Luis Dison, plaintiff and appellant, vs. Juan Posadas, Jr.

,
Collector of Internal Revenue, defendant and appellant.
GR No. 36770, November 4, 1932
Germaine Suzette C. Austero
Case No. 2 - TAX 2

FACTS:

Dison filed a case for recovery of an inheritance tax in the sum of P2,808.73, which he paid
under protest, against Posadas Jr., who was then the Collector of Internal Revenue. The
petitioner alleged that the tax is illegal because he received the property 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 P1,254.56 which was the alleged balance still due and
unpaid on account of the said tax.

The court a quo held that the cause of action set up in the counterdemand was not proven
and dismissed the same. Hence, both sides appealed.

ISSUE:
WON Sec. 1540 of the Administrative Code subjects the plaintiff to the payment of an
inheritance tax. (YES)

RULING:
Dison is still liable to pay the inheritance tax by virtue of Sec. 1540 of the Administrative
Code.

The said provision plainly does not tax gifts per se but only those gifts which were made to
those who shall prove to be the heirs, devisees, legatees, or donees mortis causa of the
donor.

Here, the Dison’s argument that he is not an heir of his deceased father within the meaning
of the above-mentioned provision because his father, in his lifetime, has given the
appellant all his property and left no property to be inherited, is so fallacious. In any event,
Dison could not be deprived of his share of the inheritance because the Civil Code confers
upon him the status of a forced heir.

Hence, the Court held Sec. 1540 to be applicable and the tax to have been properly
assessed by the CIR.