Luis Dison Vs.

Juan Posadas
Facts:

That before the death of Don Felix Dison (a widower), who was the father of
the petitioner (legitimate son), the former has made a gift inter vivos in favor
of the plaintiff of all of his properties (22 tracts of land reserving the usufruct
of 3 tracts for his life); and that plaintiff did not receive any property upon the
death of the former.
The contention of the petitioner that he had received and holds the property
by a consummated gift and that Section 1540 of Act No. 2601 or the
Administrative Code being the inheritance tax statute should not apply and
that he should not pay Inheritance Tax.
In addition the petitioner argues that there is no evidence to support that the
gift was simulated and that it was an artifice for evading the payment of
inheritance tax; and that he is not a heir of the deceased for his father in his
lifetime had given all his property and left no property to be inherited.
There was also an attack on the constitutionality of section 1540 of the
Administrative Code (levies a tax inter vivos), for it violates section 3 of the
organic act of the Philippine Island, that no bill which may be enacted into law
shall embraced more than one subject and that the subject shall be
expressed in the title of the bill. That the title of the law does not make any
reference to a tax on gifts. That Section 1540 does not tax gifts per se but
only when those gifts are made to those who shall prove to be the heirs,
devisees, legatees or donees mortis causa of the donor.
Petitioner filed a suit with the CFI alleging that the inheritance tax he has paid
under protest was illegal and must be recovered.
CFI ruled in favor of the defendant

Issue: W/N Petitioner should be charge Inheritance tax as provided for Section 1540
of the Administrative Code?
Ruling: Yes, Petitioner should be charge inheritance tax

The law refers to gift inter vivos and not mortis causa. The language of the
law refers to donations that took effect before the donors death and not
mortis causa donations which can only be made with the formalities of a will
and can only take effect after the donors death.
Section 1540 of the Administrative Code presumes that such gifts have been
made in anticipation of inheritance, devise, bequest or gift mortis causa for
the purpose of evading taxes, and it is to prevent this that it provides that
they shall be added to the resulting amount.
Petition was denied, CFI judgment affirmed.