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The Supreme Court held that Tangier, Morocco qualifies as a "foreign country" under Section 122 of the National Internal Revenue Code, which provides an exemption from estate and inheritance taxes for intangible personal properties located in the Philippines that are owned by residents of foreign countries. The Court found that Tangier constituted a politically organized sovereign community, independent and exercising legal authority over individuals within its territory, even if it was not fully independent. As such, Tangier satisfied the requirements to be considered a "foreign country" under the Code's exemption, despite arguments that it was merely a principality and not a fully recognized state under international law.
The Supreme Court held that Tangier, Morocco qualifies as a "foreign country" under Section 122 of the National Internal Revenue Code, which provides an exemption from estate and inheritance taxes for intangible personal properties located in the Philippines that are owned by residents of foreign countries. The Court found that Tangier constituted a politically organized sovereign community, independent and exercising legal authority over individuals within its territory, even if it was not fully independent. As such, Tangier satisfied the requirements to be considered a "foreign country" under the Code's exemption, despite arguments that it was merely a principality and not a fully recognized state under international law.
The Supreme Court held that Tangier, Morocco qualifies as a "foreign country" under Section 122 of the National Internal Revenue Code, which provides an exemption from estate and inheritance taxes for intangible personal properties located in the Philippines that are owned by residents of foreign countries. The Court found that Tangier constituted a politically organized sovereign community, independent and exercising legal authority over individuals within its territory, even if it was not fully independent. As such, Tangier satisfied the requirements to be considered a "foreign country" under the Code's exemption, despite arguments that it was merely a principality and not a fully recognized state under international law.
NO. It was held by this Court that the aforesaid (RESPONDENT) 42 SCRA 23 (1971) provision does not require that the ‘’foreign PONENTE: Fernando, J. country’’ possess an international personality to come within its terms. Accordingly, we have to FACTS: affirm, it does not admit of doubt that if a foreign In January 1955, Maria Cerdeira died in Tangier, country is to be identified with a state, it is Morroco, which is a foreign country in South required that it be a politically organized sovereign Africa. She is a Spanish national, by reason of her community independent of outside control bound marriage to a Spanish citizen and was a resident of by ties of nationhood, legally supreme within its Tangier from 1931 up to Jan. 2, 1955. She however territory acting through a government functioning left some personal properties such as shares of under a regime of law. stocks and other intangibles in the Philippines. The It is thus a sovereign person with the people designated administrator of her estate here is composing it viewed as an organized corporate Antonio Campos Rueda, herein respondent. society under a government with the legal On September 22, 1955, petitioner filed a competence to exact obedience to its commands. provisional estate and inheritance tax return It has been referred to as a body-politic organized exemption claimed by respondent on the ground by common consent for mutual defense and that the law of Tangier is not reciprocal to Sec. 122 mutual safety, and to promote the general welfare. of the National Internal Revenue Code, and that, Correctly has it been described by Esmein as ‘’the Tangier is a mere principality, not a foreign country juridical personification of the nation’’. within the meaning of said provision. This is to view it in the light its historical Petitioner held the estate liable for deficiency development. The stress is on its being a nation, its estate and inheritance taxes for the transfer of people occupying a definite territory, politically intangible personal properties in the Philippines. organized, exercising by means of its government The Court of Tax Appeals reversed the Collector its sovereign will over the individuals within it and and held that the expression ‘’foreign country’’, maintaining its separate international personality. used in Sec. 122 of the NIRC, ‘’refers to a Laski could speak of it then as a territorial society government of that foreign power which, although divided into government and subjects, claiming not an international person in the sense of within its allotted area a supremacy over all other international law, does not impose transfer or institutions. Mclver similarly would point to the death taxes upon intangible personal properties of power entrusted to its government to maintain our citizens not residing therein, or whose law within its territory the conditions of a legal order allows a similar exemption from such taxes. It is and to enter into international relations. With the therefore, not necessary that Tangier should have latter requisites satisfied, international law does been recognized by our government in order to not exact independence as a condition of entitle petitioner (respondent herein) to the statehood. exemption benefits of the last proviso of Sec. 122 of our Tax Code. Hence this appeal to this Court by petitioner Collector of Internal Revenue.
ISSUE:
Whether or not the requisite of statehood, or at
least so much thereof as may be necessary for the acquisition of an international personality, must be satisfied for a “foreign country” to fall within the exemption of Sec. 122 of the National Internal Revenue Code.