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G.R. No.


March 13, 1933

JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.
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.
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.

G.R. No. L-36770

November 4, 1932

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


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
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 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):
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.

G.R. No. 187056

September 20, 2010

surnamed G. FERRER, and MIGUELA FERRER ALTEZA, Respondents.
This case pertains to a gift, otherwise denominated as a donation mortis causa, which in reality is a
donation inter vivos made effective upon its execution by the donors and acceptance thereof by the
donees, and immediately transmitting ownership of the donated property to the latter, thus precluding
a subsequent assignment thereof by one of the donors.
The Facts and the Case
On August 27, 1968 the spouses Leopoldo and Guadalupe Gonzales executed a document entitled
"Donation Mortis Causa"1 in favor of their two children, Asuncion and Emiliano, and their
granddaughter, Jarabini (daughter of their predeceased son, Zoilo) covering the spouses 126-square
meter lot and the house on it in Pandacan, Manila2 in equal shares. The deed of donation reads:
It is our will that this Donation Mortis Causa shall be irrevocable and shall be respected by the surviving
It is our will that Jarabini Gonzales-del Rosario and Emiliano Gonzales will continue to occupy the
portions now occupied by them.
It is further our will that this DONATION MORTIS CAUSA shall not in any way affect any other
distribution of other properties belonging to any of us donors whether testate or intestate and where
ever situated.
It is our further will that any one surviving spouse reserves the right, ownership, possession and
administration of this property herein donated and accepted and this Disposition and Donation shall be
operative and effective upon the death of the DONORS.3
Although denominated as a donation mortis causa, which in law is the equivalent of a will, the deed had
no attestation clause and was witnessed by only two persons. The named donees, however, signified
their acceptance of the donation on the face of the document.
Guadalupe, the donor wife, died in September 1968. A few months later or on December 19, 1968,
Leopoldo, the donor husband, executed a deed of assignment of his rights and interests in subject
property to their daughter Asuncion. Leopoldo died in June 1972.
In 1998 Jarabini filed a "petition for the probate of the August 27, 1968 deed of donation mortis causa"
before the Regional Trial Court (RTC) of Manila in Sp. Proc. 98-90589. Asuncion opposed the petition,
invoking his father Leopoldos assignment of his rights and interests in the property to her.
After trial, the RTC rendered a decision dated June 20, 2003, finding that the donation was in fact one
made inter vivos, the donors intention being to transfer title over the property to the donees during the

donors lifetime, given its irrevocability. Consequently, said the RTC, Leopoldos subsequent assignment
of his rights and interest in the property was void since he had nothing to assign. The RTC thus directed
the registration of the property in the name of the donees in equal shares.
On Asuncions appeal to the Court of Appeals (CA), the latter rendered a decision on December 23,
2008, reversing that of the RTC. The CA held that Jarabini cannot, through her petition for the probate of
the deed of donation mortis causa, collaterally attack Leopoldos deed of assignment in Asuncions
favor. The CA further held that, since no proceeding exists for the allowance of what Jarabini claimed
was actually a donation inter vivos, the RTC erred in deciding the case the way it did. Finally, the CA held
that the donation, being one given mortis causa, did not comply with the requirements of a notarial will,
rendering the same void. Following the CAs denial of Jarabinis motion for reconsideration,9 she filed
the present petition with this Court.
Issue Presented
The key issue in this case is whether or not the spouses Leopoldo and Guadalupes donation to
Asuncion, Emiliano, and Jarabini was a donation mortis causa, as it was denominated, or in fact a
donation inter vivos.
The Courts Ruling
That the document in question in this case was captioned "Donation Mortis Causa" is not controlling.
This Court has held that, if a donation by its terms is inter vivos, this character is not altered by the fact
that the donor styles it mortis causa.
In Austria-Magat v. Court of Appeals, the Court held that "irrevocability" is a quality absolutely
incompatible with the idea of conveyances mortis causa, where "revocability" is precisely the essence of
the act. A donation mortis causa has the following characteristics:
1. It conveys no title or ownership to the transferee before the death of the transferor; or, what
amounts to the same thing, that the transferor should retain the ownership (full or naked) and
control of the property while alive;
2. That before his death, the transfer should be revocable by the transferor at will, ad nutum;
but revocability may be provided for indirectly by means of a reserved power in the donor to
dispose of the properties conveyed; and
3. That the transfer should be void if the transferor should survive the transferee. (Underscoring
The Court thus said in Austria-Magat that the express "irrevocability" of the donation is the "distinctive
standard that identifies the document as a donation inter vivos." Here, the donors plainly said that it is
"our will that this Donation Mortis Causa shall be irrevocable and shall be respected by the surviving
spouse." The intent to make the donation irrevocable becomes even clearer by the proviso that a
surviving donor shall respect the irrevocability of the donation. Consequently, the donation was in
reality a donation inter vivos.

The donors in this case of course reserved the "right, ownership, possession, and administration of the
property" and made the donation operative upon their death. But this Court has consistently held that
such reservation (reddendum) in the context of an irrevocable donation simply means that the donors
parted with their naked title, maintaining only beneficial ownership of the donated property while they
Notably, the three donees signed their acceptance of the donation, which acceptance the deed
required. This Court has held that an acceptance clause indicates that the donation is inter vivos, since
acceptance is a requirement only for such kind of donations.1awphi1 Donations mortis causa, being in
the form of a will, need not be accepted by the donee during the donors lifetime.
Finally, as Justice J. B. L. Reyes said in Puig v. Peaflorida, in case of doubt, the conveyance should be
deemed a donation inter vivos rather than mortis causa, in order to avoid uncertainty as to the
ownership of the property subject of the deed.
Since the donation in this case was one made inter vivos, it was immediately operative and final. The
reason is that such kind of donation is deemed perfected from the moment the donor learned of the
donees acceptance of the donation. The acceptance makes the donee the absolute owner of the
property donated.
Given that the donation in this case was irrevocable or one given inter vivos, Leopoldos subsequent
assignment of his rights and interests in the property to Asuncion should be regarded as void for, by
then, he had no more rights to assign. He could not give what he no longer had. Nemo dat quod non
The trial court cannot be faulted for passing upon, in a petition for probate of what was initially
supposed to be a donation mortis causa, the validity of the document as a donation inter vivos and the
nullity of one of the donors subsequent assignment of his rights and interests in the property. The Court
has held before that the rule on probate is not inflexible and absolute. Moreover, in opposing the
petition for probate and in putting the validity of the deed of assignment squarely in issue, Asuncion or
those who substituted her may not now claim that the trial court improperly allowed a collateral attack
on such assignment.
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the assailed December 23, 2008 Decision and
March 6, 2009 Resolution of the Court of Appeals in CA-G.R. CV 80549, and REINSTATES in toto the June
20, 2003 Decision of the Regional Trial Court of Manila, Branch 19, in Sp. Proc. 98-90589.