Digest Roces v. Posadas, JR

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CONCEPCION VIDAL DE ROCES and her husband,

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


vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.
G.R. No. L-34937
March 13, 1933

Facts:
On March 10 and 12, 1925, Esperanza Tuazon donated certain parcels of land situated in
Manila to herein plaintiffs. 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. In 1926, Tuazon 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 plaintiffs-donees the sum of Php5,000. After the estate had been distributed among the
instituted legatees and before delivery of their respective shares, the Collector of Internal
Revenue ruled that plaintiffs, as donees and legatees, should pay as inheritance tax the sums of
P16,673 and P13,951.45, respectively.

The plaintiffs paid the subject inheritance tax under protest and filed an action to recover
the same against the Collector of Internal Revenue. The latter filed a demurrer to the complaint
on the ground that the facts alleged therein were not sufficient to constitute a cause of action. The
court sustained the demurrer and ordered the amendment of the complaint which the appellants
failed to do. The judgment appealed from was based on the provisions of Section 1540
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 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, 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, the legislature has
no authority to impose inheritance tax on donations inter vivos; and third, 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.

Issue:
Whether or not the transmissions of property in the instant case is subject to inheritance
tax.

Ruling:
The gifts referred to in Section 1540 of the Revised Administration Code are 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.

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. The tax collected by the appellee on the properties donated really constitutes
an inheritance tax imposed on the transmission of said properties in contemplation or in
consideration of the donor’s death. 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. The
Court also held that the subject provision 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.

Based on the allegations, the transmissions effected in March 1925, the donor’s death in
January 1926 and that the donees were instituted legatees in the donor’s will which was admitted
to probate, the Court ruled that said donations were made mortis causa and, as such, are subject
to the payment of inheritance tax.

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