Foreign currency deposits and estate tax: the Romig ruling and later law

Facts and context

Charles Romig died in 2011, leaving a dollar deposit in HSBC’s Makati branch. His heir initially excluded the account from the estate-tax computation, later paid additional tax, and sought a refund under Section 6 of Republic Act No. 6426.

The Commissioner argued that the 1997 National Internal Revenue Code had displaced that exemption. The Court of Tax Appeals allowed the refund.

Issue

Had the general provisions of the 1997 Tax Code repealed the special exemption applicable to Romig’s deposit?

Ruling

The Supreme Court upheld the refund. It found no express repeal of the special exemption by the general provisions considered in that case.

This is a historical ruling on the law applicable to Romig’s estate. Republic Act No. 12214 subsequently expressly listed Section 6 of RA 6426 in its repealing clause. The earlier result must therefore not be presented as an unconditional exemption for present-day estates.

Practice implications

Parao Law practice guidance

For professionals and families

• Begin with the date of death, the account’s location and legal classification, and the applicable law. A foreign-currency deposit in a Philippine bank is not simply the same thing as any asset held overseas.
• Obtain bank certifications, estate returns, proof of tax payments, and documents establishing the claimant’s authority. Preserve dates of filing and receipt for any refund review.
• Before excluding a deposit from an estate computation, have the effect of the later legislation and any relevant transitional provisions assessed.

For lawyers

• Separate the Court’s treatment of the 1997 Tax Code from the express legislative change in 2025. Analyze the governing time period before relying on Romig.
• Distinguish the underlying exemption question from compliance with the procedural requirements for a refund. A favorable precedent does not cure a missing factual or procedural element.

Later legislation

Section 27(s) of RA 12214 expressly identifies Section 6 of RA 6426; Section 28 contains a transition provision for specified financial instruments. Their application requires a separate analysis of the particular estate and account.

Read Republic Act No. 12214 in the Supreme Court E-Library ↗

Limits of the ruling

Romig does not establish that all dollar-denominated assets are exempt or that its historical exemption remains available without examining subsequent law.