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G.R. No.

L-770

April 27, 1948

ANGEL T. LIMJOCO, petitioner, vs. INTESTATE ESTATE OF PEDRO O. FRAGRANTE, deceased, respondent. Angel Limjoco, Jr. and Delfin L. Gonzales for petitioner. Bienvenido A. Tan for respondent. HILADO, J.: Under date of May 21, 1946, the Public Service Commission, through Deputy Commissioner Fidel Ibañez, rendered its decision in case No. 4572 of Pedro O. Fragante, as applicant for a certificate of public convenience to install, maintain and operate an ice plant in San Juan, Rizal, whereby said commission held that the evidence therein showed that the public interest and convenience will be promoted in a proper and suitable manner "by authorizing the operation and maintenance of another ice plant of two and one-half (2-½) tons in the municipality of San Juan; that the original applicant Pedro O. Fragante was a Filipino Citizen at the time of his death; and that his intestate estate is financially capable of maintaining the proposed service". The commission, therefore, overruled the opposition filed in the case and ordered "that under the provisions of section 15 of Commonwealth Act No. 146, as amended a certificate of public convenience be issued to the Intestate Estate of the deceased Pedro Fragante, authorizing said Intestate Estate through its Special or Judicial Administrator, appointed by the proper court of competent jurisdiction, to maintain and operate an ice plant with a daily productive capacity of two and one-half (2-1/2) tons in the Municipality of San Juan and to sell the ice produced from said plant in the said Municipality of San Juan and in the Municipality of Mandaluyong, Rizal, and in Quezon City", subject to the conditions therein set forth in detail (petitioner's brief, pp. 33-34). Petitioner makes four assignments of error in his brief as follows: 1. The decision of the Public Service Commission is not in accordance with law. 2. The decision of the Public Service Commission is not reasonably supported by evidence. 3. The Public Service Commission erred in not giving petitioner and the Ice and Cold Storage Industries of the Philippines, Inc., as existing operators, a reasonable opportunity to meet the increased demand. 4. The decision of the Public Service Commission is an unwarranted departure from its announced policy with respect to the establishment and operation of ice plant. (Pp. 1-2, petitioner's brief.) In his argument petitioner contends that it was error on the part of the commission to allow the substitution of the legal representative of the estate of Pedro O. Fragante for the latter as party applicant in the case then pending before the commission, and in subsequently granting to said estate the certificate applied for, which is said to be in contravention of law. If Pedro O. Fragante had not died, there can be no question that he would have had the right to prosecute his application before the commission to its final conclusion. No one would have denied him that right. As declared by the commission in its decision, he had invested in the ice plant in question P 35,000, and from what the commission said regarding his other properties and business, he would certainly have been financially able to maintain and operate said plant had he not died. His transportation business alone was

netting him about P1,440 a month. He was a Filipino citizen and continued to be such till his demise. The commission declared in its decision, in view of the evidence before it, that his estate was financially able to maintain and operate the ice plant. The aforesaid right of Pedro O. Fragante to prosecute said application to its conclusion was one which by its nature did not lapse through his death. Hence, it constitutes a part of the assets of his estate, for which a right was property despite the possibility that in the end the commission might have denied application, although under the facts of the case, the commission granted the application in view of the financial ability of the estate to maintain and operate the ice plant. Petitioner, in his memorandum of March 19, 1947, admits (page 3) that the certificate of public convenience once granted "as a rule, should descend to his estate as an asset". Such certificate would certainly be property, and the right to acquire such a certificate, by complying with the requisites of the law, belonged to the decedent in his lifetime, and survived to his estate and judicial administrator after his death. If Pedro O. Fragrante had in his lifetime secured an option to buy a piece of land and during the life of the option he died, if the option had been given him in the ordinary course of business and not out of special consideration for his person, there would be no doubt that said option and the right to exercise it would have survived to his estate and legal representatives. In such a case there would also be the possibility of failure to acquire the property should he or his estate or legal representative fail to comply with the conditions of the option. In the case at bar Pedro O. Fragrante's undoubted right to apply for and acquire the desired certificate of public convenience — the evidence established that the public needed the ice plant — was under the law conditioned only upon the requisite citizenship and economic ability to maintain and operate the service. Of course, such right to acquire or obtain such certificate of public convenience was subject to failure to secure its objective through nonfulfillment of the legal conditions, but the situation here is no different from the legal standpoint from that of the option in the illustration just given. Rule 88, section 2, provides that the executor or administrator may bring or defend actions, among other cases, for the protection of the property or rights of the deceased which survive, and it says that such actions may be brought or defended "in the right of the deceased". Rule 82, section 1, paragraph (a), mentions among the duties of the executor or administrator, the making of an inventory of all goods, chattels, rights, credits, and estate of the deceased which shall come to his possession or knowledge, or to the possession of any other person for him. In his commentaries on the Rules of Court (Volume II, 2nd ed., pages 366, 367) the present chief Justice of this Court draws the following conclusion from the decisions cited by him: Therefore, unless otherwise expressly provided by law, any action affecting the property or rights (emphasis supplied) of a deceased person which may be brought by or against him if he were alive, may likewise be instituted and prosecuted by or against the administrator, unless the action is for recovery of money, debt or interest thereon, or unless, by its very nature, it cannot survive, because death extinguishes the right . . . . It is true that a proceeding upon the application for a certificate of public convenience before the Public Service Commission is not an "action". But the foregoing provisions and citations go to prove that the decedent's rights which by their nature are not extinguished by death go to make up a part and parcel of the assets of his estate which, being placed under the control and management of the executor or administrator, can not be exercised but by him in representation of the estate for the benefit of the creditors, devisees or legatees, if any, and the heirs of the decedent. And if the right involved happens to consist in the prosecution of an unfinished proceeding upon an application for a certificate of public convenience of the deceased before

the Public Service Commission, it is but logical that the legal representative be empowered and entitled in behalf of the estate to make the right effective in that proceeding. Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and article 336 of the Civil Code, respectively, consider as immovable and movable things rights which are not material. The same eminent commentator says in the cited volume (p. 45) that article 336 of the Civil Code has been deficiently drafted in that it is not sufficiently expressive of all incorporeal rights which are also property for juridical purposes. Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the term, property includes, among other things, "an option", and "the certificate of the railroad commission permitting the operation of a bus line", and on page 748 of the same volume we read: However, these terms (real property, as estate or interest) have also been declared to include every species of title, inchoate or complete, and embrace rights which lie in contract, whether executory or executed. (Emphasis supplied.) Another important question raised by petitioner is whether the estate of Pedro O. Fragrante is a "person" within the meaning of the Public Service Act. Words and Phrases, First Series, (Vol. 6, p, 5325), states the following doctrine in the jurisdiction of the State of Indiana: As the estate of the decedent is in law regarded as a person, a forgery committed after the death of the man whose name purports to be signed to the instrument may be prosecuted as with the intent to defraud the estate. Billings vs. State, 107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am. Rep. 77. The Supreme Court of Indiana in the decision cited above had before it a case of forgery committed after the death of one Morgan for the purpose of defrauding his estate. The objection was urged that the information did not aver that the forgery was committed with the intent to defraud any person. The Court, per Elliott, J., disposed of this objection as follows: . . . The reason advanced in support of this proposition is that the law does not regard the estate of a decedent as a person. This intention (contention) cannot prevail. The estate of the decedent is a person in legal contemplation. "The word "person" says Mr. Abbot, "in its legal signification, is a generic term, and includes artificial as well as natural persons," 2 Abb. Dict. 271; Douglas vs. Pacific, etc. Co., 4 Cal. 304; Planters', etc., Bank vs. Andrews, 8 Port. (Ala.) 404. It said in another work that 'persons are of two kinds: natural and artificial. A natural person is a human being. Artificial persons include (1) a collection or succession of natural persons forming a corporation; (2) a collection of property to which the law attributes the capacity of having rights and duties. The latter class of artificial persons is recognized only to a limited extent in our law. "Examples are the estate of a bankrupt or deceased person." 2 Rapalje & L. Law Dict. 954. Our own cases inferentially recognize the correctness of the definition given by the authors from whom we have quoted, for they declare that it is sufficient, in pleading a claim against a decedent's estate, to designate the defendant as the estate of the deceased person, naming him. Ginn vs. Collins, 43 Ind. 271. Unless we accept this definition as correct, there would be a failure of justice in cases where, as here, the forgery is committed after the death of a person whose name is forged; and this is a result to be avoided if it can be done consistent with principle. We perceive no difficulty in avoiding such a result; for, to our minds, it seems reasonable that the estate of a decedent should be regarded as an artificial person. It is the creation of law for the purpose of enabling a disposition of the assets to be properly made, and, although natural

and this Court gave judgment in favor of said estate along with the other plaintiffs in these words: . supra. The fraudulent intent is against the artificial person. In this jurisdiction there are ample precedents to show that the estate of a deceased person is also considered as having legal personality independent of their heirs. 55. as for instance. This is why according to the Supreme Court of Indiana in Billings vs. the artificial creature is a distinct legal entity. vs. The interest which natural persons have in it is not complete until there has been a due administration. that becomes vested and charged with his rights and obligations which survive after his demise. . The reason and purpose for indulging the fiction is identical and the same in both cases.000. Petitioner raises the decisive question of whether or not the estate of Pedro O. for quashing of the proceedings for no other reason than his death would entail prejudicial results to his investment amounting to P35. to exercise those rights and to fulfill those obligations of the deceased. among the artificial persons recognized by law figures "a collection of property to which the law attributes the capacity of having rights and duties". 954. Dolor. for they might not have been flesh and blood — the reason was one in the nature of a legal exigency derived from the principle that the heirs succeeded to the rights and obligations of the decedent. as held in Suiliong & Co. Concepcion. citing 2 Rapalje & L. and not the natural persons having diverse interests in it. Chio-Taysan. In that case. .69 ... the heirs of a deceased person were considered in contemplation of law as the continuation of his personality by virtue of the provision of article 661 of the first Code that the heirs succeed to all the rights and obligations of the decedent by the mere fact of his death. there would be no juridical basis for the estate. And if the same legal fiction were not indulged. 22.804. such rights and obligations as survive after death have to be exercised and fulfilled only by the estate of the deceased. wherein the principal plaintiff was the estate of the deceased Lazaro Mota. (107 Ind. However. Fragrante is considered a "person". — the estate — and not the natural persons who have direct or contingent interest in it. since ha cannot be presumed to have known who those persons were. devises.persons as heirs. 12 Phil. after the enactment of the Code of Civil Procedure. 46. Fragrante can be considered a "citizen of the Philippines" within the meaning of section 16 of the Public Service Act. as amended. 712. and one who forges the name of the decedent to an instrument purporting to be a promissory note must be regarded as having intended to defraud the estate of the decedent. article 661 of the Civil Code was abrogated. instead of the heirs directly. The heirs were formerly considered as the continuation of the decedent's personality simply by legal fiction. it has been the constant doctrine that it is the estate or the mass of property. Dictionary. the judgment appealed from must be affirmed so far as it holds that defendants Concepcion and Whitaker are indebted to he plaintiffs in the amount of P245. 13. 2 Phil. the estate of a bankrupt or deceased person.. . State. . represented by the executor or administrator. rights and assets left by the decedent. Under the regime of the Civil Code and before the enactment of the Code of Civil Procedure. 914-915. 56 Phil. It was so held by this Court in Barrios vs. as well as in many others decided by this Court after the innovations introduced by the Code of Civil Procedure in the matter of estates of deceased persons. let alone those defrayed by the estate thereafter.E. Among the most recent cases may be mentioned that of "Estate of Mota vs.) In the instant case there would also be a failure of justice unless the estate of Pedro O. 54. . 717. not counting the expenses and disbursements which the proceeding can be presumed to have occasioned him during his lifetime. 44. Under the present legal system.00 as found by the commission. or creditors. or what was the nature of their respective interest. 6 N. particularly the proviso thereof expressly and categorically limiting the power of the commission to issue certificates of public convenience or certificates of public convenience and necessity "only to citizens of the Philippines or of . have an interest in the property.

it is the creation of law for the purpose of enabling a disposition of the assets to be properly made . if successful.000. The fiction is made necessary to avoid the injustice of subjecting his estate. if for such reasons the estate of Pedro O. Fragrante should be considered an artificial or juridical person herein. no less than natural. not counting the other expenses occasioned by the instant proceeding. to cite just one example. Substantially the same reason is assigned to support the same rule in the jurisdiction of the State of Indiana. an injustice would ensue from the opposite course. and for not considering it as likewise extended for the purposes of the aforesaid unfinished proceeding before the Public Service Commission. and motivated by the same reason. the term "person" used in section 1 (1) and (2) must be deemed to include artificial or juridical persons. or joint-stock companies constituted and organized under the laws of the Philippines". him may be paid. we find no sound and cogent reason for denying the application of the same fiction to his citizenship. from the Public Service Commission of this Court. . As stated above. The outcome of said proceeding. The fiction of such extension of his citizenship is grounded upon the same principle. and surviving. copartnerships. the underlying reason for the legal fiction by which. when the Supreme Court of said State said: . and any surviving rights may be exercised for the benefit of his creditors and heirs. any more than he could have done if Fragrante had lived longer and obtained the desired certificate. We take it that it was the intendment of the framers to include artificial or juridical. creditors and heirs. would in the end inure to the benefit of the same creditors and the heirs. the estate of Pedro O. we can find no justification for refusing to declare a like fiction as to the extension of his citizenship for the purposes of this proceeding. include the exercise during the judicial administration thereof of those rights and the fulfillment of those obligations of his which survived after his death. . Among these artificial or juridical persons figure estates of deceased persons. . . and the further proviso that sixty per centum of the stock or paid-up capital of such entities must belong entirely to citizens of the Philippines or of the United States. . Within the framework and principles of the constitution itself. persons in these constitutional immunities and in others of similar nature. We can perceive no valid reason for holding that within the intent of the constitution (Article IV). How about the point of citizenship? If by legal fiction his personality is considered extended so that any debts or obligations left by. for otherwise these latter would be without the constitutional guarantee against being deprived of property without due process of law. the estate of the deceased person is considered a "person" is the avoidance of injustice or prejudice resulting from the impossibility of exercising such legal rights and fulfilling such legal obligations of the decedent as survived after his death unless the fiction is indulged. for certain purposes. solely by reason of his death to the loss of the investment amounting to P35. supra. its provisions on Philippine citizenship exclude the legal principle of extension above adverted to. consisting in the prosecution of said application to its final conclusion. which he has already made in the ice plant. One of those rights was the one involved in his pending application before the Public Service Commission in the instant case. State. Fragrante should be considered an artificial or juridical person for the purposes of the settlement and distribution of his estate which. Hence. as announced in Billings vs. respectively. Within the Philosophy of the present legal system. of course. under the bill of rights it seems clear that while the civil rights guaranteed therein in the majority of cases relate to natural persons. associations. as the fiction of the extension of personality. . or the immunity from unreasonable searches and seizures. If for reasons already stated our law indulges the fiction of extension of personality.the United States or to corporations. Even in that event petitioner could not allege any prejudice in the legal sense. It seems reasonable that the estate of a decedent should be regarded as an artificial person. we hold that within the framework of the Constitution.

Pedro O. there is the simple expedient of revoking the certificate or enjoining them from inheriting it. In the absence of a contrary showing. therefore. Fragrante fulfill the citizenship requirement of the law. and as such. Moran. Justice Feria voted with the majority. has only a representative value. as amended. dissenting: Commonwealth Act No. The situation has suffered but one change. It is a device by which the law gives a kind of personality and unity to undetermined tangible persons. As there are procedural requisites for their identification and determination that need time for their compliance. a matter of fact. No franchise granted to any individual.J. C. Padilla and Tuason. boils down to the citizenship of the heirs of Fragrante. So ordered. in this case. both the personality and citizenship of Pedro O. J. The estate is an abstract entity. J. except under the condition that it shall be subject to amendment. Pablo. That legal fiction is the estate. Briones. The limitation is in accordance with section 8 of Article XIV of the Constitution which provides No franchise. They inherit and replace the deceased at the very moment of his death. Separate Opinions PERFECTO. JJ. His estate was that of a Filipino citizen. And its economic ability to appropriately and adequately operate and maintain the service of an ice plant was the same that it received from the decedent himself. in harmony with the constitution: it is so adjudged and decreed. certificate. nor such franchise.. I hereby certify that Mr. which does not exist here. certificate or authorization be exclusive in character or for a longer period than fifty years. 146 reserves to Filipino citizens the right to obtain a certificate of public convenience to operate an ice plant in San Juan. his heirs may be assumed to be also Filipino citizens.. . What the law calls estate is. Fragrante must be deemed extended. he would have obtained from the commission the certificate for which he was applying. Decision affirmed. The question. without costs. his death. intended to designate the heirs of the deceased. we are of the opinion that for the purposes of the prosecution of said case No. in view of the evidence of record. Rizal. or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or other entities organized under the laws of the Philippines. As such. concur. alteration. a liquid condition in process of solidification.. 4572 of the Public Service Commission to its final conclusion. and if they are not. The main question in this case is whether the estate of Pedro O. the heirs. Paras. sixty per centum of the capital of which is owned by citizens of the Philippines. Fragrante was a Filipino citizen. or repeal by Congress when the public interest so requires. Upon the whole. Bengzon. Fragrante fulfills the citizenship requirement.. the question can be restated by asking whether the heirs of Pedro O. firm or corporation. To our mind. and that is. within the meaning and intent of the Public Service Act. a legal fiction has been devised to represent them. if he had lived. The estate. its legal value depends on what it represents. therefore.

We are of the opinion that the citizenship of the heirs of Fragrante should be determined by the Commission upon evidence that the party should be present. If they are not. 1946. . the action taken by the Public Service Commission should be affirmed. it should be reversed. be set aside and that the Commission be instructed to receive evidence of the above factual questions and render a new decision accordingly.There is nothing in the record to show conclusively the citizenship of the heirs of Fragrante. We are of opinion and so vote that the decision of the Public Service Commission of May 21. the special administrator of the estate. Petitioner alleges that the estate is just a front or dummy for aliens to go around the citizenship constitutional provision. If they are Filipino citizens. is an alien. It is alleged that Gaw Suy. It should also determine the dummy question raised by the petitioner.

Pablo Lorenzo and Delfin Joven for plaintiff-appellant. when he resigned and the plaintiff herein was appointed in his stead. and proceeds thereof to be given to my nephew. together with the penalties for delinquency in payment consisting of a 1 per cent .191. the defendant Collector of Internal Revenue. proceedings for the probate of his will and the settlement and distribution of his estate were begun in the Court of First Instance of Zamboanga.74. plaintiff-appellant. 1922. On june 14. 6. 5. Moore took his oath of office and gave bond on March 10. appointed trustee.: On October 4. Matthew Hanley. and allowing a deduction of P480. The Court of First Instance of Zamboanga considered it proper for the best interests of the estate to appoint a trustee to administer the real properties which. From the decision of the Court of First Instance of Zamboanga dismissing both the plaintiff’s complaint and the defendant’s counterclaim. is a son of my said brother. 1924. defendant-appellant.. vs. then the Collector of Internal Revenue. brought this action in the Court of First Instance of Zamboanga against the defendant. County of Rosecommon. No. Collector of Internal Revenue. JUAN POSADAS. deceased. and for the collection of interst thereon at the rate of 6 per cent per annum. Juan Posadas. During the incumbency of the plaintiff as trustee. 1932. under the will. I direct that all real estate owned by me at the time of my death be not sold or otherwise disposed of for a period of ten (10) years after my death. the plaintiff Pablo Lorenzo. were to pass to Matthew Hanley ten years after the two executors named in the will. Said will provides. assessed against the estate an inheritance tax in the amount of P1.R. LAUREL.G. and that he be directed that the same be used only for the education of my brother’s children and their descendants.. computed from September 15. leaving a will (Exhibit 5) and considerable amount of real and personal properties.052. xxxxxxxxx 8. 1932. Zamboanga. on March 8. I direct that any money left by me be given to my nephew Matthew Hanley. was. among other things. 1922. L-43082 PABLO LORENZO. one Thomas Hanley died in Zamboanga.27 alleged to be interest due on the tax in question and which was not included in the original assessment. named Malachi Hanley. Jr. for the refund of the amount of P2. as follows: 4. I direct that ten (10) years after my death my property be given to the above mentioned Matthew Hanley to be disposed of in the way he thinks most advantageous. I state at this time I have one brother living. J. Office of the Solicitor-General Hilado for defendant-appellant.24 which.434. The defendant set up a counterclaim for P1. the date when the aforesaid tax was [paid under protest. at Castlemore.465. paid by the plaintiff as inheritance tax on the estate of the deceased. in his capacity as trustee of the estate of Thomas Hanley. The will was admitted to probate. It appears that on May 27. Malachi Hanley. He acted as trustee until February 29. JR. Ireland.81.920 and personalty valued at P1. as trustee of the estate of Thomas Hanley. 1924. deceased. Ballaghaderine. Matthew Hanley. and that the same be handled and managed by the executors. alleging that the estate left by the deceased at the time of his death consisted of realty valued at P27. both parties appealed to this court. 1932. and that my nephew.

052.” The tax therefore is upon transmission or the transfer or devolution of property of a decedent. 1931 to the date of payment and a surcharge of 25 per cent on the tax.74. passed to his instituted heir. or bequest. In not rendering judgment in favor of the plaintiff and in denying his motion for new trial. In his appeal. The motion was granted. be ordered to pay to the Government the said sum of P2. and that from the time. or take property by or under a will or the intestacy law. In holding. is it proper to deduct the compensation due to trustees? (d) What law governs the case at bar? Should the provisions of Act No. in the determination of the net amount of the estate subject to said tax. 1924. which the plaintiff had failed to pay on the inheritance tax assessed by the defendant against the estate of Thomas Hanley. upon the value thereof at the expiration of the period of ten years after which. of the Administrative Code. 1592. 1931. The defendant-appellant contradicts the theories of the plaintiff and assigns the following error besides: The lower court erred in not ordering the plaintiff to pay to the defendant the sum of P1.052. plaintiff went to court with the result herein above indicated. according to the testator’s will. plaintiff contends that the lower court erred: I. the defendant filed a motion in the testamentary proceedings pending before the Court of First Instance of Zamboanga (Special proceedings No. On March 15. representing part of the interest at the rate of 1 per cent per month from April 10. bequest. from the moment of the death of the former. 1932. In not allowing as lawful deductions..74. gift mortis causa. J. notifying the defendant at the same time that unless the amount was promptly refunded suit would be brought for its recovery. raised by the parties in their briefs. the plaintiff paid said amount under protest. The defendant overruled the plaintiff’s protest and refused to refu nd the said amount hausted.191.27. to June 30. 302) praying that the trustee. the property could be and was to be delivered to the instituted heir. will be touched upon in the course of this opinion. III. that there was delinquency in the payment of inheritance tax due on the estate of said deceased. (a) The accrual of the inheritance tax is distinct from the obligation to pay the same. Matthew Hanley. deceased. devise. grant. p.monthly interest from July 1. receive. IV. 3606 favorable to the tax-payer be given retroactive effect? (e) Has there been delinquency in the payment of the inheritance tax? If so. Section 1536 as amended. or gift to become operative at or after death. (61 C. II. made effective by his death. . or deed. amounted to P2. On September 15. as it should have been held. or advance in anticipation of inheritance. the latter became the owner thereof. imposes the tax upon “every transmission by virtue of inheritance.) It is in reality an excise or privilege tax imposed on the right to succeed to. in effect. should the additional interest claimed by the defendant in his appeal be paid by the estate? Other points of incidental importance. In holding that the real property of Thomas Hanley. and not. In holding that the inheritance tax in question be based upon the value of the estate upon the death of the testator. V. plaintiff herein. 1932. the amounts allowed by the court as compensation to the “trustees” and paid to them from the decedent’s estate. or on its value ten years later? (c) In determining the net value of the estate subject to tax. The following are the principal questions to be decided by this court in this appeal: (a) When does the inheritance tax accrue and when must it be satisfied? (b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the testator’s death.devise.

27. 53 Phil. succession takes place in any event at the moment of the decedent’s death. 305. but if judicial testamentary or intestate proceedings shall be instituted prior to the expiration of said period. the inheritance tax accrued as of the date. In the last two cases. J. legatee. Osario & Yuchausti Steamship Co.) Thomas Hanley having died on May 27. Arbado.” (5 Manresa. Alaras Frondosa. – The tax fixed in this article shall be paid: (a) In the second and third cases of the next preceding section. 489. 19 Phil. 14 Phil. 321. 654. The authentication of a will implies its due execution but once probated and allowed the transmission is effective as of the death of the testator in accordance with article 657 of the Civil Code. it does not even use the word “heir”. 17 Phil. the payment shall be made by the executor or administrator before delivering to each beneficiary his share. 1543. “the rights to the succession of a person are transmitted from the moment of his death. (b) In other cases. 232. 434. Dais vs. Heirs of Baun. (c) The transmission from the first heir. 34 Phil. Briones. transcurra mucho o poco tiempo. SEC. But the language of article 657 of the Civil Code is broad and makes no distinction between different classes of heirs. 195. that Thomas Hanley died on May 27. 51 Phil. 391. Ilustre vs. – The following shall not be taxed: (a) The merger of the usufruct in the owner of the naked title. 38 Phil. Fule vs. . 531. vs. par. said Arellano. it operates only in so far as forced heirs are concerned. hasta que el heredero o legatario entre en posesion de los bienes de la herencia o del legado. Suilong & Co. The provision of section 625 of the Code of Civil Procedure regarding the authentication and probate of a will as a necessary condition to effect transmission of property does not affect the general rule laid down in article 657 of the Civil Code. art. asserts that while article 657 of the Civil Code is applicable to testate as well as intestate succession. Bowa vs. Nery. Lubrico vs. “que desde el falleimiento del causante.Alcantara. . 12 Phil. C. however. Baun vs. Exemption of certain acquisitions and transmissions. The time when the heirs legally succeed to the inheritance may differ from the time when the heirs actually receive such inheritance. in accordance with the desire of the predecessor. Bondad. the former must pay the difference. 3 Phil. que debe considerarse como complemento del presente. When tax to be paid. See also. Innocencio vs. 12 Phil. y asi lo ordena el articulo 989. It speaks of the rights of succession and the transmission thereof from the moment of death. 317. it does not follow that the obligation to pay the tax arose as of the date. (b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees. 16 Phil. Malahacan vs.) Plaintiff. Aliasas vs. in relation to section 1543 of the same Code. “. The two sections follow: SEC. Chio-Taysan.” (Bondad vs. Ignacio. Civil Code. The time for the payment on inheritance tax is clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No. pues la adquisicion ha de retrotraerse al momento de la muerte.According to article 657 of the Civil Code. From the fact. Gat-Pandan. 41 Phil. Whatever may be the time when actual transmission of the inheritance takes place. . Mijares vs. 1922. if the scale of taxation appropriate to the new beneficiary is greater than that paid by the first. Court of First Instance of Capiz. 46 Phil. That article does not speak of forced heirs. 396. 491. 3031. before entrance into possession of the property. the heirs succe ed immediately to all of the property of the deceased ancestor. however. or donee in favor of another beneficiary. 13... 1. 1544. Fule.. The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death. 440. within the six months subsequent to the death of the predecessor.” “In other words”. 1922. “Poco importa”. see also. says Manresa commenting on article 657 of the Civil Code. Osario vs.

Y. (61 C. 82 N. 782.. 1905.. p. Subsequent appreciation or depreciation is immaterial. 37.. until after the expiration of ten years from the death of the testator on May 27... p. 72. 611... The instant case does fall under subsection (a). 609. 458.787. legatee or donee. taxation is postponed until the estate vests in possession or the contingency is settled. should read “fideicommissary” or “cestui que trust”. first heirs. L. however. This rule was formerly followed in New York and has been adopted in Illinois. would amount only to about P169. 3 Macq. 85 App. in so far as the real properties are concerned. regardless of any subsequent contingency value of any subsequent increase or decrease in value. L. 970. the defects of its anterior system. App. The plaintiff introduced evidence tending to show that in 1932 the real properties in question had a reasonable value of only P5. 20 Sup. Sc. 888. 72 N.. 659. pp. of section 1544 above-quoted. 769. Realizing. Saltoun vs. Rul. Ohio. 1924. 1574.465.. H. Massachusetts. 69 N. It should be observed in passing that the word “trustee”. 69. 1693. Pennsylvania and Wisconsin. and hence is ordinarily measured as to any beneficiary by the value at that time of such property as passes to him. 231. 1 Peter. C. Moore. Y. Estate of Post. (In re Vanderbilt. sec. interest at the rate of twelve per centum per annum shall be added as part of the tax. 44 Law.. 178 U. as there is here no fiduciary heirs.. 179 N. But whatever may be the rule in other jurisdictions. Cas. but under subsection (b). Minnesota. the tax should be measured by the value of the estate as it stood at the time of the decedent’s death.. If death is the generating source from which the power of the estate to impose inheritance taxes takes its being and if. Y. which the plaintiff admits is P1. J. 232. App. E. ed. Blakemore and Bancroft. succession takes place and the right of the estate to tax vests instantly. perhaps. interest and surcharge. 1575) that. 172 N. excluding deductions. 958. Ct. L. E. See also Knowlton vs. 969. 1079.. Y. Y.52.” (Ross. Div. Rep. Supp. we hold that a transmission by inheritance is taxable at the time of the predecessor’s death. 172 N. Y. 26 R. Under the subsection. that the inheritance tax should be based on the value of the estate in 1932.. Inheritance Taxes. (b) The plaintiff contends that the estate of Thomas Hanley. 86 N. pp.. did not and could not legally pass to the instituted heir. the tax should have been paid before the delivery of the properties in question to P. Vide also. or ten years after the testator’s death. 747. J. 137.S. This amount added to the value of the personal property left by the deceased. 23 Eng. 83 N. is by no means entirely satisfactory either to the estate or to those interested in the property (26 R. 343). M. This rule. Lord Advocate. C. 1922 and.. appearing in subsection (b) of section 1543. p.. In re Huber.) Our attention is directed to the statement of the rule in Cyclopedia of Law of and Procedure (vol. Supp. p.) “The right of the state to an inheritance tax accrues at the moment of death. A certified of all letters testamentary or of administration shall be furnished the Collector of Internal Revenue by the Clerk of Court within thirty days after their issuance. Div. 519. Matthew Hanley.If the tax is not paid within the time hereinbefore prescribed. Inheritance Taxation. notwithstanding the postponement of the actual possession or . 41. there shall be further added a surcharge of twenty-five per centum. we find upon examination of cases and authorities that New York has varied and now requires the immediate appraisal of the postponed estate at its clear market value and the payment forthwith of the tax on its out of the corpus of the estate transferred. 1692. 501.. Moore as trustee on March 10. Estate of Tracy. and to the tax and interest due and unpaid within ten days after the date of notice and demand thereof by the collector. p. Estate of Brez..) California adheres to this new rule (Stats. 5. 64 N. upon the death of the decedent. There was an obvious mistake in translation from the Spanish to the English version. in the case of contingent remainders. would generate an inheritance tax which. Y.).

) “A statute should be considered as prospective in its operation. unless the language of the statute clearly demands or expresses that it . 44... and intended for the preservation of the estate.) On the contrary.187. 14 Law. (Scwab vs. 893. L. 221. but in the management thereof for the benefit of the legatees or devises. Of course. was not the law in force when the testator died on May 27. 49 Law. no doubt.. 16 How. 323. not in the administrati on of the estate. and are not required or essential to the perfection of the rights of the heirs or legatees. as amended by Act No. (c) Certain items are required by law to be deducted from the appraised gross in arriving at the net value of the estate on which the inheritance tax is to be computed (sec. in paragraph 5 of his will. 195 U. Trusts . ...” A trustee. . . The compensation of a trustee. The plaintiff contends that the compensation and fees of the trustees. 42 Sup. The law at the time was section 1544 above-mentioned. and the tax measured by the value of the property transmitted at that time regardless of its appreciation or depreciation. Revised Administrative Code). . the judicial expenses of the testamentary or intestate proceedings. 161 N. Liability for taxes under retroactive legislation has been “one of the incidents of social life. But Act No. which took effect on March 9. (Ibid. 1922.. p.. Ct. the defendant and the trial court allowed a deduction of only P480. in case of a resident. Saunders. OO).. 206. LL. ed. Rep. when an inheritance is concerned. Lunch vs. This sum represents the expenses and disbursements of the executors until March 10. 175 App. 878. a tax statute may be made retroactive in its operation. Insurance Co. S. Ct. . 491.. HH. .81. Stockdale vs.. . . J. First Trust & Savings Bank. . does not come properly within the class or reason for exempting administration expenses. it was said: “...28 (Exhibits C. p. Smietanka vs. . Hennepin County Probate Court (112 N. of the character of that here before the court. 1705) but. . In re Vanneck’s Estate. 161 N. 360. or repeals an inheritance tax. as follows: “In order to determine the net sum which must bear the tax. should also be deducted under section 1539 of the Revised Administrative Code which provides. Div. C. .) But legislative intent that a tax statute should operate retroactively should be perfectly clear. In re Collard’s Estate. NN. 1705). Y.. 3606. 1539. Service rendered in that behalf have no reference to closing the estate for the purpose of a distribution thereof to those entitled to it. in part. It is well-settled that inheritance taxation is governed by the statute in force at the time of the death of the decedent (26 R. are of voluntary creation. . the testator expressed the desire that his real estate be handled and managed by his executors until the expiration of the period of ten years therein provided. amends. in State vs. 4th ed. In the case at bar. Doyle. S. Rep.. Judicial expenses are expenses of administration (61 C. 3461). S. 247 U. The taxpayer can not foresee and ought not to be required to guess the outcome of pending measures. 455..enjoyment of the estate by the beneficiary.” (d) The defendant levied and assessed the inheritance tax due from the estate of Thomas Hanley under the provisions of section 1544 of the Revised Administrative Code. W. 1924. JJ. Kelleher. which aggregate P1. p. 363. . 232 Sup. 4 Cooley on Taxation. 1047)... 1930.” (Seattle vs. 20 Wall. Y. It. are created for the the benefit of those to whom the property ultimately passes. therefore. 602. it does not appear that the testator intended that the duties of his executors and trustees should be separated. earned. 3606 went into effect on January 1. 1922. 535. EE. is entitled to receive a fair compensation for his services (Barney vs. among which were their fees and the proven debts of the deceased. Supp. Turrish. . There is no statute in the Philippines which requires trustees’ commissions to be deducted in determining the net value of the estate subject to inheritance tax (61 C. 3031. No sound reason is given to support the contention that such expenses should be taken into consideration in fixing the value of the estate for the purpose of this tax. though a testamentary trust has been created. PP... ed. p. as amended by section 3 of Act No. AA. 101 Minn. 257 U. J. But from this it does not follow that the compensation due him may lawfully be deducted in arriving at the net value of the estate subject to tax. 485). Supp. . . there shall be deducted.. Furthermore. whether it enacts.

” (61 C. . the defendant contends that delivery to the trustee was delivery to the cestui que trust. 12 Sup. Properly speaking. 239. . 101 Pa. the use of these two words is not conclusive on the question that a trust is created (69 C. Stated otherwise.) Article 22 of the Revised Penal Code is not applicable to the case at bar.. their interest in the trust. In common use. He ordered in his will that certain of his properties be kept together . Stated otherwise. vs. J.) The defendant maintains that it was the duty of the executor to pay the inheritance tax before the delivery of the decedent’s property to the trustee. Moore as trustee was made by the trial court in conformity with the wishes of the testator as expressed in his will. C. (2) a definite subject. The appointment of P. . vs. 44 P. 711). . Revenue laws. 430. under Act No. p. P. 4 C. Com. State vs. vs. 3606. Wheeler. and even those which. This contention is well taken and is sustained. J. S.. 3031. Twine Co. (3) a certain or ascertain object. to constitute a valid testamentary trust there must be a concurrence of three circumstances: (1) Sufficient words to raise a trust. J.) Though the last paragraph of section 5 of Regulations No... applicable to all estates the inheritance taxes due from which have not been paid.. that certain provisions of Act No.706. J. 3031. A. 714). Worthington.. The words “trust” and “trustee”...” (69 C. 3606 a retroactive effect. instead of ten days only as required by the old law. 1110).) There is no doubt that the testator intended to create a trust. 143.. as provided for in Act No. 3031. 1602. 3606 itself contains no provisions indicating legislative intent to give it retroactive effect. 65 of the Department of Finance makes section 3 of Act No. 910. It is true that the word “trust” is not me ntioned or used in the will but the intention to create one is clear. and the property or subject matter thereof. 150. 705.” (U. J. Labadan. S. Rice vs. are not necessary. Standard Oil Co. 55. 468. we cannot give Act No. No such effect can begiven the statute by this court. J. 3606 are more favorable to the taxpayer than those of Act No.. 53 Fed. Statutory Construction.. should operate retroactively in conformity with the provisions of article 22 of the Revised Penal Code. 3606 instead of Act No. M.shall have a retroactive effect. The defendant Collector of Internal Revenue maintains. within the meaning of the first paragraph of subsection (b) of section 1544 of the Revised Administrative Code.. In fact. 104. p. (e) The plaintiff correctly states that the liability to pay a tax may arise at a certain time and the tax may be paid within another given time. 25 Nev. the Executive has the power to pardon. the purpose or object of the trust. statutes in some jurisdictions expressly or in effect so providing. “the mere failure to pay one’s tax does not render one delinquent until and unless the entire period has elapsed within which the taxpayer is authorized by law to make such payment without being subjected to the payment of penalties for failure to pay his taxes within the prescribed period. Act No. p. amending section 1544 of the Revised Administrative Code. 3606. without expressly prohibiting certain acts. Indeed. (See Sutherland. impose a penalty upon their commission (59 C. however. although there are authorities to the contrary. however. 141 U. Ct. and establish penalties for their violation. this sense has been enlarged to include within the term “penal statutes” all status which command or prohibit certain acts. 361. S. This is the reason why he applied Act No. As stated by this court. under the Constitution. and in the absence of clear legislative intent. St. the beneficiary in this case. (1) the surcharge of 25 per cent is based on the tax only. No particular or technical words are required to create a testamentary trust (69 C. generally. U. instead of on both the tax and the interest. though apt for the purpose. 26 Phil. a statute is penal when it imposes punishment for an offense committed against the state which. “To create a trust by will the testator must indicate in the will his intention so to do by using language sufficient to separate the legal from the equitable estate. therefore.. and (2) the taxpayer is allowed twenty days from notice and demand by the Collector of Internal Revenue within which to pay the tax. which impose taxes collected by the means ordinarily resorted to for the collection of taxes are not classed as penal laws. that said provisions are penal in nature and. pp. and with sufficient certainty designate the beneficiaries.

) The obligation to pay taxes rests not upon the privileges enjoyed by.. 74 Law. ed. ed. the statute. 10 Law. or for a longer period which does not offend the rule against perpetuities. 1924. 19. (Thomas vs. Luzon Stevedoring Co. 124. cited in 65 C. ed. 491. The estate then vested absolutely in the beneficiary (65 C. 435. 21 Phil. 226.... 1086). 3. The corresponding inheritance tax should have been paid on or before March 10. without resulting in injustice to the taxpayer. 461).. Lane County vs. Ct.. Ct. 50 Sup... 16 Pet. McCoy. U. ed. 90.. The probate court certainly exercised sound judgment in appointment a trustee to carry into effect the provisions of the will (see sec.. 43 Law. Fed. Thus. ed. Erie Country. 39 Phil. 624. Trinidad. Muñoz & Co. a citizen by the government but upon the necessity of money for the support of the state (Dobbins vs. Rafferty. supra). McCaughn. It held that “the fact that on account of riots directed against the Chinese on October 18. Charles River Bridge vs. Union Refrigerator Transit Co. No. For this reason. 18 Sup.) While courts will not enlarge. the trust may last for fifty years.” (Syllabus. He did not acquire any beneficial interest in the estate. 63). 1924. The collection of the tax would then be left to the will of a private individual.. Gay. Wolf & Sons vs. Warren Bridge. 43 Phil. On that date trust estate vested in him (sec. 9 Law. 18 Phil.) . ed.. Fed. 582. 169 U. n. 264.690. p. ed. M. 33 Sup. The highest considerations of public policy also justify the conclusion we have reached. vs. 19 Law. 2 Story. The mere suggestion of this result is a sufficient warning against the acceptance of the essential to the very existence of government. Posadas (47 Phil. Construed this way. 100 U. his estate ceased upon the fulfillment of the testator’s wishes. 590. for a stated purpose. as Thomas Hanley has provided. 50 Law. 7 Wall. J. Ct. vs. to escape the penalties of the laws.. 369. Castle Bros.. Sarasola vs. they were prevented from praying their internal revenue taxes on time and by mutual agreement closed their homes and stores and remained therein. In the case at bar. Watts. vs. P. no court is allowed to grant injunction to restrain the collection of any internal revenue tax ( sec. 340. The mere fact that the estate of the deceased was placed in trust did not remove it from the operation of our inheritance tax laws or exempt it from the payment of the inheritance tax. Hotchkiss. J. ed. 150. Cas. the period is ten years. S. A trustee is but an instrument or agent for the cestui que trust (Shelton vs. Hongkong & Shanghai Banking Corporation vs.) When proper. 1578. or the protection afforded to. 25 Law. Cas. That taxes must be collected promptly is a policy deeply intrenched in our tax system. This is so for the reason already stated that the delivery of the estate to the trustee was in esse delivery of the same estate to the cestui quetrust. 252).. Vitug. 300. followed in Froelich & Kuttner vs. no one is allowed to object to or resist the payment of taxes solely because no personal benefit to him can be pointed out. Code of Civil Procedure). In the case of Lim Co Chui vs. 46) they also will not place upon tax laws so loose a construction as to permit evasions on merely fanciful and insubstantial distinctions. 773. J. S.. p. S. 692. 1 Bond. the result would be plainly disastrous. 194. Kentucky. Testators may provide. vs. Oregon.undisposed during a fixed period.. 16. 57 Law.. 11 Pet. and 20. Erie Country. Kirkland vs. Hord. this court had occasion to demonstrate trenchment adherence to this policy of the law. 1924. (U. 542). 580. When Moore accepted the trust and took possession of the trust estate he thereby admitted that the estate belonged not to him but to his cestui que trust (Tolentino vs. Wigglesirth. S. that their estates be not delivered to their beneficiaries until after the lapse of a certain period of time. No.126. King. 740.. Moore became trustee on March 10.. 689.. J. 199 U. Collector of Customs. Rep. 71. He took such legal estate only as the proper execution of the trust required (65 C. 36. 39 Phil. does not authorize the Collector of Internal Revenue to extend the time prescribed for the payment of the taxes or to accept them without the additional penalty of twenty five per cent. 558. becomes fair to the government.. 280 U. S. 803. S. Rep. 461. the beneficiary in this case. Revised Administrative Code. the government’s power of taxation (Bromley vs. vs. Code of Civil Procedure). Trinidad. Rep.653... 1022. 40 Phil. Ct. by construction. 145. 481. 12 Phil. (Dobbins vs. 582 in relation to sec. 299 U. Rep. No. 16. 528) and. In other cases. p.. a tax statute should be construed to avoid the possibilities of tax evasion. Were we to hold that the payment of the tax could be postponed or delayed by the creation of a trust of the type at hand. 101. S. 26 Sup. 420.

the sum of P1. As the plaintiff has already paid the sum of P2. Deducting from this amount the sum of P480. The interest due should be computed from that date and it is error on the part of the defendant to compute it one month later. and also P10.16.634. and thereby.74. liable for the payment of interest and surcharge provided by law in such cases. subsec. of the Revised Administrative Code.supra).904. The primary tax. . that the modes adopted to enforce the taxes levied should be interfered with as little as possible. In view of the foregoing. no matter how heavily it may burden the taxpayer.43. 65.465. Demand was made by the Deputy Collector of Internal Revenue upon Moore in a communication dated October 16. 32 Phil.19 is P378.81.” said the Supreme Court of the United States. 6 months and 5 days. Revised Administrative Code). giving a grand total of P3.19 as the net value of the estate subject to inheritance tax.052.24. the date when Moore became trustee. therefore. 2. a surcharge of twenty-five per centum should be added (sec. To the tax and interest thus computed should be added the sum of P724. Rafferty.920 and personal properties worth P1.“.31 which stands for interest at the rate of twelve per centum per annum from March 10. representing a surcharge of 25 per cent on both the tax and interest. according to section 1536. But. This last sum is P390.08. 1931. or P965. the tenth day fell on December 1. At the time of his death. Churchill and Tait vs. (b).” (Dows vs. subsection (c). representing allowable deductions under section 1539 of the Revised Administrative Code..) It results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax and. 1924. the compromise sum fixed by the defendant (Exh. . 1924. the date of payment under protest. the date of delinquency. a period covering 8 years. Adding to these two sums an additional two hundred per centum. . “.434. and neither the Collector of Internal Revenue or this court may remit or decrease such interest. the estate became liable for the payment of the surcharge. plus an additional two hundred per centum. Lim Co Chui vs. cause serious detriment to the public. To the tax and interest due and unpaid within ten days after the date of notice and demand thereof by the Collector of Internal Revenue. should be imposed at the rate of one per centum upon the first ten thousand pesos and two per centum upon the amount by which the share exceed thirty thousand pesos. 66. Two per centum of P18. 1931 (Exhibit 29). par. The provisions cases is mandatory (see and cf.42 more than the amount demanded by the defendant in his counterclaim. Chicago.581. 108. may derange the operations of government. 11 Wall. 20 Law. First should be added P1.69 is legally due from the estate. 29). Posadas. it becomes unnecessary for us to discuss the fifth error assigned by the plaintiff in his brief.465.. 580. 1544. November 30 being an official holiday. We shall now compute the tax. . 1932. . to September 15. To the primary tax thus computed should be added the sums collectible under section 1544 of the Revised Administrative Code. The date fixed for the payment of the tax and interest was November 30. or a total of P29.88. The delinquency in payment occurred on March 10. 1931. ed. Any delay in the proceedings of the officers. we have as primary tax. the deceased left real properties valued at P27.385. we have P28.904. together with the interest and surcharge due from the estate of Thomas Hanley in accordance with the conclusions we have reached. upon whom the duty is developed of collecting the taxes. correctly computed by the defendant. One per centum of ten thousand pesos is P100. only the sums of P1. It is of the utmost importance. As the tax and interest due were not paid on that date.

So ordered. with costs against the plaintiff in both instances. The judgment of the lower court is accordingly modified. we must hold that the plaintiff is liable only in the sum of P1.191. .27 the amount stated in the counterclaim.as we cannot give the defendant more than what he claims.

and THE YNCHAUSTI STEAMSHIP CO. Said sum was deposited with the Steamship Co. J. Antonio Osorio. 1914.000. The project of partition was approved on May 10. 1914.” that is. until the final settlement of the question that had arisen between the heirs of Da. one-third belonged to D. the sum of P94. Antonio Osorio and before the distribution of the estate. vs. On February 28. while the plaintiff alleges that. administratrix of the estate of Petrona Reyes. widow of Osorio. 1915. he is the owner of said shares and of their value which is P61... the defendant on the other hand contends that said shares are not included in . executed before the notary D. the estate of D. in the vessel Governor Forbes. Antonio Osorio. Antonio Osorio as having an interest to the extent of one-third in the ownership and business of said steamer. now also deceased. Villamor (Ignacio). This capital amounted to P500. Leonardo Osorio. 1915. Upon his death. Tomasa Osorio.66. Ynchausti & Co. wherein it was stated that said half was adjudicated to her as part of her conjugal property. a joint account association for the exploitation of the shipping business.: The plaintiff seeks to recover 610 shares of stock of “Ynchausti Steamship Co. a donation which was duly accepted by the donee D. and the donor Da. that is. Carlos Ledesma for appellee. executed another document dated July 3. 1915. February 28. Petrona Reyes as to the ownership thereof for. the widow of D. he being the owner of the one-third of the company’s capital. among the properties which belonged to the widow Da. Antonio Osorio. defendants-appellants. Petrona Reyes in order to correct the error in said document. equivalent to 610 shares of stock of said corporation. No. Petrona Reyes.666. On that date. who signed said document with the plaintiff. which division was approved by the Court of First Instance of Cavite on May 10. 1914. of which P166.000. L-16544 LEONARDO OSORIO.” and the dividends corresponding to them.R. maintaining said donation in effect in the sense that she ceded and donated to her son D.000. whose estate is administered by the defendant. Fernandez and Ansaldo for appellants. plaintiff-appellee.. for the same reasons stated in the document of February 28. by virtue of the donation made in his favor by Da. by the Court of First Instance of Cavite.66. Da. and said administratix inserted in the project with the consent of all the heirs.. Leonardo Osorio. a little over P166. the plaintiff. then administratrix of the estate of the deceased. Maria Petrona Reyes. with the consent of the heirs. giving to him one-half of her share in the one-third part which belonged to her husband in the shipping business of Ynchausti & Co.000 as her part in the “share of the estate in the shipping business of Ynchausti & Co. which was adjudicated to her in the division of the estate of D. The facts of this case are: D. Petrona Reyes. After the death of D. Petrona Reyes. Leonardo Osorio. to present a project of partition. which was the share in said business of the deceased Osorio during his lifetime. TOMASA OSORIO. when the partition was yet being effected. his heirs agreed to authorize the defendant Da. at the time of the incorporation of “The Ynchausti Steamship Co.666 . which were included in the inventory of the properties of the deceased Da. Antonio Osorio was not yet distributed among his heirs. Petrona Reyes. purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio had formed with Ynchausti & Co. Florencio Gonzales Diez a document of gift in favor of her son D.G. al interest or participation in said shipping business of Ynchausti & Co. It was agreed upon by all the interested parties that the share of Da. which had cognizance of the testamentary and administration proceedings of the state of the deceased Osorio. .” was P61.

and ordered the defendant Da. In turn. was a shareholder to the extent of one-third in the joint account association “Ynchausti & Co. which is engaged in the business of buying vessels and in the exploitation of six steam vessels acquired from the Compañia Maritima. freely and voluntarily state: 1.” which is neither transferred nor burdened in any manner whatever. with all liberty. maintain the two following propositions: 1. state my conformity and acceptance of said donation which my dear mother makes to me. the article of association of said joint account association having been executed in the city of Manila on July 3. 1906. The document of donation dated February 28. Petrona Reyes in favor of the plaintiff was of no value and effect. married and a resident of the Province of Cavite.000. 2. Petrona Reyes. That upon the death of my husband D. delivering to him the dividends corresponding thereto. 3. and denied the counterclaim for the sum of P45. there was adjudicated to me as conjugal property.000. for which I am greatly thankful to her. attacked by the appellant. and donated by her to the defendant in the counterclaim. Leonardo Osor io.” to inscribe them in the name of the plaintiff D. on the ground that said sum represents the dividends corresponding to the P94. the 610 shares of stock. The donation made by Da. Tomasa Osorio. and the other defendant “The Ynchausti Steamship Co. Leonardo Osorio. one-half of said one-third part in the business referred to. Florencio Gonzales Diez. supposing said donation valid. the deceased D. declaring that the 610 shares of stock in dispute and their dividends belong to the plaintiff. . Leonardo Osorio of all my interest and participation in said compan y “Ynchausti and Co. Antonio Osorio and resident of the Province of Cavite. of age. The case having been appealed to this court. married and a resident of Cavite also. widow of D. Antonio Osorio. That in consideration of the continuous services and attention received by me from my son D. of age. Petrona Reyes. I. I also declare that the present donation does not in any way prejudice the right which may accrue to my other children with respect to inheriting my property and that therefore I can effect this donation. is as follows: Know all me by these presents: That I. Antonio Osorio and upon the partition of his estate. Antonio Osorio. That. of age. That my husband. in the partition of the estate of D. I make a free and expressed donation to my said son D. Such as the facts which gave rise to this litigation.the donation in question and belong to the heirs of Da.” of this place. to exclude them from the inventory and her accounts. being in possession of all my senses. and because of the affection he has always shown and still shows me. The trial court rendered judgment in the case. administratrix of the estate of Da. Leonardo Osorio. the value of which is P61. as well as because of the number of children that he has. in summing up their arguments in support of the errors assigned in their brief. Petrona Reyes. Petrona Reyes. the other half thereof going to our four surviving children. Philippine Islands. cannot be considered as included among them. counsel for the defendant and appellant.000 adjudicated to Da. 1914. as I reserve for myself what is sufficient for me to live on in the manner which corresponds to my social position and needs. before the notary public D. such being the present condition of our interest in said company. and 2. 4. 5.

Signed in the presence of:(Sgd. 1914. The document rectifying the ratifying the preceding is literally as follows: Know all men by these presents: That I. among other things: To close these fundamental ideas which the spirit of articles 634 and 635 develops we must fix our attention to the definition which the Code gives of future properties. and approved by the Court of First Instance of Cavite. (Sgd. That in order to correct said error. 1914.) PETRONA REYES. declaring however in any event that I make said donation subsisting in the sense that I cede and donate to my side son D. this twenty-eighth day of February. Antonio Osorio and resident of the Province of Cavite. They are those of which the donor cannot dispose at the time of making the donation. That on February 28. in consideration of the same causes mentioned in said document of February 28. Petrona Reyes. Signed in the presence of: (Sgd. In witness whereof I sign the present document in triplicate of Cavite on July 3. 1915. although they may or may not later belong to the donor. Manresa says. of age.LEONARDO OSORIO. of one-half of the one-third part which my deceased husband had in certain shipping business of the association “Ynchausti & Co. Leonardo Osorio. nineteen hundred and fourteen.) EUSEBIO ALBA. 1915. By future property is understood that of which the donor can not dispose at the time of making the donation. Commenting on article 635 of the Civil Code. the appellant invokes as the legal provision violated. (Sgd. 3. by): PETRONA REYES.) CARLOS LEDESMA. freely and voluntarily declare: 1. I so state. Philippine Islands. thus connecting two ideas which. article 635 of the Civil Code.In witness whereof we sign the present document in triplicate at Manila. through error. on May 10. Article 635 refers to the properties of third persons but it may be . when the truth was that said partition had not yet been put in proper form or finished. although lacking apparently in relation. before the notary public of Manila. 1914. all interest or share in said shipping business of Ynchausti & Co. Acknowledged before the notary public D. That in said document I stated. widow of D.SALVADOR BARRIOS.” 2.ISAURO GABALDON. Florencio Gonzales Diez on February 28. I executed a document of donation in favor of my son D. In support of the first proposition. This definition in reality includes all properties which belong to others at the time of the donation. which was adjudicated to me in the partition of the estate of my deceased husband. Florencio Gonzales Diez. which says: A donation can not include future property. Leonardo Osorio. are merged in reality in the subject which we examine and which gives assurance to their application. D. that said half of one-third part of the business referred to was adjudicated to me as my part of the conjugal property in the partition of the properties left by my deceased husband. being in the full possession of my senses. Philippine Islands.

but he may also donate the usufruct which corresponds to the time that it will go back to him. and it may be deduced that an inheritance already existing. The testator institutes as his only and universal heirs his said children and granddaugther. it must be observed that in the project of partition of the property of D.. but this is not an obstacle. betterment. Tomasa. We conclude that the donor Da. A donation being of a contractual nature. for the acquisition of said property retroacts in any event to the moment of death. ibi est eadem legis dispositio. cannot be considered as another’s property with relation to the heirs who through a fiction of law continue the personality of the owner. the donation of which is prohibited by said article. 1912. Nor do they have the character of future property because the died before 1912. Carefully examining said article 635 of the Civil Code. inasmuch as for its efficacy the concurrence of two wills is required. More of less time may elapse before the heirs enter into the possession of the hereditary property.said that id does so in relation to a time to come. The testator declares that all property left by him was acquired during his marriage with Petrona Reyes. 827. that of the donor and the donee. her children Feliza. according to which the heirs succeed the deceased by the mere fact of his death. because he cannot dispose of them at the moment of making the donation. and because in 1914 she did not have the right to all or part of the share which her deceased husband had in the shipping business of Ynchausti & Co. Furthermore the Civil Code does not prohibit absolutely that future inheritance should be the object of agreement. With respect to the point that Da. The usufructuary for life or for a determined number of years of a vineyard may donate said usufruct to the whole extent that it belongs to him but never the property itself. It is alleged that the donation made by Da. and could legally dispose of her right through an act of liberality. and 1331) in which agreements may be made as to them. Petrona Reyes. as she had done. 177. because the case refers to a vested right of which he may dispose at the time of the donation. designates the parts which each of them must receive as legitime. 1914. and Leonardo and her granddaugther Soledad Encarnacion Osorio y San Agustin are at present all living and are the only heirs of the deceased. 1915. cannot be the object of the disposal by the donor. which. there can be properties which may latter belong to the donor. leaves to the disposition of his widow . because they are not at present his properties. according to article 989 of the Civil Code. and legacy. we believe that which may be the object of contract may also be the object of a donation. as such. Ubi eadem est ratio. beside that indicated in article 1271. for there are certain cases (arts. his heirs acquired a right to succeed him from the moment of his death. Petrona Reyes did not have in 1914 any right to all or part of the share of her deceased husband in the shipping business of Ynchausti and Co. 831. on February 28. in relation to the worthy opinion of the commentator Manresa. Maria Petrona Reyes. Petrona Reyes is void because she donated on February 28. but these properties cannot be donated. are those belonging to other. we believe that the future properties. The bare owner of said vineyard may donate his right of course. a future property. Antonio Osorio the following appears: The widow of the testator. because of the principle announced in article 657 and applied by article 661 of the Civil Code. The right is acquired although subject to the adjudication of the corresponding hereditary portion. such as the share in the business of the deceased Osorio. may legally be the object of contract. but the properties of an existing inheritance as those of the case at bar. which was adjudicated to her on May 10. which is no longer future from the moment of death of the predecessor.

The appellant herself admits that his vessel took part in the general shipping business of Ynchausti & Co. We do not have before us the will of D. It is the duty of the donee. as a mode of transferring ownership. which she donated to her son Leonardo. Antonio Osorio.. according to article 623 of the Civil Code. can it be denied that the donor by law had the right to half of said share as her part of the conjugal property? Clearly not. Petrona Reyes had in 1914 a right to a certain part of the interest of the deceased Osorio in the shipping business of the firm Ynchausti & Co. After its approval by the Court of First Instance of Cavite. the donation. that the 610 shares. for no new partnership was constituted for the purchase thereof. D. to accept to the donation and notify the donor thereof. 1914. after its acquisition the Ynchausti firm accounted to the estate of D. becomes perfect. The acceptance is necessary because nobody is obliged to receive a benefit against his will. And all this was complied with in the document of 1914. indepedently of that former partnership in which the deceased Osorio had an interest. which was adjudicated to her in the partition of the property of D. wherein it is stated that in the partition of the property of her husband there was adjudicated to her the part of the interest in the shipping business of Ynchausti & Co. Leonardo Osorio. secretary and accountant of the firm Ynchausti. Antonio Osorio but supposing that he had left no property but the share which he had in the shipping business of Ynchausti & Co. She did not make a new donation. The question whether the streamer Governor Forbes was or was not purchased with money furnished by Ynchausti and the heirs of Osorio. which are the subject matter of the suit. This admission of the defendant is conclusive. In the second document. as she did. to her son D.. and. She executed a personal act which did not require the concurrence of the donee. in order that the donation may produce legal effect. Julio Gonzales. is void. the donor executed the document of 1915. The reasons alleged by the appellant are: (1) That the steam vessel Governor Forbes was purchased after the death of D. Maria Petrona Reyes did not donate to the plaintiff more that her share in the shipping business of the firm Ynchausti & Co. cannot be considered as included in the donation made by Da. and could donate it. states that the Forbes was purchased with money which the shipping business of Unchaisti & Co. when in fact said partition was yet pending. because of the conclusion we have reached in discussing the document of donation of February 28.and amount equivalent to that set aside by him in payment of one-half part of the conjugal property and orders that the remainder should be equally distributed among his heirs. had. supposing that said donation was valied. Antonio Osorio for the profits obtained and the dividends to be distributed and no separate account was made of the earnings of the vessel. that is. witness for the defendant. with money borrowed and furnished by the heirs individually and not by the estate. 1915. The wills of the donor and of the donee having concurred. ratifying and correcting the document of donation. Petrona Reyes in favor of the plaintiff. and makes it unnecessary for us to enter into another discussion in order to deduce that Da. including the profits obtained in the shipping . The allegation that the document of July 3. because it does not show the acceptance of the donee. but only a general account. is one of the fact and must be resolved in view of the evidence adduced at the trial. is of no importance. the donor only tried to correct what she believed to be an error in the first. Antonio Osorio and that said share amounts to P94. and (2) that the plaintiff appellee has recognized that the capital used in the steamer Forbes is distinct from the money used in the purchase of other vessels in which the deceased Osorio had an interest. We will not pass to the second proposition of the appellant.000. The defendant in her answer says: That Da.

and (4) because. and as such profits they belong to the latter. the guaranty required by the bank where the money used in the purchase of the Forbes was taken: (1) Because the guaranty is for the purpose only for securing the payment of the amount indebted and not for excluding the estate of Osorio from the result of that banking operation. the guaranty which the bank required. and the widow Da. (Art. Florencio Gonzales Diez. that is to say. or is united or incorporated thereto.000.000. Leonardo Osorio. which is the object of this suit.. Petrona Reyes having disposed of this half. The other reason alleged by the appellant in support of her contention is that the plaintiff has recognized in his letter addressed to the defendant corporation.000 should be deposited with Ynchausti & Co. with the others. 353 of the Civil Code. with costs against the appellant. the accruing to each P11. upon the principle of law that ownership of property gives right by accession to all that it produces. stating that when the steamer Forbes was acquired in 1912. Soledad Osorio.) In view of what has been said. when the question between the heirs of Da. and therefore belong t o the plaintiff-appellee. naturally or artificially. and the heirs of Osorio for the purchase of the vessel Forbes. that the sum of 61.33.609. the Ynchausti firm did not bring in any new capital.” are included in said donation.. In our opinion the evidence shows conclusively that the vessel Governor Forbes forms part of the shipping business of Ynchausti & Co.33 and to the widow Da. except Da. Petrona Reyes in the distribution of the estate of the deceased Osorio and which were donated by her to the plaintiff. (3) because no new partnership was formed between Ynchausti & Co. when Unchausti & Co. besides said guaranty. And this sum being part of the one-half of one-third of the shipping business of Ynchausti & Co.000. (2) because. it clearly results. Joaquin Elizalde. and inserted in the answer presented by the latter that the Forbes was acquired with money different from that of the joint account association theretofore mentioned. the other vessels of the joint account association of Osorio and Ynchausti & Co. this sum was distributed among said heirs. in which the Governor Forbes was but one of several vessels. as it is hereby. the sum of P61. 833. in which D. With respect to the counterclaim of P45. in our opinion. but signed jointly with Ynchausti & Co. we are of the opinion that the evidence justifies the conclusion of the trial court that they are the profits or dividends accruing to the P94. Petrona Reyes had already been terminated. by agreement of the interested parties. to be distributed with its accumulated dividends. All of the above shows that the estate of Osorio had a one-third part of the steamer Forbes represented by the capital which was distributed among the heirs. by agreement of the parties and with the approval of the court.333. which one-half part accrued to the widow in the distribution of the properties of Osorio. according to the result of the present suit. manager of the firm Ynchausti & Co. Petrona Reyes P61. but obtained money for its purchase by mortgaging the vessel itself and other vesseles of the company. there accruing to the widow. as trustee. including Da. There is nothing in said letter which indicates how the Governor Forbes was acquired. agreed with the heirs of Osorio in that his share in the steamer Forbes was P108. made a deposition before the notary public D. donating it to her son D. the judgment appealed from should be. or the corresponding shares of the new corporation “The Ynchausti Steamship Co. and that the heirs of D.000. D. affirmed.. It is no argument against this conclusion that the heirs of Osorio signed with Ynchausti & Co.business. Antonio Osorio and his estate had an interest. Antonio Osorio did not bring in any new capital for the purchase of the vessel. So ordered. which were adjudicated to the widow Da. . were mortgage.91. We have carefully read the letter in question and what appears is that said plaintiff agreed that the P61. Soledad Osorio who did not sign the guaranty.

321). before the Court of First Instance of Pangasinan. With this background. her now co-defendants. the court rendered decision ordering the defendants to restore to the plaintiff the ownership and possession of the lands in dispute without special pronouncement as to costs. cannot be entertained for the simple reason that future inheritance cannot be the subject of a contract nor can it be renounced (1 Manresa. CONRADO NEBREDA. Defendants in their answer set up as special defense that on February 21.G. However. Brigido G. defendants-appellants. the late Faustino Nebreda. There is no dispute that Maria Uson. 41 Phil. sixth edition.R. in consideration of their separation. filed by Maria Uson against Maria del Rosario and her four children named Concepcion. at which both parties presented their respective evidence. plaintiff-appellee. the rights of inheritance of Maria Uson over the lands in question became vested.. vs. L-4963 January 29. is the lawful wife of Faustino Nebreda. his widow Maria Uson (Article 657. 123. plaintiff claims that when Faustino Nebreda died in 1945. There is likewise no dispute that Maria del Rosario. executed a public document whereby they agreed to separate as husband and wife and. 12. was merely a common-law wife of the late Faustino Nebreda with whom she had four illegitimate children. who are all of minor age.. one of the defendants-appellants.As this Court aptly said. The claim of the defendants that Maria Uson had relinquished her right over the lands in question because she expressly renounced to inherit any future property that her husband may acquire and leave upon his death in the deed of separation they had entered into on February 21.: This is an action for recovery of the ownership and possession of five (5) parcels of land situated in the Municipality of Labrador. MARIA DEL ROSARIO. From that moment. p. . Maria Uson and her husband. AND FAUSTINO NEBREDA.. 531). his common-law wife Maria del Rosario took possession illegally of said lands thus depriving her of their possession and enjoyment. Estrada for appellant. CONCEPCION NEBREDA. "The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death" (Ilustre vs. After trial. Maria Uson was given a parcel of land by way of alimony and in return she renounced her right to inherit any other property that may be left by her husband upon his death (Exhibit 1). Jr. it is evident that when Faustino Nebreda died in 1945 the five parcels of land he was seized of at the time passed from the moment of his death to his only heir. therefore. 1931. 17 Phil. Osorio vs. It likewise appears that Faustino Nebreda died in 1945 much prior to the effectivity of the new Civil Code. Faustino Nebreda left no other heir except his widow Maria Uson. Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands involved in this litigation. and Faustino. surnamed Nebreda. Alaras Frondosa. Defendants interposed the present appeal. old Civil Code). Osorio and Ynchausti Steamship Co. Conrado. plaintiff-appellee. Province of Pangasinan. Dominador. Priscilo Evangelista for appellee. J. No.. DOMINADOR NEBREDA. former owner of the five parcels of lands litigated in the present case. 1931. 1953 MARIA USON. Tolentino on Civil Code. BAUTISTA ANGELO.

provided said new right does not prejudice or impair any vested or acquired right.But defendants contend that. As regards the claim that Maria Uson. Article 2253 above referred to provides indeed that rights which are declared for the first time shall have retroactive effect even though the event which gave rise to them may have occurred under the former legislation. 1950. WHEREFORE. The new right recognized by the new Civil Code in favor of the illegitimate children of the deceased cannot. apart from the fact that this claim is disputed. new Civil Code). agreed to assign the lands in question to the minor children for the reason that they were acquired while the deceased was living with their mother and Maria Uson wanted to assuage somewhat the wrong she has done to them. said article provides that "if a right should be declared for the first time in this Code. this much can be said. without costs. Inasmuch as this essential formality has not been followed. we are of the opinion that said assignment. old Civil Code). even though the act or event which gives rise thereto may have been done or may have occurred under the prior legislation. if any. the decision appealed from is affirmed. old Civil Code). partakes of the nature of a donation of real property. in a gesture of pity or compassion. but this is so only when the new rights do not prejudice any vested or acquired right of the same origin." As already stated in the early part of this decision. therefore. it shall be effective at once. Thus. and in order that it may be valid it shall be made in a public document and must be accepted either in the same document or in a separate one (Article 633. however. they are given the status and rights of natural children and are entitled to the successional rights which the law accords to the latter (article 2264 and article 287. while her deceased husband was lying in state. be asserted to the impairment of the vested right of Maria Uson over the lands in dispute. and because these successional rights were declared for the first time in the new code. they shall be given retroactive effect even though the event which gave rise to them may have occurred under the prior legislation (Article 2253. it results that the alleged assignment or donation has no valid effect. while it is true that the four minor defendants are illegitimate children of the late Faustino Nebreda and under the old Civil Code are not entitled to any successional rights. new Civil Code). inasmuch as it involves no material consideration. of the same origin. There is no merit in this claim. the right of ownership of Maria Uson over the lands in question became vested in 1945 upon the death of her late husband and this is so because of the imperative provision of the law which commands that the rights to succession are transmitted from the moment of death (Article 657. . under the new Civil Code which became in force in June.

property and participation of Claudio Montilla. Enage and Yap Tico. PEDRO LITONJUA. Carbonell for oppositor. PARAS. Litonjua be paid.. It is true that Yap Tico. On June 12. We quote hereunder pertinent passages of the decision. L-4170 January 31. 1950. Litonjua obtained a judgment against Claudio Montilla for the payment of the sum of P4. administrator-appellee. C. as the creditor of the widow and heirs of the deceased Ildefonso.00 In due time. Gaudencio Occeño and Jose Ur. From this order Pedro L. It was therein also held that a person who is not a creditor of a deceased. Litonjua filed in special Proceeding No 32 of the Court of First Instance of Negros Occidental. 734 et seq. and 1032 of the civil Code.J. oppositor-appellee. plus costs amounting to P39. because the debts of the deceased must be paid before his heirs can inherit. a writ of execution was issued. a motion praying that the interest. 1952 Intestate of the late AGUSTIN MONTILLA. MONTILLA. but it is no less that only after all the debts of the said estate have been paid can it be known what net remainder will be left for division among the heirs. 1026. one of the heirs of Agustin Montilla. 868 of the court of First Instance of Negros Occidental.. because the debts of the deceased must first be paid before his heirs can inherit. shall be barred from recovering such demand or from pleading the same as an offset to any action. and secs.) .. under the provisions of section 695 of the Code of Civil Procedure. it was held that the creditor of the heirs of a deceased person is entitled to collect his claim out of the property which pertains by inheritance to said heirs. with still less reason can one who is not a creditor of the said deceased intervene in the proceedings relative to the latter's intestate estate and to the settlement of his succession (article 1034 of the Civil Code). Jr.R. CLAUDIO MONTILLA. only after the debts of the testate or intestate succession have been paid and when the net assets that are divisible among the heirs are known. Coruña for the administrator. This motion was opposed by Claudio Montilla and by Agustin Montilla. excepting the case referred to in section 701 of the same. vs. vs. except in any remainder which may be found due the heir. deceased. a movant-appellant. but no property of Claudio Montilla was found which could be levied upon. In the case of Ortiga Brothers and Co. On August 7..000 with legal interest. 1027. A person who. 659 et seq. the Court of First Instance of Negros Occidental issued an order denying the motion. having claim against a deceased person which should be considered by the committee does not. Sr. Intestate Estate of Agustin Montilla. after publication of the required notice. Code of Civil Code Procedure. Jose M. Litonjua appealed. No. has no right to intervene either in the proceedings brought in connection with the estate or in the settlement of the succession. Estacion for movant. exhibit his claim to the committee as provided by law.. AGUSTIN B. in the latter's intestate estate be sold and out of the proceed the judgment debt of Claudio Montilla in favor of Pedro L. SR. Sr.G. Carlos Hilado and Jose V. (Arts.. is entitled to collect what is due him out of the property left by the latter and which was inherited by such widow and heirs. because such creditor has no right or interest that call for the protection of the law and the courts. testate or intestate. 345. Pedro L. 18 Phil.: In Civil Case No. 1950 Pedro L. administrator of the intestate estate. JR.

an heir. the appealed order is affirmed. before the net assets of the intestate estate have been determined. .An execution cannot legally be levied upon the property of an intestate succession to pay the debts of the widow and heirs of the deceased. 350-251) The foregoing pronouncements are perfectly applicable to the case at bar. until the credits held against the latter at the time of his death shall have been paid can the remaining property that pertains to the said debtors heirs can be attached (Art. because the appellant is not a creditor of the deceased Agustin Montilla. Civil Code. and he seeks to collect his claim out of the inheritance of Claudio Montilla. Sr. Wherefore.) (pp. aforecited. 1034. and it is so ordered with costs against the appellant.

known. So ordered. it is hereby declared that the said Silvina Chio-Taysan y Caballero is the legal heir abintestato of her deceased parents.. respectively. and turned over her title deeds to this tract of land to the lender as security for the loan. Don Jose Chio-Taysan. 1904. 1908 SUILIONG & CO. for appellees.: Avelina Caballero. the remaining description of which appears in the first inscription of this number. and Insurance Co. who died on the 29th of April. as an "action for the declaration of heirship" and on the 5th day of August. as liquidators of The Yek Tong Lim Fire. and April 29. On March 9.. according to the proceeding inscription. Marine. died on June 5. — Urban property. and on the 5th of June. Carlos Ledesma. but no entry touching the transaction was noted in the land registry. vs. the intervener and appellant in this action.S. Judge. and Ramon Fernandez.. Part III. 1903. without leaving any other descendant or having executed any will. and there being no objection whatever to the claim of the petitioner. deceased. under the system of civil procedure in existence prior to the adoption of the present code. intervener-appellant. built thereon. L-4777 November 11. plaintiffsappellees. Leodegario Azarraga. 1895.G. Mexican currency. A. and neither of . instituted in the Court of First Instance of Manila an action. of age. 1903. In the Court of First Instance of Manila. the said Jose Chio-Taysan and Avelina Caballero. widow. — A parcel of land and a house of a strong materials. the defendant in this action. SILVINA CHIO-TAYSAN. this city. tile roofed. she borrowed from Francisca Jose. Let a certificate of this decision be issued to the interested party and those who may hereafter apply for the same. situated in Calle Lavezares of the district of Binondo. CARSON. 1903.R.] It having been proven by both documental and oral evidence introduced in the above-cited case. — Doña Avelina Caballero y Bugnot. 1903. On March 27. No. which was duly inscribed in her name in the land registry of the city of Manila. 1895. Avelina Caballero died on the 5th day of June. the following order declaring her to be the only and exclusive heir of Avelina Caballero. 1903. and thereafter Silvina Chio-Taysan. Philippine Islands. was issued in that proceeding: [United States of America. marked number eight.000 pesos. 1. in conformity with the provisions of the Civil Code now in force. is the owner of this property under a title of repurchase. respectively. J. of this vicinity. defendant-FRANCISCA JOSE. deceased. the registrar of deeds of the city of Manila by virtue of this order entered the following inscription in the land registry whereby the said Silvina Chio-Taysan is made to appear as the owner of the land in question: Ninth inscription. CROSSFIELD. Said lady and her husband. for appellant. Ltd. owned during her lifetime a certain tract of land. — It has no encumbrances. that the petitioner Silvina Chio-Taysan y Caballero is the daughter of Jose Chio-Taysan and Avelina Caballero.

issued by Don Salvador Chofre.000 pesos. and further that it annul the inscription in the land registry of the title of Silvina Chio-Taysan to the land in question. 1906. in which was included the land in question. declaring their daughter. in accordance with the provisions of section 708 of the Code of Civil Procedure. and that. on the 28th day of March. under title by intestate inheritance. Crossfield. filed her answer.500 from the Fire and Marine Insurance and Loan Co. which document was presented to this registry at 8:50 a. By virtue thereof. 1907. On the 26th day of May. the intervener in this action. their intestate heir. the corresponding intestate proceedings were instituted. 7. on August 5. All the above appears from the previous records and from the copy of the above judicial order. 1906. 1905. for the sum of 1. an inventory of the property of the estate. whatever lien she may have held as security therefor. On the 10th day of October. 1904. he was. Mexican currency. deceased. the right she was acquired over the property of this number. and declare this land subject to her claim against the estate of Avelina Caballero. submitted as such administrator. but on the 30th of October. deceased. judge of the third sala of the Court of First Instance of this city. to the committee appointed in the administration proceedings. Silvina Chio-Taysan y Caballero. and on the 28th of November. and thereupon. and the foreclosure of its mortgage upon the land. the plaintiff in this action filed its complaint against the defendant. We do not think that the judgment of the trial court can be sustained in so far as it wholly denies relief to the intervener. 1904. she must be taken to have abandoned. is merely for the rescission and annulment of the mortgage contract between the loan company and the defendant and of the inscription in the land registry of . since she admitted that she had admitted her claim against the estate of Avelina Caballero. and the intervener brings that judgment before this court for review upon her bill of exceptions duly signed and certified. deceased.them having executed a will. page 266. assistant clerk of the Court of First Instance of this city. on the 25th day of February last. of the 7th volume of the Diario. of which the plaintiff is the lawfully appointed liquidator. I sign these presents in Manila. as above set out. for the administration of the estate of Avelina Caballero. Tariff of Fees. To this complaint the defendant. deceased. and prayed that the court declare the mortgage executed by Silvina Chio-Taysan rescinded and of no effect. admitting the facts alleged in the complaint and declining to interpose any objection to the prayer of the complaint. appointed administrator.50. And all the above being in accordance with the document above referred to. as per record No. Francisca Jose. submitted her claim to the commissioner appointed in these proceedings. in favor of the said Silvina Chio-Taysan y Caballero. lawphil. No. 1903. on March 9. however. 1904 — Fees: $7. — Alberto Barretto.net The trial court entered judgment in favor of the plaintiff and against both the defendant and the intervener in conformity with the prayer of the complaint. 1905. 1903. on the ground that her intervention in this action was for the purpose of the written title deeds on the land. Francisca Jose. Thereafter the husband of Silvina Chio-Taysan instituted special proceedings under the provisions of the present Code of Civil Procedure. which claim was duly approved on the 31st of August. and mortgaged the land in question as security for the repayment of the loan. 452. loaned the deceased. the said Silvina Chio-Taysan borrowed the sum of P2. m. I inscribe. in accordance with his petition. Silvina Chio-Taysan. by A.. praying for judgment for the amount loaned her as above set out. in which an order was issued on August 5. The prayer of her complaint in intervention. The trial judge denied the relief prayed for by the intervener. and on the 16th day of October.S. Francisca Jose was permitted to intervene and file her separate "complaint in intervention" wherein she set out the facts touching the loan made by her to Avelina Caballero. Silvina Chio-Taysan.

the unsecured debts and other personal obligations of the deceased becoming the unsecured debts and personal obligations of the heir for which he was held personally responsible in precisely the same manner as the deceased. . and a declaration that as a creditor of the estate she has a superior right to that of the plaintiff company in the proceeds of any sale of the land in question. were bound to accept as a sufficient basis for the formal entry. Had the transactions above set out in taken place under the system of law in force in these Islands immediately prior to the 1st day of October.the title of the defendant. with no new right in or to the property of the decease. The property of the deceased. He could alienate or mortgage it with the same freedom as could the deceased in his lifetime. and if the estate of the deceased is subject to the payment of the debts of the deceased in such form that the heirs of the deceased could not alienate this land free of the claims of the creditors of the deceased against the land. became the property of the heir by the mere fact of death of his prodecessor in interest.) Spanish procedural law provided an action known as an action for the declaration of heirship ( declaracion de herederos) whereby one claiming the status of heir could have his right thereto judicially declared. when the new Code of Civil Procedure went into effect. in all rights and obligations). save only that when he accepted the inheritance. of ownership of the property of the deceased. the intervener is clearly entitled to at least so much of the relief she seeks in this action as will have the effect of preventing the sale of this land under the plaintiff's foreclosure proceedings. 1901. and he could deal with it in precisely the same way in which the deceased could have dealt with it. personal debts and obligations of the deceased becoming the personal debts and obligations of the heir. Book of the Civil Code. including the land registry. Under these. which was not in existence at the time of his death. where he availed himself of the privilege of taking the estate "with the benefit of an inventory. (The rights to the succession of another are transmitted from the moment of his death). it might well be that there would not be sufficient property in the estate to pay the amount of the claim of the intervener against the estate. (Heirs succeed the deceased by the mere fact of his death. a sole and exclusive heir (as defined in article 660 of the Civil Code) became the owner of the property and was charged with the obligations of the deceased at the moment of his death. was evidence of the fact of heirship which the officials charged with the keeping of the public records. save only. and this judicial declaration of heirship unless and until set aside or modified in a proper judicial proceeding. free of the claims of creditors of the deceased. if the plaintiffs in this action were permitted to foreclosure their mortgage and to recover their debt from the sale of the land in question. upon precisely the same terms and conditions as the property was held and as the obligations had been incurred by the deceased prior to his death. for the payment of their claims against the deceased. in the hands of the heir. She does not seek to enforce her claim and recover her debt in this proceeding. though in other respects its character as a personal liability remained unchanged. because. If her contentions are well founded. but merely to prevent the plaintiff from securing a judgment in this action which would take out of the estate property which she believes to be subject to her claim set up in the administration proceedings. as has been said before. to whom the creditor was compelled to look for payment. and co-related provisions of the Civil Code. subject only to the limitations which by law or by contract were imposed upon the deceased himself. Article 657 of the Civil Code provides that Los derechos a la succession de una persona se transmiten desde el momento de su muerte. Thus death created no new lien in favor of creditors upon the property of the deceased. there would be no difficulty in determining the respective rights of the various parties to this action. which he did not have in or to such property in the hands of the deceased. in the name of the heir. (Title 3. "with benefit of an inventory" he was not held liable for the debts and obligations of the deceased beyond the value of the property which came into his hands. both real and personal." in which case the extent of his liability was limited to the value of the estate which came into his hands. and article 661 provides thatLos herederos suceden al difunto por el hecho solo de su muerte en todos sus derechos y obligaciones.

wholly different from that in force in the various States from which the new system of administration of the estates of deceased persons was adopted. and especially in regard to rights of inheritance. Silvina Chio-Taysan. in whose name the land is registered. as defined in the Civil Code (art. taking respectively real or personal property by virtue of a will. the property of the deceased comes to him charged with the debts of the deceased. It must be admitted that we can not point out the specific section of the new Code of Civil Procedure which in express terms repeals the old law and formally enacts the new doctrine of succession just laid down. under the provisions of the new code. and on the other hand. to a greater or less degree. and that the Loan Company. or to hold that in such cases the provisions of substantive as well as procedural law in conflict or inconsistent with the provisions of the new Code of Procedure are repealed. and substitutes therefor a system similar to that generally adopted in the United States. most of its provisions having been borrowed word for word from the codes of one or other of the various States. the absolute owner of the tract of land in question. 733. while heredero in the Civil Code was applicable . became. as wholly inapplicable. by the mere fact of the death of Caballero. but we think that an examination of the various provisions of that code touching the administration of the estates of deceased person leaves no room for doubt that they do so by necessary implication. prescription. and we are of opinion that." as used in the new code. But both the substantive and procedural law touching rights of succession and their enforcement. and 749 of the Code of Civil Procedure. the heir is not a such personally responsible for the debts of the deceased. was entitled to rely on the properly noted entries in the land registry and that the company's mortgage deed from Chio-Taysan. which were in force in these Islands when the new Code of Civil Procedure went into effect. subject only to such liens thereon as may have existed prior thereto. and in most of its provisions closely adhered to American precedent. unless the provisions of Spanish procedural and substantive law. been repealed or modified by its enactment. or satisfaction in one or other of the modes recognized by law. 731. deceased. many irreconcilable conflicts are to be found between the provisions of the new and the old law. that. 695. clearly indicates that the provisions of articles 660 and 661 of the Civil Code have been abrogated. who must look to the heirs for the recovery of her debt. upon proof of such judicial declaration of heirship. The substantive law in force in these Islands being in many respects. the defendant in this action. 660). of which the plaintiffs are the duly appointed liquidators. so that he can not alienate or charge it free of such debts. in force when the new Code of Civil Procedure went into effect. 727. the word "heir" in the new code being technically and applicable only to a relative taking property of an intestate by virtue of the laws of descent. until and unless they are extinguished either by payment. have. 644. These provisions of the new code clearly demonstrate that the terms heredero and legatario. It substantially repeals in toto the proceedings prescribed under the old law for the administration of estates of deceased persons. read together with the remaining provisions for the administration of the estates of deceased persons. 729. in whole or in part. have been repealed or modified thereby. who was judicially declared to be the sole and universal heir of Avelina Caballero. so that it becomes necessary either to declare a great part of the provisions of the new Code of Procedure void and no effect. are not synonymous with the words "heir" and "legatee. The legislators who enacted this code were more especially acquainted with the American and English systems of legislation. or amended by the substitution of such other provisions as are clearly necessary as a basis upon which the new provisions of procedural law are predicated.It is evident therefore that. the personal obligations of the deceased also passing to her at the same time. devisee and legatee being reserved for all persons whether relatives or not. the register of deeds of the city of Manila properly entered Chio-Taysan in the land registry as the owner of this land by right of inheritance. An examination more especially of sections 597. could not be affected by the unrecorded claim of the indebtedness of the intervener.

or by an agreement in writing executed by all the heirs. and on the other hand.. (Pavia vs. where the legal proceedings are had looking to the settlement of testate or intestate estates. 70). his death having created a lien thereon for the benefit of creditor. either by a family council. it has provided machinery for the enforcement of the debts and other obligations of the deceased. the existence of the right may safely be denied. in express terms. and indeed an examination of the proceedings prescribed in the new Code of Civil Procedure for the administration and distribution of the estates of deceased persons leaves no room for doubt that those proceedings are exclusive of all other judicial proceedings looking to that end. the real estate at least was charged in like manner with the debts of the deceased. made chargeable with the payment of these debts." under the provisions of the new code. It appears also from an examination of these provisions that the legislature has provided no machinery whereby an absolute right on the part of the heir to succeed by the mere fact of death to all the rights and property of the deceased may be enforced. but as debt or obligations of the deceased. the property both real and personal being. without previous payment or provision of the payment of the debts. may be said to be recognized and created by the provisions of the new code. 727 and 729). that claim is a right recognized and established by the law. in those cases where settlement of an intestate estate may be made without legal proceedings.not only to one who would be called an "heir. not by proceedings directed against the heir. or in so far as they give to the heredero the reciprocal right to receive the property of the deceased. for it passes to the heir. and the new code having provided a remedy whereby the property of the deceased may always be subjected to the payment of his debts in whatever hands it may be found. not as debts or obligations of the heir. to the exclusion of the heirs. for the payment of the debts of the deceased. to the payment of which the property of the deceased may be subjected wherever it be found. 8 Phil. De la Rosa. that a judgement in an action for the declaration of heirship in favor of one or more heirs could not entitle such persons to be recognized as the owner or owners of the property of the deceased on the same terms as such property was held by the deceased. whether relative or not. created by the mere fact of his death. The new Code of Procedure furnishing no remedy whereby the provisions of article 661 of the of the Civil Code may be enforced. and supersede the judicial proceeding for the declaration of heirship. the executor or administrator having the right to the possession of the real as well as the personal property. but by proceedings looking directly to the subjection of the property of the deceased to the payment of such claims. . burdened with all the debts of the deceased. at least so far as that proceeding served as a remedy whereby the right of specific persons to succeed to the rights and obligations of the deceased as his heirs might be judicially determined and enforced. at least to the extent of the value of the property received from the estate. For practical purposes it may well be said that in the eye of the law. "notwithstanding any transfers thereof that may have been made. It is evident. these provisions of article 661 may properly be held to have been abrogated. Rep. who took what might be called "a residuary estate under a will" ( el que sucede a titulo universal). under the new code. as recognized in the old procedure." and we think the inference is clear that the legislator in this section recognizes and affirms the doctrine that. Thus section 597 expressly provides that. in so far as they impose upon the heredero (heir) the duty of assuming as a personal obligation all the debts of the deceased. So it will be found that. the right of a creditor to a lien upon the property of the deceased. as known under the Spanish law. without such property being specifically subjected to the payment of the debts to the deceased by the very fact of his deceased. where there is no remedy to enforce an alleged right when it is invaded. prior to the date of such settlement. but also to one. and where the law furnishes a remedy whereby one may enforce a claim. provision is made for the recovery of claims against the deceased. so long as may be necessary for that purpose (secs. therefore. the real estate of the deceased remains charged with liability to creditors of the deceased for two years after the settlement.

second. be modified in accordance with the foregoing principles. deceased. in the light of the doctrine as to the law of succession as thus modified and amended by the new Code of Civil Procedure. Such provision for the protection of her rights having been made. by providing that the proceeds of the sale of the land under the foreclosure proceedings will be deposited with the clerk of the court. where it will be retained until the amount of the debt due the intervener and unpaid in the course of the administration of the estate of Avelina Caballero shall have been ascertained. and that this lien ought to have and has priority to any lien created upon this property by the heir of the deceased. is clearly entitled to so much of the relief prayed for as will have the effect of preventing the application of the proceeds of the sale of this land under foreclosure proceedings to the payment of debts contracted by the heir until and unless it shall appear that the residue of the estate of the deceased is sufficient to satisfy her claim. the residue.Examining the facts in the case at bar. she has no proper interest in the rescission of the mortgage contract between plaintiff and defendant. it is evident that her death created a lien upon her property in favor of the intervener Francisca Jose. for the payment of the debt contracted by her during her lifetime. The judgment of the trial court should. if any. improperly made. Francisca Jose. and finally. the intervener to have her costs in this action in both instances. art. to be paid to the estate of the deceased. was subject to the prior lien of the intervener. if any. that such entry. So ordered. 33). for the payment of her debt. therefore. of the claim of the intervener. Silvina Chio-Taysan. and her rights having been secured. to pay the debt due the plaintiff in this action. but we think that the intervener. and the record will be returned to the trial court where judgment will be entered modifying the judgment. to extinguish the unpaid residue. since a provision subjecting the land in question to the payment of her claim against the estate of Avelina Caballero. It is not necessary for us to consider the action of the court below in ordering the foreclosure of the mortgage. whereupon the said funds shall be applied: first. . which went into effect prior to the death of Avelina Caballero. who is seeking to subject the property of the deceased to the payment of her debt in the administration proceedings now pending. Francisca Jose. could not and did not prejudice the lien of the intervener. the other relief prayed for by her may properly be denied. and that the mortgage of the property of the deceased by her heir. for the debt due her by the deceased (Mortgage Law. could not and did not furnish a basis for an entry in the land registry of the name of Silvina Chio-Taysan as the absolute owner of the property of Avelina Caballero. or the cancellation of the inscription of the defendant's title as heir in the land registry. in so far as it affects the defendant Silvina Chio-Taysan who did not appeal. fully and sufficiently protects her rights in the premises. that the judicial declaration of heirship in favor of Silvina Chio-Taysan.

221 originally belonging to the spouses Severino Salak and Petra Garcia. defendants-appellees. 1944. on May 22. the Court finds the grounds of said motions well-taken. 1948. 1939. (deceased) substituted by PRIMA CARRILLO. and after proper proceedings. an expediente now close more than two years ago. 1945. 221 was originally owned by the spouses Severino Salak and Petra Garcia. were never registered in the office of the Registered of Deeds. plaintiff herein. this transaction.. 970 was issued in her name. 1943. on August 16. including lot No. DE CARRILLO. respectively. Aurea Sahagun.R.200 to spouses Pedro Magat and Filomena Silva. 221. This Court has no jurisdiction to entertain any collateral attack in the present action against the proceedings taken in the said Special Proceeding No. Severino Salak transferred his ½ interest in the property to Honaria Salak for the sum of P612. Besides judging from the facts alleged in the complaint. FRANCISCA SALAK DE PAZ. 1943. The facts alleged in the complaint are: lot No. intestate proceedings were instituted for the settlement and distribution of the estate of the deceased Severino Salak and Petra Garcia. 41453 of the register's office of Tarlac.632 with the consent of the surviving debtor Severino Salak. filed by defendant Francisca Salak de Paz and defendant spouses Gabino de Leon and Asuncion Reyes. Honoria Salak died single living as sole heir Agustina de Guzman. said spouses mortgaged said lot for the sum of P1. the mortgage having been registered in accordance with law. Defendants filed a motion to dismiss on the ground that the complaint does not state a cause of action. as well as the assignment of the mortgage credit. Francisca Salak acquired later the shares of the other heirs in said lot by virtue of which transfer certificate of title No.G. Severino Salak died on December 5. ET ALS. representing ½ of the consideration paid by her to the mortgagees Pedro Magat and Filomena Silva. the action filed by plaintiff would call necessarily for the undoing of all the proceedings taken in Special Proceedings No. 41453. their title being evidence by original Certificate of Title No. said lot was adjudicated to Ernesto Bautista. the cancellation of the lease executed on said lot in favor of the spouses Gabino de Leon and Asuncion Reyes as well as the mortgage executed thereon by the lessees in favor of the Rehabilitation Finance Corporation. plaintiff-appellant. on December 20. and the payment of damages suffered by the plaintiff. which motion the court granted in an order which reads as follows: Acting on the motions to dismiss dated November 16. nor annotated on the certificate of title No. Ramos for appellant. 1952 AGUSTINA DE GUZMAN VDA. BAUTISTA ANGELO. vs. 3. No. Pedro Magat and Filomena Silva assigned their mortgaged rights to Honaria Salak for the sum of P1. 1948. intestado de los finados Severino Salak y Petra Garcia. 3. It is admitted in the complaint that the property sought to be recovered by plaintiff from defendants in this present case had regularly been adjudicated by the Court in favor of the latter as heirs of the . J. Tomas Besa for appellees. Francisco M. while Honaria Salak died on January 13. and November 27. his wife having already died. Rita Sahagun and Francisca Salak in the proportion of ¼ interested each.: This is an action by the plaintiff against the defendant in the Court of First Instance of Tarlac seeking the reconveyance to the plaintiff of one-half (½) portion of lot No. L-4133 May 13.

Such being the case. and said proceedings closed and terminated. but it simply renders the transaction not binding against a third person because. as well as all obligations charged against the estate. This means that plaintiff can still press her claim against the heirs of the deceased Severino Salak who were made parties-defendants in this case. the Court dismisses the complaint with cost against the plaintiff. the operative act to bind the land is the act of registration(section 50.deceased Severino Salak and Petra Garcia after compliance with all the steps and proceedings established in the Rules of Court for the settlement of the estates of deceased. such technical deficiency does not render the transaction ineffective. . This means that property now sought to be recovered from the defendants was adjudicated in their favor after all claims. Let this case be remanded to the lower court for further proceedings. the same can be invoked against them or their privies. The claim of the plaintiff set up in the complaint should have been interposed during the pendency and progress of Special Proceeding No. and settled. For the present suffice it to state that the lower court erred in dismissing the complaint for the reasons set forth in its order subject of the present appeal. the property now in question can no longer be reached by the plaintiff upon the theory that it has been adjudicated to the heirs free from all lien or claim whatsoever. she can not now bring this action against the defendants. the order appealed from is reversed. 496). for it is clear that there exists no privity of contract between plaintiff and defendants upon which plaintiff can predicate her action against the present defendants. nor annotated on the Torrens Title covering it. and having failed to do so. the transaction being binding between the parties. One of the grounds which was considered by the lower court in dismissing the complaint is the fact that the property in question has already been the subject of adjudication in the intestate proceedings instituted for the settlement and distribution of the estate of the deceased Severino Salak and Petra Garcia. The fact that Francisca Salak bought the shares of her co-heirs in said property is of no moment because in so far as the portion of the land acquired by Honoria Salak is concerned. nor does it convert it into a mere monetary obligation. Francisca Salak can recoup what she has parted with from her co-heirs when the time for read judgment comes. IN VIEW OF ALL THE FOREGOING. Wherefore. so that. While we admit that the sale made by Severino Salak of his ½ undivided interest in the property to Honoria Salak. the properties now in the hands of the defendants are presumed to be free from all claims whatsoever. These heirs cannot escape the legal consequence of this transaction because they have inherited the property subject to the liability affecting their common ancestor. and having all the claims filed therein. indebtedness and obligations chargeable against the intestate estate of the deceased Severino Salak and Petra Garcia had been all paid and accounted for out of the estate of the deceased. has not been registered in the office of the Register of Deeds. predecessor in interest of the plaintiff. in the eyes of the law.). having said property been duly adjudicated in said intestate estate proceedings. passed upon. with costs against the appellees. This matter can be threshed out when the case is decided on the merits. Act No. but plaintiff not having done so. it is error to say that plaintiff should have filed her claim in the intestate proceedings of the late Severino Salak if she wanted to protect her interest in the land for. We do not subscribe to these findings of the court a quo. and the court a quo entertains the view that. The Court further holds that the claim of the plaintiff should have been claimed in said proceedings within the period prescribed by the Rules of Court. The case is now before this Court on Appeal taken by the plaintiff imputing the five errors to the court a quo. her claim is now barred and cannot be entertained. being considered. being a registered land. Said transaction however is valid and binding between the parties and can serve as basis to compel the register of deeds to make the necessary registration (id. 3.