FACTS
During the estate proceedings following the death of his father, Manuel Pineda received his share amounting to P2,500. Subsequently, the CIR investigated the income tax liability of the estate for the years 1945, 1946, 1947, and 1948 and it found that the corresponding income tax returns were not filed.
An assessment for the deficiency taxes were sent to Pineda, who contested the same, arguing that only that proportionate part or portion pertaining to him as one of the heirs should be assessed.
RULING
The Supreme Court ruled in favor of the CIR.
As an heir, Pineda is individually answerable for the part of the tax proportionate to the share he received from the inheritance. But as a holder of property belonging to the estate, Pineda is liable for he tax up to the amount of the property in his possession.
The reason is that the Government has a lien on the P2,500.00 received by him from the estate as his share in the inheritance, for unpaid income taxes for which said estate is liable.
The SC added that the government has two ways of collecting the tax in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received, and two, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belonging to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due, the estate.
The CIR should be given the necessary discretion to avail itself of the most expeditious way to collect the tax as may be envisioned in the particular provision of the Tax Code.
