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1. Sometime in 1925, plaintiffs Concepcion Vidal de Roces and her husband, as well as
one Elvira Richards, received as donation several parcels of land from Esperanza Tuazon.
They took possession of the lands thereafter and likewise obtained the respective transfer

2.The donor died a year after without leaving any forced heir. In her will, which was
admitted to probate, she bequeathed to each of the donees the sum of P5,000. After the
distribution of the estate but before the delivery of their shares, the CIR (appellee) ruled
that plaintiffs as donees and legatees should pay inheritance taxes. The plaintiffs paid the
taxes under protest.

3. CIR filed a demurrer on ground that the facts alleged were not sufficient to constitute a
cause of action. The court sustained the demurrer and ordered the amendment of the
complaint but the appellants failed to do so. Hence, the trial court dismissed the action on
ground that plaintiffs, herein appellants, did not really have a right of action.

4. Plaintiffs (appellant) contend that Sec. 1540 of the Administrative Code does not
include donation inter vivos and if it does, it is unconstitutional, null and void for
violating SEC. 3 of the Jones Law (providing that no law shall embrace more than one
subject and that the subject should be expressed in its titles ; that the Legislature has no
authority to tax donation inter vivos; finally, that said provision violates the rule on
uniformity of taxation.

5. CIR however contends that the word 'all gifts' refer clearly to donation inter vivos and
cited the doctrine in Tuason v. Posadas.


WON the donations should be subjected to inheritance tax


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

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.

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

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."



Don Felix Dizon died on April 21, 1928. Before his death, he made a gift inter vivos in
favor of the plaintiff Luis W. Dizon of all his property according to a deed of a gift of
which includes all the property of Don Felix Dizon. The plaintiff did not receive the
property of any kind of Don Felix upon the death of the latter. Don Luis is the legitimate
and only son of Don Felix. The defendant, collector of internal revenue assess an
inheritance tax of Php2,808.73 which Don Luis paid under protest and later filed an
action to recover sum of money thus paid. Plaintiff alleged that the inheritance 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.


WON section 1540 of the Administrative Code subject the plaintiff-appellant to the
payment of an inheritance tax


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.