Tax Exemption on the Value of the Estate Left by the Deceased Pedro Lee

October 7, 1958 BIR RULING NO. 542-58 Mr. Emilio Benitez, Jr. Attorney at Law 1349 Pedro Guevarra Sta. Cruz, Manila S i r : In answer to your letter of the 6th instant, I have the honor to inform you that, in view of your representations that the value of the estate left by the deceased Pedro Lee, a resident alien at the time of his death on September 27, 1954, which consists solely of the proceeds of the insurance policy taken out during his lifetime, does not exceed P5,000.00 and that the heirs left by said decedent are his wife and child, said estate is exempt from the estate and inheritance taxes prescribed in Sections 85 and 86 of the National Internal Revenue Code. In view further of your representations that the Philippine American Insurance Company had previously disallowed the insurance claim of said heirs and that it was only on October 3, 1958 that company reconsidered its action and eventually allowed such claim, such circumstances constitute a reasonable cause for the failure of the heirs to file the estate and inheritance tax return within the time prescribed by Section 93(b) of the Tax Code and, therefore, they are not liable for the 25% ad valorem penalty imposed in Section 102 of the same Code. Likewise, those circumstances justify the heirs' failure to file the notice of death within the time required under Section 92 of the Code. Accordingly, they are not liable to the penalty provided therefor under Section 107 of the Code. (See Ben L. Chuy et al . vs. Collector, Pangasinan Civil Case No. 12823 (C.T.A.), July 16, 1958, & cases cited therein) cdtech Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue