RUFINA ZAPANTA ET AL., PLAINTIFFS AND APPELLEES, VS. JUAN POSADAS, JR., ET AL., DEFENDANTS AND APPELLANTS.

Father Braulio Pineda died in January 1925 without any
ascendants or descendants, leaving a will in which he instituted his sister
Irene Pineda as his sole heiress. During his lifetime Father Braulio donated
some of his property by public instruments to the six plaintiffs, severally,
with the condition that some of them would pay him a certain amount of rice, and
others of money every year, and with the express provision that failure to
fulfill this condition would revoke the donations ipso facto. These six
plaintiff-donees are relatives, and some of them brothers of Father Braulio
Pineda. The donations contained another clause that they would take effect upon
acceptance. They were accepted during Father Braulio’s lifetime by every one of
the donees.

Every one of the six plaintiffs filed a separate action against
the Collector of Internal Revenue and his deputy for the sums of which each of
them paid, under protest, as inheritance tax on the property donated to them, in
accordance with section 1536 of the Administrative Code, as amended by section
10 of Act No. 2835, and by section 1 of Act No. 3031. Section 1536 of the
Administrative Code reads:

“Every transmission by virtue of inheritance, devise, bequest,
gift mortis causa or advance in anticipation of inheritance, devise, or bequest
of real property located in the Philippine Islands and real rights in such
property; * * *”

The trial court in deciding these six cases, held that the
donations to the six plaintiffs made by the deceased Father Braulio Pineda are
donations inter vivos, and therefore, not subject to the inheritance tax, and
ordered the defendants to return to each of the plaintiffs the sums paid by the
latter.

The defendants appealed from this judgment.

The whole question involved in this appeal resolves into
whether the donations made by Father Braulio Pineda to each of the plaintiffs
are donations inter vivos, or mortis causa, for it is the latter upon which the
Administrative Code imposes inheritance tax. In our opinion, said donations are
inter vivos. It is so expressly stated in the instruments in which they appear.
They were made in consideration of the donor’s affection for the donees, and of
the services they had rendered him, but he has charged them with the obligation
to pay him a certain amount of rice and money, respectively, each year during
his lifetime, the donations to become effective upon acceptance. They are
therefore not in the nature of donations mortis causa but inter vivos.

The principal characteristics of a donation mortis causa, which
distinguish it essentially from a donation inter vivos, are that in the former
it is the donor’s death that determines the acquisition of, or the right to, the
property, and that it is revocable at the will of the donor. In the donations in
question, their effect, that is, the acquisition of, or the right to, the
property, was produced while the donor was still alive, for, according to their
expressed terms they were to have this effect upon acceptance, and this took
place during the donor’s lifetime. The nature of these donations is not affected
by the fact that they were subject to a condition, since it was imposed as a
resolutory condition, and in this sense, it necessarily implies that the right
came into existence first as well as its effect, because otherwise there would
be nothing to resolve upon the non-fulfillment of the condition imposed. Neither
does the fact that these donations are revocable, give them the character of
donations mortis causa, inasmuch as the revocation is not made to depend on the
donor’s exclusive will, but on the failure to fulfill the condition imposed. In
relation to the donor’s will alone, these donations are irrevocable. On the
other hand, this condition, in so far as it renders the donation onerous, takes
it further away from the dispositions mortis causa and brings it nearer to
contract. In this sense, by virtue of this condition imposed, they are not
donations throughout their full extent, but only so far as they exceed the
incumbrance imposed, for so far as concerns the portion equivalent to or less
than said incumbrance, it has the nature of a real contract and is governed by
the rules on contracts (art 622 of the Civil Code). And in the part in which it
is strictly a donation, it is a donation inter vivos, because its effect was
produced by the donees’ acceptance during the donor’s lifetime and was not
determined by the donor’s death. Upon being accepted they had full effect. If
the donor’s life is mentioned in connection with this condition, it is only to
fix the donor’s death as the end of the term within which the condition must be
fulfilled, and nqt because such death of the donor is the cause which determines
the birth of the right to the donation. The property donated passed to the
ownership of the donees from the acceptance of the donations, and these could
not be revoked except upon the non-fulfillment of the condition imposed, or for
other causes prescribed by the law, but not by the mere will of the donor.

Neither can these donations be considered as an advance on
inheritance or legacy, according to the terms of section 1536 of the
Administrative Code, because they are neither an inheritance nor a legacy. And
it cannot be said that the plaintiffs received such advance on inheritance or
legacy, since they were not heirs or legatees of their predecessor in interest
upon his death (sec. 1540 of the Administrative Code). Neither can it be said
that they obtained this inheritance or legacy by virtue of a document which does
not contain the requisites of a will (sec. 618 of the Code of Civil Procedure).

Besides, if the donations made by the plaintiffs are, as the
appellants contend, mortis causa, then they must be governed by the law on
testate succession (art. 620 of the Civil Code). In such a case, the documents
in which these donations appear, being instruments which do not contain the
requisites of a will, are not valid to transmit the property to the donees (sec.
618, Code of Civil Procedure.) Then the defendants are not justified in
collecting from the donees the inheritance tax on property which has not been
legally transferred to them, and in which they acquired no right.

For these reasons the judgment appealed from is affirmed,
without special pronouncement as to costs. So ordered.

Johnson, Malcolm, Villamor, Romualdez, and Villa-Real, JJ.,
concur.
Ostrand, and Johns, JJ., dissent.

---

DISSENTING

STREET, J.:

Of course I agree with so much of the discussion in the
majority opinion as declares that the various donations made prior to his death
by Rev. Braulio Pineda to various nephews and nieces were not donations mortis
causa. But this is by no means decisive of the case. Among the forms of
succession which are by law made subject to the inheritance tax are advances in
anticipation of inheritance (Adm. Code, sec. 1636, as amended); and I consider
these donations to be taxable in that character. The device adopted in this case
for the distribution of the bulk of the donor’s property before his death is, to
my mind, a transparent attempt at an evasion of the tax. The donations in
question were made to all of the persons who would have been entitled to inherit
if no will had been made, except one; and this one was instituted as sole heir
in the will. If no will had been left, all of the donees and the heir instituted
in the will would have shared jointly in the estate by regular succession. It is
thus seen that the making of the donations and the making of the will were part
of a single purpose, which was, to effect the distribution of the donor’s
property. What else is necessary to make an advance “in anticipation of
inheritance?”

The suggestion in the opinion that the institution of another
person as heir in the will had the effect of destroying the capacity of the
donees to take as heirs, is not well founded, for the question whether these
donations should be considered advances in anticipation of inheritance ought to
be determined with reference to the situation at the time the donations were
made. The very reason that the prospective heir to whom no donation had been
made was instituted as sole heir in the will is of course found in the fact that
advances had already been made to the others. The purpose of the statute was to
impose a tax on successions; and in order to prevent the successful use of
devices of this kind, the lawmaker expressly made the tax applicable to advances
in anticipation of inheritance. If the situation before us is not within both
the letter and meaning of that provision, the undersigned has entirely
misinterpreted its purport.

Judgment affirmed.