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.

Dison v Posadas

Facts:
Don Felix Dison, before his death, made a gift inter vivos in favor of plaintiff Luis Dison.
Luis was the legitimate and only child of Felix. The Collector of Internal Revenue, Juan
Posadas Jr. taxed him. Luis filed for the recovery of an inheritance tax in the sum of
P2,808.73 paid under protest. He alleged in his complaint 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. He contends that
he received and held the property by a consummated gift and that Act No. 2601 being
the inheritance tax statute, does not tax gifts.

Issue:
Whether or not Dison should pay inheritance tax.

Held:
Yes. Dison should pay tax. Section 1540 of the Administrative Code is applicable. It
states that:
 ‘Addition of Gifts and Advances- After the aforementioned deductions have been
made, there shall be added to the resulting amount the value of all gifts/advances made
by the predecessor to any of those, who, after his death, shall prove to be his heirs,
devisees, legatees or donees mortis causa.’
That Dison occupies the status of heir to his deceased father cannot be questioned. The
conveyance is deemed to be 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 tax has been properly assessed by the CIR.
As regards Act 2601, it is not applicable since the Act does not make any reference to a
tax on gifts.