UP Law F2021 85 Beam vs.

Yatco
Tax 2 Gross Estate 1948 Perfecto

SUMMARY

Upon the death of female spouse, heirs sought the exclusion of several properties. The Court ruled which among the
properties left by the decedent form part of the net estate subject to estate taxes.

DOCTRINE

The Court ruled that properties acquired by husband and wife (in this case, A.W. Beam and Lydia McKee-Beam)
during their marriage should be considered community property, and upon Lydia’s death, the one that belonged to
her passed by succession to heirs is subject to estate (inheritance) tax. Moreover, section 1536 of 1917
Administrative Code states that the shares owned by A.W. Beam, his wife and children are subject to inheritance tax,

1. Transmission by inheritance, devise, bequest, gift mortis causa, advance in anticipation of inheritance, devise,
or bequest of real property in the Philippines and real rights in such property;
2. Any franchise which must be exercised in Philippines.
3. Any shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in
accordance with Philippine law.
4. Any shares or rights in any partnership, business, or industry established in the Philippines.
5. Any personal property in the Philippines.

FACTS

 A.W. Beam and Lydia McKee-Beam were married in 1913 and begot out of their union two (legitimate)
children A.W. Beam Jr. and Eugenia. They were citizens of United States of America from birth.

 Mr. A.W. Beam was a resident domiciled in Philippines for many years, beginning from 1902. Until 18 April
1934, he was Vice-President and Assistant General Manager of Benguet Consolidated Mining Company,
member of Board of Directors of the said company and of

 Balatoc Mining Company. He was also, and up to the present, is, the President of the Beam Investment
Company.

 Beam Investment Company, Balatoc Mining Company and Manila Building and Loan Association are
corporations organized and existing under Philippine laws, while Benguet Consolidated Mining Company is a
sociedad anonima organized and existing under Philippine laws.

 He filed an application for a tax clearance certificate with Bureau of Internal Revenue, prior to his departure
from the Philippines for California on 18 April 1934 with his wife Lydia and daughter Eugenia. Later, they left
the Philippines for California on 18 April 1934 and arrived at San Francisco on 9 May 1934.

 Except for A.W. Beam who was in the Philippines from 20 December 1936 until 15 January 1937, neither
Lydia nor her children have been in the Philippines since they arrived in San Francisco.

 During their marriage and up until Lydia’s death, A.W. Beam, his wife and children acquired the following
properties in the Philippines from 1913 until 18 April 1934:

o "LYDIA McKEE BEAM: 15,000 shares of stock of Beam Investment Company, evidenced by Certificates
Nos. 2, 15 and 25 issued to and in the name of Lydia McKee Beam;
o W. BEAM: 88,163 shares of stock of Beam Investment Company, evidenced by Certificates Nos. 11, 23
and 24 issued to and in the name of A. W. Beam; 500 shares of stock of Benguet Consolidated Mining
Company, evidenced by Certificate No. 3342 issued to and in the name of A. W. Beam; 2,080 shares of
stock of Balatoc Mining Company, Nos. 600, 614 and 809 issued to and in the name of A. W. Beam;
o A. W. BEAM, JUNIOR: 5,000 shares of stock of Beam Investment Company, evidenced by Certificates
Nos. 17 and 26 issued to and in the name of A. W. Beam, Junior; Deposit of P2,933.18 in Manila
Building and Loan Association in the name and to the credit of A. W. Beam, Junior;
 o EUGENIA BEAM: 5,000 shares of stock of Beam Investment Company, evidenced by Certificates Nos.
19 and 27 issued to and in the name of Eugenia Beam; Deposit of P2,933.18 in Manila Building and
Loan Association in the name and to the credit of Eugenia Beam.”

 Lydia left a last will and testament upon her death in the State of California on 8 October 1934, which after
due and regular proceedings, was admitted to probate in the superior court of State of California for the
County of Almeda.

 As plaintiffs, A.W. Beam, his children A.W. Beam, Jr. and Eugenia Beam (through their guardian ad litem John
W. Haussermann) filed on 17 June 1937) complaint for refund of PhP343,298.72 paid as inheritance tax:

o PhP40,480 to A. W. Beam
o PhP151,409.36 to his son A. W. Beam, Jr.
o PhP151,409.36 to his daughter Eugenia Beam.

 However, on 30 September 1940, the lower court’s decision dismissed their complaint for refund of
inheritance tax and as a result, they went to the Supreme Court (of the Philippines) to appeal.

RATIO

Whether or not the properties acquired from Lydia by her husband and children subject to inheritance tax?
YES. The Court ruled that properties acquired by spouses (husband and wife) during their marriage should be
considered community property, and upon the wife’s death, the one that belonged to her passed by succession to
heirs is subject to estate (inheritance) tax. Moreover, the provisions of Sec. 1536 of 1917 Administrative Code
states that the shares of A.W. Beam, his wife and children are subject to inheritance tax:

1. Transmission by inheritance, devise, bequest, gift mortis causa, advance in anticipation of inheritance, devise, or
bequest of real property in the Philippines and real rights in such property;

2. Any franchise which must be exercised in Philippines;

3. Any shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in
accordance with Philippine law;

4. Any shares or rights in any partnership, business, or industry established in the Philippines;

5. Any personal property in the Philippines.

FALLO

The lower court's decision is affirmed with costs against appellants.