Vidal de Roces vs Posadas Jr
58 Phil 108 [GR No. L-34937 March 13, 1933]
Facts: On March 1o and 12, 1925, Esperanza Tuazon, by means of public documents, donated certain parcel of lands 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 certificate of title. On January 25, 1926, the donor died in the city of Manila leaving the forced heir and her will which was admitted to probate, she bequeathed to each of the donees the sum of Php5,000. After the estate had been distributed among the instituted legatees and before the delivery of their respective shares, the appellee herein, as collector of internal revenue, ruled that the appellant as donees and legatees should pay as inheritance taxes the sums of Php16,673 and Php13,951.45 respectively. At first, the appellants refused to pay the aforementioned taxes but, at the insistence of the appellee in order not to delay the adjudication of the legacies, they agreed at last to pay them under protest. Hence, plaintiff-appellants filed an action to recover the taxes paid under protest.
Issue: Whether or not inheritance tax should be imposed on donations inter vivos.
Held: Yes. 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 circumstance that the donees were later instituted as the former’s legatees. For this reason, the law considers such transmission in the form of gifts inter vivos, as advances on the inheritance and nothing therein violates any constitutional provision, in as much 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 gifts inter vivos in the manner designated by statute, whether such property be real or personal, tangible or intangible, corporeal or incorporeal.
While a donee inter vivos, who after the predecessor’s death proved to be an heir, legatee or donee mortis causa, would have to pay the tax, another donee inter vivos who did not prove to be an heir, a legatee or a donee mortis causa of the predecessor, would be exempt from such tax.
It may be inferred from the allegations contained in par 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 in 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 payment of inheritance tax.