TAX EVASION
No. The omission and under declaration of the properties was not
REPUBLIC VS HEIRS OF JALANDONI
15 SCRA 51. SEPTEMBER 20, 1965
FACTS:
Isabel Ledesma died intestate leaving real and personal properties
(shares of stock). Cesar Jalandoni filed and estate and inheritance tax
return. BIR made partial assessments and required the heirs to pay
the deficiency estate and inheritance tax, to which the latter complied
to.
BIR made another assessment and found that the market values of
the lands were undeclared; seven lots were omitted; and shares of
stock owned by Isabel were undeclared. BIR require the heirs to pay
for the deficiency estate and inheritance taxes.
The heirs used prescription as a defense considering that more than
five years had already elapsed from the filing of the return. On the
other hand, BIR argued that the heirs cannot avail prescription as a
defense since the tax return filed contained omissions which would
amount to fraud indicative of a intent to evade payment of tax.
ISSUE: Was there an intention on the part of the heirs to evade
payment of proper tax?
RULING:
deliberate and did not amount to fraud indicative of an intention to evade
payment of the proper tax due the government.
As regards to the claim of the government that the seven lots were
deliberately omitted from the tax returns filed by the representative
of the heirs: it appears, however, that three of the seven lots alleged
to have been excluded were actually included in the returns; that one
lot was not included because it belonged to one of the heirs; and that
the three remaining lots were already declared in the return
submitted by Bernardino Jalandoni as part of the conjugal property
for purposes of income tax.
As regards to the claim of the government that the market value of the
sugar lands were under declared by the representative of the heirs, as it
did not tally with the valuation made by the collector: any mistake
made in the valuation made by the representative can only be
considered as honest mistake or one based on an excusable inadvertence,
since he not an expert in appraising real estate. It is certainly an error to
impute fraud based on an honest difference of opinion.
As regards to the claim of the government that the value of the shares of
stock did not tally with their book value: the fact that the value of the
shares of stock given in the returns did not tally with their book value
appearing in the corporate books is not in itself indicative of fraud
especially when said book value only became known several months after the
death of the deceased. Moreover, stock securities frequently fluctuate in
value and a mere difference of opinion in relation thereto cannot serve as
proper basis for assessing an intention to defraud the government.