G.R. No.

L-36770

November 4, 1932

LUIS W. DISON, plaintiff-appellant, vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendantappellant. BUTTE, J.: This is an appeal from the decision of the Court of First Instance of Pampanga in favor of the defendant Juan Posadas, Jr., Collector of Internal Revenue, in a suit filed by the plaintiffs, Luis W. Dison, for the recovery of an inheritance tax in the sum of P2,808.73 paid under protest. The petitioner alleged in his complaint that the tax is illegal because he received the property, which is the basis of the tax, from his father before his death by a deed of gift inter vivos which was duly accepted and registered before the death of his father. The defendant answered with a general denial and with a counterdemand for the sum of P1,245.56 which it was alleged is a balance still due and unpaid on account of said tax. The plaintiff replied to the counterdemand with a general denial. The courta quo held that the cause of action set up in the counterdemand was not proven and dismissed the same. Both sides appealed to this court, but the cross-complaint and appeal of the Collector of Internal Revenue were dismissed by this court on March 17, 1932, on motion of the Attorney-General.1awphil.net The only evidence introduced at the trial of this cause was the proof of payment of the tax under protest, as stated, and the deed of gift executed by Felix Dison on April 9, 1928, in favor of his sons Luis W. Dison, the plaintiffappellant. This deed of gift transferred twenty-two tracts of land to the donee, reserving to the donor for his life the usufruct of three tracts. This deed was acknowledged by the donor before a notary public on April 16, 1928. Luis W. Dison, on April 17, 1928, formally accepted said gift by an instrument in writing which he acknowledged before a notary public on April 20, 1928. At the trial the parties agreed to and filed the following ingenious stipulation of fact: 1. That Don Felix Dison died on April 21, 1928; 2. That Don Felix Dison, before his death, made a gift inter vivos in favor of the plaintiff Luis W. Dison of all his property according to a deed of gift (Exhibit D) which includes all the property of Don Felix Dizon; 3. That the plaintiff did not receive property of any kind of Don Felix Dison upon the death of the latter; 4. That Don Luis W. Dison was the legitimate and only child of Don Felix Dison. It is inferred from Exhibit D that Felix Dison was a widower at the time of his death. The theory of the plaintiff-appellant is that he received and holds the property mentioned by a consummated gift and that Act No. 2601 (Chapter 40 of the Administrative Code) being the inheritance tax statute, does not tax gifts. The provision directly here involved is section 1540 of the Administrative Code which reads as follows: Additions of Gifts and Advances. After the aforementioned deductions have been made, there shall be added to the resulting amount the value of all gifts or advances made by the predecessor to any of those who, after his death, shall prove to be his heirs, devises, legatees, or donees mortis causa. The question to be resolved may be stated thus: Does section 1540 of the Administrative Code subject the plaintiffappellant to the payment of an inheritance tax?

The appellant argues that there is no evidence in this case to support a finding that the gift was simulated and that it was an artifice for evading the payment of the inheritance tax, as is intimated in the decision of the court below and the brief of the Attorney-General. We see no reason why the court may not go behind the language in which the transaction is masked in order to ascertain its true character and purpose. In this case the scanty facts before us may not warrant the inference that the conveyance, acknowledged by the donor five days before his death and accepted by the donee one day before the donor's death, was fraudulently made for the purpose of evading the inheritance tax. But the facts, in our opinion, do warrant the inference that the transfer was an advancement upon the inheritance which the donee, as the sole and forced heir of the donor, would be entitled to receive upon the death of the donor. The argument advanced by the appellant that he is not an heir of his deceased father within the meaning of section 1540 of the Administrative Code because his father in his lifetime had given the appellant all his property and left no property to be inherited, is so fallacious that the urging of it here casts a suspicion upon the appellants reason for completing the legal formalities of the transfer on the eve of the latter's death. We do not know whether or not the father in this case left a will; in any event, this appellant could not be deprived of his share of the inheritance because the Civil Code confers upon him the status of a forced heir. We construe the expression in section 1540 "any of those who, after his death, shall prove to be his heirs", to include those who, by our law, are given the status and rights of heirs, regardless of the quantity of property they may receive as such heirs. That the appellant in this case occupies the status of heir to his deceased father cannot be questioned. Construing the conveyance here in question, under the facts presented, as an advance made by Felix Dison to his only child, we hold section 1540 to be applicable and the tax to have been properly assessed by the Collector of Internal Revenue. This appeal was originally assigned to a Division of five but referred to the court in banc by reason of the appellant's attack upon the constitutionality of section 1540. This attack is based on the sole ground that insofar as section 1540 levies a tax upon gifts inter vivos, it violates that provision of section 3 of the organic Act of the Philippine Islands (39 Stat. L., 545) which reads as follows: "That no bill which may be enacted into law shall embraced more than one subject, and that subject shall be expressed in the title of the bill." Neither the title of Act No. 2601 nor chapter 40 of the Administrative Code makes any reference to a tax on gifts. Perhaps it is enough to say of this contention that section 1540 plainly does not tax gifts per se but only when those gifts are made to those who shall prove to be the heirs, devisees, legatees or donees mortis causa of the donor. This court said in the case of Tuason and Tuason vs. Posadas 954 Phil., 289):lawphil.net When the law says all gifts, it doubtless refers to gifts inter vivos, and not mortis causa. Both the letter and the spirit of the law leave no room for any other interpretation. Such, clearly, is the tenor of the language which refers to donations that took effect before the donor's death, and not to mortis causa donations, which can only be made with the formalities of a will, and can only take effect after the donor's death. Any other construction would virtually change this provision into: ". . . there shall be added to the resulting amount the value of all gifts mortis causa . . . made by the predecessor to those who, after his death, shall prove to be his . . . donees mortis causa." We cannot give to the law an interpretation that would so vitiate its language. The truth of the matter is that in this section (1540) the law presumes that such gifts have been made in anticipation of inheritance, devise, bequest, or gift mortis causa, when the donee, after the death of the donor proves to be his heir, devisee or donee mortis causa, for the purpose of evading the tax, and it is to prevent this that it provides that they shall be added to the resulting amount." However much appellant's argument on this point may fit his preconceived notion that the transaction between him and his father was a consummated gift with no relation to the inheritance, we hold that there is not merit in this attack upon the constitutionality of section 1540 under our view of the facts. No other constitutional questions were raised in this case. The judgment below is affirmed with costs in this instance against the appellant. So ordered. G.R. No. L-34937 March 13, 1933

CONCEPCION VIDAL DE ROCES and her husband, MARCOS ROCES, and ELVIRA VIDAL DE RICHARDS, plaintiff-appellants, vs.JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee. IMPERIAL, J.: The plaintiffs herein brought this action to recover from the defendant, Collector of Internal Revenue, certain sums of money paid by them under protest as inheritance tax. They appealed from the judgment rendered by the Court of First Instance of Manila dismissing the action, without costs. On March 10 and 12, 1925, Esperanza Tuazon, by means of public documents, donated certain parcels of land situated in Manila to the plaintiffs herein, who, with their respective husbands, accepted them in the same public documents, which were duly recorded in the registry of deeds. By virtue of said donations, the plaintiffs took possession of the said lands, received the fruits thereof and obtained the corresponding transfer certificates of title. On January 5, 1926, the donor died in the City of Manila without leaving any forced heir and her will which was admitted to probate, she bequeathed to each of the donees the sum of P5,000. After the estate had been distributed among the instituted legatees and before delivery of their respective shares, the appellee herein, as Collector of Internal Revenue, ruled that the appellants, as donees and legatees, should pay as inheritance tax the sums of P16,673 and P13,951.45, respectively. Of these sums P15,191.48 was levied as tax on the donation to Concepcion Vidal de Roces and P1,481.52 on her legacy, and, likewise, P12,388.95 was imposed upon the donation made to Elvira Vidal de Richards and P1,462.50 on her legacy. At first the appellants refused to pay the aforementioned taxes but, at the insistence of the appellee and in order not to delay the adjudication of the legacies, they agreed at last, to pay them under protest. The appellee filed a demurrer to the complaint on the ground that the facts alleged therein were not sufficient to constitute a cause of action. After the legal questions raised therein had been discussed, the court sustained the demurrer and ordered the amendment of the complaint which the appellants failed to do, whereupon the trial court dismissed the action on the ground that the afore- mentioned appellants did not really have a right of action. In their brief, the appellants assign only one alleged error, to wit: that the demurrer interposed by the appellee was sustained without sufficient ground. The judgment appealed from was based on the provisions of section 1540 Administrative Code which reads as follows: SEC. 1540. Additions of gifts and advances. After the aforementioned deductions have been made, there shall be added to the resulting amount the value of all gifts or advances made by the predecessor to any those who, after his death, shall prove to be his heirs, devisees, legatees, or donees mortis causa. The appellants contend that the above-mentioned legal provision does not include donations inter vivos and if it does, it is unconstitutional, null and void for the following reasons: first, because it violates section 3 of the Jones Law which provides that no law should embrace more than one subject, and that subject should be expressed in the title thereof; second that the Legislature has no authority to impose inheritance tax on donations inter vivos; and third, because a legal provision of this character contravenes the fundamental rule of uniformity of taxation. The appellee, in turn, contends that the words "all gifts" refer clearly to donations inter vivos and, in support of his theory, cites the doctrine laid in the case of Tuason and Tuason vs. Posadas (54 Phil., 289). After a careful study of the law and the authorities applicable thereto, we are the opinion that neither theory reflects the true spirit of the aforementioned provision. The gifts referred to in section 1540 of the Revised Administration Code are, obviously, those donations inter vivos that take effect immediately or during the lifetime of the donor but are made in consideration or in contemplation of death. Gifts inter vivos, the transmission of which is not made in contemplation of the donor's death should not be understood as included within the said legal provision for the reason that it

would amount to imposing a direct tax on property and not on the transmission thereof, which act does not come within the scope of the provisions contained in Article XI of Chapter 40 of the Administrative Code which deals expressly with the tax on inheritances, legacies and other acquisitions mortis causa. Our interpretation of the law is not in conflict with the rule laid down in the case of Tuason and Tuason vs. Posadas, supra. We said therein, as we say now, that the expression "all gifts" refers to gifts inter vivos inasmuch as the law considers them as advances on inheritance, in the sense that they are gifts inter vivos made in contemplation or in consideration of death. In that case, it was not held that that kind of gifts consisted in those made completely independent of death or without regard to it. Said legal provision is not null and void on the alleged ground that the subject matter thereof is not embraced in the title of the section under which it is enumerated. On the contrary, its provisions are perfectly summarized in the heading, "Tax on Inheritance, etc." which is the title of Article XI. Furthermore, the constitutional provision cited should not be strictly construed as to make it necessary that the title contain a full index to all the contents of the law. It is sufficient if the language used therein is expressed in such a way that in case of doubt it would afford a means of determining the legislators intention. (Lewis' Sutherland Statutory Construction, Vol. II, p. 651.) Lastly, the circumstance that the Administrative Code was prepared and compiled strictly in accordance with the provisions of the Jones Law on that matter should not be overlooked and that, in a compilation of laws such as the Administrative Code, it is but natural and proper that provisions referring to diverse matters should be found. (Ayson and Ignacio vs. Provincial Board of Rizal and Municipal Council of Navotas, 39 Phil., 931.) The appellants question the power of the Legislature to impose taxes on the transmission of real estate that takes effect immediately and during the lifetime of the donor, and allege as their reason that such tax partakes of the nature of the land tax which the law has already created in another part of the Administrative Code. Without making express pronouncement on this question, for it is unnecessary, we wish to state that such is not the case in these instance. The tax collected by the appellee on the properties donated in 1925 really constitutes an inheritance tax imposed on the transmission of said properties in contemplation or in consideration of the donor's death and under the circumstance that the donees were later instituted as the former's legatees. For this reason, the law considers such transmissions in the form of gifts inter vivos, as advances on inheritance and nothing therein violates any constitutional provision, inasmuch as said legislation is within the power of the Legislature. Property Subject to Inheritance Tax. The inheritance tax ordinarily applies to all property within the power of the state to reach passing by will or the laws regulating intestate succession or by gift inter vivos in the manner designated by statute, whether such property be real or personal, tangible or intangible, corporeal or incorporeal. (26 R.C.L., p. 208, par. 177.) In the case of Tuason and Tuason vs. Posadas, supra, it was also held that section 1540 of the Administrative Code did not violate the constitutional provision regarding uniformity of taxation. It cannot be null and void on this ground because it equally subjects to the same tax all of those donees who later become heirs, legatees or donees mortis causa by the will of the donor. There would be a repugnant and arbitrary exception if the provisions of the law were not applicable to all donees of the same kind. In the case cited above, it was said: "At any rate the argument adduced against its constitutionality, which is the lack of Uniformity, does not seem to be well founded. It was said that under such an interpretation, while a donee inter vivos who, after the predecessor's death proved to be an heir, a legatee, or a donee mortis causa, would have to pay the tax, another donee inter vivos who did not prove to he an heir, a legatee, or a donee mortis causa of the predecessor, would be exempt from such a tax. But as these are two different cases, the principle of uniformity is inapplicable to them." The last question of a procedural nature arising from the case at bar, which should be passed upon, is whether the case, as it now stands, can be decided on the merits or should be remanded to the court a quo for further proceedings. According to our view of the case, it follows that, if the gifts received by the appellants would have the right to recover the sums of money claimed by them. Hence the necessity of ascertaining whether the complaint contains an allegation to that effect. We have examined said complaint and found nothing of that nature. On the contrary, it be may be inferred from the allegations contained in paragraphs 2 and 7 thereof that said donations inter vivos were made in consideration of the donor's death. We refer to the allegations that such

transmissions were effected in the month of March, 1925, that the donor died in January, 1926, and that the donees were instituted legatees in the donor's will which was admitted to probate. It is from these allegations, especially the last, that we infer a presumption juris tantum that said donations were made mortis causa and, as such, are subject to the payment of inheritance tax. Wherefore, the demurrer interposed by the appellee was well-founded because it appears that the complaint did not allege fact sufficient to constitute a cause of action. When the appellants refused to amend the same, spite of the court's order to that effect, they voluntarily waived the opportunity offered them and they are not now entitled to have the case remanded for further proceedings, which would serve no purpose altogether in view of the insufficiency of the complaint. Wherefore, the judgment appealed from is hereby affirmed, with costs of this instance against the appellants. So ordered. G.R. No. L-15939 January 31, 1966

Neither did the document operate to vest possession upon Doa Estela Magbanua, in view of the express condition that (paragraph 3) if at the date of her death the donor had not transferred, sold, or conveyed one-half of lot 58 of the Pototan Cadastre to other persons or entities, the donee would be bound to pay to Caridad Ubalde, married to Tomas Pedrola, the amount of P600.00, and such payment was to be made on the date the donee took possession of Lot No. 58. As the obligation to pay the legacy to Caridad Ubalde would not definitely arise until after the death of the donor, because only by then would it become certain that the "donor" could not transfer the property to someone else, and such payment must precede the taking possession of the property "donated", it necessarily follows that the "donee's" taking of possession could not occur before the death of the donor. It being thus clear that the disposition contained in the deed is one that produces no effect until the death of the grantor, we are clearly faced by an act mortis causa of the Roman and Spanish law. We thus see no need of resorting to American authorities as to the import of the reservation of the donor's right to dispose of the donated property, for the Spanish authorities are very clear on this point: Desde el momento en que la muerte del donante es la que determina la adquisicion o el derecho a los bienes; desde el montento en que la disposicion puede ser revocada voluntariamente , se salva la linea divisoria entre unos y otros actos: la donacion equivale a un legado; mas aun que esto: es un legado en realidad. (5 Manresa, 5th Ed., p. 107) Ahora bien: si el mal llamado donante no solo dilata la fecha de la ejecucion para el momento de su muerte, sino que ademas se reserva la facultad de revocar a su arbitrio la disposicion , entonces el acto no es valido bajo la forma de contrato; hay en realidad una disposicion mortis causa que exige las solemnidades del testamento. (V Manresa, 5th Ed., p. 109) (Emphasis supplied) The presence of an acceptance is but a consequence of the erroneous concept of the true nature of the juridical act, and does not indicate that in the same is a true donation inter vivos. Appellant Magbanua further argues that the reserved power of the donor to convey the donated property to other parties during her lifetime is but a resolutory condition (albeit a potestative one) that confirms the passing of the title to the donee. In reality, this argument is a veritable petitio principii; it takes for granted what has to be proved, i.e., that some proprietary right has passed under the terms of the deed, which, as we have shown, is not true until the donor has died. It is highly illuminating to compare the condition imposed in the deed of donation of December 28, 1949 with that established in the contract dealt with in Taylor vs. Uy Tieng Piao & Tau Liuan, 43 Phil. 874, invoked by appellants. In the alleged deed of donation of December 28, 1949, the late Doa Carmen Ubalde imposed expressly that: Que antes de su muerte, la Donante podra enajenar, vender, traspasar e hipotecar a cualesquiera personas o entidades los bienes aqui donados a favor de la Donataria en concepto de Donacion mortis causa. In the Taylor vs. Uy Tieng Piao case, on the other hand, the condition read: It is understood and agreed that should the machinery to be installed in said factory fail, for any reason, to arrive, in the City of Manila within the period of six (6) months from date hereof, this contract may be cancelled by the party of the second part at its option, such cancellation, however, not to occur before the expiration of such six (6) months. (pp. 874-875, cas. cit.). In the Uy Tieng Piao case the contract could only be cancelled after six months, so that there could be no doubt that it was in force at least for that long, and the optional cancellation can be viewed as a resolutory condition (or

ANGELES UBALDE PUIG, ET AL., plaintiffs-appellants, vs.ESTELLA MAGBANUA PEAFLORIDA, ET AL., defendants-appellants.

RESOLUTION (Main opinion was promulgated on November 29, 1965). REYES, J.B.L., J.: Defendants-appellants Estela Magbanua Peaflorida, et al., insist that the reservation by the donor of the right to dispose of the property during her lifetime in the deed of December 28, 1949 indicates that title had passed to the donee in her lifetime, otherwise, it is argued, the reservation would be superfluous, and they cite American authorities in support. This thesis would be plausible if the reservation of the power to dispose were the only indication to be considered in deciding whether the donation of December 28, 1949 was mortis causa or inter vivos. But such is not the case. The Court in its decision took to account not only the foregoing circumstance but also the fact that the deceased expressly and consistently declared her conveyance to be one of donation mortis causa, and further forbade the registration of the deed until after her death. All these features concordantly indicated that the conveyance was not intended to produce any definitive effects, nor to finally pass any interest to the grantee, except from and after the death of the grantor. We see nothing in the deed itself to indicate that any right, title or interest in the properties described was meant to be transferred to Doa Estela Magbanua prior to the death of the grantor, Carmen Ubalde Vda. de Parcon. Not ownership, certainly, for the stipulation: Que esta escritura de donacion mortis causa no se registrara en la oficina del Registrador de Titulos de Iloilo sino despues del fallecimiento de la Donante necessarily meant, according to section 50 of the Land Registration Act, that the deed in question should not take effect as a conveyance nor bind the land until after the death of the "donor".

more properly, a non-retroactive revocatory one); but no such restriction limited the power of the donor, Doa Carmen Ubalde, to set at naught the alleged conveyance in favor of Doa Estela Magbanua by conveying the property to other parties at any time, even at the very next instant after executing the donation, if she so chose. It requires no argument to demonstrate that the power, as reserved in the deed, was a power to destroy the donation at any time, and that it meant that the transfer is not binding on the grantor until her death made it impossible to channel the property elsewhere. Which, in the last analysis, as held in our main decision, signifies that the liberality is testamentary in nature, and must appear with the solemnities required of last wills and testaments in order to be legally valid. Wherefore, the motion to reconsider is denied. G.R. No. L-9374 February 16, 1915

It says in its opinion: "This purports to be an action for partition, brought against an heir by his coheirs. The complaint, however, fails to comply with Code Civ., Pro. sec. 183, in that it does not 'contain an adequate description of the real property of which partition is demanded.' Because of this defect (which has not been called to our attention and was discovered only after the cause was submitted) it is more than doubtful whether any relief can be awarded under the complaint, except by agreement of all the parties." This alleged defect of the complaint was made one of the two bases for the dismissal of the action. We do not regard this as sufficient reason for dismissing the action. It is the doctrine of this court, set down in several decisions, Lizarraga Hermanos vs. Yap Tico, 24 Phil. Rep., 504, that, even though the complaint is defective to the extent of failing in allegations necessary to constitute a cause of action, if, on the trial of the cause, evidence is offered which establishes the cause of action which the complaint intended to allege, and such evidence is received without objection, the defect is thereby cured and cannot be made the ground of a subsequent objection. If, therefore, evidence was introduced on the trial in this case definitely and clearly describing the real estate sought to be partitioned, the defect in the complaint was cured in that regard and should not have been used to dismiss the action. We do not stop to inquire whether such evidence was or was not introduced on the trial, inasmuch as this case must be turned for a new trial with opportunity to both parties to present such evidence as is necessary to establish their respective claims. The court in its decision further says: "It will be noticed that the provision above quoted refers exclusively to real estate. . . . It is, in other words, an exclusive real property action, and the institution thereof gives the court no jurisdiction over chattels. . . . But no relief could possibly be granted in this action as to any property except the last (real estate), for the law contemplated that all the personal property of an estate be distributed before the administration is closed. Indeed, it is only in exceptional cases that the partition of the real estate is provided for, and this too is evidently intended to be effected as a part of the administration, but here the complaint alleges that the estate was finally closed on December 9, 1911, and we find upon referring to the record in that case that subsequent motion to reopen the same were denied; so that the matter of the personal property at least must be considered res judicata (for the final judgment in the administration proceedings must be treated as concluding not merely what was adjudicated, but what might have been). So far, therefore, as the personal property at least is concerned, plaintiffs' only remedy was an appeal from said order." We do not believe that the law is correctly laid down in this quotation. The courts of the Islands have jurisdiction to divide personal property between the common owners thereof and that power is as full and complete as is the power to partition real property. If an actual partition of personal property cannot be made it will be sold under the direction of the court and the proceeds divided among the owners after the necessary expenses have been deducted. The administration of the estate of the decedent consisted simply, so far as the record shows, in the payment of the debts. No division of the property, either real or personal, seems to have been made. On the contrary, the property appears, from the record, to have been turned over to the heirs in bulk. The failure to partition the real property may have been due either to the lack of request to the court by one or more of the heirs to do so, as the court has no authority to make a partition of the real estate without such request; or it may have been due to the fact that all the real property of decedent had been sold under pacto de retro and that, therefore, he was not the owner of any real estate at the time of his death. As to the personal property, it does not appear that it was disposed of in the manner provided by law. (Sec. 753, Code of Civil Procedure.) So far as this action is concerned, however, it is sufficient for us to know that none of the property was actually divided among the heirs in the administration proceeding and that they remain coowners and tenants-in- common thereof at the present time. To maintain an action to partition real or personal property it is necessary to show only that it is owned in common. The order finally closing the administration and discharging the administrator, referred to in the opinion of the trial court, has nothing to do with the division of either the real or the personal property. The heirs have the right to ask the probate court to turn over to them both the real and personal property without division; and where that request is unanimous it is the duty of the court to comply with it, and there is nothing in section 753 of the Code of Civil Procedure which prohibits it. In such case an order finally settling the estate and discharging the administrator

FRANCISCO DEL VAL, ET AL., plaintiffs-appellants, vs.ANDRES DEL VAL, defendant-appellee. MORELAND, J.: This is an appeal from a judgment of the Court of First Instance of the city of Manila dismissing the complaint with costs. The pleadings set forth that the plaintiffs and defendant are brother and sisters; that they are the only heirs at law and next of kin of Gregorio Nacianceno del Val, who died in Manila on August 4, 1910, intestate; that an administrator was appointed for the estate of the deceased, and, after a partial administration, it was closed and the administrator discharged by order of the Court of First Instance dated December 9, 1911; that during the lifetime of the deceased he took out insurance on his life for the sum of P40,000 and made it payable to the defendant as sole beneficiary; that after his death the defendant collected the face of the policy; that of said policy he paid the sum of P18,365.20 to redeem certain real estate which the decedent had sold to third persons with a right to repurchase; that the redemption of said premises was made by the attorney of the defendant in the name of the plaintiff and the defendant as heirs of the deceased vendor; that the redemption of said premises they have had the use and benefit thereof; that during that time the plaintiffs paid no taxes and made no repairs. It further appears from the pleadings that the defendant, on the death of the deceased, took possession of most of his personal property, which he still has in his possession, and that he has also the balance on said insurance policy amounting to P21,634.80. Plaintiffs contend that the amount of the insurance policy belonged to the estate of the deceased and not to the defendant personally; that, therefore, they are entitled to a partition not only of the real and personal property, but also of the P40,000 life insurance. The complaint prays a partition of all the property, both real and personal, left by the deceased; that the defendant account for P21,634.80, and that that sum be divided equally among the plaintiffs and defendant along with the other property of deceased. The defendant denies the material allegations of the complaint and sets up as special defense and counterclaim that the redemption of the real estate sold by his father was made in the name of the plaintiffs and himself instead of in his name alone without his knowledge or consent; and that it was not his intention to use the proceeds of the insurance policy for the benefit of any person but himself, he alleging that he was and is the sole owner thereof and that it is his individual property. He, therefore, asks that he be declared the owner of the real estate redeemed by the payment of the P18,365.20, the owner of the remaining P21,634.80, the balance of the insurance policy, and that the plaintiff's account for the use and occupation of the premises so redeemed since the date of the redemption. The learned trial court refused to give relief to either party and dismissed the action.

would not bar a subsequent action to require a division of either the real or personal property. If, on the other hand, an order had been made in the administration proceedings dividing the personal or the real property, or both, among the heirs, then it is quite possible that, to a subsequent action brought by one of the heirs for a partition of the real or personal property, or both, there could have been interposed a plea of res judicata based on such order. As the matter now stands, however, there is no ground on which to base such a plea. Moreover, no such plea has been made and no evidence offered to support it. With the finding of the trial court that the proceeds of the life-insurance policy belong exclusively to the defendant as his individual and separate property, we agree. That the proceeds of an insurance policy belong exclusively to the beneficiary and not to the estate of the person whose life was insured, and that such proceeds are the separate and individual property of the beneficiary, and not of the heirs of the person whose life was insured, is the doctrine in America. We believe that the same doctrine obtains in these Islands by virtue of section 428 of the Code of Commerce, which reads: The amount which the underwriter must deliver to the person insured, in fulfillment of the contract, shall be the property of the latter, even against the claims of the legitimate heirs or creditors of any kind whatsoever of the person who effected the insurance in favor of the former. It is claimed by the attorney for the plaintiffs that the section just quoted is subordinate to the provisions of the Civil Code as found in article 1035. This article reads: An heir by force of law surviving with others of the same character to a succession must bring into the hereditary estate the property or securities he may have received from the deceased during the life of the same, by way of dowry, gift, or for any good consideration, in order to compute it in fixing the legal portions and in the account of the division. Counsel also claim that the proceeds of the insurance policy were a donation or gift made by the father during his lifetime to the defendant and that, as such, its ultimate destination is determined by those provisions of the Civil Code which relate to donations, especially article 819. This article provides that "gifts made to children which are not betterments shall be considered as part of their legal portion." We cannot agree with these contentions. The contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject. The Civil Code has no provisions which relate directly and specifically to life- insurance contracts or to the destination of life insurance proceeds. That subject is regulated exclusively by the Code of Commerce which provides for the terms of the contract, the relations of the parties and the destination of the proceeds of the policy. The proceeds of the life-insurance policy being the exclusive property of the defendant and he having used a portion thereof in the repurchase of the real estate sold by the decedent prior to his death with right to repurchase, and such repurchase having been made and the conveyance taken in the names of all of the heirs instead of the defendant alone, plaintiffs claim that the property belongs to the heirs in common and not to the defendant alone. We are not inclined to agree with this contention unless the fact appear or be shown that the defendant acted as he did with the intention that the other heirs should enjoy with him the ownership of the estate in other words, that he proposed, in effect, to make a gift of the real estate to the other heirs. If it is established by the evidence that that was his intention and that the real estate was delivered to the plaintiffs with that understanding, then it is probable that their contention is correct and that they are entitled to share equally with the defendant therein. If, however, it appears from the evidence in the case that the conveyances were taken in the name of the plaintiffs without his knowledge or consent, or that it was not his intention to make a gift to them of the real estate, then it belongs to him. If that facts are as stated, he has two remedies. The one is to compel the plaintiffs to reconvey to him and the other is to let the title stand with them and to recover from them the sum he paid on their behalf.

For the complete and proper determination of the questions at issue in this case, we are of the opinion that the cause should be returned to the trial court with instructions to permit the parties to frame such issues as will permit the settlement of all the questions involved and to introduce such evidence as may be necessary for the full determination of the issues framed. Upon such issues and evidence taken thereunder the court will decide the questions involved according to the evidence, subordinating his conclusions of law to the rules laid down in this opinion. We do not wish to be understood as having decided in this opinion any question of fact which will arise on the trial and be there in controversy. The trial court is left free to find the facts as the evidence requires. To the facts as so found he will apply the law as herein laid down. The judgment appealed from is set aside and the cause returned to the Court of First Instance whence it came for the purpose hereinabove stated. So ordered. [G.R. No. 123206. March 22, 2000] COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. COURT OF APPEALS, COURT OF TAX APPEALS and JOSEFINA P. PAJONAR, as Administratrix of the Estate of Pedro P. Pajonar, respondents. RESOLUTION GONZAGA-REYES, J.: Supr-ema Assailed in this petition for review on certiorari is the December 21, 1995 Decision[1] of the Court of Appeals[2] in CA-G.R. Sp. No. 34399 affirming the June 7, 1994 Resolution of the Court of Tax Appeals in CTA Case No. 4381 granting private respondent Josefina P. Pajonar, as administratrix of the estate of Pedro P. Pajonar, a tax refund in the amount of P76,502.42, representing erroneously paid estate taxes for the year 1988. Pedro Pajonar, a member of the Philippine Scout, Bataan Contingent, during the second World War, was a part of the infamous Death March by reason of which he suffered shock and became insane. His sister Josefina Pajonar became the guardian over his person, while his property was placed under the guardianship of the Philippine National Bank (PNB) by the Regional Trial Court of Dumaguete City, Branch 31, in Special Proceedings No. 1254. He died on January 10, 1988. He was survived by his two brothers Isidro P. Pajonar and Gregorio Pajonar, his sister Josefina Pajonar, nephews Concordio Jandog and Mario Jandog and niece Conchita Jandog. On May 11, 1988, the PNB filed an accounting of the decedent's property under guardianship valued at P3,037,672.09 in Special Proceedings No. 1254. However, the PNB did not file an estate tax return, instead it advised Pedro Pajonar's heirs to execute an extrajudicial settlement and to pay the taxes on his estate. On April 5, 1988, pursuant to the assessment by the Bureau of Internal Revenue (BIR), the estate of Pedro Pajonar paid taxes in the amount of P2,557. On May 19, 1988, Josefina Pajonar filed a petition with the Regional Trial Court of Dumaguete City for the issuance in her favor of letters of administration of the estate of her brother. The case was docketed as Special Proceedings No. 2399. On July 18, 1988, the trial court appointed Josefina Pajonar as the regular administratrix of Pedro Pajonar's estate. On December 19, 1988, pursuant to a second assessment by the BIR for deficiency estate tax, the estate of Pedro Pajonar paid estate tax in the amount of P1,527,790.98. Josefina Pajonar, in her capacity as administratrix and heir of Pedro Pajonar's estate, filed a protest on January 11, 1989 with the BIR praying that the estate tax payment in the amount of P1,527,790.98, or at least some portion of it, be returned to the heirs.[3] Jur-is However, on August 15, 1989, without waiting for her protest to be resolved by the BIR, Josefina Pajonar filed a petition for review with the Court of Tax Appeals (CTA), praying for the refund of P1,527,790.98, or in the alternative, P840,202.06, as erroneously paid estate tax.[4] The case was docketed as CTA Case No. 4381.

On May 6, 1993, the CTA ordered the Commissioner of Internal Revenue to refund Josefina Pajonar the amount of P252,585.59, representing erroneously paid estate tax for the year 1988.[5] Among the deductions from the gross estate allowed by the CTA were the amounts of P60,753 representing the notarial fee for the Extrajudicial Settlement and the amount of P50,000 as the attorney's fees in Special Proceedings No. 1254 for guardianship.[6]Juri-ssc On June 15, 1993, the Commissioner of Internal Revenue filed a motion for reconsideration[7] of the CTA's May 6, 1993 decision asserting, among others, that the notarial fee for the Extrajudicial Settlement and the attorney's fees in the guardianship proceedings are not deductible expenses. On June 7, 1994, the CTA issued the assailed Resolution[8] ordering the Commissioner of Internal Revenue to refund Josefina Pajonar, as administratrix of the estate of Pedro Pajonar, the amount of P76,502.42 representing erroneously paid estate tax for the year 1988. Also, the CTA upheld the validity of the deduction of the notarial fee for the Extrajudicial Settlement and the attorney's fees in the guardianship proceedings. On July 5, 1994, the Commissioner of Internal Revenue filed with the Court of Appeals a petition for review of the CTA's May 6, 1993 Decision and its June 7, 1994 Resolution, questioning the validity of the abovementioned deductions. On December 21, 1995, the Court of Appeals denied the Commissioner's petition.[9] Hence, the present appeal by the Commissioner of Internal Revenue. The sole issue in this case involves the construction of section 79[10] of the National Internal Revenue Code[11] (Tax Code) which provides for the allowable deductions from the gross estate of the decedent. More particularly, the question is whether the notarial fee paid for the extrajudicial settlement in the amount of P60,753 and the attorney's fees in the guardianship proceedings in the amount of P50,000 may be allowed as deductions from the gross estate of decedent in order to arrive at the value of the net estate. We answer this question in the affirmative, thereby upholding the decisions of the appellate courts. J-jlex In its May 6, 1993 Decision, the Court of Tax Appeals ruled thus: Respondent maintains that only judicial expenses of the testamentary or intestate proceedings are allowed as a deduction to the gross estate. The amount of P60,753.00 is quite extraordinary for a mere notarial fee. This Court adopts the view under American jurisprudence that expenses incurred in the extrajudicial settlement of the estate should be allowed as a deduction from the gross estate. "There is no requirement of formal administration. It is sufficient that the expense be a necessary contribution toward the settlement of the case." [ 34 Am. Jur. 2d, p. 765; Nolledo, Bar Reviewer in Taxation, 10th Ed. (1990), p. 481 ] xxx.....xxx.....xxx The attorney's fees of P50,000.00, which were already incurred but not yet paid, refers to the guardianship proceeding filed by PNB, as guardian over the ward of Pedro Pajonar, docketed as Special Proceeding No. 1254 in the RTC (Branch XXXI) of Dumaguete City. x x x xxx.....xxx.....xxx The guardianship proceeding had been terminated upon delivery of the residuary estate to the heirs entitled thereto. Thereafter, PNB was discharged of any further responsibility. Attorney's fees in order to be deductible from the gross estate must be essential to the collection of assets, payment of debts or the distribution of the property to the persons entitled to it. The services for which the fees are charged must relate

to the proper settlement of the estate. [ 34 Am. Jur. 2d 767. ] In this case, the guardianship proceeding was necessary for the distribution of the property of the late Pedro Pajonar to his rightful heirs. Sc-juris xxx.....xxx.....xxx PNB was appointed as guardian over the assets of the late Pedro Pajonar, who, even at the time of his death, was incompetent by reason of insanity. The expenses incurred in the guardianship proceeding was but a necessary expense in the settlement of the decedent's estate. Therefore, the attorney's fee incurred in the guardianship proceedings amounting to P50,000.00 is a reasonable and necessary business expense deductible from the gross estate of the decedent.[12] Upon a motion for reconsideration filed by the Commissioner of Internal Revenue, the Court of Tax Appeals modified its previous ruling by reducing the refundable amount to P76,502.43 since it found that a deficiency interest should be imposed and the compromise penalty excluded.[13] However, the tax court upheld its previous ruling regarding the legality of the deductions It is significant to note that the inclusion of the estate tax law in the codification of all our national internal revenue laws with the enactment of the National Internal Revenue Code in 1939 were copied from the Federal Law of the United States. [UMALI, Reviewer in Taxation (1985), p. 285 ] The 1977 Tax Code, promulgated by Presidential Decree No. 1158, effective June 3, 1977, reenacted substantially all the provisions of the old law on estate and gift taxes, except the sections relating to the meaning of gross estate and gift. [ Ibid, p. 286. ] Nc-mmis In the United States, [a]dministrative expenses, executor's commissions and attorney's fees are considered allowable deductions from the Gross Estate. Administrative expenses are limited to such expenses as are actually and necessarily incurred in the administration of a decedent's estate. [PRENTICE-HALL, Federal Taxes Estate and Gift Taxes (1936), p. 120, 533. ] Necessary expenses of administration are such expenses as are entailed for the preservation and productivity of the estate and for its management for purposes of liquidation, payment of debts and distribution of the residue among the persons entitled thereto. [Lizarraga Hermanos vs. Abada, 40 Phil. 124. ] They must be incurred for the settlement of the estate as a whole. [34 Am. Jur. 2d, p. 765. ] Thus, where there were no substantial community debts and it was unnecessary to convert community property to cash, the only practical purpose of administration being the payment of estate taxes, full deduction was allowed for attorney's fees and miscellaneous expenses charged wholly to decedent's estate. [ Ibid., citing Estate of Helis, 26 T .C. 143 (A). ] Petitioner stated in her protest filed with the BIR that "upon the death of the ward, the PNB, which was still the guardian of the estate, (Annex 'Z' ), did not file an estate tax return; however, it advised the heirs to execute an extrajudicial settlement, to pay taxes and to post a bond equal to the value of the estate, for which the estate paid P59,341.40 for the premiums. (See Annex 'K')." [p. 17, CTA record. ] Therefore, it would appear from the records of the case that the only practical purpose of settling the estate by means of an extrajudicial settlement pursuant to Section 1 of Rule 74 of the Rules of Court was for the payment of taxes and the distribution of the estate to the heirs. A fortiori, since our estate tax laws are of American origin, the interpretation adopted by American Courts has some persuasive effect on the interpretation of our own estate tax laws on the subject. Anent the contention of respondent that the attorney's fees of P50,000.00 incurred in the guardianship proceeding should not be deducted from the Gross Estate, We consider the same unmeritorious. Attorneys' and guardians' fees incurred in a trustee's accounting of a taxable inter vivos trust attributable to the usual issues involved in such an accounting was held to be proper deductions because these are expenses incurred in terminating an inter vivos trust that was includible in the decedent's estate. (Prentice Hall, Federal Taxes on Estate and Gift, p.120, 861] Attorney's fees are allowable deductions if incurred for the settlement of the estate. It is noteworthy to point that PNB was appointed the guardian over the assets of the deceased. Necessarily the assets of the deceased formed part of his gross estate. Accordingly, all expenses incurred in relation to the estate of the deceased will be deductible for estate tax purposes provided these are necessary and ordinary expenses for administration of the settlement of the estate.[14] In upholding the June 7, 1994 Resolution of the Court of Tax Appeals, the Court of Appeals held that: Newmiso

2. Although the Tax Code specifies "judicial expenses of the testamentary or intestate proceedings," there is no reason why expenses incurred in the administration and settlement of an estate in extrajudicial proceedings should not be allowed. However, deduction is limited to such administration expenses as are actually and necessarily incurred in the collection of the assets of the estate, payment of the debts, and distribution of the remainder among those entitled thereto. Such expenses may include executor's or administrator's fees, attorney's fees, court fees and charges, appraiser's fees, clerk hire, costs of preserving and distributing the estate and storing or maintaining it, brokerage fees or commissions for selling or disposing of the estate, and the like. Deductible attorney's fees are those incurred by the executor or administrator in the settlement of the estate or in defending or prosecuting claims against or due the estate. (Estate and Gift Taxation in the Philippines, T. P. Matic, Jr., 1981 Edition, p. 176 ). xxx.....xxx.....xxx It is clear then that the extrajudicial settlement was for the purpose of payment of taxes and the distribution of the estate to the heirs. The execution of the extrajudicial settlement necessitated the notarization of the same. Hence the Contract of Legal Services of March 28, 1988 entered into between respondent Josefina Pajonar and counsel was presented in evidence for the purpose of showing that the amount of P60,753.00 was for the notarization of the Extrajudicial Settlement. It follows then that the notarial fee of P60,753.00 was incurred primarily to settle the estate of the deceased Pedro Pajonar. Said amount should then be considered an administration expenses actually and necessarily incurred in the collection of the assets of the estate, payment of debts and distribution of the remainder among those entitled thereto. Thus, the notarial fee of P60,753 incurred for the Extrajudicial Settlement should be allowed as a deduction from the gross estate. 3. Attorney's fees, on the other hand, in order to be deductible from the gross estate must be essential to the settlement of the estate. Acctmis The amount of P50,000.00 was incurred as attorney's fees in the guardianship proceedings in Spec. Proc. No. 1254. Petitioner contends that said amount are not expenses of the testamentary or intestate proceedings as the guardianship proceeding was instituted during the lifetime of the decedent when there was yet no estate to be settled. Again , this contention must fail. The guardianship proceeding in this case was necessary for the distribution of the property of the deceased Pedro Pajonar. As correctly pointed out by respondent CTA, the PNB was appointed guardian over the assets of the deceased, and that necessarily the assets of the deceased formed part of his gross estate. x x x xxx.....xxx.....xxx It is clear therefore that the attorney's fees incurred in the guardianship proceeding in Spec. Proc. No. 1254 were essential to the distribution of the property to the persons entitled thereto. Hence, the attorney's fees incurred in the guardianship proceedings in the amount of P50,000.00 should be allowed as a deduction from the gross estate of the decedent.[15] The deductions from the gross estate permitted under section 79 of the Tax Code basically reproduced the deductions allowed under Commonwealth Act No. 466 (CA 466), otherwise known as the National Internal Revenue Code of 1939,[16] and which was the first codification of Philippine tax laws. Section 89 (a) (1) (B) of CA 466 also provided for the deduction of the "judicial expenses of the testamentary or intestate proceedings" for purposes of determining the value of the net estate. Philippine tax laws were, in turn, based on the federal tax laws of the United States.[17] In accord with established rules of statutory construction, the decisions of American courts construing the federal tax code are entitled to great weight in the interpretation of our own tax laws.[18] Scc-alr Judicial expenses are expenses of administration.[19] Administration expenses, as an allowable deduction from the gross estate of the decedent for purposes of arriving at the value of the net estate, have been construed by the federal and state courts of the United States to include all expenses "essential to the collection of the assets, payment of debts or the distribution of the property to the persons entitled to it."[20] In other words, the expenses must be essential to the proper settlement of the estate. Expenditures incurred for the individual benefit of the heirs, devisees or legatees are not

deductible.[21] This distinction has been carried over to our jurisdiction. Thus, in Lorenzo v. Posadas[22] the Court construed the phrase "judicial expenses of the testamentary or intestate proceedings" as not including the compensation paid to a trustee of the decedent's estate when it appeared that such trustee was appointed for the purpose of managing the decedent's real estate for the benefit of the testamentary heir. In another case, the Court disallowed the premiums paid on the bond filed by the administrator as an expense of administration since the giving of a bond is in the nature of a qualification for the office, and not necessary in the settlement of the estate.[23] Neither may attorney's fees incident to litigation incurred by the heirs in asserting their respective rights be claimed as a deduction from the gross estate.[24] Coming to the case at bar, the notarial fee paid for the extrajudicial settlement is clearly a deductible expense since such settlement effected a distribution of Pedro Pajonar's estate to his lawful heirs. Similarly, the attorney's fees paid to PNB for acting as the guardian of Pedro Pajonar's property during his lifetime should also be considered as a deductible administration expense. PNB provided a detailed accounting of decedent's property and gave advice as to the proper settlement of the latter's estate, acts which contributed towards the collection of decedent's assets and the subsequent settlement of the estate. We find that the Court of Appeals did not commit reversible error in affirming the questioned resolution of the Court of Tax Appeals. WHEREFORE, the December 21, 1995 Decision of the Court of Appeals is AFFIRMED. The notarial fee for the extrajudicial settlement and the attorney's fees in the guardianship proceedings are allowable deductions from the gross estate of Pedro Pajonar. SO ORDERED. Lorenzo vs. Posadas 64 Phil 353 Facts: On 27 May 1922, Thomas Hanley died in Zamboanga, leaving a will and considerable amount of real and personal properties. Hanleys will provides the following: his money will be given to his nephew, Matthew Hanley, as well as the real estate owned by him. It further provided that the property will only be given ten years after Thomas Hanleys death. Thus, in the testamentary proceedings, the Court of First Instance of Zamboanga appointed P.J.M. Moore as trustee of the estate. Moore took oath of office on March 10, 1924, and resigned on Feb. 29, 1932. Pablo Lorenzo was appointed in his stead. Juan Posadas, Collector of Internal Revenue, assessed inheritance tax against the estate amounting to P2,057.74 which includes penalty and surcharge. He filed a motion in the testamentary proceedings so that Lorenzo will be ordered to pay the amount due. Lorenzo paid the amount in protest after CFI granted Posadas motion. He claimed that the inheritance tax should have been assessed after 10 years. He asked for a refund but Posadas declined to do so. The latter counterclaimed for the additional amount of P1,191.27 which represents interest due on the tax and which was not included in the original assessment. However, CFI dismissed this counterclaim. It also denied Lorenzos claim for refund against Posadas. Hence, both appealed. Issue: Whether the estate was delinquent in paying the inheritance tax and therefore liable for the P1,191.27 that Posadas is asking for?

Held: Yes. It was delinquent because according to Sec. 1544 (b) of the Revised Administrative Code, payment of the inheritance tax shall be made before delivering to each beneficiary his share. This payment should have been made before March 10, 1924, the date when P.J.M. Moore formally assumed the function of trustee. Although the property was only to be given after 10 years from the death of Hanley, the court considered that delivery to the trustee is delivery to cestui que trust, the beneficiary within the meaning of Sec. 1544 (b). Even though there was no express mention of the word trust in the will, the court of first instance was correct in appointing a trustee because no particular or technical words are required to create a testamentary trust (69 C.J.,p. 711). The requisites of a valid testamentary trust are: 1) sufficient words to raise a trust, 2) a definite subject, 3) a certain or ascertained object. There is no doubt that Hanley intended to create a trust since he ordered in his will that certain of his properties be kept together undisposed during a fixed period or for a stated purpose. G.R. No. L-9271 March 29, 1957

The only issue to be determined is "whether a judicial administrator, serving without compensation, is entitled to charge as an expense of administration the premiums paid on his bond." The lower court did not consider the premiums paid on the bond filed by the administrator as an expense of administration taking into account undoubtedly the ruling laid down in the case of Sulit vs. Santos, 56 Phil., 626. That is a case which also involves the payment of certain premium on the bond put up by the judicial administrator and when he asked the court that the same be considered as an expense of administration, it was disapproved for the same reasons advanced by the trial court. In sustaining this finding, this Court ruled that the "expense incurred by an executor or administrator to produce a bond is not a proper charge against the estate. Section 680 of the Code of Civil Procedure (similar to section 7, Rule 86) does not authorize the executor or administrator to charge against the estate the money spent for the presentation, filing, and substitution of a bond." And elaborating on this matter, the Court made the following comment: The aforementioned cases, in reality, seem superfluous in ascertaining the true principle. The position of an executor or administrator is one of trust. In fact, the Philippine Code of Civil Procedure so mentions it. It is proper for the law to safeguard the estate of deceased persons by requiring the executor or administrator to give a suitable bond. The ability to give this bond is in the nature of a qualification for the office. The execution and approval of the bond constitute a condition precedent to acceptance of the responsibilities of the trust. If an individual does not desire to assume the position of executor of administrator, he may refuse to do so. On the other hand, when the individual prefers an adequate bond and has it approved by the probate court, he thereby admits the adequacy of the compensation which is permitted him pursuant to law. It would be a very far-fetched construction to deduce the giving of a bond in order to qualify for the office of executor or administrator is a necessary expense in the care, management, and settlement of the estate within the meaning of section 680 of the Code of Civil Procedure, for these are expenses incurred after the executor of administrator has met the requirements of the law and has entered upon the performance of his duties. (See In re Eby's Estate [1894], 30 Atl., 124.) We feel that the orders of Judge Mapa in this case rested on a fine sense of official duty, sometimes lacking in cases of this character, to protect the residue of the estate of a deceased person from unjustifiable inroads by an executor, and that as these orders conform to the facts and the law, they are entitled to be fortified by an explicit pronouncement from this court. We rule that the expense incurred by an execution or administrator to procure a bond is not a proper charge against the estate, and that section 680 of the Code of Civil Procedure does not authorize the executor or administrator to charge against the estate the money spent for the presentation, filing, and substitution of a bond. It is true that the Sulit case may be differentiated from the present in the sense that, in the former the administrator accepted the trust with the emolument that the law allows, whereas in the latter the administrator accepted the same without compensation, but this difference is of no moment, for there is nothing in the decision that may justify the conclusion that the allowance or disallowance of premiums paid on the bond of the administrator is made dependent on the receipt of compensation. On the contrary, a different conclusion may be inferred considering the ratio decidendi on which the ruling is predicated. Thus, it was there stated that the position of an executor or administrator is one of trust: that it is proper for the law to safeguard the estates of deceased persons by requiring the administrator to give a suitable bond, and that the ability to give this bond is in the nature of a qualification for the office. It is also intimated therein that "If an individual does not desire to assume the position of executor or administrator, he may refuse to do so," and it is far-fetched to conclude that the giving of a bond by an administrator is an necessary expense in the care, management and settlement of the estate within the meaning of the law, because these expenses are incurred "after the executor or administrator has met the requirement of the law and has entered upon the performance of his duties." Of course, a person may accept the position of executor or administrator with all the incident appertaining thereto having in mind the compensation which the law allows for the purpose, but he may waive this compensation in the same manner as he may refuse to serve without it. Appellant having waived compensation, he cannot now be heard to complain of the expenses incident to his qualification. The orders appealed from are hereby affirmed, without costs. G.R. No. L-19153 June 30, 1922

In the matter of the testate estate of the late DA. MARGARITA DAVID. CARLOS MORAN SISON, Judicial Administrator, petitioner-appellant, vs. NARCISA F. TEODORO, heiress, oppositor-appellee. Teodoro R. Dominguez for appellant. Manuel O. Chan for appellee. BAUTISTA ANGELO, J.: On December 20, 1948, the Court of First Instance of Manila, which has jurisdiction over the estate of the late Margarita David, issued an order appointing Carlos Moran Sison as judicial administrator, without compensation, after filing a bond in the amount of P5,000. The next day, Carlos Moran Sison took his oath of office and put up the requisite bond which was duly approved by the court. On the same day, letters of administration were issued to him. On January 19, 1955, the judicial administrator filed an accounting of his administration which contains, among others, the following disbursement items: 13. Paid to Visayan Surety & Insurance Corporation on August 6, 1954, as renewal premiums on the Administrator's bond of Judicial Administrator Carlos Moran Sison covering the period from December 20, 1949 to December 20, 1954, inclusive ................................. P380.70 15. Paid to Visayan Surety & Insurance Corporation on December 21, 1954, for premiums due on the Administrator's bond of judicial Administrator Carlos Moran Sison for the period from December 21, 1954 to December 21, 1955 ............................................................... 76.14 Narcisa F. Teodoro, one of the heirs, objected to the approval of the above- quoted items on the grounds that they are not necessary expenses of administration and should not be charged against the estate. On February 25, 1955, the court approved the report of the administrator but disallowed the items objected to on the ground that they cannot be considered as expenses of administration. The administrator filed a motion for reconsideration and when the same was denied, he took the present appeal.

B. E. JOHANNES, as principal administrator of the estate of Carmen Theodora Johannes, relator, vs.

CARLOS A. IMPERIAL, as judge of the Court of First Instance, City of Manila, respondent. Amzi B. Kelly for relator. Fisher and De Witt and William C. Brady for respondent. STATEMENT Case No 18600,1 in which B. E. Johannes, husband of Carmen Theodora Johannes, deceased as administrator, et al., were relators, and the Honorable George R. Harvey, as judge of the Court of First Instance of Manila, et al., were respondents was a petition for certiorari and a temporary injunction, in which the relators prayed for an order this court: (A) To annul the appointment of Alfred D' Almeida as administrator of said deposit in the Philippines; and all acts and a proceedings taken by him as said administrator; and, (B) To issue an order itself, or one to the said Judge George R. Harvey, directing the manager of the Philippine National Bank,' to place to the credit B. E. Johannes, as administrator of the estate of Carmen Theodora Johannes, all of the funds of said Carmen D' Almeida (Johannes), now on deposit, with said bank, subject to the order of said court. And, as the act of the said Alfred D' Almeida in having himself appointed administrator was in evident bad faith, as clearly appears from the petition asking his appointment, the court is requested to grant relators five thousand pesos (P5,000), as damages caused by delay, expensive and unnecessary litigation, and such other relief as the court may deem in equity proper. Upon a hearing, the prayer was denied, and the petition dismissed in an opinion written by Justice Malcolm and concurred in by all the other members of this court. After that opinion was rendered, B. E. Johannes, as principal administrator of the estate of Carmen Theodora Johannes, applied to his Honor Carlos A. Imperial, as judge of the Court of Instance of the City of Manila, by petition, which, among other things, alleges: That "he is the duly appointed principal administrator of the estate of his late wife at the place of her domicile, Singapore, Straits Settlements, as appears from a certified copy of his appointment now on file . . . Second. The said Carmen Theodora Johannes, at the time of her death, was a subject and citizen of Great Britain, domiciled in Singapore, Straits Settlements, and your petitioner, the said B. E. Johannes, her lawful husband, at the time of her death was a subject and citizen of Great Britain and resident of Singapore, Straits Settlements. Third. Under British Law, (22 and 23, Charles II c-10, 29 Charles II c-3, and James II c-17), the husband of a deceased wife is the sole heir, to the exclusion of all others, of the property of his wife when she dies intestate, as the said Carmen Theodora Johannes did die. Fourth. This Honorable Court at a prior date on application of Mr. Alfred D' Almeida, the brother of the deceased, appointed him as administrator of the property of the deceased situated within Philippine Islands, in the absence of, and without notice, knowledge or consent of her husband, your petitioner. Fifth. Your petitioner is now within the jurisdiction of this court and has come here and established his residence at "The Manila Hotel," in the City of Manila, for the sole purpose of taking over from the said Alfred D' Almeida the administration of said estate: and To relieve the said Alfred D' Almeida as administrator of said estate within the jurisdiction of this court and appoint in his stead your petitioner, the said B. E. Johannes, and principal administrator, "the ancillary administrator" of said estate now subject to administration within the Philippine Islands.

From an order denying and overruling the petition, the relator filed certiorari proceedings in this court against the respondent, as judge of the Court of First Instance, and later made Alfred D'Almeida, a brother of the deceased, ancillary administrator, defendant, in which he pray for an order of this court: (a) To substitute your petitioner, the principal administrator, the husband of the deceased and the owner of the deposit, instead of Alfred D'Almeida, as "the ancillary administrator' of said estate, in this jurisdiction; and (b) Order the said Judge to disapprove and disallow all of the amounts claimed to have been paid for attorneys' fees to Messrs. Fisher and DeWit, and cable, amounting to P2,860.05; and (c) To disapproved and disallow the amount of P1,093.75, claimed due but proven false; and (d) To cancel the appointment of the special administrator' appointed by virtue of these false claims; and (e) Order the said Judge to order the manager of the Philippine National Bank to place to credit of the said substituted ancillary administrator, Mr. B. E. Johannes, all of the funds now on deposit in said bank, the property of the deceased Carmen Theodora Johannes. The defendant claims that the petition here does not state sufficient facts, and that at the time the appointment was made, the court had jurisdiction to appoint Alfred D'Almeida as ancillary administrator of the estate of the deceased Carmen Theodora Johannes, who was then a resident of the Philippine Islands, and that his appointment is not subject to review in this court.

JOHNS, J.: The legal questions presented are well stated in the former opinion court in case No. 18600. It appears that the petitioner is the husband of Carmen Theodora Johannes, deceased, who, at the time of her death, was a resident of Singapore, Straits Settlements, and a citizen of Great Britain; that he is also a foreigner and a citizen of Great Britain and an actual resident to Singapore; that Alfred D'Almeida is a brother of the deceased Carmen Theodora Johannes, and a bona fide resident of the City of Manila; that at the time of her death Carmen Theodora Johannes had P109,722.55 on deposit in one of the banks in the City of Manila; and that the petitioner, her surviving husband, was indebted to a bank in Manila for about P20,000. That the deceased left no will in the absence of which the petitioner claims to be her sole heir and entitled to all of her estate. That there were no debts against the estate of the deceased. Upon the death of his wife, the petitioner was duly appointed as administrator of her estate by the court at Singapore, and qualified and entered upon the discharge of his duties. After the decision was rendered by this court in case No. 18600, supra, the petitioner came to Manila and claims to have established a temporary residence at the Manila Hotel, based upon which, in legal effect, he asked for an order of court that Alfred D'Almeida be removed as ancillary administrator, and that he be appointed. From an order of the lower court denying that petition, an original petition was filed here to review the proceedings of the lower court. There is a marked legal distinction between the authority of a court to appoint and the authority to remove an administrator after he is appointed. Here, the appointment was made and the administrator had qualified and entered upon the discharge of his duties. There was no contest over the appointment, and the court had jurisdiction of the petition and of the subjectmatter. It was not a case of where two or more petitions were filed, in which each was claiming the right to appointed, or in which the court decided which one of the petitioners should be appointed. It was a case in which only one petition was presented to the court, and to which no objections were file and in which it appeared the petitioner was a brother of the deceased, and that the estate was the owner of property in the City of Manila. The court, having jurisdiction and the appointment having been made, the only question here presented is whether Alfred D'Almeida should be removed and the petitioner substituted as ancillary administrator. As this court said case No 18600 (Johannes vs. Harvey, supra):

The ancillary administration is proper, whenever a person dies, leaving in a country other than that of his last domicile, property to be administered in the nature of assets of the decedent, liable for his individual debts or to be distributed among his heirs. It is almost a universal rule to give the surviving spouse a preference when and administrator is to be appointed, unless for strong reason it is deemed advisable to name someone else. This preference has particular force under Spanish Law precedents. However, the Code of Civil Procedure, in section 642, while naming the surviving spouse is unsuitable for the responsibility. . . . Undoubtedly, if the husband should come into this jurisdiction, the court give consideration to his petition that he be named the ancillary administrator for local purposes. Ancillary letters should ordinarily be granted to the domiciliary representative, if he applies therefor, or to his nominee, or attorney; but in the absence of express statutory requirement the court may in its discretion appoint some other person. The real contention of the petitioner is that, because he had the legal right to apply for and be appointed in the first instance, such right is continuous, and that he could be appointed any time on his own application. That is not the law. Although it is true that in the first instance everything else being equal and upon the grounds of comity, in ordinary case, the court would appoint the petitioner or his nominee as ancillary administrator, but even then, as stated in the above opinion the appointment is one of more or less legal discretion. But that is not this case. Here, in legal effect, it is sought to oust an administrator who was appointed without protest or objection where the court had jurisdiction of the petitioner and of the subject matter. Again, it appears that Carmen Theodora Johannes died August 21, 1921, and on September 19, 1921, the petitioner was appointed administrator of her estate by Supreme Court of Straits Settlements on his own petition, and on October 1, 1921, based upon his petition, Alfred D'Almeida, the brother of the deceased, was appointed administrator of her estate in Manila. The initial proceeding against the appointment of Alfred D'Almeida, as administrator, was filed in this court on January 21, 1922. At time of the appointment here, the court had primary and original jurisdiction, and no objections were then made. The question as to who should have been appointed ancillary administrator, if presented at the proper time and in the proper way, is not before this court. Here, the appointment was made on the 1st day of October, 1921, and no formal objections were made until 21st day of January, 1922. The petition is denied, the injunction dissolved and the case dismissed. It appears that the debts of the state, if any, are nominal, and that the only asset here is the money on deposit in the bank. Hence, the administration of the estate itself is matter of form only and should be very simple and inexpensive. Even though it is foreign money, it is the duty of the court to protect it from any illegal, unjust, or unreasonable charges. All claims against the estate should be for just debts only, or for the actual expenses of administration, and those should be reasonable. No other claims should be allowed. If, as claimed, the real dispute here is whether the brothers and sisters of the deceased are entitled to share in her estate, or whether the petitioner only, as the surviving husband, is entitle to all of it, that question is not one of administration, and any expense and attorneys' fees incurred by either party for the settlement of that question is a personal matter to them, and should not be allowed as claims against the estate. Claims against the estate should only be for just debts or expense for administration of the estate itself. Costs in favor of the respondent. So ordered.