Case Summary (G.R. No. 36811)
Fundamental Facts and Prior Supreme Court Determinations
The Supreme Court began by restating the “fundamental conclusions” reiterated in the resolution adopted after motions for reconsideration. These conclusions, already established, were that the first-born possessor of the mayorazgo was a mere usufructuary, that the mayorazgo operated as a fideicomiso, and that the charge to distribute the fifth of the revenues constituted a family trust. The Court also held that article 4 of the Disentailing Law (October 11, 1820) applied to the case. It further concluded that the fifth of the properties into which the fifth of revenue was converted on March 1, 1864 subsisted as a fideicomiso up to the time of litigation. It also declared that the plaintiffs’ right of action had not prescribed. Finally, it held that the registration under Act No. 496 of the entailed properties must, as to the fifth conserved as a fideicomiso, be treated as having been made in favor of the beneficiaries of the fifth part, and that descendants of the founder were entitled to participate in the fifth in accordance with the foundation’s deed and article 4 of the Disentailing Law.
The Supreme Court’s resolution denied reconsideration insofar as it conflicted with these conclusions but granted a new trial limited to determine the amount to which original parties and those allowed to intervene were entitled in the fifth of the mayorazgo’s properties. The resolution set aside the dispositive part of the principal decision, returned the record to the Court of First Instance of Manila for intervention, and directed the trial court to include known and unknown persons who might have rights to participate in the fifth part. It also stated that the stipulation of facts subscribed on August 30, 1924 would subsist, while allowing parties to present additional evidence.
Remand, Referees, and the New Trial
After remand, numerous complaints of intervention were filed by claimants asserting they were relatives of the founder and of the founder’s younger children, and therefore entitled to participate in one-fifth of the properties. The trial court appointed Modesto Reyes as referee; after his death, Attorney Crispin Oben became referee. Both submitted reports, though the first referee’s premature death prevented resolution of substantial issues. At trial, objections were raised and resolved by the court. In its final judgment after the new trial, the trial court approved many of the referee’s findings but modified portions it found unsupported by facts or applicable law.
The dissatisfied parties then pursued the four appeals now decided by the Supreme Court.
G. R. No. 36811: Appeal of the Intervenors Surnamed Legarda y de la Paz
The Claim and the Impugned Sales
In G. R. No. 36811, the intervenors (Benito, Consuelo, and Rita Legarda y de la Paz) claimed entitlements to participate in one-fifth of the properties in two capacities: first, as descendants of the younger son Pablo Tuason; and second, by inheritance from their parents of participations sold to the latter by relatives of the founder. They also claimed a share in participations related to Eustaquia Ma. Tuason, who had sold such participations to the defendants.
The intervenors enumerated multiple vendors whose sales were by various deeds of absolute sale executed between 1881 and 1888. However, only certain sales were impugned in the litigation: those executed by Isabel Arenas, Tomasa Tuason de Tobias, Luis Tuason and Pedro Tuason, Alejandro Camacho and brothers (and others surnamed Camacho y Tuason; and others surnamed Macaranas y Tuason), Felipe G. Alcalde, and Teodora Eizmendi. The intervenors’ theory also faced allegations that some purchases were invalid because the vendors allegedly were in the enjoyment of revenue at the time the disentailing law took effect.
Assigned Errors I and II: Alleged Half-Reservation and Validity of Sales
The intervenors challenged the trial court’s rulings under their first two assigned errors, which involved the sales of participations by Tomasa Tuason de Tobias (deed dated October 3, 1888) and by Luis Tuason and Pedro Tuason (deed dated April 7, 1886). The referee and the trial court had taken the view that those vendors were the ones receiving the revenue at March 1, 1864, and therefore they could not dispose of more than one-half of their participations, reserving the other half in accordance with article 4 connected with articles 2 and 3 of the Disentailing Law.
The intervenors argued, among others, that the reservation did not apply because the vendors allegedly were not those receiving revenue at the effectivity of the disentailing law. They also asserted prescription, acquisitive prescription, and estoppel by laches.
The Supreme Court declined to finally resolve whether the named vendors were in fact the revenue recipients on March 1, 1864, but held that the first two assigned errors had to be resolved in relation to the arguments on prescription of the action and ownership, including laches. It noted that the complaints challenging the validity of those sales were filed only in 1927, meaning approximately forty-one years after the first sale was executed (1888) and approximately thirty years after the second sale was executed (1886), and that the plaintiffs’ action to invalidate operated as a personal action.
The Supreme Court held that the impugners’ right was governed by the laws applicable at the time of contract execution, specifically the Novisima Recopilacion and Partida 3, which provided a ten-year period, citing Cruzado vs. Bustos and Escaler, 34 Phil., 17. It then applied the transition principles under the Civil Code, including article 1939 on prescription begun before the Code and article 1301 on the prescriptive period for annulment. The Court concluded that under the prior laws and even under the Civil Code’s scheme for annulment, the impugners’ action of annulment had already prescribed because it was not filed within the time required, including the Civil Code’s rule that actions of annulment lasted four years, subject to commencement rules that were not complied with. It rejected the attempt to recharacterize the action as mere defense, holding instead that the impugners were in truth seeking to recover rights lost under their deeds and were required to annul the sale through an action in substance. It emphasized that the impugners had themselves waited so long that their rights were barred not only by prescription but also by estoppel by laches, given their inaction while appellants and predecessors enjoyed the participations and their fruits.
Assigned Error III: Sales Involving Younger Children Without Succession
The third assigned error concerned the sales executed by descendants who sold participations that the vendors would have received as descendants of the younger children who died without succession. The trial court had invalidated these sales on the ground that the rights conveyed were rights not known or determined at deed execution. The Supreme Court rejected this reasoning, holding that if the sales were valid as to participations derived from younger children with succession, then they were necessarily valid as to participations derived from younger children who died without succession, because the contracts involved existing, knowable, and determinable successor rights that arose through the death of the vendors’ predecessor in interest. It thus sustained the validity of these sales.
Assigned Error IV: No Estoppel from Stipulation about Eustaquia Tuason’s Lack of Succession
The fourth assigned error contested the court’s finding that defendants were not estopped by a stipulation at trial that Eustaquia Ma. Tuason died without descendants. The Supreme Court agreed with the trial court that there was no estoppel as against defendants, explaining that the defendants had stipulated only regarding succession or descendants of the younger daughter, not regarding sales made by the descendants of Eustaquia. The Court also reasoned that appellants’ position would lead to an absurd result depriving other descendants who did not sell their participations merely because the original stipulation concerned a deceased predecessor’s succession.
Assigned Error V: Dorotea Tuason’s Participation from Santos Luciano Tuason
The fifth assigned error related to the participation of Dorotea Tuason, who was entitled to a double participation allegedly coming from both Santos Luciano Tuason and Felix Bolois Tuason. The referee’s amendatory report had allegedly overlooked the portion as descendant of Santos Luciano. The trial court, upon motion for reconsideration, corrected the matter but, as described by appellants, transposed which source participation would be adjudicated. The Supreme Court found the fifth assigned error well-founded and ordered adjustment in accordance with the correct source participation.
Assigned Errors VI and VII: Legal Interest and New Trial
The Supreme Court rejected the request for legal interest under the sixth assigned error, explaining that in the original decision plaintiffs were already held entitled to an accounting of expenses and revenues and to receive the corresponding revenues from January 1, 1923 until delivery of participations, and those revenues were held in lieu of legal interest. The seventh assigned error was treated as a corollary and not separately discussed.
Disposition in G. R. No. 36811
The Supreme Court summarized its rulings by holding that:
the sales by Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason to the Legarda intervenors were valid in their entirety and should be adjudicated to the purchasers;
the sales of participations derived from younger children without succession were likewise valid and adjudicated to the intervenors;
and the participation of Dorotea Tuason as descendant of Santos Luciano Tuason should be adjudicated to the intervenors.
The fourth and sixth assigned errors were overr
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Case Syllabus (G.R. No. 36811)
- The controversies arose for the third time regarding the mayorazgo founded by Don Antonio Tuason, and they were resolved through four separate but jointly discussed appeals.
- In the first appeal, both plaintiffs and defendants appealed from the Court of First Instance of Manila decision dismissing the complaint and counterclaim, and the resulting ruling was published in Barretto v. Tuason (fifth appeal stage) as 50 Phil., 888.
- In the second occasion, certain defendants filed certiorari against the Court of First Instance of Manila and challenged the appointment of the Bank of the Philippine Islands as receiver, which decision was published in 54 Phil., 408.
- The third occasion involved four appeals by defendants and some intervenors from portions of a decision and order rendered during a new trial ordered after the Supreme Court’s prior resolution.
- The Supreme Court treated the four appeals in a single decision for coherence, while discussing each appeal individually.
Fundamental Mayorazgo Facts
- The mayorazgo was founded by Don Antonio Tuason on February 25, 1794.
- The founder died on June 4 of the same year in the City of Manila.
- The mayorazgo received approval through a Royal Cedula dated August 20, 1795.
- The Statute of Civil Disentailments was promulgated in Spain on October 11, 1820, extended to the Philippine Islands, and took effect on March 1, 1864 by virtue of a Royal Decree dated October 31, 1863.
- The mayorazgo properties consisted of the Haciendas de Santa Mesa y Diliman, Hacienda de Mariquina, and two urban properties on Rosario Street, Manila.
- The parties stipulated assessed values of the properties as P3,550,646.00, P1,507,140.00, and P542,382.00, for a total of P5,600,168.00.
- By the Supreme Court’s earlier conclusions reiterated in the new-trial resolution, the first-born possessor was a mere usufructuary, the mayorazgo operated as a fideicomiso, and the charge to distribute the fifth of the revenues functioned as a family trust.
- The Court also reiterated that article 4 of the Disentailing Law of October 11, 1820 applied to the case.
- The Court held that the fifth of the properties into which the fifth of the revenues converted on March 1, 1864 remained and subsisted as a fideicomiso up to the time of decision.
- The Court reiterated that the plaintiffs’ right of action had not prescribed, and that registration under Act No. 496 had to be treated as made for the beneficiaries of the fifth part conserved as a fideicomiso.
- The Court reiterated that descendants of the founder were entitled to participate in the fifth part pursuant to the foundation deed and article 4 of the Disentailing Law.
Earlier Supreme Court Resolution Effects
- The Supreme Court partially denied the defendants’ motion for reconsideration insofar as it conflicted with final conclusions previously reached.
- The Supreme Court then set aside the dispositive portion and remanded the record to the Court of First Instance of Manila to allow new intervenors to prove rights to participation in the fifth part.
- The remand order directed the inclusion of known and unknown persons entitled to participate in the fifth, and it required the trial court to determine the amount each original party and intervenor was entitled to receive.
- The resolution maintained the subsisting effect of the stipulation of facts signed on August 30, 1924, and it allowed additional evidence by original parties and future intervenors.
New Trial Conduct and Referral
- After remand and the filing of numerous complaints of intervention by relatives claiming rights to participate in one-fifth of the properties, the trial court appointed Modesto Reyes as referee.
- Upon Reyes’s death, the trial court appointed Attorney Crispin Oben as substitute referee.
- The referees filed written reports, and at trial the court resolved objections raised during reception of evidence.
- The trial court approved most recommendations of Oben but modified others for lack of factual support or mismatch with applicable law.
- The defendants and some intervenors took the present four appeals from portions of the trial court’s decision and order.
Appeal in G. R. No. 36811
- The appellants in G. R. No. 36811 were Benito, Consuelo, and Rita, surnamed Legarda y de la Paz.
- The intervenors claimed participation in the one-fifth of the properties both as descendants of the younger son Pablo Tuason and through inheritance of participation shares sold to their parents by certain relatives of the founder.
- They also claimed participation stemming from relatives of the younger daughter Eustaquia Ma. Tuason, whose participation had been sold to the defendants.
- The Court noted that the last claim would be discussed later under the intervenors’ fourth assigned error.
Impugned Sales and Intervenors’ Grounds
- The Court enumerated multiple vendors who sold participations to Benito Legarda and Teresa de la Paz by deeds dated between 1881 and 1888.
- The intervenors’ challenge focused only on specific sales, namely those executed by Isabel Arenas, Tomasa Tuason de Tobias, Luis Tuason and Pedro Tuason, Alejandro, Anacleto, Teodorico, Maria, and Dionisia surnamed Camacho y Tuason, and Tomas, Encarnacion, Maria, and Mercedes surnamed Macaranas y Tuason, and also Felipe G. Alcalde and Teodora Eizmendi.
- The intervenors’ sales were assailed by other relatives as relatives of the vendors who would succeed them in their respective participations.
First Two Assigned Errors Treated Together
- The intervenors assigned errors challenging the findings that Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason were already receiving revenue when the Disentailing Statute took effect, and that their sales should be declared void only as to one-half.
- The referee had recommended partial invalidity by reasoning that the vendors were those receiving revenue at the relevant statutory date and could not dispose of more than one-half, reserving the remaining half under article 4 in relation to articles 2 and 3 of the Disentailing Statute.
- The intervenors argued that the relevant vendors were not receiving the revenue on March 1, 1864, and therefore the reservation should not apply.
- The intervenors further argued that the impugners’ action was already prescribed, that the intervenors had acquired ownership by acquisitive prescription, and that long inaction should bar the claims under estoppel by laches.
- The Supreme Court did not definitively resolve who received revenue on March 1, 1864, because the issues on prescription, ownership, and laches were decisive.
Prescription for Impugning Sales
- The intervenors’ sales to their parents were executed on April 7, 1886 and October 3, 1888.
- The impugners filed complaints of intervention assailing those sales for the first time in 1927, which produced gaps of about forty-one years and about thirty years respectively from execution.
- The Court treated the impugners’ invoked right as a personal action requiring prescription rules applicable under the law in force at the time of the deeds.
- The Court identified the governing periods in the Novisima Recopilacion and Partida 3 provisions providing a ten-year period, citing Cruzado vs. Bustos and Escaler, 34 Phil., 17.
- The Court explained that under Art. 1939 of the present Civil Code, prescription already begun before its effect would follow the prior law, but if the time required under prior law had elapsed after the Civil Code took effect, the shorter sufficiency under the Civil Code would apply.
- The Court explained under Art. 1301 that the action of annulment lasts four years, with commencement depending on the grounds stated in the provision.
- The Court reasoned that even assuming a longer period equivalent to ten years, the impugners’ action of annulment was still already time-barred.
- The Court rejected reliance on Code of Civil Procedure prescription rules, explaining that section 38 required application of former prescriptive periods only when rights had already accrued before the new statute’s effect.
- The Court concluded that the action of annulment invoked to invalidate the sales had already prescribed.
Nature of the Relief Sought
- The Court addressed the impugners’ attempt to characterize their intervention as mere defense rather than an annulment action.
- The Court held that the impugners effectively brought an annulment action in substance because the appellants were those enjoying the participations and attempting to restore rights lost under the deeds required annulment.
- The Court further treated the complaints of intervention as complaints within the letter and spirit of section 121 of the Code of Civil Procedure.
Acquisitive Prescription and Laches
- The Court held that due to the long lapse of time, the appellants had acquired by prescription whatever rights the impugners had in the participations sold.
- The Court also invoked estoppel by laches based on years of enjoyment by appellants’ predecessors and the impugners’ failure to act to recover rights.
- The Court relied on equitable reasoning articulated in Buenaventura vs. David (37 Phil., 435) that long delay obscures evidence and may destroy rights.
- The Court also relied on the principle restated in Tuason vs. Marquez (45 Phil., 381) that inexcusable delay and acquiescence bar legal action under the equity doctrine of estoppel by laches.
- The Court concluded that the impugners’ delay barred the instant action of annulment.
Third Assigned Error on Younger Children Without Succession
- The third assigned error concerned sales executed by descendants of the founder who sold participations belonging to them as descendants of the younger children.
- The trial court initially validated sales involving younger children with succession and initially validated, but later invalidated, sales involving younger children without succession.
- The trial court reasoned that sales were illegal because they conveyed rights not known and determined at the time of the deeds.
- The Supreme Court rejected this reasoni