G.R. No. L-13142 - People vs. Felix Masala

Case Summary (G.R. No. L-13142)

Petitioner

Tomasa Osorio, administratrix of the estate of Petrona Reyes, contests that the donation from Petrona Reyes to her son Leonardo included the 610 shares and contends the donation was void or did not encompass those shares.

Respondent

Leonardo Osorio claims ownership of the 610 shares and the dividends by virtue of a donation executed by his mother, Petrona Reyes, and seeks inscription of the shares in his name and delivery of dividends.

Key Dates

Death of D. Antonio Osorio: before 1912 (heirs succeeded from his death).
Donation executed: February 28, 1914 (donation to Leonardo).
Partition approved by Court of First Instance of Cavite: May 10, 1915.
Rectifying/ratifying document by donor: July 3, 1915.
Trial court judgment: in favor of plaintiff; appealed to the Supreme Court (decision affirmed).

Applicable Law (as invoked and applied in decision)

Civil Code: Article 623 (effect of donation upon acceptance), Article 635 (donation cannot include future property), Article 353 (accession: ownership gives right to fruits and incorporations), Articles 657, 661, and 989 (rules on succession and retroactive effect of succession).
Referenced commentators and Code provisions: commentary of Manresa on Article 635; other Civil Code provisions referenced (arts. 177, 827, 831, 1331, 1271) regarding agreements on inheritances.

Facts

D. Antonio Osorio owned one-third of the capital of a joint-account association “Ynchausti & Co.” capitalized at P500,000 (one-third ≈ P166,666.66). After his death, his heirs authorized administratrix Tomasa Osorio to present a partition project; the partition (approved May 10, 1915) adjudicated to the widow, Petrona Reyes, the sum of P94,000 as her part in the shipping business (a part of the deceased’s interest). On February 28, 1914, Petrona executed a donation in favor of her son Leonardo purporting to donate one-half of her share in the one-third part of her husband’s interest in Ynchausti & Co.; Leonardo accepted. On July 3, 1915, Petrona executed a rectifying/ratifying instrument to correct an error in the 1914 document and to cede and donate all interest adjudicated to her in the partition approved May 10, 1915. The steamer Governor Forbes was purchased after D. Antonio’s death; the parties agreed that the widow’s share in the Forbes at incorporation of Ynchausti Steamship Co. was P61,000 (610 shares). The P61,000 was deposited with Ynchausti & Co. pending resolution among heirs. The plaintiff alleges the donation included those shares; defendants deny inclusion and assert alternative ownership among heirs.

Procedural History and Trial Court Ruling

The trial court declared that the 610 shares and their dividends belong to the plaintiff, ordered the administratrix to exclude them from the inventory/accounts, and ordered Ynchausti Steamship Co. to inscribe the shares in plaintiff’s name and deliver dividends. The court denied the defendant’s counterclaim for P45,000. The defendants appealed.

Issues Presented on Appeal

Whether the donation of February 28, 1914 was void because it purported to include a “future property” (the widow’s share adjudicated only in the partition of May 10, 1915), in violation of Article 635 of the Civil Code.
If the donation were valid, whether the 610 shares (P61,000) representing the widow’s share in the Governor Forbes are included in that donation.

Analysis — Validity of the Donation (Article 635 and Succession Rules)

Article 635 bars donation of future property defined as property the donor cannot dispose of at the time of donation. The court applied the Civil Code’s succession rules (arts. 657, 661, 989) and concluded that, because D. Antonio died before 1912, his heirs acquired the right to succeed him from the moment of death; thus the widow’s hereditary interest was a vested right and not a “future” property beyond her power to dispose.
The court relied on the legal fiction that heirs continue the personality of the deceased regarding the hereditary property; the right to the inheritance is acquired immediately upon death even if adjudication or partition occurs later. The court also observed that the Civil Code allows agreements concerning inheritance in various provisions, and a vested post-mortem hereditary right may be the object of contract or donation.
The defendant’s own admission that the widow’s adjudicated share amounted to P94,000 was treated as conclusive proof that the widow had a legal right which she could donate in 1914.
The rectifying document of July 3, 1915 was characterized as a correction and ratification of the 1914 donation rather than a new donation; acceptance by the donee had already occurred in 1914, satisfying Article 623.

Analysis — Inclusion of the 610 Shares (Governor Forbes) in the Donation

The court treated the question of whether the Governor Forbes and the P61,000 (610 shares) formed part of the deceased’s interest in the Ynchausti business as one of fact determined by evidence. The record showed: Ynchausti & Co. accounted for profits of the Forbes within general accounts of the shipping business rather than separately; no new partnership was formed for the Forbes; the firm mortgaged vessels to finance purchase; heirs signed bank guaranties but did not supply distinct capital; and, by agreement among the parties, the deceased’s one-third interest in the Forbes wa

Case Syllabus (G.R. No. L-13142)

Case Citation and Panel

Reported in 41 Phil. 531; G.R. No. 16544; decided March 30, 1921.
Decision penned by Villamor, J.
Justices Maya, C.J., Araullo, Street, and Malcolm, JJ., concurred.

Parties and Relief Sought

Plaintiff and appellee: D. Leonardo Osorio.
Defendants and appellants: Tomasa Osorio, administratrix of the estate of Petrona Reyes; and The Ynchausti Steamship Co.
Relief sought by plaintiff: recovery of 610 shares of stock of "Ynchausti Steamship Co." and the dividends corresponding thereto, which had been included in the inventory of the properties of the deceased Da. Maria Petrona Reyes and were under administration by the defendant administratrix.

Underlying Facts — Family, Business and Estate

D. Antonio Osorio was a one-third owner in the joint account association "Ynchausti & Co." The total capital of that association was P500,000; one-third of this capital, i.e., P166,666.66, was attributed to D. Antonio Osorio.
Upon his death (pre-1912 according to references), his heirs agreed to authorize Da. Tomasa Osorio, as administratrix of his estate, to present a project of partition.
In the project of partition, with consent of all heirs and inserted by the administratrix, Da. Petrona Reyes (the widow) was listed as having “the sum of P94,000 as her part in the 'share of the estate in the shipping business of Ynchausti & Co.,' that is, a little over P166,666.66,” language reproduced from the project.
The project of partition was approved by the Court of First Instance of Cavite on May 10, 1915.
After D. Antonio Osorio’s death and before distribution of his estate, Ynchausti & Co. purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio as having a one-third interest in ownership and business of that steamer.
By agreement among interested parties at the time of incorporation of "The Ynchausti Steamship Co.," the share of Da. Petrona Reyes in the vessel Governor Forbes was fixed at P61,000, equivalent to 610 shares of stock of the corporation. That sum was deposited with the Steamship Co. pending final settlement of ownership disputes among the heirs.
The dispute in litigation: plaintiff asserts ownership of the 610 shares and P61,000 by virtue of a donation from Da. Petrona Reyes; defendant contends those shares are not included in the donation and instead belong to the heirs of Da. Petrona Reyes.

Documents of Donation — February 28, 1914 (Primary Donation)

Date and notarial authentication: February 28, 1914, before Notary D. Florencio Gonzales Diez.
Donor: Petrona Reyes, widow of D. Antonio Osorio.
Donee: her son, D. Leonardo Osorio, who accepted and signed the document.
Key recitals and provisions in the document (literal content reproduced in the record):
- Statement that D. Antonio Osorio was a shareholder to the extent of one-third in the joint account association "Ynchausti & Co." with articles executed July 3, 1906.
- Assertion that upon partition of his estate, the donor was adjudicated as conjugal property one-half of that one-third part, with the other half going to the four surviving children — described as “the present condition of our interest in said company.”
- Express donation: “I make a free and express donation to my said son D. Leonardo Osorio of all my interest and participation in said company 'Ynchausti and Co.' which is neither transferred nor burdened in any manner whatever.”
- Declaration that the donation does not prejudice other children’s rights to inherit and that the donor reserves for herself what is sufficient for her subsistence.
- Acceptance: Leonardo Osorio explicitly states his conformity and acceptance in the same instrument.
- Execution in triplicate and witness signatures; acknowledgement before the notary public on February 28, 1914.

Documents of Ratification/Correction — July 3, 1915 (Rectifying Instrument)

Date and notarial context: July 3, 1915, executed at Cavite; reproduced verbatim in the record.
Purpose stated: to correct an error in the February 28, 1914 document where it was asserted that half of the one-third had been adjudicated to the donor as conjugal property when, in fact, the partition had not yet been finalized at that date.
The instrument reaffirmed the donation in effect, declaring that the donor ceded and donated “all interest or participation in said shipping business of Ynchausti & Co. which was adjudicated to me in the partition of the estate of my deceased husband, and approved by the Court of First Instance of Cavite, on May 10, 1915.”
Witness signatures and execution in triplicate included in the record.

Procedural History and Trial Court Disposition

Trial court judgment: declared that the 610 shares and their dividends belong to the plaintiff.
Orders of the trial court:
- Defendant Da. Tomasa Osorio, administratrix, was ordered to exclude the shares from the inventory and her accounts.
- The Ynchausti Steamship Co. was ordered to inscribe the shares in the name of plaintiff D. Leonardo Osorio and deliver the corresponding dividends to him.
- The trial court denied the defendant’s counterclaim for P45,000 (expressed in the text as P45,000 and elsewhere the counterclaim decided as P45,609.91), on the ground that said sum represented dividends corresponding to the P94,000 adjudicated to Da. Petrona Reyes in the partition and donated by her to the plaintiff.
Appeal was taken to the Supreme Court by the defendants/appellants.

Issues Presented on Appeal (Appellant’s Two Propositions)

Proposition 1: The donation made by Da. Petrona Reyes in favor of the plaintiff was of no value and effect.
- Appellant asserts invalidity under Article 635 of the Civil Code (a donation cannot include future property — property of which the donor cannot dispose at the time of donation).
Proposition 2: Supposing the donation valid, the 610 shares (value P61,000) cannot be considered included among the donated interest.

Statutory and Doctrinal Authorities Cited in the Record

Civil Code Article 635: “A donation can not include future property. By future property is understood that of which the donor can not dispose at th