Case Study

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Yaleslie B. Amene
4BLM

ESTATE TAX CASE DIGESTS

Vidal de Roces v. Posadas, 58 Phil. 108
Facts:
On March 10 and 12, 1925, Esperanza Tuazon donated several parcels of land located in Manila to plaintiffs Concepcion Vidal de Roces and her husband, as well as one Elvira Richards. This was recorded in the Registry of Deeds. After subsequently taking possession of the said lands and its fruits, plaintiffs obtained the corresponding transfer certificates. In 1926, the donor died without leaving any forced heir and designated the sum of P5,000 to each of her donees. After the estate had been distributed among the instituted legatees and before delivery of their respective share, the Commissioner of Internal Revenue (CIR) ruled that plaintiffs being donees and legatees should pay inheritance taxes. These were then paid under protest. Plaintiffs argue that donation inter vivos is not included in the Administrative Code and if it does, it is unconstitutional because it violates Section 3 of the Jones Law, the Legislature has no authority to impose inheritance tax on donations inter vivos, and that a legal provision of this character contravenes the fundamental rule of uniformity of taxation. Nonetheless, CIR contends that words ‘all gifts’ pertain plainly to donation inter vivos. Issue:

Whether or not the donations are subject to inheritance tax
Ruling:
The court held that the said donations are subject to inheritance tax because the phrase ‘all gifts’ as laid down in the case of Tuason v. Posadas refers to gifts inter vivos being considered as advances in anticipation of inheritance in such a way that it is considered as gifts inter vivos made in contemplation of death therefore there is no violation of any constitutional provision. 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. Donations which are not made in contemplation of the decedent's death are not included because it would mean imposing a direct tax on property and not on its transmission.

Dizon v. Posadas, 57 Phil. 465
Facts:
Don Felix Dizon donated twenty-two tracts of land to Luis Dizon, his only son, by a deed of gift inter vivos. The same was duly accepted and registered before the death of the former. Included in the assessment of the inheritance tax against Luis was the gift made to him during the lifetime of his father. Luis asserts that the tax is illegal since he received the property by a deed of gift inter vivos duly accepted and registered before his father’s death/ Issue:

Whether or not the gift inter vivos is subject to inheritance tax Ruling:
Yes. The gift received by Luis was really considered advancement upon the inheritance to which he would be entitled upon the death of his father. Following the provisions of Sec. 1540 of the Administrative Code, Luis being a forced heir cannot be deprived of his share in the inheritance thus his argument that he is no longer an heir after the death of his father because there is no longer any property is deemed invalid and following previous rulings, when the law says all gifts, it undoubtedly refers to gifts inter vivos, and not mortis causa. De Guzman v. De Guzman, 83 SCRA 256

Facts:
One of the properties left by the deceased testator was a residential house located in the poblacion. In conformity with his last will, that house and the lot on which it stands were adjudicated to his eight children, each being given a one-eighth proindiviso share in the project of partition dated March 19, 1966, which was signed by the eight heirs and which was approved...
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