Dizon vs Posadas Jr

57 Phil 465 [GR No. L-36770 November 4, 1932]

Facts: 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.

Issue: Whether or not the gift inter vivos is subject to inheritance tax.

Held: Yes. Section 1540 of the administrative code 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 cause of the donor.

In this case, the scanty facts before us may not warrant the inference that the conveyance,
acknowledged by the donor 5 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 not 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.