Commissioner of Internal Revenue vs. Algue Inc.GR No. L-28896 | Feb. 17, 1988

Facts:·         Algue Inc. is a domestic corp engaged in engineering, construction and other allied activities·         On Jan. 14, 1965, the corp received a letter from the CIR regarding its delinquency income

taxes from 1958-1959, amtg to P83,183.85·         A letter of protest or reconsideration was filed by Algue Inc on Jan 18·         On March 12, a warrant of distraint and levy was presented to Algue Inc. thru its counsel,

Atty. Guevara, who refused to receive it on the ground of the pending protest·         Since the protest was not found on the records, a file copy from the corp was produced and

given to BIR Agent Reyes, who deferred service of the warrant·         On April 7, Atty. Guevara was informed that the BIR was not taking any action on the protest

and it was only then that he accepted the warrant of distraint and levy earlier sought to be served

·         On April 23, Algue filed a petition for review of the decision of the CIR with the Court of Tax Appeals

·         CIR contentions:-          the claimed deduction of P75,000.00 was properly disallowed because it was not an ordinary

reasonable or necessary business expense-          payments are fictitious because most of the payees are members of the same family in

control of Algue and that there is not enough substantiation of such payments·         CTA: 75K had been legitimately paid by Algue Inc. for actual services rendered in the form of

promotional fees. These were collected by the Payees for their work in the creation of the Vegetable Oil Investment Corporation of the Philippines and its subsequent purchase of the properties of the Philippine Sugar Estate Development Company.

Issue: W/N the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction claimed by Algue as legitimate business expenses in its income tax returns

Ruling:·         Taxes are the lifeblood of the government and so should be collected without unnecessary

hindrance, made in accordance with law.·         RA 1125: the appeal may be made within thirty days after receipt of the decision or ruling

challenged·         During the intervening period, the warrant was premature and could therefore not be served.·         Originally, CIR claimed that the 75K promotional fees to be personal holding company

income, but later on conformed to the decision of CTA·         There is no dispute that the payees duly reported their respective shares of the fees in their

income tax returns and paid the corresponding taxes thereon. CTA also found, after examining the evidence, that no distribution of dividends was involved

·         CIR suggests a tax dodge, an attempt to evade a legitimate assessment by involving an imaginary deduction

·         Algue Inc. was a family corporation where strict business procedures were not applied and immediate issuance of receipts was not required. at the end of the year, when the books were to be closed, each payee made an accounting of all of the fees received by him or her, to make up the total of P75,000.00. This arrangement was understandable in view of the close relationship among the persons in the family corporation

·         The amount of the promotional fees was not excessive. The total commission paid by the Philippine Sugar Estate Development Co. to Algue Inc. was P125K. After deducting the said fees, Algue still had a balance of P50,000.00 as clear profit from the transaction. The amount of

P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties.

·         Sec. 30 of the Tax Code: allowed deductions in the net income – Expenses - All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered xxx

·         the burden is on the taxpayer to prove the validity of the claimed deduction·         In this case, Algue Inc. has proved that the payment of the fees was necessary and

reasonable in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a new business requiring millions of pesos.

·         Taxes are what we pay for civilization society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values

·         Taxation must be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor

Algue Inc.’s appeal from the decision of the CIR was filed on time with the CTA in accordance with Rep. Act No. 1125. And we also find that the claimed deduction by Algue Inc. was permitted under the Internal Revenue Code and should therefore not have been disallowed by the CIR

CIR vs. BPIG.R. No. 134062, April 17, 2007

Corona, J.:FACTS:                  In October 28, 1988, petitioner assessed BPI of deficiency percentage and documentary stamp tax for the year 1986, in the total amount of P129,488,056.63. A letter reply by respondent was sent on December 10, 1988 stating among other:  ... we shall inform you the taxpayer’s decision on whether to pay of protest the assessment, CTA ruled that BPI failed to protest on time under Sec 270 of NIRC of 1986.ISSUE:                  Whether or not the assessments issued to BPI for deficiency percentage and documentary stamp taxes for 1986 had already become final and un-appealable.RULING:                  In merely notifying BPI of his findings. CIR relied on the provisions of the former Section 270 prior to its amendment by RA 8424. The sentence “the taxpayers shall be informed in writing of the law and the facts on which the assessment is made…”  Was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997.                  Tax assessments by tax examiners are presumed correct and are made in good faith. The taxpayer has the duty to prove otherwise. In the absence of proof of any irregularities in the performance of duties, an assessment duly made by BIR examiner and approved by his superior officers will not be distributed. All presumptions are in favor of the correctness of tax assessments.

Tio v VideogramG.R. No. L-75697 June 18, 1987

Melencio-Herrera, J.:

Facts:

1.  Petitioner on his own behalf and purportedly on behalf of other videogram operators adversely affected assailed the constitutionality of PD 1987 entitled "An Act Creating the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram industry. The Decree promulgated on October 5, 1985, took effect on April 10, 1986, fifteen (15) days after completion of its publication in the Official Gazette.

2.   PD 1994 issued a month thereafter reinforced PD 1987 and in effect amended the National Internal Revenue Code (NIRC). Petitioner contended among others  that the tax provision of the decree is a rider. 

ISSUE: Whether or not the PD 1987 is unconstitutional due to the tax provision included

RULING: PD 1987 is constitutional.

1.  The title of the decree, which calls for the creation of the VRB is comprehensive enough to include the purposes expressed in its Preamble and reasonably covered in all its provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the body of the decree.

2. The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of the general object of the decree, which is the regulation of the video industry through the VRB as expressed in its title. The tax provision is not inconsistent with nor foreign to the general subject and title. As a tool for regulation  it is simply one of the regulatory and control mechanisms scattered throughout the decree.

3.  The express purpose of PD 1987 to include taxation of the video industry in order to regulate and rationalize the heretofore uncontrolled distribution of videos is evident from Preambles 2 and 5. Those preambles explain the motives of the lawmaker in presenting the measure. 

Fels Energy, Inc. vs. Province of BatangasG.R. No. 168557. February 16, 2007.Callejo Sr., J.

Doctrine: In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city’s motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.Moreover, Article 415 (9) of the New Civil Code provides that “docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast” are considered immovable property. Thus, power barges are categorized as

immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.

Facts: On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3×30 MW diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years. Article 10 states that NPC shall be responsible for the payment of taxes. (other than (i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees and other similar fees and charges. Polar Energy then assigned its rights under the Agreement to Fels despite NPC’s initial opposition.FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred the matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference regarding the real property assessment of the Provincial Assessor. NPC filed a petition with the LBAA. The LBAA ordered Fels to pay the real estate taxes. The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the barges–FELS, a private corporation–is the one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.

Fels appealed to the CBAA. The CBAA reversed and ruled that the power barges belong to NPC; since they are actually, directly and exclusively used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the CBAA reversed itself.

Issue: Whether or not the petitioner may be assessed of real property taxes.Held: YES. The CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. Besides, factual findings of administrative bodies, which have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial mind is left in doubt, it is a sound policy to leave the assessment undisturbed. We find no reason to depart from this rule in this case.In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city’s motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that “docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast” are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.

Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply, generation, and transmission of electric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated under Section 2.11, Article 2 of the Agreement:

“OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity.”

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation; nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides:

“OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7.

It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good customs, public order or public policy, the parties to the contract are bound by its terms and conditions.

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant

is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas.

It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local government’s deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals.

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

Caveat: Anyone who claims this digest as his own without proper authority shall be held liable under the law of Karma. 

CIR V TOKYO SHIPPING CO., LTD. May 26, 1995Sunday, January 25, 2009 Posted by Coffeeholic Writes 

Labels: Case Digests, Taxation

Facts: Private respondent is a foreign corporation represented in the Philippines by Soriamont Steamship Agencies, Inc. It owns and operates tramper vessel M/V Gardenia. In December 1980, NASUTRA chartered M/V Gardenia to load 16,500 metric tons of raw sugar in the Philippines. On December 23, 1980 Mr. Edilberto Lising, the operations supervisor of Soriamont Agency, paid the required income and common carrier’s taxes in the sum total of P107,142.75 based on the expected gross receipts of the vessel. Upon arriving, however, at Guimaras Port of Iloilo, the vessel found no sugar for loading. On January 10, 1981, NASUTRA and private respondent’s agent mutually agreed to have the vessel sail for Japan without any cargo.

Claiming the pre-payment of income and common carrier’s taxes as erroneous since no receipt was realized from the charter agreement private respondent instituted a claim for tax credit or refund of the sum of P107,142,75 before petitioner commissioner of Internal Revenue on March 23, 1981. Petitioner failed to act promptly on the claim, hence, on May 14, 1981, private respondent filed a petition for review before public respondent CTA. 

Petitioner contested the petition. As special and affirmative defenses, it alleged the following: that taxes are presumed to have been collected in accordance with law; that in an action for refund, the burden of proof is upon the taxpayer to show that taxes are erroneously or illegally collected and the taxpayer’s failure to sustain said burden is fatal to the action for refund; and that claims for refund are construed strictly against tax claimants.

After trial, respondent tax court decided in favor of the private respondent.

Issue: Whether or not tax claimants has the burden of proof to support its claim of refund.

Held: A claim for refund is in the nature of a claim for exemption and should be construed in strictissimi juris against the taxpayer. Likewise, there can be no disagreement with petitioner’s stance that private respondent has the burden of proof to establish the factual basis of its claim for tax refund.

Pilipinas Shell Petrolium Corp v. CIRG.R. No. 172598; December 21, 2007

Facts: In 1988, BIR sent a collection letter to Petitioner Pilipinas Shell Petroleum Corporation (PSPC) for alleged deficiency excise tax liabilities of PhP 1,705,028,008.06 for the taxable years 1992 and 1994 to 1997, inclusive of delinquency surcharges and interest.  As basis for the collection letter, the BIR alleged that PSPC is not a qualified transferee of the TCCs it acquired from other BOI-registered companies.  These alleged excise tax deficiencies covered by the collection letter were already paid by PSPC with TCCs acquired through, and issued and duly authorized by the Center, and duly covered by Tax Debit Memoranda (TDM) of both the Center and BIR, with the latter also issuing the corresponding Accept Payment for Excise Taxes (APETs).

PSPC protested the collection letter, but it was denied.  Because of respondent inaction on a motion for reconsideration PSPC filed a petition for review before the CTA.

In 1999, the CTA ruled that the use by PSPC of the TCCs was legal and valid, and that respondent’s attempt to collect alleged delinquent taxes and penalties from PSPC without an assessment constitutes denial of due process.  Respondent elevated CTA Decision to the Court of Appeals (CA) through a petition for review.

Despite the pendency of this case, PSPC received assessment letter from respondent for excise tax deficiencies, surcharges, and interest based on the first batch of cancelled TCCs and TDM covering PSPC’s use of the TCCs.  All these cancelled TDM and TCCs were also part of the subject matter of the now pending before the CA.

PSPC protested the assessment letter, but the protest was denied by the BIR, constraining it to file another case before the CTA.  Subsequently, CTA ruled in favor of PSPC and accordingly cancelled and set aside the assessment issued by the respondent. Respondent motion for reconsideration of the above decision which was rejected thus respondent appealed the above decision before the CTA En Banc.

The CTA En Banc ruled in favor of respondent and ordered PSPC to pay the amount of P570,577,401.61 as deficiency excise tax for the taxable years 1992 and 1994 to 1997, inclusive of 25% surcharge and 20% interest.

Issue: Whether or not petitioner is liable for the assessment of deficiency excise tax after the validly issued TCCs were subsequently cancelled for having been issued fraudulently

Held: No. Petitioner is not liable for the assessment of deficiency excise tax.

In the instant case, with due application, approval, and acceptance of the payment by PSPC of the subject TCCs for its then outstanding excise tax liabilities in 1992 and 1994 to 1997, the subject TCCs have been canceled as the money value of the tax credits these represented have been used up.  Therefore, the DOF through the Center may not now cancel the subject TCCs as these have already been canceled and used up after their acceptance as payment for PSPC’s excise tax liabilities.  What has been used up, debited, and canceled cannot anymore be declared to be void, ineffective, and canceled anew.

Besides, it is indubitable that with the issuance of the corresponding TDM, not only is the TCC canceled when fully utilized, but the payment is also final subject only to a post-audit on computational errors.  Under RR 5-2000, a TDM is a certification, duly issued by the Commissioner or his duly authorized representative, reduced in a BIR Accountable Form in accordance with the prescribed formalities, acknowledging that the taxpayer named therein has duly paid his internal revenue tax liability in the form of and through the use of a Tax Credit Certificate, duly issued and existing in accordance with the provisions of these Regulations.  The Tax Debit Memo shall serve as the official receipt from the BIR evidencing a taxpayer’s payment or satisfaction of his tax obligation.  The amount shown therein shall be charged against and deducted from the credit balance of the aforesaid Tax Credit Certificate.

Thus, with the due issuance of TDM by the Center and TDM by the BIR, the payments made by PSPC with the use of the subject TCCs have been effected and consummated as the TDMs serve as the official receipts evidencing PSPC’s payment or satisfaction of its tax obligation.  Moreover, the BIR not only issued the corresponding TDM, but it also issued ATAPETs which doubly show the payment of the subject excise taxes of PSPC.

Based on the above discussion, we hold that respondent erroneously and without factual and legal basis levied the assessment.  Consequently, the CTA En Banc erred in sustaining respondent’s assessment.

Coconut Oil Refiners Association, Inc. vs. Ruben Torres (Case Digest) June 29, 2011

Facts:This is a Petition to enjoin and prohibit the public respondent Ruben Torres in his capacity as Executive Secretary from allowing other private respondents to continue with the operation of tax and duty-free shops located at the Subic Special Economic Zone (SSEZ) and the Clark Special Economic Zone (CSEZ). The petitioner seeks to declare Republic Act No. 7227 as unconstitutional on the ground that it allowed only tax-free (and duty-free) importation of raw materials, capital andequipment. It reads:The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. However, exportation or removal of goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of thePhilippines [RA 7227, Sec 12 (b)].Petitioners contend that the wording of Republic Act No. 7227 clearly limits the grant of tax incentives to the importation of raw materials, capital and equipment only thereby violating the equal protection clause of the Constitution.He also assailed the constitutionality of Executive Order No. 97-A for being violative of their right to equal protection. They asserted that private respondents operating inside the SSEZ are not different from the retail establishments located outside.

The respondent moves to dismiss the petition on the ground of lack of legal standing and unreasonable delay in filing of the petition.

Issues:(1) Statutory Construction; Political Law; Taxation Law:Whether or not there is a violation of equal protection clause.(2) Political Law:Whether or not the case can be dismiss due to lack of the petitioners legal standing.(3) Remedial Law:Whether or not the case can be dismissed due to unreasonable delay in filing of the petition.Held:(1) The SC ruled in the negative. The phrase ‘tax and duty-free importations of raw materials, capital and equipment was merely cited as an example of incentives that may be given to entities operating within the zone. Public respondent SBMA correctly argued that the maxim expressio unius est exclusio alterius, on which petitioners impliedly rely to support their restrictive interpretation, does not apply when words are mentioned by way of example.The petition with respect to declaration of unconstitutionality of Executive Order No. 97-A cannot be, likewise, sustained. The guaranty of the equal protection of the laws is not violated by a legislation based which was based on reasonable classification. A classification, to be valid, must (1) rest on substantial distinction, (2) be germane to the purpose of the law, (3) not be limited to existing conditions only, and (4) apply equally to all members of the same class. Applying the foregoing test to the present case, this Court finds no violation of the right to equal protection of the laws. There is a substantial distinctions lying between the establishments inside and outside the zone. There are substantial differences in a sense that, investors will be lured to establish and operate their industries in the so-called ‘secured area and the present business operators outside the area. There is, then, hardly any reasonable basis to extend to them the benefits and incentives accorded in R.A. 7227.(2) No. Anent the claim on lack of legal standing, respondents argue that petitioners, being mere suppliers of the local retailers operating outside the special economic zones, do not stand to suffer direct  injury in the enforcement of the issuances being assailed herein. Assuming this is true, this Court has nevertheless held that in cases of paramount importance where serious constitutional questions are involved, the standing requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review.(3) No. With respect to the other alleged procedural flaws, even assuming the existence of such defects, this Court, in the exercise of its discretion, brushes aside these technicalities and takes cognizance of the petition considering the importance to the public of the present case and in keeping with the duty to determine whether the other branches of the government have kept themselves within the limits of the Constitution

LORENZO vs. POSADAS JR.G.R. No. L-43082

June 18, 1937 FACTS: Thomas Hanley died, leaving a will and a considerable amount of real and personal properties. Proceedings for the probate of his will and the settlement and distribution of his estate were begun in the CFI of Zamboanga. The will was admitted to probate.The CFI considered it proper for the best interests of the estate to appoint a trustee to administer the real properties which, under the will, were to pass to nephew Matthew ten years after the two executors named in the will was appointed trustee. Moore acted as trustee until he resigned and the plaintiff Lorenzo herein was appointed in his stead.

During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue (Posadas) assessed against the estate an inheritance tax, together with the penalties for deliquency in payment. Lorenzo paid said amount under protest, notifying Posadas at the same time that unless the amount was promptly refunded suit would be brought for its recovery. Posadas overruled Lorenzo’s protest and refused to refund the said amount. Plaintiff went to court. The CFI dismissed Lorenzo’s complaint and Posadas’ counterclaim. Both parties appealed to this court.

ISSUE: (e) Has there been delinquency in the payment of the inheritance tax? HELD: The judgment of the lower court is accordingly modified, with costs against the plaintiff in both instancesYESThe defendant maintains that it was the duty of the executor to pay the inheritance tax before the delivery of the decedent’s property to the trustee. Stated otherwise, the defendant contends that delivery to the trustee was delivery to the cestui que trust, the beneficiary in this case, within the meaning of the first paragraph of subsection (b) of section 1544 of the Revised Administrative Code. This contention is well taken and is sustained. A trustee is but an instrument or agent for the cestui que trust The appointment of Moore as trustee was made by the trial court in conformity with the wishes of the testator as expressed in his will. It is true that the word “trust” is not mentioned or used in the will but the intention to create one is clear. No particular or technical words are required to create a testamentary trust. The words “trust” and “trustee”, though apt for the purpose, are not necessary. In fact, the use of these two words is not conclusive on the question that a trust is created. ” To constitute a valid testamentary trust there must be a concurrence of three circumstances: (1) Sufficient words to raise a trust;(2) a definite subject;(3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect so providing.” There is no doubt that the testator intended to create a trust. He ordered in his will that certain of his properties be kept together undisposed during a fixed period, for a stated purpose. The probate court certainly exercised sound judgment in appointmening a trustee to carry into effect the provisions of the will As the existence of the trust was already proven, it results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax and, therefore, liable for the payment of interest and surcharge provided by law in such cases.The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. On that date trust estate vested in him. The interest due should be computed from that date.