G.R. No.

L-29204 December 29, 1928

RUFINA ZAPANTA, ET AL., plaintiffs-appellees,

vs.
JUAN POSADAS, JR., ET AL., defendants-appellants.

AVANCEÑA, C. J.:

Father Braulio Pineda died in January 1925 without any ascendants or descendants leaving a will in which he
instituted his sister Irene Pineda as his sole heiress. During his lifetime Father Braulio donated some of his property
by the instruments to the six plaintifffs, severally, with the condition that some of them would pay him a certain
amount of rice, and others of money every year, and with the express provision that failure to fulfill this condition
would revoke the donations ipso facto. These six plaintiff-donees are relatives, and some of them brothers of Father
Braulio Pineda. The donations contained another clause that they would take effect upon acceptance. They were
accepted during Father Braulio's lifetime by every one of the donees.

Every one of the six plaintiffs filed a separate action against the Collector of Internal Revenue and his deputy for the
sums of which each of them paid, under protest, as inheritance tax on the property donated to them, in accordance
with section 1536 of the Administrative Code, as amended by section 10 of Act No. 2835, and by section 1 of Act No.
3031. Section 1536 of the Administrative Code reads:

Every transmission by virtue of inheritance, devise, bequest, gift mortis causa or advance in anticipation of
inheritance, devise, or bequest of real property located in the Philippine Islands and real rights in such
property; . . .

The trial court in deciding these six cases, held that the donations to the six plaintiffs made by the deceased Father
Braulio Pineda are donations inter vivos, and therefore, not subject to the inheritance tax, and ordered the defendants
to return to each of the plaintiffs the sums paid by the latter.

The defendants appealed from this judgment.

The whole quetion involved in this appeal resolves into whether the donations made by Father Braulio Pineda to each
of the plaintiffs are donations inter vivos, or mortis causa, for it is the latter upon which the Administrative Code
imposes inheritance tax. In our opinion, said donations are inter vivos. It is so expressly stated in the instruments in
which they appear. They were made in consideration of the donor's affection for the donees, and of the services they
had rendered him, but he has charged them with the obligation to pay him a certain amount of rice and money,
respectively, each year during his lifetime, the donations to become effective upon acceptance. They are therefore
not in the nature of donations mortis causa but inter vivos.

The principal characteristics of a donation mortis causa, which distinguish it essentially from a donation inter vivos,
are that in the former it is the donor's death that determines the acquisition of, or the right to, the property, and that it
is revocable at the will of the donor. In the donations in question, their effect, that is, the acquisition of, or the right to,
the property, was produced while the donor was still alive, for according to their expressed terms they were to have
this effect upon acceptance, and this took place during the donor's lifetime. The nature of these donations is not
affected by the fact that they were subject to a condition, since it was imposed as a resolutory condition, and in this
sense, it is necessarily implies that the right came into existence first as well as its effect, because otherwise there
would be nothing to resolve upon the nonfulfillment of the condition imposed. Neither does the fact that these
donations are revocable, give them the character of donations mortis causa, inasmuch as the revocation is not the
failure to fulfill the condition imposed. In relation to the donor's will alone, these donations are irrevocable. On the
other hand, this condition, in so far as it renders the donation onerous, takes it further away from the
disposition mortis causa and brings it nearer to contract. In this sense, by virtue of this condition imposed, they are
not donations throughout their full extent, but only so far as they exceed the incumbrance imposed, for so far as
concerns the portion equivalent to or less than said incumbrance, it has the nature of a real contract and is governed
by the rule on contracts (art. 622 of the Civil Code). And in the part in which it is strictly a donation, it is a
donation inter vivos, because its effect was produced by the donees' acceptance during the donor's lifetime and was
not determined by the donor's death. Upon being accepted they had full effect. If the donor's life is mentioned in
connection with this condition, it is only fix the donor's death as the end of the term within which the condition must be

1
fulfilled, and not because such death of the donor is the cause which determines the birth of the right to the donation.
The property donated passed to the ownership of the donees from the acceptance of the donations, and these could
not be revoked except upon the nonfulfillment of the condition imposed, or for other causes prescribed by the law, but
not by mere will of the donor.

Neither can these donations be considered as an advance on inheritance or legacy, according to the terms of section
1536 of the Administrative Code, because they are neither an inheritance nor a legacy. And it cannot be said that the
plaintiffs received such advance on inheritance or legacy, since they were not heirs or legatees of their predessor in
interest upon his death (sec. 1540 of the Administrative Code). Neither can it be said that they obtained this
inheritance or legacy by virtue of a document which does not contain the requisites of a will (sec. 618 of the Code of
Civil Pocedure).1awphi1.net

Besides, if the donations made by the plaintiffs are, as the appellants contended, mortis causa, then they must be
governed by the law on testate succession (art. 620 of the Civil Code). In such a case, the documents in which these
donations appear, being instruments which do not contain the requisites of a will, are not valid to transmit the property
to the donees (sec. 618, Code of Civil Procedure.) Then the defendants are not justified in collecting from the donees
the inheritance tax, on property which has not been legally transferred to them, and in which they acquired no right.

For these reasons the judgment appealed from is affirmed, without special pronouncement as to costs. So ordered.

Johnson, Malcolm, Villamor, Romualdez and Villa-Real, JJ., concur.

Ostrand and Johns, JJ., dissent.

2.

G.R. No. L-30885 January 23, 1930

ALFONSO TUASON Y ANGELES and MARIANO TUASON Y ANGELES, plaintiffs-appellees,

vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.

Attorney-General Jaranilla for appellant.

Salvador Franco for appellees.

AVANCEÑA, C.J.:

On September 15, 1922, Esperanza Tuason y Chuajap made a donation inter vivos of certain property to plaintiff
Mariano Tuason y Angeles. On April 30, 1923, she made another donation inter vivos to Alfonso Tuason y Angeles,
the other plaintiff. On January 5, 1926, she died of senile weakness at the age of 73, leaving a will bequeathing of
P5,025 to Mariano Tuason y Angeles. Her judicial administratrix paid the prescribed inheritance tax on these two
bequests.

Furthermore, the defendant collected the sums of P3,809.76 and P6,653.64 from plaintiffs Mariano Tuason y Angeles
and Alfonso Tuason y Angeles against their opposition and over their protest as inheritance tax upon the gifts inter
vivos made to them.

The plaintiffs brought this action against the Collector of Internal Revenue for the recovery of the amounts of
P3,809.76 and P6,653.64 collected from them as inheritance tax.

The judgment appealed from ordered the defendant to return the amounts claimed to the plaintiffs.

The appellant contends that the collection of these amounts as inheritance tax is authorized by the law.

2
Section 1536 of the Administrative Code provides:

SEC. 1536. Conditions and rate of taxation. — Every transmission by virtue of inheritance, devise, bequest,
gift mortis causa, or advance in anticipation of inheritance, devise, or bequest shall be subject to the
following tax;

xxx xxx xxx

Section 1539 enumerates the deductions to be made in determining the net sum which must bear the tax.

Section 1540 then provides:

SEC. 1540. Additions of gifts and advances. — After the aforementioned deductions have been made, there
shall be added to the resulting amount the value of all gifts or advances made by the predecessor to any of
those who, after his death, shall prove to be his heirs, devisees, legatees, or donees mortis causa.

When the law say all gifts, it doubtless refers to gifts inter vivos, and not mortis causa. Both the letter and the spirit of
the law leave no room for any other interpretation. Such, clearly, is the tenor of the language which refers to donation
that took effect before the donor's death, and not to mortis causa donations, which can only be made with the
formalities of a will, and can only take effect after the donor's death. Any other construction would virtually change this
provision into:

. . . there shall be added to the resulting amount the value of all gifts mortis causa . . . made by the
predecessor to those who, after his death, shall prove to be his . . . donees mortis causa." We cannot give to
the law an interpretation that would so vitiate its language. The truth of the matter is that in this section
(1540) the law presumes that such gifts have been made in anticipation of inheritance, devise, bequest, or
gift mortis causa, when the donee, after the death of the donor proves to be his heir, devisee or donee
mortis causa, for the purpose of evading the tax, and it is to prevent this that it provides that they shall be
added to the resulting amount.

This being so, and it appearing that the appellees after the death of Esperanza Tuason y Chuajap, were found to be
legatees under her will, the donation inter vivos she had made to them in 1922 and 1923, must be added to the net
amount that is to be taxed.

In the course of the deliberations of this court on this case, the question arose as to whether or not that interpretation
of the law would be constitutional. But as the parties did not raise this question in the court below, nor in this court, we
cannot consider it. At any rate the argument adduced against its constitutionality, which is the lack of uniformity, does
not seem to be well-founded. It was said that under such an interpretation, while a donee inter vivos who, after the
predecessor's death prove to be an heir, a legatee, or a donee mortis causa, would have to pay the tax, another
donee inter vivos who did not prove to be an heir, a legatee, or a donee mortis causa of the predecessor, would be
exempt from such a tax. But as these are two different cases, the principle of uniformity is inapplicable to them. Aside
from this, in regard to other aspects, we see nothing against the constitutionality of the law (Bromley vs. McCaughn
[1929], U. S. Supreme Court Advance Opinions, p. 69).

The judgment appealed from is reversed, and the defendant is absolved from the complaint, without special
pronouncement of costs. So ordered.

Malcolm, Villamor, Ostrand, Johns and Romualdez, JJ., concur.

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3.

G.R. No. L-36770 November 4, 1932

LUIS W. DISON, plaintiff-appellant,

vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.

BUTTE, J.:

This is an appeal from the decision of the Court of First Instance of Pampanga in favor of the defendant Juan
Posadas, Jr., Collector of Internal Revenue, in a suit filed by the plaintiffs, Luis W. Dison, for the recovery of an
inheritance tax in the sum of P2,808.73 paid under protest. The petitioner alleged in his complaint that the tax is
illegal because he received the property, which is the basis of the tax, from his father before his death by a deed of
gift inter vivos which was duly accepted and registered before the death of his father. The defendant answered with a
general denial and with a counterdemand for the sum of P1,245.56 which it was alleged is a balance still due and
unpaid on account of said tax. The plaintiff replied to the counterdemand with a general denial. The court a quo held
that the cause of action set up in the counterdemand was not proven and dismissed the same. Both sides appealed
to this court, but the cross-complaint and appeal of the Collector of Internal Revenue were dismissed by this court on
March 17, 1932, on motion of the Attorney-General.1awphil.net

The only evidence introduced at the trial of this cause was the proof of payment of the tax under protest, as stated,
and the deed of gift executed by Felix Dison on April 9, 1928, in favor of his sons Luis W. Dison, the plaintiff-
appellant. This deed of gift transferred twenty-two tracts of land to the donee, reserving to the donor for his life the
usufruct of three tracts. This deed was acknowledged by the donor before a notary public on April 16, 1928. Luis W.
Dison, on April 17, 1928, formally accepted said gift by an instrument in writing which he acknowledged before a
notary public on April 20, 1928.

At the trial the parties agreed to and filed the following ingenious stipulation of fact:

1. That Don Felix Dison died on April 21, 1928;

2. That Don Felix Dison, before his death, made a gift inter vivos in favor of the plaintiff Luis W. Dison of all
his property according to a deed of gift (Exhibit D) which includes all the property of Don Felix Dizon;

3. That the plaintiff did not receive property of any kind of Don Felix Dison upon the death of the latter;

4. That Don Luis W. Dison was the legitimate and only child of Don Felix Dison.

It is inferred from Exhibit D that Felix Dison was a widower at the time of his death.

The theory of the plaintiff-appellant is that he received and holds the property mentioned by a consummated gift and
that Act No. 2601 (Chapter 40 of the Administrative Code) being the inheritance tax statute, does not tax gifts. The
provision directly here involved is section 1540 of the Administrative Code which reads as follows:

Additions of Gifts and Advances. — After the aforementioned deductions have been made, there shall be
added to the resulting amount the value of all gifts or advances made by the predecessor to any of those
who, after his death, shall prove to be his heirs, devises, legatees, or donees mortis causa.

The question to be resolved may be stated thus: Does section 1540 of the Administrative Code subject the plaintiff-
appellant to the payment of an inheritance tax?

The appellant argues that there is no evidence in this case to support a finding that the gift was simulated and that it
was an artifice for evading the payment of the inheritance tax, as is intimated in the decision of the court below and
the brief of the Attorney-General. We see no reason why the court may not go behind the language in which the
transaction is masked in order to ascertain its true character and purpose. In this case the scanty facts before us may
not warrant the inference that the conveyance, acknowledged by the donor five days before his death and accepted

4
by the donee one day before the donor's death, was fraudulently made for the purpose of evading the inheritance tax.
But the facts, in our opinion, do warrant the inference that the transfer was an advancement upon the inheritance
which the donee, as the sole and forced heir of the donor, would be entitled to receive upon the death of the donor.

The argument advanced by the appellant that he is not an heir of his deceased father within the meaning of section
1540 of the Administrative Code because his father in his lifetime had given the appellant all his property and left no
property to be inherited, is so fallacious that the urging of it here casts a suspicion upon the appellants reason for
completing the legal formalities of the transfer on the eve of the latter's death. We do not know whether or not the
father in this case left a will; in any event, this appellant could not be deprived of his share of the inheritance because
the Civil Code confers upon him the status of a forced heir. We construe the expression in section 1540 "any of those
who, after his death, shall prove to be his heirs", to include those who, by our law, are given the status and rights of
heirs, regardless of the quantity of property they may receive as such heirs. That the appellant in this case occupies
the status of heir to his deceased father cannot be questioned. Construing the conveyance here in question, under
the facts presented, as an advance made by Felix Dison to his only child, we hold section 1540 to be applicable and
the tax to have been properly assessed by the Collector of Internal Revenue.

This appeal was originally assigned to a Division of five but referred to the court in banc by reason of the appellant's
attack upon the constitutionality of section 1540. This attack is based on the sole ground that insofar as section 1540
levies a tax upon gifts inter vivos, it violates that provision of section 3 of the organic Act of the Philippine Islands (39
Stat. L., 545) which reads as follows: "That no bill which may be enacted into law shall embraced more than one
subject, and that subject shall be expressed in the title of the bill." Neither the title of Act No. 2601 nor chapter 40 of
the Administrative Code makes any reference to a tax on gifts. Perhaps it is enough to say of this contention that
section 1540 plainly 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. This court said in the case of Tuason and
Tuason vs. Posadas 954 Phil., 289):lawphil.net

When the law says all gifts, it doubtless refers to gifts inter vivos, and not mortis causa. Both the letter and
the spirit of the law leave no room for any other interpretation. Such, clearly, is the tenor of the language
which refers to donations that took effect before the donor's death, and not to mortis causa donations, which
can only be made with the formalities of a will, and can only take effect after the donor's death. Any other
construction would virtually change this provision into:

". . . there shall be added to the resulting amount the value of all gifts mortis causa . . . made by the predecessor to
those who, after his death, shall prove to be his . . . donees mortis causa." We cannot give to the law an interpretation
that would so vitiate its language. The truth of the matter is that in this section (1540) the law presumes that such gifts
have been made in anticipation of inheritance, devise, bequest, or gift mortis causa, when the donee, after the death
of the donor proves to be his heir, devisee or donee mortis causa, for the purpose of evading the tax, and it is to
prevent this that it provides that they shall be added to the resulting amount." However much appellant's argument on
this point may fit his preconceived notion that the transaction between him and his father was a consummated gift
with no relation to the inheritance, we hold that there is not merit in this attack upon the constitutionality of section
1540 under our view of the facts. No other constitutional questions were raised in this case.

The judgment below is affirmed with costs in this instance against the appellant. So ordered.

Avanceña, C.J., Street, Malcolm, Ostrand, Abad Santos, Vickers and Imperial, JJ., concur.

4. G.R. No. L-34937 March 13, 1933

CONCEPCION VIDAL DE ROCES and her husband,

MARCOS ROCES, and ELVIRA VIDAL DE RICHARDS, plaintiff-appellants,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.

Feria and La O for appellants.

Attorney-General Jaranilla for appellee.

5
IMPERIAL, J.:

The plaintiffs herein brought this action to recover from the defendant, Collector of Internal Revenue, certain sums of
money paid by them under protest as inheritance tax. They appealed from the judgment rendered by the Court of
First Instance of Manila dismissing the action, without costs.

On March 10 and 12, 1925, Esperanza Tuazon, by means of public documents, donated certain parcels of land
situated in Manila to the plaintiffs herein, who, with their respective husbands, accepted them in the same public
documents, which were duly recorded in the registry of deeds. By virtue of said donations, the plaintiffs took
possession of the said lands, received the fruits thereof and obtained the corresponding transfer certificates of title.

On January 5, 1926, the donor died in the City of Manila without leaving any forced heir and her will which was
admitted to probate, she bequeathed to each of the donees the sum of P5,000. After the estate had been distributed
among the instituted legatees and before delivery of their respective shares, the appellee herein, as Collector of
Internal Revenue, ruled that the appellants, as donees and legatees, should pay as inheritance tax the sums of
P16,673 and P13,951.45, respectively. Of these sums P15,191.48 was levied as tax on the donation to Concepcion
Vidal de Roces and P1,481.52 on her legacy, and, likewise, P12,388.95 was imposed upon the donation made to
Elvira Vidal de Richards and P1,462.50 on her legacy. At first the appellants refused to pay the aforementioned taxes
but, at the insistence of the appellee and in order not to delay the adjudication of the legacies, they agreed at last, to
pay them under protest.

The appellee filed a demurrer to the complaint on the ground that the facts alleged therein were not sufficient to
constitute a cause of action. After the legal questions raised therein had been discussed, the court sustained the
demurrer and ordered the amendment of the complaint which the appellants failed to do, whereupon the trial court
dismissed the action on the ground that the afore- mentioned appellants did not really have a right of action.

In their brief, the appellants assign only one alleged error, to wit: that the demurrer interposed by the appellee was
sustained without sufficient ground.

The judgment appealed from was based on the provisions of section 1540 Administrative Code which reads as
follows:

SEC. 1540. Additions of gifts and advances. — After the aforementioned deductions have been made, there
shall be added to the resulting amount the value of all gifts or advances made by the predecessor to any
those who, after his death, shall prove to be his heirs, devisees, legatees, or donees mortis causa.

The appellants contend that the above-mentioned legal provision does not include donations inter vivos and if it does,
it is unconstitutional, null and void for the following reasons: first, because it violates section 3 of the Jones Law which
provides that no law should embrace more than one subject, and that subject should be expressed in the title thereof;
second that the Legislature has no authority to impose inheritance tax on donations inter vivos; and third, because a
legal provision of this character contravenes the fundamental rule of uniformity of taxation. The appellee, in turn,
contends that the words "all gifts" refer clearly to donations inter vivos and, in support of his theory, cites the doctrine
laid in the case of Tuason and Tuason vs. Posadas (54 Phil., 289). After a careful study of the law and the authorities
applicable thereto, we are the opinion that neither theory reflects the true spirit of the aforementioned provision. The
gifts referred to in section 1540 of the Revised Administration Code are, obviously, those donations inter vivos that
take effect immediately or during the lifetime of the donor but are made in consideration or in contemplation of death.
Gifts inter vivos, the transmission of which is not made in contemplation of the donor's death should not be
understood as included within the said legal provision for the reason that it would amount to imposing a direct tax on
property and not on the transmission thereof, which act does not come within the scope of the provisions contained in
Article XI of Chapter 40 of the Administrative Code which deals expressly with the tax on inheritances, legacies and
other acquisitions mortis causa.

Our interpretation of the law is not in conflict with the rule laid down in the case of Tuason and Tuason vs.
Posadas, supra. We said therein, as we say now, that the expression "all gifts" refers to gifts inter vivos inasmuch as
the law considers them as advances on inheritance, in the sense that they are gifts inter vivos made in contemplation
or in consideration of death. In that case, it was not held that that kind of gifts consisted in those made completely
independent of death or without regard to it.

6
Said legal provision is not null and void on the alleged ground that the subject matter thereof is not embraced in the
title of the section under which it is enumerated. On the contrary, its provisions are perfectly summarized in the
heading, "Tax on Inheritance, etc." which is the title of Article XI. Furthermore, the constitutional provision cited
should not be strictly construed as to make it necessary that the title contain a full index to all the contents of the law.
It is sufficient if the language used therein is expressed in such a way that in case of doubt it would afford a means of
determining the legislators intention. (Lewis' Sutherland Statutory Construction, Vol. II, p. 651.) Lastly, the
circumstance that the Administrative Code was prepared and compiled strictly in accordance with the provisions of
the Jones Law on that matter should not be overlooked and that, in a compilation of laws such as the Administrative
Code, it is but natural and proper that provisions referring to diverse matters should be found. (Ayson and Ignacio vs.
Provincial Board of Rizal and Municipal Council of Navotas, 39 Phil., 931.)

The appellants question the power of the Legislature to impose taxes on the transmission of real estate that takes
effect immediately and during the lifetime of the donor, and allege as their reason that such tax partakes of the nature
of the land tax which the law has already created in another part of the Administrative Code. Without making express
pronouncement on this question, for it is unnecessary, we wish to state that such is not the case in these instance.
The tax collected by the appellee on the properties donated in 1925 really constitutes an inheritance tax imposed on
the transmission of said properties in contemplation or in consideration of the donor's death and under the
circumstance that the donees were later instituted as the former's legatees. For this reason, the law considers such
transmissions in the form of gifts inter vivos, as advances on inheritance and nothing therein violates any
constitutional provision, inasmuch as said legislation is within the power of the Legislature.

Property Subject to Inheritance Tax. — The inheritance tax ordinarily applies to all property within the power
of the state to reach passing by will or the laws regulating intestate succession or by gift inter vivos in the
manner designated by statute, whether such property be real or personal, tangible or intangible, corporeal or
incorporeal. (26 R.C.L., p. 208, par. 177.)

In the case of Tuason and Tuason vs. Posadas, supra, it was also held that section 1540 of the Administrative Code
did not violate the constitutional provision regarding uniformity of taxation. It cannot be null and void on this ground
because it equally subjects to the same tax all of those donees who later become heirs, legatees or donees mortis
causa by the will of the donor. There would be a repugnant and arbitrary exception if the provisions of the law were
not applicable to all donees of the same kind. In the case cited above, it was said: "At any rate the argument adduced
against its constitutionality, which is the lack of Uniformity, does not seem to be well founded. It was said that under
such an interpretation, while a donee inter vivos who, after the predecessor's death proved to be an heir, a legatee,
or a donee mortis causa, would have to pay the tax, another donee inter vivos who did not prove to he an heir, a
legatee, or a donee mortis causa of the predecessor, would be exempt from such a tax. But as these are two different
cases, the principle of uniformity is inapplicable to them."

The last question of a procedural nature arising from the case at bar, which should be passed upon, is whether the
case, as it now stands, can be decided on the merits or should be remanded to the court a quo for further
proceedings. According to our view of the case, it follows that, if the gifts received by the appellants would have the
right to recover the sums of money claimed by them. Hence the necessity of ascertaining whether the complaint
contains an allegation to that effect. We have examined said complaint and found nothing of that nature. On the
contrary, it be may be inferred from the allegations contained in paragraphs 2 and 7 thereof that said donations inter
vivos were made in consideration of the donor's death. We refer to the allegations that such transmissions were
effected in the month of March, 1925, that the donor died in January, 1926, and that the donees were instituted
legatees in the donor's will which was admitted to probate. It is from these allegations, especially the last, that we
infer a presumption juris tantum that said donations were made mortis causa and, as such, are subject to the
payment of inheritance tax.

Wherefore, the demurrer interposed by the appellee was well-founded because it appears that the complaint did not
allege fact sufficient to constitute a cause of action. When the appellants refused to amend the same, spite of the
court's order to that effect, they voluntarily waived the opportunity offered them and they are not now entitled to have
the case remanded for further proceedings, which would serve no purpose altogether in view of the insufficiency of
the complaint.

Wherefore, the judgment appealed from is hereby affirmed, with costs of this instance against the appellants. So
ordered.

Avanceña, C.J., Villamor, Ostrand, Abad Santos, Hull, Vickers and Buttes, JJ., concur.