G.R. No. 29204 , 29205, 29206, 29207, 29208, 29209, December 29, 1928
RUFINA ZAPANTA, ET AL., plaintiffs-appellees, vs. JUAN POSADAS, JR., ET AL., defendants-appellants.

(Consolidated Cases)

FACTS

Father Braulio Pineda died in January 1925 without ascendants or descendants. He left a will instituting his sister, Irene Pineda, as his sole heir. During his lifetime, he executed several donation instruments in favor of the six sets of plaintiffs (his relatives, including some brothers). The donations contained conditions requiring the donees to pay him certain amounts of rice or money annually during his lifetime. The instruments expressly stipulated that failure to comply would revoke the donations *ipso facto* and that the donations would take effect upon acceptance. All donees accepted the donations during Father Braulio’s lifetime.

After his death, the Collector of Internal Revenue assessed and collected inheritance taxes from the donees on the donated properties, pursuant to Section 1536 of the Administrative Code (as amended), which taxes transmissions “by virtue of inheritance, devise, bequest, gift *mortis causa* or advance in anticipation of inheritance, devise, or bequest.” The donees paid under protest and filed separate actions for recovery. The trial court ruled in favor of the donees, holding the donations were *inter vivos* and thus not subject to inheritance tax. The Collector appealed.

ISSUE

Whether the donations made by Father Braulio Pineda are donations *inter vivos* or donations *mortis causa* (or advances in anticipation of inheritance), the latter being subject to inheritance tax under Section 1536 of the Administrative Code.

RULING

The Supreme Court AFFIRMED the trial court’s decision. The donations are DONATIONS *INTER VIVOS* and are NOT SUBJECT to the inheritance tax.

1. Nature as Donation *Inter Vivos*: The donations expressly stated they were *inter vivos*. They were made out of affection and in consideration of past services, took effect upon acceptance (which occurred during the donor’s lifetime), and transferred ownership to the donees at that moment. The imposition of an annual charge (rice/money) made them onerous donations, further distancing them from gratuitous dispositions *mortis causa* and bringing them closer to contracts.

2. Distinction from Donation *Mortis Causa*: The Court reiterated the principal characteristics of a donation *mortis causa*: (a) the donor’s death is the event that determines the acquisition of the right to the property, and (b) it is revocable at the mere will of the donor. Here, the right was acquired upon acceptance during the donor’s life. The resolutory condition (failure to pay the annual charge) did not make the donation revocable at the donor’s mere whim; revocation was contingent only upon that specific non-fulfillment.

3. Not an “Advance in Anticipation of Inheritance”: The donations could not be considered taxable “advances” under the tax law because the donees were not the heirs or legatees of Father Braulio upon his death (his sole heir by will was Irene Pineda). Furthermore, if the donations were treated as *mortis causa*, they would be void for lacking the formalities of a will (under Section 618 of the Code of Civil Procedure), meaning no right would have been transmitted to tax.

4. Dissent (Street, J.): The dissenting opinion argued that the donations were taxable as “advances in anticipation of inheritance.” The view was that the donations and the will were part of a single scheme to distribute the donor’s estate to his natural heirs (the donees and the instituted heir), thus constituting a device to evade the inheritance tax which the law on “advances” was designed to prevent.

DOCTRINE:
A donation is *inter vivos* if the transfer of ownership is perfected and takes effect during the donor’s lifetime, upon acceptance by the donee. The imposition of an onerous charge or resolutory condition does not convert it into a donation *mortis causa*. The essential characteristics of a donation *mortis causa* are: (1) the transfer is conditioned upon the donor’s death, and (2) it is revocable at the donor’s sole will.