Zapanta v. Posadas (G.R. No. L-29204.

December
29, 1928)
Father Braulio Pineda instituted his sister Irene Pineda as
the his sole heiress. During his lifetime, he donated some
of his property to the six plaintiffs in this case with the
condition to 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 plaintiffs, relatives of Fr. Pineda, filed an
action against the Collector of Internal Revenue as they
were made to pay inheritance taxes on the properties
donated to them. They paid under protest and claimed
that the donation was inter vivos, thus not subject to
inheritance tax. The issue is whether or not the deeds of
donation executed by Fr. Pineda was inter vivos. The
contention of the plaintiffs are correct. In a
donation mortis causa it is the donor's death that
determines that acquisition of, or the right to, the
property donated, and the donation is revocable at
the donor's will, Where the donation took effect
immediately upon the donee's acceptance thereof
and it was subject to the resolutory condition that
the donation would be revoked if the donee did not
give the donor a certain quantity of rice or a sum
of money, the donation is inter vivos.
Neither does the fact that these donations are revocable,
give them the character of donations mortis causa,
inasmuch as the revocation is not the failure to fulfill the
condition imposed. Neither can these donations be
considered as an advance on inheritance or legacy
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 predessor in interest upon his death.
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.

Moreover, 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.
CIR v. CA and Pajonar (G.R. No. 123206. March 22,
2000)
By reason of the Bataan Death March during World War II,
Pedro Pajonar became insane. His property was placed
under the guardianship of PNB, while his sister Josefina
became the guardian over his person, and eventually the
administratrix of his estate when he died. After his death,
his heirs executed an extrajudicial settlement and paid
the estate tax. Thereafter, BIR assessed the estate of
Pedro deficiency taxes. The estate paid under protest and
filed a case with the CTA, which in turn allowed P60,753
representing the notarial fee for the Extrajudicial
Settlement and P50,000 attorney's fees for guardianship
proceedings as among the allowed deductions from the
gross estate. The Issue is WON the notarial fee and
attorney's fees allowed as deductions from the gross
estate.
Administration
expenses,
as
an
allowable
deduction from the gross estate of the decedent
for purposes of arriving at the value of the net
estate, have been construed to include all
expenses "essential to the collection of the assets,
payment of debts or the distribution of the
property to the persons entitled to it." In other
words, the expenses must be essential to the
proper settlement of the estate. Expenditures
incurred for the individual benefit of the heirs,

devisees or legatees are not deductible. In this

case, it is clear that the extrajudicial settlement
was for the purpose of payment of taxes and the
distribution of the estate to the heirs. The
execution
of
the
extrajudicial
settlement
necessitated the notarization of the same.
Deductible expenses of administration of the estate may
include executor's or administrator's fees, attorney's fees,
court fees and charges, appraiser's fees, clerk hire, costs
of preserving and distributing the estate and storing or
maintaining it, brokerage fees or commissions for selling
or disposing of the estate, and the like. Deductible
attorney's fees are those incurred by the executor or
administrator in the settlement of the estate or in
defending or prosecuting claims against or due the
estate. Thus, attorney's fees paid to PNB for acting
as the guardian of Pedros property during his
lifetime should also be considered as a deductible
administration expense. This is because PNB
provided a detailed accounting of decedent's
property and gave advice as to the proper
settlement of the latter's estate, acts which
contributed towards the collection of decedent's
assets and the subsequent settlement of the
estate.
CIR v. PINEDA (GR No. L-22734. September 15,
1967)
Atanasio Pineda died, survived by his wife, Felicisima
Bagtas, and 15 children, the eldest of whom is Atty.
Manuel Pineda. Estate proceedings were had in Court so
that the estate was divided among and awarded to the
heirs. Atty Pineda's share amounted to about P2,500.00.
After the estate proceedings were closed, the BIR
investigated the income tax liability of the estate for the
years 1945, 1946, 1947 and 1948 and it found that the
corresponding income tax returns were not filed.

Thereupon, the representative of the CIR filed said

returns for the estate issued an assessment and charged
the full amount to the inheritance due to Atty. Pineda who
argued that he is liable only to extent of his proportional
share in the inheritance. Can BIR collect the full amount
of estate taxes from an heir's inheritance? Yes. The
Government can require Atty. Pineda to pay the full
amount of the taxes assessed. As a holder of
property belonging to the estate, Pineda is liable
for the tax up to the amount of the property in his
possession. The reason is that the Government has
a lien on what he received from the estate as his
share in the inheritance for unpaid income taxes
for which said estate is liable. By virtue of such
lien, the Government has the right to subject the
property in Pineda's possession, i.e., the P2,500.00,
to satisfy the income tax assessment in the sum of
P760.28. After such payment, Pineda will have a
right of contribution from his co-heirs, to achieve
an adjustment of the proper share of each heir in
the distributable estate.
The Government has two ways of collecting the tax
in question. One, by going after all the heirs and
collecting from each one of them the amount of the
tax proportionate to the inheritance received. The
reason why a case suit is filed against all the heirs
for the tax due from the estate is to achieve
thereby two results: first, payment of the tax; and
second, adjustment of the shares of each heir in
the distributed estate as lessened by the tax.
Another remedy is by subjecting said property of
the estate which is in the hands of an heir or
transferee to the payment of the tax due. This
second remedy is the very avenue the Government
took in this case to collect the tax. The BIR should be
given the necessary discretion to avail itself of the most
expeditious way to collect the tax because taxes are the

lifeblood of government and their prompt and certain

availability is an imperious need. The adjustment of the
respective shares due to the heirs from the inheritance,
as lessened by the tax, is left to await the suit for
contribution by the heir from whom the Government
recovered said tax.
Gestopa v. CA (G.R. No. 111904. October 5, 2000)
Spouses Danlag own six parcels of land. To four parcels of
land, they executed a donation mortis causa in favor of
respondent Mercedes Danlag-Pilapil, reserving donor's
rights to amend, cancel, or revoke the donation and to
sell or encumber such properties. Years later, they
executed another donation, this time inter vivos, to six
parcels of land in favor of respondents, reserving their
rights to the fruits of the land during their lifetime and for
prohibiting the donee to sell or dispose the properties
donated. Subsequently, the spouses sold 2 parcels to
herein petitioners, spouses Gestopa, and eventually
revoking the donation. Respondent filed a petition to
quiet title, stating that she had already become the
owner of the parcels of land. The issue is whether the
(second) donation was inter vivos or mortis causa. It was
donation inter vivos. The spouses were aware of

the difference between the two donations, and

that they needed to execute another deed of
donation inter vivos, since it has a different
application to a donation mortis causa. Also, the
court stated four reasons to the matter: (1) that
the spouses donated the parcels of land out of love
and affection, a clear indication of a donation inter
vivos; (2) the reservation of a lifetime usufruct; (3)
reservation
of
sufficient
properties
for
maintenance that shows the intention to part with
their six lot; and (4) respondent's acceptance,
contained in the deed of donation. Once a deed of
donation has been accepted, it cannot be revoked,
except for officiousness or ingratitude, which the
spouses failed to invoke. The deed merely stated
that while the said donation was a donation Inter
Vivos, our intention thereof is that of Mortis Causa
Moreover, the existence of an acceptance clause in
the deed shows that the donation is of inter vivos.
There is no acceptance needed when it comes to
donations mortis causa.