TAX.2.

1 COLLECTOR V NORTON

FACTS: Hargis, an American citizen, died in California, leaving shares of stock and equities in the Philippines appraised
at P927,835.07. The estate was reappraised, thus the BIR issued an amended assessment notice demanding the payment
of an estate tax and deficiency inheritance tax in the amount of P147,192.19. Respondents contested the assessment of
the deficiency inheritance tax. Petitioner refused, thus the case was brought before the CTA. Respondents claimed
exemption from the inheritance tax on the transmission of intangible personal properties of the deceased in the
Philippines relying on the reciprocity provision contained in Section 122 of the Tax Code which complements Section
13351 of the Revenue and Taxation Code of California. Petitioner however contends that the exemption enshrined in
Section 13351 was intended only for states or territories of the United States.
ISSUE: Whether the respondents are exempt from inheritance tax.
RULING: Yes. The term “foreign country” may refer to the Federal Government or to the individual states of the
United States. Petitioner's contention, therefore, that the exemption in said section was intended only for states or
territories of the United States is untenable. Reciprocity exists also with any "foreign state or country."