evidence to show that the acquisition was with the money belonging exclusively to one of the spouses, properties acquired during coverture shall be presumed conjugal, even if the title thereto has been taken in the name of one of them only." (1 Padilla, 1951 ed. 253) In view of the foregoing consideration, the land in question should be included in the gross estate of the deceased. We come now to the 246 shares of stock. It is uncontroverted that the shares of stock in question were originally acquired by the deceased, in his name, from the Yakan Plantation Co., Inc., a domestic corporation, but said stocks were subsequently transferred by him to his wife on various dates from March 9, 1915 to March 10, 1941. By virtue of said transfer, the surviving spouse, thru counsel, now claims exclusive ownership to the shares of stock. This claim is supported by an affidavit signed by "two disinterested parties" Mr. Marc Anthony and Miss Mary Bullard who stated, among other things, that they are "close friends" of the parents of Mrs. Ann H. Robinson; that said parents "were financially affluent at all times"; that Mrs. Ann H. Robinson received from her parents "frequent monetary gifts"; and, that the decedent, Don Robinson, "acknowledged" to said affiants that his wife was the sole owner of the shares of stock in question. The above declaration taken together, however, do not show that Mrs. Ann H. Robinson acquired the stocks in question with funds exclusively belonging to her. Following the doctrine heretofore stated, the presumption that these stocks are conjugal still stands. While it is true that under the law in force at the time of death of Don Robinson, personal property is governed by the national law of the owner (Art. 10 Old Civil Code now Art. 16) this rule, however, yields to the exception provided in the last paragraph of Article II, Old Civil Code (now Art. 17). Assuming then, as counsel for the surviving spouse states, that under the laws of the State of Taxes, Transfers of property between husband and wife is permitted, such transfers, being prohibited in our jurisdiction (see: Arts. 1334 and 1458, Old Civil Code, now Arts. 133 and 1490, respectively) cannot be given effect here. Mrs. Robinson's counsel also invoked the reciprocity provisions of section 122 of the Tax Code. Said provisions apply to personal intangible property of non-residents. Was the decedent a non-resident at the time of his death? Considering the duration of the decedent's stay in this country (35 years), the fact that shortly after his arrival here his wife joined him and lived with him in a residential house acquired by them, that while they were residing in this country there is no showing that they continued to maintain a home in the United States, the extent of their property acquisitions here, and the fact that the deceased returned to the Philippines after his visits to the United States indicate that Don Robinson has intended to make this country his true, fixed, and permanent home. We are therefore inclined to believe, and, so hold, that Don, Robinson was a resident of this country at the time of his death. Accordingly, the 246 shares of stock in question should be included in the gross estate of the deceased. The assessment and demand should therefore be made in the light of the foregoing observations. MELECIO R. DOMINGO Commissioner of Internal Revenue