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Cases in TAX (Estate tax)

Republic of the PhilippinesSUPREME COURT

Manila

THIR I!ISIO"

#$R$ "o$ %&' && Ap il *'+ ,''-

RA.AE/ ARSE"IO S$ I0O"+ in his capacit1 as the 2u3icialA34inist ato of the Estate of the 3ecease3 2OSE P$.ER"A" E0+ petitione +5s$

COURT O. TAX APPEA/S an3 COMMISSIO"ER O.I"TER"A/ RE!E"UE+ espon3ents$

E C I S I O "

"ACHURA+ 2$6

7efo e this Cou t is a Petition fo Re5ie8 on Ce tio a i% un3eRule &9 of the Rules of Ci5il P oce3u e see:in; the e5e sal ofthe Cou t of Appeals (CA) ecision, 3ate3 Ap il *'+ %

8hich affi 4e3 the ecision* of the Cou t of Tax Appeals(CTA) 3ate3 2une %

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late pa14ent

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*$

Plea3in; entitle3 Co4pliance file3 8ith the p obate Cou t

sub4ittin; the final in5ento 1 of all the p ope ties of the3ecease3 (p$ %'?+ 7IR eco 3s)

C

&$

Attach4ent to Exh$ C 8hich is the 3etaile3 an3 co4pletelistin; of the p ope ties of the 3ecease3 (pp$ - %'9+ 7IR ec$)

C % to C %a@ The nu4e ous pen3in; cou t cases uestionin; the lateP esi3ent s o8ne ship o inte ests in se5e al p ope ties (bothpe sonal an3 eal) 4a:e the total 5alue of his estate+ an3 theconse uent estate tax 3ue+ incapable of exact pecunia 13ete 4ination at this ti4e$ Thus+ espon3ents assess4ent of theestate tax an3 thei issuance of the "otices of /e51 an3 Salea e p e4atu e+ confiscato 1 an3 opp essi5e$

>b@ Petitione + as one of the late P esi3ent s co4pulso 1hei s+ 8as ne5e notifie3+ 4uch less se 5e3 8ith copies of the"otices of /e51+ cont a 1 to the 4an3ate of Section ,%* of the"IRC$ As such+ petitione 8as ne5e ;i5en an oppo tunit1 tocontest the "otices in 5iolation of his i;ht to 3ue p ocess ofla8$

C$ O" ACCOU"T O. THE C/EAR MERIT O. THEPETITIO"+ RESPO" E"T COURT MA"I.EST/ ERREI" RU/I"# THAT IT HA "O PO ER TO #RA"TI"2U"CTI!E RE/IE. TO PETITIO"ER$ SECTIO" ,% O.THE "IRC "OT ITHSTA" I"#+ COURTS POSSESSTHE PO ER TO ISSUE A RIT O. PRE/IMI"ARI"2U"CTIO" TO RESTRAI" RESPO" E"TSCOMMISSIO"ER S A" E #U0MA" S AR7ITRARMETHO O. CO//ECTI"# THE A//E#EE.ICIE"C ESTATE A" I"COME TAXES 7 MEA"SO. /E! $

The facts as foun3 b1 the appellate cou t a e un3ispute3+ an3a e he eb1 a3opte36

On Septe4be , + % - + fo 4e P esi3ent .e 3inan3 Ma cos3ie3 in Honolulu+ Ha8aii+ USA$

On 2une ,

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tax assess4ent no$ .AC % -? % '',&9% (a;ainst the Spouses.e 3inan3 an3 I4el3a Ma cos in the a4ounts of P%& +99%$

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Rule ?9 of the Rules of Cou t+ 8ith p a1e fo te4po a 1est ainin; o 3e an3Jo 8 it of p eli4ina 1 inBunction$

It has been epeate3l1 obse 5e3+ an3 not 8ithout 4e it+ that theenfo ce4ent of tax la8s an3 the collection of taxes+ is ofpa a4ount i4po tance fo the sustenance of ;o5e n4ent$ Taxesa e the lifebloo3 of the ;o5e n4ent an3 shoul3 be collecte38ithout unnecessa 1 hin3 ance$ Ho8e5e + such collectionshoul3 be 4a3e in acco 3ance 8ith la8 as an1 a bit a iness8ill ne;ate the 5e 1 eason fo ;o5e n4ent itself$ It is the efo enecessa 1 to econcile the appa entl1 conflictin; inte ests of theautho ities an3 the taxpa1e s so that the eal pu pose oftaxation+ 8hich is the p o4otion of the co44on ;oo3+ 4a1 beachie5e3$ *

hethe o not the p ope a5enues of assess4ent an3collection of the sai3 tax obli;ations 8e e ta:en b1 theespon3ent 7u eau is no8 the subBect of the Cou t s in ui 1$

Petitione posits that notices of le51+ notices of sale+ an3subse uent sale of p ope ties of the late P esi3ent Ma coseffecte3 b1 the 7IR a e null an3 5oi3 fo 3is e;a 3in; theestablishe3 p oce3u e fo the enfo ce4ent of taxes 3ue uponthe estate of the 3ecease3$ The case of o4in;o 5s$ #a litos &is specificall1 cite3 to bolste the a ;u4ent that the o 3ina 1p oce3u e b1 8hich to settle clai4s of in3ebte3ness a;ainst theestate of a 3ecease3+ pe son+ as in an inhe itance (estate) tax+ isfo the clai4ant to p esent a clai4 befo e the p obate cou t sothat sai3 cou t 4a1 o 3e the a34inist ato to pa1 the a4ountthe efo $ This e4e31 is alle;e3l1+ exclusi5e+ an3 cannot beeffecte3 th ou;h an1 othe 4eans$

Petitione ;oes fu the + sub4ittin; that the p obate cou t is notp eclu3e3 f o4 3en1in; a e uest b1 the ;o5e n4ent fo thei44e3iate pa14ent of taxes+ an3 shoul3 o 3e the pa14ent ofthe sa4e onl1 8ithin the pe io3 fixe3 b1 the p obate cou t fothe pa14ent of all the 3ebts of the 3ece3ent$ In this e;a 3+petitione cites the case of Collecto of Inte nal Re5enue 5s$The A34inist at ix of the Estate of Echa i (?< Phil 9',)+8he e it 8as hel3 that6

The case of Pine3a 5s$ Cou t of .i st Instance of Ta1abas an3Collecto of Inte nal Re5enue (9, Phil -'*)+ elie3 upon b1 thepetitione appellant is ;oo3 autho it1 on the p oposition thatthe cou t ha5in; cont ol o5e the a34inist ation p ocee3in;shas Bu is3iction to ente tain the clai4 p esente3 b1 the;o5e n4ent fo taxes 3ue an3 to o 3e the a34inist ato to pa1the tax shoul3 it fin3 that the assess4ent 8as p ope + an3 thatthe tax 8as le;al+ 3ue an3 collectible$ An3 the ule lai3 3o8n inthat case 4ust be un3e stoo3 in elation to the case of Collectoof Custo4s 5s$ Ha1;oo3+ sup a$+ as to the p oce3u e to befollo8e3 in a ;i5en case b1 the ;o5e n4ent to effectuate thecollection of the tax$ Cate;o icall1 state3+ 8he e 3u in; thepen3enc1 of Bu3icial a34inist ation o5e the estate of a3ecease3 pe son a clai4 fo taxes is p esente3 b1 the;o5e n4ent+ the cou t has the autho it1 to o 3e pa14ent b1the a34inist ato but+ in the sa4e 8a1 that it has autho it1 too 3e pa14ent o satisfaction+ it also has the ne;ati5e autho it1to 3en1 the sa4e$ hile the e a e cases 8he e cou ts a ee ui e3 to pe fo 4 ce tain 3uties 4an3ato 1 an3 4iniste ial incha acte + the function of the cou t in a case of the p esentcha acte is not one of the4 an3 he e+ the cou t cannot be ano ;anis4 en3o8e3 8ith latitu3e of Bu3;4ent in one 3i ection+an3 con5e te3 into a 4e e 4echanical cont i5ance in anothe3i ection$

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Sec$ *$ Po8e s an3 3uties of the 7u eau$ Q The po8e s an33uties of the 7u eau of Inte nal Re5enue shall co4p ehen3 theassess4ent an3 collection of all national inte nal e5enue taxes+fees+ an3 cha ;es+ an3 the enfo ce4ent of all fo feitu es+penalties+ an3 fines connecte3 the e8ith+ inclu3in; theexecution of Bu3;4ents in all cases 3eci3e3 in its fa5o b1 theCou t of Tax Appeals an3 the o 3ina 1 cou ts$ Sai3 7u eaushall also ;i5e effect to an3 a34iniste the supe 5iso 1 an3police po8e confe e3 to it b1 this Co3e o othe la8s$

Thus+ it 8as in !e a 5s$ .e nan3e= %, that the cou t eco;ni=e3the libe al t eat4ent of clai4s fo taxes cha ;e3 a;ainst theestate of the 3ece3ent$ Such taxes+ 8e sai3+ 8e e exe4pte3f o4 the application of the statute of non clai4s+ an3 this is

Bustifie3 b1 the necessit1 of ;o5e n4ent fun3in;+ i44o tali=e3in the 4axi4 that taxes a e the lifebloo3 of the ;o5e n4ent$!ecti;alia ne 5i sunt ei publicae Q taxes a e the sine8s of thestate$

Taxes assesse3 a;ainst the estate of a 3ecease3 pe son+ aftea34inist ation is opene3+ nee3 not be sub4itte3 to theco44ittee on clai4s in the o 3ina 1 cou se of a34inist ation$In the exe cise of its cont ol o5e the a34inist ato + the cou t4a1 3i ect the pa14ent of such taxes upon 4otion sho8in;that the taxes ha5e been assesse3 a;ainst the estate$

Such libe al t eat4ent of inte nal e5enue taxes in the p obatep ocee3in;s exten3s so fa + e5en to allo8in; the enfo ce4entof tax obli;ations a;ainst the hei s of the 3ece3ent+ e5en afte3ist ibution of the estate s p ope ties$

Clai4s fo taxes+ 8hethe assesse3 befo e o afte the 3eath ofthe 3ecease3+ can be collecte3 f o4 the hei s e5en afte the

3ist ibution of the p ope ties of the 3ece3ent$ The1 a eexe4pte3 f o4 the application of the statute of non clai4s$ Thehei s shall be liable the efo + in p opo tion to thei sha e in theinhe itance$ %*

Thus+ the #o5e n4ent has t8o 8a1s of collectin; the taxes inuestion$ One+ b1 ;oin; afte all the hei s an3 collectin; f o4each one of the4 the a4ount of the tax p opo tionate to theinhe itance ecei5e3$ Anothe e4e31+ pu suant to the lienc eate3 b1 Section *%9 of the Tax Co3e upon all p ope t1 an3i;hts to p ope t1 belon; to the taxpa1e fo unpai3 inco4e tax+is b1 subBectin; sai3 p ope t1 of the estate 8hich is in thehan3s of an hei o t ansfe ee to the pa14ent of the tax 3ue theestate$ (Co44issione of Inte nal Re5enue 5s$ Pine3a+ ,%SCRA %'9+ Septe4be %9+ % ?

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of Inte nal Re5enue that the estate taxes ha5e been pai3$ Thisp o5ision 3isp o5es the petitione s contention that it is thep obate cou t 8hich app o5es the assess4ent an3 collection ofthe estate tax$

If the e is an1 issue as to the 5ali3it1 of the 7IR s 3ecision toassess the estate taxes+ this shoul3 ha5e been pu sue3 th ou;hthe p ope a34inist ati5e an3 Bu3icial a5enues p o5i3e3 fo b1la8$

Section ,, of the "IRC tells us ho86

Sec$ ,, $ P otestin; of assess4ent$ Q hen theCo44issione of Inte nal Re5enue o his 3ul1 autho i=e3ep esentati5e fin3s that p ope taxes shoul3 be assesse3+ heshall fi st notif1 the taxpa1e of his fin3in;s$ ithin a pe io3 tobe p esc ibe3 b1 i4ple4entin; e;ulations+ the taxpa1e shallbe e ui e3 to espon3 to sai3 notice$ If the taxpa1e fails toespon3+ the Co44issione shall issue an assess4ent base3 onhis fin3in;s$

Such assess4ent 4a1 be p oteste3 a34inist ati5el1 b1 filin; ae uest fo econsi3e ation o ein5esti;ation in such fo 4 an34anne as 4a1 be p esc ibe3 b1 i4ple4entin; e;ulations8ithin (*') 3a1s f o4 eceipt of the assess4ent othe 8ise+ theassess4ent shall beco4e final an3 unappealable$

If the p otest is 3enie3 in 8hole o in pa t+ the in3i5i3ual+association o co po ation a35e sel1 affecte3 b1 the 3ecision onthe p otest 4a1 appeal to the Cou t of Tax Appeals 8ithinthi t1 (*') 3a1s f o4 eceipt of sai3 3ecision othe 8ise+ the3ecision shall beco4e final+ executo 1 an3 3e4an3able$ (Asinse te3 b1 P$ $ %

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"otices of /e51 not ea lie than th ee (*) 4onths no late thansix (?) 4onths f o4 %, Septe4be % %$ In acco 3ance 8iththe Ci cula + espon3ents onl1 ha3 until %, Ma ch % , (thelast 3a1 of the sixth 4onth) 8ithin 8hich to issue these "oticesof /e51$ The "otices of /e51+ ha5in; been issue3 be1on3 thepe io3 allo8e3 b1 la8+ a e thus 5oi3 an3 of no effect$ %9

e hol3 othe 8ise$ The "otices of /e51 upon eal p ope t18e e issue3 8ithin the p esc ipti5e pe io3 an3 in acco 3ance8ith the p o5isions of the p esent Tax Co3e$ The 3eficienc1 taxassess4ent+ ha5in; al ea31 beco4e final+ executo 1+ an33e4an3able+ the sa4e can no8 be collecte3 th ou;h thesu44a 1 e4e31 of 3ist aint o le51 pu suant to Section ,'9 ofthe "IRC$

The applicable p o5ision in e;a 3 to the p esc ipti5e pe io3 fothe assess4ent an3 collection of tax 3eficienc1 in this instanceis A ticle ,,* of the "IRC+ 8hich pe tinentl1 p o5i3es6

Sec$ ,,*$ Exceptions as to a pe io3 of li4itation ofassess4ent an3 collection of taxes$ Q (a) In the case of a falseo f au3ulent etu n 8ith intent to e5a3e tax o of a failu e tofile a etu n+ the tax 4a1 be assesse3+ o a p ocee3in; in cou tfo the collection of such tax 4a1 be be;un 8ithoutassess4ent+ at an1 ti4e 8ithin ten (%') 1ea s afte the3isco5e 1 of the falsit1+ f au3+ o o4ission6 P o5i3e3+ That+ in af au3 assess4ent 8hich has beco4e final an3 executo 1+ thefact of f au3 shall be Bu3iciall1 ta:en co;ni=ance of in the ci5ilo c i4inal action fo the collection the eof$

xxx xxx xxx

(c) An1 inte nal e5enue tax 8hich has been assesse38ithin the pe io3 of li4itation abo5e p esc ibe3+ 4a1 becollecte3 b1 3ist aint o le51 o b1 a p ocee3in; in cou t 8ithinth ee 1ea s follo8in; the assess4ent of the tax$

xxx xxx xxx

The o4ission to file an estate tax etu n+ an3 the subse uentfailu e to contest o appeal the assess4ent 4a3e b1 the 7IR isfatal to the petitione s cause+ as un3e the abo5e cite3p o5ision+ in case of failu e to file a etu n+ the tax 4a1 beassesse3 at an1 ti4e 8ithin ten 1ea s afte the o4ission+ an3an1 tax so assesse3 4a1 be collecte3 b1 le51 upon ealp ope t1 8ithin th ee 1ea s follo8in; the assess4ent of the tax$Since the estate tax assess4ent ha3 beco4e final an3unappealable b1 the petitione s 3efault as e;a 3s p otestin;the 5ali3it1 of the sai3 assess4ent+ the e is no8 no eason 8h1the 7IR cannot continue 8ith the collection of the sai3 tax$An1 obBection a;ainst the assess4ent shoul3 ha5e beenpu sue3 follo8in; the a5enue pa5e3 in Section ,, of the"IRC on p otests on assess4ents of inte nal e5enue taxes$

Petitione fu the a ;ues that the nu4e ous pen3in; cou tcases uestionin; the late p esi3ent s o8ne ship o inte ests inse5e al p ope ties (both eal an3 pe sonal) 4a:e the total 5alueof his estate+ an3 the conse uent estate tax 3ue+ incapable ofexact pecunia 1 3ete 4ination at this ti4e$ Thus+ espon3entsassess4ent of the estate tax an3 thei issuance of the "otices of/e51 an3 sale a e p e4atu e an3 opp essi5e$ He points out thepen3enc1 of San3i;anba1an Ci5il Case "os$ '''% ''*& an3'%&%+ 8hich 8e e file3 b1 the ;o5e n4ent to uestion theo8ne ship an3 inte ests of the late P esi3ent in eal an3pe sonal p ope ties locate3 8ithin an3 outsi3e the Philippines$

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Petitione + ho8e5e + o4its to alle;e 8hethe the p ope tiesle5ie3 upon b1 the 7IR in the collection of estate taxes uponthe 3ece3ent s estate 8e e a4on; those in5ol5e3 in the sai3cases pen3in; in the San3i;anba1an$ In3ee3+ the cou t is at aloss as to ho8 these cases a e ele5ant to the 4atte at issue$The 4e e fact that the 3ece3ent has pen3in; cases in5ol5in; ill;otten 8ealth 3oes not affect the enfo ce4ent of taxassess4ents o5e the p ope ties in3ubitabl1 inclu3e3 in hisestate$

Petitione also exp esses his ese 5ation as to the p op iet1 ofthe 7IR s total assess4ent of P,*+, ,+?'

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sa4e ti4e+ 8 itten notice of the le51 shall be 4aile3 to ose 5e3 upon the Re;iste of ee3s of the p o5ince o cit18he e the p ope t1 is locate3 an3 upon the 3elin uent taxpa1e +o if he be absent f o4 the Philippines+ to his a;ent o the4ana;e of the business in espect to 8hich the liabilit1 a ose+o if the e be none+ to the occupant of the p ope t1 in uestion$

xxx xxx xxx

The fo e;oin; not8ithstan3in;+ the eco 3 sho8s that noticesof 8a ants of 3ist aint an3 le51 of sale 8e e fu nishe3 thecounsel of petitione on Ap il

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On Ma ch %&+ %

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In the lette to the 3ece3ent s estate 3ate3 Ma ch *%+ % -,+ theCo44issione of Inte nal Re5enue 8 ote as follo8s6

Estate of ARRE" T$ #RAHAM cJo M $ I/ E.E"SOO$ E/E#A O Ancilla 1 A34inist ato Philex 7uil3in;co $ 7 ixton G .ai lane Sts$ Pasi;+ Met o Manila

Si 6

This is 8ith e;a 3 to the estate of the late ARRE"TA /OR #RAHAM+ 8ho 3ie3 a esi3ent of O e;on+ U$S$A$on Ma ch %&+ %

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assess4ent 8as not challen;e3 on ti4e an3 in acco 3ance 8iththe p esc ibe3 p oce3u e+ that e o Q fo e o it 8as Q 8asco44itte3 not b1 the espon3ents but b1 the 3ece3ent s estateitself 8hich the petitione ep esents$ So ho8 can he no8co4plain$

HERE.ORE+ the petition is E"IE + 8ith costs a;ainst thepetitione $ It is so o 3e e3+

Republic of the PhilippinesSUPREME COURTManila

SECO" I!ISIO"

#$R$ "o$ %'?

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"A#SASA/A SA

"a alan; alan; sa 4abutin; pa;lilin;:o3 at pa;tin;in nainiu:ol sa a:in n; apat :on; 4;a tuna1 na ana: na sila6

ROSARIO AUSTRIA+ .ilipina+ 4a1 sapat na ;ulan;+ balo+nanini ahan sa -' /$ 2a5ie + 7a;on; Poo:+ San Antonio+/un;so3 n; Kabite

CO"SO/ACIO" AUSTRIA+ .ilipina+ 4a1 sapat na ;ulan;+balo nanini ahan sa -' /$ 2a5ie + 7a;on; Poo:+ San Antonio+/un;so3 n; Kabite

APO/I"ARIA AUSTRIA+ .ilipina+ 4a1 sapat na ;ulan;+ 4a1asa8a+ nanini ahan sa Pason; Ka8a1an+ Hen$ T ias+ Kabite

./ORE"TI"O /UMU7OS+ .ilipino+ 4a1 sapat na ;ulan;+asa8a ni Enca nacion Ma;sino+ at nanini ahan 3in sa -' /$2a5ie + 7a;on; Poo:+ San Antonio+ /un;so3 n; Kabite a1

Kusan; loob na ibinibi;a1 :o at ipina;:a:aloob n; ;anap athin3i na 4ababa8i sa naulit n; apat na ana: :o at sa :anilan;4;a ta;a4a;4ana (sic)+ an; a:in; isan; lupan; esi3ential oti ahan sa4pu n; a:in; baha1 nahan n; na:ati i: 3oon na nasa7a;on; Poo: 3in+ San Antonio+ /un;so3 n; Kabite+ at

na:i:ilala bilan; /ote no$

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7asilisa an3 he sai3 chil3 en li:e8ise execute3 anothenota i=e3 3ocu4ent 3eno4inate3 as Kasulatan 8hich isattache3 to the 3ee3 of 3onation$ The sai3 3ocu4ent states that6

KASU/ATA"

TA/ASTASI" "# MA /A6

"a :a4in; 4;a na:ala;3a o na:a3iit sa laba: nito sila7asilisa Co4e ciante at an; :an1an; 4;a ana: na sila6

Rosa io Aust ia+ Consolacion Aust ia+ Apolonio Aust ia+ at.lo entino /u4ubos+ pa8an; 4a1 4;a sapat na ;ulan;+ nalu4a;3a o 3u4iit sa :asulatan; :aloob pala+ na sinan;a1unanna4in sa ha ap n; "ota io Publico+ Ca los T$ !inie; a+ a1na;papaha1a; n; su4usuno36

"a an; titulo nu4e o TCT T ,,?' (RT &'*?) n; /un;so3 n;Kabite+ baha1 sa loten; ti ahan n; 7a;on; Poo: nanababan;;it sa nasabin; :asulatan+ a1 4ananatili sa po3e opossession n; Ina+ na si 7asilisa Co4e ciante haban; si1a a1nabubuha1 at

#a1on 3in an; nasabin; Titulo a1 hin3i 4apapasan;la o4aipa;bibili an; lupa haban; 4a1buha1 an; nasabin; 7asilisa

Co4e ciante$

Sa :atuna1an an; na;sila;3a :a4in; lahat sa laba: nito saha ap n; abo;a3o Ca los T$ !inie; a at 3ala8an; sa:si$

"obeleta+ Kabite$ I:a %< n; is1e4b e+ %

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the 3eath of the 3ono that the p o5ision statin; that the 3onoese 5e3 the i;ht to e5o:e the 3onation is a featu e of a

3onation 4o tis causa 8hich 4ust co4pl1 8ith the fo 4alitiesof a 8ill an3 that inas4uch as the 3onation 3i3 not follo8 thefo 4alities pe tainin; to 8ills+ the sa4e is 5oi3 an3 p o3uce3no effect 8hatsoe5e $ Hence+ the sale b1 the 3ono of the sai3p ope t1 8as 5ali3 since she e4aine3 to be the absolute o8nethe eof 3u in; the ti4e of the sai3 t ansaction$

On appeal+ the 3ecision of the t ial cou t 8as e5e se3 b1 theCou t of Appeals in its subBect 3ecision+ the 3ispositi5e po tionof 8hich ea3s+ to 8it6

HERE.ORE+ in 5ie8 of the fo e;oin;+ the appeale3 3ecisionis he eb1 SET ASI E an3 a ne8 one en3e e36

%$ 3ecla in; null an3 5oi3 the ee3 of Sale of Re;iste e3 /an3(Annex 7) an3 T ansfe Ce tificate of Title "o$ T %'&*& of theRe;ist 1 of ee3s of Ca5ite Cit1 (Annex E) an3 o 3e in; thecancellation the eof an3

,$ 3ecla in; appellants an3 appellee co o8ne s of the housean3 lot in uestion in acco 3ance 8ith the 3ee3 of 3onationexecute3 b1 7asilisa Co4e ciante on ece4be %

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I

THE RESPO" E"T COURT O. APPEA/S+ ITH UERESPECT+ I#"ORE THE RU/ES O. I"TERPRETATIO"O. CO"TRACTS HE" IT CO"SI ERE THEO"ATIO" I" VUESTIO" AS I"TER !I!OS$

II

THE RESPO" E"T COURT O. APPEA/S+ A#AI" ITHUE RESPECT+ ERRE I" "OT HO/ I"# THAT THEPRESE"T ACTIO" HAS PRESCRI7E U" ER THESTATUTE O. /IMITATIO"S$

Anent the fi st assi;n4ent of e o + the petitione a ;ues thatthe Cou t of Appeals e e3 in ulin; that the 3onation 8as a3onation inte 5i5os$ She clai4s that in inte p etin; a3ocu4ent+ the othe ele5ant p o5isions the ein 4ust be ea3 inconBunction 8ith the est$ hile the 3ocu4ent in3ee3 state3that the 3onation 8as i e5ocable+ that 4ust be inte p ete3 inthe li;ht of the p o5isions p o5i3in; that the 3onation cannot beencu4be e3+ alienate3 o sol3 b1 an1one+ that the p ope t13onate3 shall e4ain in the possession of the 3ono 8hile she isali5e+ an3 that the 3onation shall ta:e effect onl1 8hen she

3ies$ Also+ the petitione clai4s that the 3onation is 4o tiscausa fo the eason that the conte4po aneous an3 subse uentacts of the 3ono + 7asilisa Co4e ciante+ sho8e3 such intention$Petitione cites the testi4on1 of Att1$ !inie; a+ 8ho nota i=e3the 3ee3 of 3onation+ that it 8as the intent of the 3ono to4aintain cont ol o5e the p ope t1 8hile she 8as ali5e thatsuch intent 8as sho8n 8hen she actuall1 sol3 the lot to he einpetitione $

e affi 4 the appellate cou t s 3ecision$

The p o5isions in the subBect 3ee3 of 3onation that a e c ucialfo the 3ete 4ination of the class to 8hich the 3onation belon;sa e+ as follo8s6

x x x x x x x x x

xxx(I)binibi;a1 :o at ipina;:a:aloob n; ;anap at hin3i4ababa8i sa naulit na apat na ana: :o at sa :anilan; 4;ata;apa;4ana+ an; a:in; lupan; esi3ential o ti ahan sa4pu n;a:in; baha1 na:ati i: 3oon na nasa 7a;on; Poo: 3in+ SanAntonio+ /un;so3 n; Kabite

x x x x x x x x x

"a an; Kaloob palan; ito a1 4a;:a:abisa la4an; si4ula saa a8 na a:o 1 pu4ana8 sa 4un3o+ xxx$

x x x x x x x x x

"a an; titulo nu4e o TCT T ,,?' (RT &'*?) n; /un;so3 n;Kabite+ baha1 sa loten; ti ahan n; 7a;on; Poo: na

nababan;;it sa nasabin; :asulatan+ a1 4ananatili sa po3e opossesion n; Ina+ na si 7asilisa Co4e ciante haban; si1a a1nabubuha1 at

#a1on 3in an; nasabin; Titulo a1 hin3i 4apapasan;la o4aipa;bibili an; lupa haban; 4a1buha1 an; nasabin; 7asilisaCo4e ciante xxx$

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It has been hel3 that 8hethe the 3onation is inte 5i5os o4o tis causa 3epen3s on 8hethe the 3ono inten3e3 to t ansfeo8ne ship o5e the p ope ties upon the execution of the3ee3$%' In 7onsato 5$ Cou t of Appeals+%% this Cou tenu4e ate3 the cha acte istics of a 3onation 4o tis causa+ to8it6

(%) It con5e1s no title o o8ne ship to the t ansfe ee befo e the3eath of the t ansfe o o + 8hat a4ounts to the sa4e thin;+ thatthe t ansfe o shoul3 etain the o8ne ship (full o na:e3) an3cont ol of the p ope t1 8hile ali5e

(,) That befo e his 3eath+ the t ansfe shoul3 be e5ocable b1the t ansfe o at 8ill+ a3 nutu4 but e5ocabilit1 4a1 bep o5i3e3 fo in3i ectl1 b1 4eans of a ese 5e3 po8e in the

3ono to 3ispose of the p ope ties con5e1e3

(*) That the t ansfe shoul3 be 5oi3 if the t ansfe o shoul3su 5i5e the t ansfe ee$

Si;nificant to the esolution of this issue is the i e5ocablecha acte of the 3onation in the case at ba $ In Cue5as 5$Cue5as+%, 8e ule3 that 8hen the 3ee3 of 3onation p o5i3esthat the 3ono 8ill not 3ispose o ta:e a8a1 the p ope t13onate3 (thus 4a:in; the 3onation i e5ocable)+ he in effect is

4a:in; a 3onation inte 5i5os$ He pa ts a8a1 8ith his na:e3title but 4aintains beneficial o8ne ship 8hile he li5es$ Ite4ains to be a 3onation inte 5i5os 3espite an exp ess

p o5ision that the 3ono continues to be in possession an3enBo14ent of the 3onate3 p ope t1 8hile he is ali5e$ In the7onsato case+ 8e hel3 that6

( )hat is 4ost si;nificant >in 3ete 4inin; the t1pe of 3onation@is the absence of stipulation that the 3ono coul3 e5o:e the3onations on the cont a 1+ the 3ee3s exp essl1 3ecla e the4 tobe i e5ocable + a ualit1 absolutel1 inco4patible 8ith thei3ea of con5e1ances 4o tis causa 8he e e5ocabilit1 is of theessence of the act+ to the extent that a testato can not la8full18ai5e o est ict his i;ht of e5ocation (Ol3 Ci5il Co3e+A t$

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5i5os cha acte of the 3onation$ It e5en hi;hli;hts the fact that8hat e4ains 8ith the 3ono is the i;ht of usuf uct an3 notan14o e the na:e3 title of o8ne ship o5e the p ope t13onate3$ In the case at ba + the p o5ision in the 3ee3 of3onation that the 3onate3 p ope t1 8ill e4ain in thepossession of the 3ono Bust ;oes to sho8 that the 3ono has;i5en up his na:e3 title of o8ne ship the eto an3 has4aintaine3 onl1 the i;ht to use (Bus uten3i) an3 possess (Buspossi3en3i) the subBect 3onate3 p ope t1$

Thus+ 8e a i5e at no othe conclusion in that the petitione scite3 p o5isions a e onl1 necessa 1 assu ances that 3u in; the3ono s lifeti4e+ the latte 8oul3 still enBo1 the i;ht ofpossession o5e the p ope t1 but+ his na:e3 title of o8ne shiphas been passe3 on to the 3onees an3 that upon the 3ono s

3eath+ the 3onees 8oul3 ;et all the i;hts of o8ne ship o5e thesa4e inclu3in; the i;ht to use an3 possess the sa4e$

.u the 4o e+ it also appea e3 that the p o5ision in the 3ee3 of3onation e;a 3in; the p ohibition to alienate the subBectp ope t1 is couche3 in ;ene al te 4s such that e5en the 3onois 3ee4e3 inclu3e3 in the sai3 p ohibition ( #a1on 3in an;nasabin; Titulo a1 hin3i 4apapasan;la o 4aipa;bibili an; lupahaban; 4a1buha1 an; nasabin; 7asilisa Co4e ciante )$ 7oththe 3ono an3 the 3onees 8e e p ohibite3 f o4 alienatin; an3

encu4be in; the p ope t1 3u in; the lifeti4e of the 3ono $ Ifthe 3ono inten3e3 to 4aintain full o8ne ship o5e the sai3p ope t1 until he 3eath+ she coul3 ha5e exp essl1 state3 the eina ese 5ation of he i;ht to 3ispose of the sa4e$ Thep ohibition on the 3ono to alienate the sai3 p ope t1 3u in; helifeti4e is p oof that na:e3 o8ne ship o5e the p ope t1 hasbeen t ansfe e3 to the 3onees$ It also suppo ts the i e5ocablenatu e of the 3onation consi3e in; that the 3ono has al ea31

3i5este3 he self of the i;ht to 3ispose of the 3onate3 p ope t1$On the othe han3+ the p ohibition on the 3onees onl1 4eantthat the1 4a1 not 4o t;a;e o 3ispose the 3onate3 p ope t18hile the 3ono enBo1s an3 possesses the p ope t1 3u in; helifeti4e$ Ho8e5e + it is clea that the 3onees 8e e al ea31 theo8ne s of the subBect p ope t1 3ue to the i e5ocable cha acteof the 3onation$

The petitione a ;ues that the subse uent an3 conte4po aneousacts of the 3ono 8oul3 sho8 that he intention 8as to 4aintaincont ol o5e he p ope ties 8hile she 8as still li5in;$ e3isa; ee$ Respon3ent o4in;o Co4ia testifie3 that so4eti4ein %

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e no8 ule on 8hethe the 3ono 5ali3l1 e5o:e3 the3onation 8hen one of he 3au;hte s an3 3onees+ ConsolacionAust ia+ 5iolate3 the p ohibition to encu4be the p ope t1$hen Consolacion Aust ia 4o t;a;e3 the subBect p ope t1 to ace tain 7ab1 Santos+ the 3ono + 7asilisa Co4e ciante+ as:e3one of the espon3ents he ein+ o4in;o Co4ia+ to e3ee4 thep ope t1+ 8hich the latte 3i3$ Afte the petitione in tu ne3ee4e3 the p ope t1 f o4 espon3ent o4in;o+ the 3ono +7asilisa+ sol3 the p ope t1 to the petitione 8ho is one of the3onees$

The act of sellin; the subBect p ope t1 to the petitione he eincannot be consi3e e3 as a 5ali3 act of e5ocation of the 3ee3 of3onation fo the eason that a fo 4al case to e5o:e the3onation 4ust be file3 pu suant to A ticle

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(,) Upon an obli;ation c eate3 b1 la8

(*) Upon a Bu3;4ent$ (n)

Thus+ an action fo econ5e1ance of the title to the i;htfulo8ne p esc ibes in ten (%') 1ea s f o4 the issuance of thetitle$,% It is onl1 8hen f au3 has been co44itte3 that theaction 8ill be ba e3 afte fou (&) 1ea s$,,

Ho8e5e + the fou 1ea p esc ipti5e pe io3 is not applicable tothe case at ba fo the eason that the e is no f au3 in this case$The fin3in;s of fact of the appellate cou t 8hich a e entitle3 to; eat espect+ a e 3e5oi3 of an1 fin3in; of f au3$ The eco 3s3o not sho8 that the 3ono + 7asilisa+ an3 the petitione e5e

inten3e3 to 3ef au3 the espon3ents he ein 8ith espect to thesale an3 o8ne ship of the sai3 p ope t1$ On the othe han3+ thesale 8as ; oun3e3 upon thei honest but e oneousinte p etation of the 3ee3 of 3onation that it is 4o tis causa+ notinte 5i5os an3 that the 3ono still ha3 the i;hts to sell o3ispose of the 3onate3 p ope t1 an3 to e5o:e the 3onation$

The e bein; no f au3 in the t ust elationship bet8een the3ono an3 the 3onees inclu3in; the he ein petitione + the actionfo econ5e1ance p esc ibes in ten (%') 1ea s$ Consi3e in; that

TCT "o$ T %'&*& in the na4e of the petitione an3 co5e in;the subBect p ope t1 8as issue3 onl1 on .eb ua 1 -+ % < + thefilin; of the co4plaint in the case at ba in % -* 8as 8ell8ithin the ten 1ea p esc ipti5e pe io3$

The Cou t of Appeals+ the efo e+ co44itte3 no e5e sible e oin its appeale3 ecision$% 8phi%

HERE.ORE+ the appeale3 ecision 3ate3 2une *'+ % - ofthe Cou t of Appeals is he eb1 A..IRME $ "op onounce4ent as to costs$

SO OR ERE $