Vidal De Roces v.

Posadas
Sometime in 1925, plaintiffs Concepcion Vidal de Roces and her husband, as well as one Elvira
Richards, received as donation several parcels of land from Esperanza Tuazon. They took
possession of the lands thereafter and likewise obtained the respective transfer certificates.

The donor died a year after without leaving any forced heir. In her will, which was admitted to
probate, she bequeathed to each of the donees the sum of P5,000. After the distribution of the
estate but before the delivery of their shares, the CIR (appellee) ruled that plaintiffs as donees
and legatees should pay inheritance taxes. The plaintiffs paid the taxes under protest.

CIR filed a demurrer on ground that the facts alleged were not sufficient to constitute a cause of
action. The court sustained the demurrer and ordered the amendment of the complaint but the
appellants failed to do so. Hence, the trial court dismissed the action on ground that plaintiffs,
herein appellants, did not really have a right of action.

Plaintiffs (appellant) contend that Sec. 1540 of the Administrative Code does not include
donation inter vivos and if it does, it is unconstitutional, null and void for violating SEC. 3 of the
Jones Law (providing that no law shall embrace more than one subject and that the subject
should be expressed in its titles ; that the Legislature has no authority to tax donation inter vivos;
finally, that said provision violates the rule on uniformity of taxation.

SEC. 1540. 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.

CIR however contends that the word 'all gifts' refer clearly to donation inter vivos and cited the
doctrine in Tuason v. Posadas.

W/N the donations should be subjected to inheritance tax

YES.

Sec. 1540 of the Administrative Code clearly refers to those donation inter vivos that take effect
immediately or during the lifetime of the donor, but made in consideration of the death of the
decedent. 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.

The phrase 'all gifts' as held in Tuason v. Posadas refers to gifts inter vivos as they are
considered as advances in anticipation of inheritance since they are made in consideration of
death.