Lee (President of Philinterlife and FLAG) v. RTC, Enderes [Feb 23, 2004]

Facts:

·         Dr. Juvencio P. Ortañez incorporated the Philippine International Life Insurance Company, Inc. on 1956. At the time of the company’s incorporation, Dr. Ortañez owned ninety percent (90%) of the subscribed capital stock.

·         On July 21, 1980, Dr. Ortañez died. He left behind a wife (Juliana Salgado Ortañez), three legitimate children (Rafael, Jose and Antonio Ortañez) and five illegitimate children by Ligaya Novicio (herein private respondent Ma. Divina Ortañez-Enderes and her siblings Jose, Romeo, Enrico Manuel and Cesar, all surnamed Ortañez).  <3 Peaches <3

·         Special administrators Rafael and Jose Ortañez submitted an inventory of the estate of their father which included 2,029 shares of stock in Philippine International Life Insurance Company, representing 50.725% of the company’s outstanding capital stock.

·         Juliana (wife) and Jose (legit child) sold 1,014 and 1,011 shares respectively to FLAG.  

·         The legal family entered into an extrajudicial settlement of the estate of Dr. Juvencio Ortañez, partitioning the estate among themselves. This was the basis of the number of shares separately sold by them.

·         The lower court declared the shares of stock as null and void. CA affirmed.

·         Meanwhile, the FLAG-controlled board of directors, increased the authorized capital stock of Philinterlife, diluting in the process the 50.725% controlling interest Dr. Juvencio Ortañez, in the insurance company. Enderes filed an action at the SEC. The SEC hearing officer dismissed the case acknowledging the jurisdiction of the civil courts.

·         Jose Lee and Alma Aggabao as president and secretary of Philinterlife ignored the orders nullifying the sales of the shares of stock.  <3 Peaches <3

Issue:

·         WON the sale of the shares of stock of Philinterlife is void. (YES)

Ruling:

·         YES. Our jurisprudence is clear that

o    (1) any disposition of estate property by an administrator or prospective heir pending final adjudication requires court approval and

o    (2) any unauthorized disposition of estate property can be annulled by the probate court, there being no need for a separate action to annul the unauthorized disposition.

·         An heir can sell his right, interest, or participation in the property under administration under NCC 533 which provides that possession of hereditary property is deemed transmitted to the heir without interruption from the moment of death of the decedent. However, an heir can only alienate such portion of the estate that may be allotted to him in the division of the estate by the probate or intestate court after final adjudication, that is, after all debtors shall have been paid or the devisees or legatees shall have been given their shares. This means that an heir may only sell his ideal or undivided share in the estate, not any specific property therein.  <3 Peaches <3

·         It goes without saying that the increase in Philinterlife’s authorized capital stock, approved on the vote of petitioners’ non-existent shareholdings and obviously calculated to make it difficult for Dr. Ortañez’s estate to reassume its controlling interest in Philinterlife, was likewise void ab initio.

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Lorenzo vs. Posadas Jr. [June 18, 1937]

Lorenzo vs. Posadas Jr. [June 18, 1937]

<3 Fluffy Peaches <3

Facts:

·         Thomas Hanley died, leaving a will and a considerable amount of real and personal properties. Proceedings for the probate of his will and the settlement and distribution of his estate were begun in the CFI of Zamboanga. The will was admitted to probate.

·         The CFI considered it proper for the best interests of the estate to appoint a trustee to administer the real properties which, under the will, were to pass to nephew Matthew ten years after the two executors named in the will was appointed trustee. Moore acted as trustee until he resigned and the plaintiff Lorenzo herein was appointed in his stead.

·         During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue (Posadas) assessed against the estate an inheritance tax, together with the penalties for deliquency in payment. Lorenzo paid said amount under protest, notifying Posadas at the same time that unless the amount was promptly refunded suit would be brought for its recovery. Posadas overruled Lorenzo’s protest and refused to refund the said amount. Plaintiff went to court. The CFI dismissed Lorenzo’s complaint and Posadas’ counterclaim. Both parties appealed to this court.

Issues and Ruling:

1. When does the inheritance tax accrue and when must it be satisfied?

·         The accrual of the inheritance tax is distinct from the obligation to pay the same.

·         NCC 657: “the rights to the succession of a person are transmitted from the moment of his death.” “In other words... the heirs succeed immediately to all of the property of the deceased ancestor. 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.”

·         Whatever may be the time when actual transmission of the inheritance takes place, succession takes place in any event at the moment of the decedent’s death. The time when the heirs legally succeed to the inheritance may differ from the time when the heirs actually receive such inheritance. ” Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of the date.

<3 Fluffy Peaches <3

·         From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation to pay the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No. 3031, in relation to section 1543 of the same Code. The two sections follow:

SEC. 1543. Exemption of certain acquisitions and transmissions. — The following shall not be taxed: x x x

(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees.

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor. xx

SEC. 1544. When tax to be paid. — The tax fixed in this article shall be paid:

(a) In the second and third cases of the next preceding section, before entrance into possession of the property.

·         The instant case fall under subsection (b), of section 1544, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax should have been paid before the delivery of the properties in question to Moore as trustee.

2. Should the inheritance tax be computed on the basis of the value of the estate at the time of the testator’s death, or on its value ten years later?

·         If death is the generating source from which the power of the estate to impose inheritance taxes takes its being and if, upon the death of the decedent, succession takes place and the right of the estate to tax vests instantly, the tax should be measured by the value of the estate as it stood at the time of the decedent’s death, regardless of any subsequent contingency value of any subsequent increase or decrease in value

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Conde v. Abaya [March 23, 1909]

 Conde v. Abaya [March 23, 1909]

Facts:

·         Casiano Abaya died in 1899 unmarried however leaving two unaknowledged children by Paula Conde. The two children died as minors in 1902 and 1903. The mother sued for the settlement of the intestate estate of Casiano along with the acknowledgment of the two as natural children of the deceased.

·         The trial court, with the opposition of the Roman Abaya, brother of the deceased, rendered judgment bestowing the estate of Casiano to Conde as legitimate heir of the decedent's natural children.

Issues:

1. WON an ordinary action for the acknowledgment of natural children may be brought in special probate proceedings. (YES)

·         Section 782 of the Code of Civil Procedure:

o    If there shall be a controversy before the Court of First Instance as to who the lawful heirs of the deceased person are, or as to the distributive share to which each person is entitled under the law, the testimony as to such controversy shall be taken in writing by the judge, under oath, and signed by the witness. Any party in interest whose distributive share is affected by the determination of such controversy, may appeal from the judgment of the Court of First Instance determining such controversy to the Supreme Court, within the time and in the manner provided in the last preceding section.P3ach3s

2.  WON the mother of a natural child now deceased, but who survived the person who, it is claimed, was his natural father, also deceased, may bring an action for the acknowledgment of the natural filiation in favor of such child?  in order to appear in his behalf to receive the inheritance from the person who is supposed to be his natural father. (NO) #peaches

·         The power to transmit the right of such action by the natural child to his descendants cannot be sustained under the law, and still less to his mother.

CIVIL CODE RULES FOR FILIATION
	Legitimate Child	Illegitimate Child
Period when it can be filed	·         Lasts during the whole lifetime of the child (NCC 118) ·         E: Within 5 years should the child die (NCC 118) o    Minor o    Insane	·         GR: Lasts ONLY during the lifetime of the presumed parent ·         E: o    Presumed parent died during the minority of the child [within 4 years] o    An instrument where the parent expressly acknowledged the child [six months after discover] (NCC 137)
Who may bring the action	·         GR: Child himself ·         E: Transmitted to its heirs should the child die: o    Minor o    Insane o    Child dies after instituting the action	·         Code is silent

·         The court concluded that the right is not transmissible to the heirs of the natural child by the following argument: It cannot place a natural child on a better position by assuming that the right is transmitted to the heirs as a general rule when it only grants exceptions to a legitimate child

Torres Dissenting Opinion:

·         While for those of the natural child, there is no provision in the code authorizing the same, although on the other hand there is none that prohibits it. As a solution, the right of action to claim acknowledgment of a natural child is transmitted by analogy to his heirs on the same conditions and terms that it is transmitted to the descendants of the legitimate child under article 118, but no more.

·         Since the children died while they were minors, they should be allowed to file an action.

Side Notes:

FAMILY CODE RULES FOR FILIATION[1]
	Legitimate Child	Illegitimate Child
Period when it can be filed	·         Lasts during the whole lifetime of the child (FC 173) ·         E: Within 5 years should the child die (FC 173) o    Minor o    Insane	·         If it’s based on a primary evidence = same way as legitimate child ·         If it’s based on a secondary evidence = within the lifetime of the parent
Who may bring the action	·         GR: Child himself ·         E: Transmitted to its heirs should the child die: o    Minor o    Insane o    Child dies after instituting the action	·         FC 175 states that it may be “established in the same way as a legitimate child”. It may be inferred that as long as the action is based on primary evidence it may be transmitted to the heirs of the child.

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[1] Types of Evidence to prove filiation

A.     Primary

1.        Record of birth in civil register or final judgments

2.        Admission of legitimate filiation in a public document or a private handwritten instrument signed by the parent concerned

B.     Secondary

1.        Open and continuous possession of the status of a legitimate child

2.        Other means allowed by the rules of court and special laws

o    Baptismal certificate of child

o    Judicial admission

o    Family bible wherein the name of the child is entered

o    Common reputation respecting pedigree

o    Admission by silence

o    Testimonies of witnesses

o    Other kinds of proof admissible under Rule 130 of the Revised Rules of Court

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Alvarez v. IAC [May 7, 1990]

·         Aniceto Yanes owned 2 parcels of land Lot 773-A and Lot 773-B.

·         Rufino and his children left the province to settle in other places as a result of the outbreak of World War II. According to Estelita, from the “Japanese time up to peace time”, they did not visit the parcels of land in question but “after liberation”, when her brother went there to get their share of the sugar produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot 773.

·         After Fuentebella’s death, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. On May 26, 1960, Teodora Yanes and the children of her brother Rufino filed a complaint against Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the “return” of the ownership and possession of Lots 773 and 823.

·         During the pendency of said case, Alvarez sold the Lots for P25,000.00 to Dr. Rodolfo Siason. CFI rendered judgment ordering defendant Rosendo Alvarez to reconvey to plaintiffs the lots.

Issue: 

·         WON the liability of Rosendo Alvarez arising from the sale of the lots could be transmitted by operation of law to the petitioners without violation of law and due process.

Ruling

·         The doctrine obtaining in this jurisdiction is on the general transmissibility of the rights and obligations of the deceased to his legitimate children and heirs.

·         The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from the estate is ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive.

·         Petitioners being the heirs of Alvarez, they cannot escape the legal consequences of their father’s transaction, which gave rise to the present claim for damages.

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