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G.R. No.


March 13, 1933


MARCOS ROCES, and ELVIRA VIDAL DE RICHARDS, plaintiff-appellants,
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

LUIS W. DISON, plaintiff-appellant,

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
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 twentytwo 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 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


ASUNCION G. FERRER, substituted by her heirs, VICENTE, PILAR, ANGELITO,
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 spouse.
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 supplied)
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 lived.
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 habet.
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.