PCIB vs.

ESCOLIN
Philippine Commercial and Industrial Bank, Administrator of the Testate Estate of
As an executor, he was bound to file tax returns for the
Charles Newton Hodges, vs. Hon. Venicio Escolin (CFI-Iloilo) and Avelina A. Magno;
Testate Estate of the late Linnie Jane Hodges. Testate Estate of the late Charles Newton estate he was administering under American law. He
Hodges. PCIB, administrator-appellant, vs. Lorenzo Carles, Jose Pablico, Alfredo did file such as estate tax return on August 8, 1958. In
Catedral, Salvador Guzman, Belcesar Causing, Florenia Barrido, Purificacion Coronado,
Graciano Lucero, Ariteo Thomas Jamir, Melquiades Batisanan, Pepito Iyulores, Schedule "M" of such return, he answered "Yes" to the
Esperidion Partisala, Winifredo Espada, Rosario Alingasa, Adelfa Premaylon, Santiago question as to whether he was contemplating
Pacaonsis, and Avelina A. Magno, appellees, Western Institute of Technology, Inc.,
movant-appellee "renouncing the will". On the question as to what
March 29, 1974; Barredo, J. property interests passed to him as the surviving
* PCIB raised 78 assignment of errors! spouse, he answered:

Short version: The Hodges lived in the Philippines for “None, except for purposes of administering the
almost half a century and died leaving substantial Estate, paying debts, taxes and other legal
properties in Iloilo and in the US. The missus died 5 charges. It is the intention of the surviving
years before the husband, providing in her will that husband of deceased to distribute the remaining
while her estate would go to him, upon his death, the property and interests of the deceased in their
remainder should pass to her siblings. (They were Community estate to the devisees and legatees
childless.) The court held that this testamentary named in the will when the debts, liabilities,
provision, while probably ineffectual as a substitution taxes and expenses of administration are finally
under the Civil Code, is not actually a substitution, but determined and paid.”
is a valid and simultaneous institution of heirs, though
the passing of title to the inheritance to the others (the
siblings) was made to depend on a resolutory condition
(the husband’s death). Case was remanded to the trial Charles died in Iloilo in December 1962 without having
court for the determination of the proper application of liquidated Linnie’s estate, which includes her share in
the renvoi principle (conflict of laws between the conjugal partnership. A longtime employee of the
Philippines and Texas law), and the proper distribution Hodges, Avelina Magno, was appointed Administratrix
of Linnie’s, Charles’, and their conjugal estates. (for Linnie’s estate) and a Special Administratrix (for
Charles’). Magno was appointed, but later Harold
Facts: Davies (representative of Charles’ heirs in the US) was
Charles Newton Hodges and Linnie Jane Hodges were designated Co-Special Administrator, who was then
originally from Texas, USA. During their marriage, they replaced by one Joe Hodges, Charles’ nephew. One Atty.
had acquired and accumulated considerable assets and Mirasol was also appointed as co-administrator, and an
properties in the Philippines and in Oklahoma and order of probate and letters of administration were
Texas in the US. They both lived, worked and were issued to Hodges and Mirasol.
domiciled in Iloilo City for around 50 years. Before her
death, Linnie Jane executed a will leaving her estate, less
her debts and funeral expenses, to her husband Charles.
At this point, the SC was already very much confused
Should Charles die, the will provided that the remainder
about the gaps in the facts, convinced that the parties
of her estate go to her brothers and sisters, share and
representing both estates had cooked up a modus
share alike. Should any of the brothers and sisters die
operandi to settle money matters (a settlement with
before the husband, Linnie willed that the heirs of the
records the Court never saw)—which, however, went
said sibling be substituted in the deceased’s sibling’s
awry, with more and more heirs from the US flocking to
place.
the Iloilo shores, and lawyers (Ozaetas! Mabantas!
Manglapuses!) filing their respective claims for retainer
When Linnie died, Charles took the will to probate
fees. Much much later, PCIB became the administrator
court, and was appointed Executor, then later, Special
of Charles’ estate, asserting a claim to all of his estate,
Administrator. He moved to be allowed to continue
including those properties/assets that passed to him
administering the family business, as per Linnie Jane’s
upon Linnie Jane’s death. Avelina naturally opposed
wishes, and to engage in sales, conveyances, leases,
this, as Linnie Jane’s other heirs (the HIGDONS) would
mortgages and other necessary transactions. He also
be prejudiced, so she continued acting in her capacity as
filed the necessary and appurtenant
administrator (entering into sales and other such
administration/accounting records, and income tax
conveyances). For these acts, the PCIB dismissed her as
returns for the estate. Charles named seven brothers and
an employee of Charles’ estate, to which she responded
sisters of Linnie Jane as her heirs (Esta, Emma, Leonard,
by locking up the premises being used by PCIB as
Aline, David, Sadie, Era and Nimroy), but the order
offices, which were among the estate’s properties.
admitting the will to probate unfortunately omitted one
of the heirs, Roy (Nimroy?) Higdon, so Charles filed a
verified motion to have Roy’s name included. PCIB’s Claims
Linnie Jane’s will should be governed by Philippine  There are generally only two kinds of
Law, with respect to the order of succession, the amount substitution provided for and authorized by our
of successional rights, and the intrinsic validity of its Civil Code (Articles 857-870), namely, (1) simple
testamentary provisions. or common substitution, sometimes referred to
 Linnie intended Philippine laws to govern her Will. as vulgar substitution (Article 859), and (2)
 Article 16, CC, provides that "the national law of the person
fideicommissary substitution (Article 863). All
whose succession is under consideration, whatever may be
the nature of the property and regardless of the country other substitutions are merely variations of
wherein said property may be found", shall prevail. these. The substitution provided for by
However, the Conflict of Law of Texas, which is the paragraph four of the Will of Linnie Jane
"national law" of the testatrix, Linnie Jane Hodges, provide
Hodges is not fideicommissary substitution,
that the domiciliary law (Philippine law) should govern the
testamentary dispositions and successional rights over because there is clearly no obligation on the part
movables, and the law of the situs of the property (also of C. N. Hodges as the first heir designated, to
Philippine law as to properties located in the Philippines) as preserve the properties for the substitute heirs.
regards immovables.
At most, it is a vulgar or simple substitution.
 Thus applying the "Renvoi Doctrine", as approved and
applied in the Christensen case (1963), Philippine law should However, in order that
apply. a vulgar orsimple substitution can be valid,
 Under Philippine and Texas law, the conjugal or community three alternative conditions must be present,
estate of spouses shall, upon dissolution, be divided equally namely, that the first designated heir (1) should
between them. Thus, upon Linnie’s death, ½ of the entirety
of the assets of the Hodges spouses constituting their
die before the testator; or (2) should not wish to
conjugal estate pertained automatically to Charles, not by accept the inheritance; or (3) should be
way of inheritance, but in his own right as partner in the conjugal incapacitated to do so. None of these conditions
partnership. apply to C. N. Hodges, and, therefore, the
 The other one-half (1/2) portion forming part of Linnie’s
estate, cannot, under a clear and specific provision of her
substitution provided for by the above-quoted
Will, be enhanced or increased by income, earnings, rents, or provision of the Will is not authorized by the
emoluments accruing after her death. “All rents, emoluments Code, and, therefore, it is void. Manresa even
and income from said estate shall belong to him (C. N. Hodges) said, “when another heir is designated to inherit
and he is further authorized to use any part of the principal of said
estate as he may need or desire."
upon the death of a first heir, the second designation
 Articles 900, 995 and 1001 provide that the surviving spouse can have effect only in case the first instituted heir
of a deceased leaving no ascendants or descendants is dies before the testator, whether or not that was the
entitled, as a matter of right and by way of irrevocable true intention of said testator.”
legitime, to at least one-half (1/2) of the estate of the
 The remedy of the Higdons, then, who are
deceased, and no testamentary disposition by the deceased
can legally and validly affect this right of the surviving claiming dubious rights to ¼ of the conjugal
spouse. In fact, her husband is entitled to said one-half (1/2) estate of the Hodges, is to file a claim against the
portion of her estate by way of legitime. (Article 886) estate of Charles.
 Clearly, therefore, immediately upon the death of Linnie
 It also follows that the conveyances executed by
Jane Hodges, C. N. Hodges was the owner of at least 3/4 or
75% percent of all of the conjugal assets of the spouses, 50% Avelina, claiming to be merely in continuation
by way of conjugal partnership share and 1/4 or 25% by of the Hodges’ businesses, and which
way of inheritance and legitime) plus all "rents, emoluments corresponding deeds of sale were confirmed by
and income" accruing to said conjugal estate from the
the probate court, are null and void and should
moment of Linnie Jane Hodges' death.
 In his capacity as sole heir and successor to Linnie’s estate, be subject to reconveyance.
Charles appropriated to himself the entirety of her estate. He
operated all the assets, engaged in business and performed Avelina’s Claims
all acts in connection with the entirety of the conjugal (At one point, even Linnie’s heirs wanted to have Avelina
estate, in his own name alone, just as he had been operating,
engaging and doing while the late Linnie Jane Hodges was
removed from her capacity as administrator, but the lower
still alive. Upon his death on December 25, 1962, therefore, all court reversed its earlier grant of the motion, on account of a
said conjugal assets were in his sole possession and control, and previous injunction it issued.)
registered in his name alone, not as executor, but as exclusive  Linnie Jane merely gave Charles a life-estate or a
owner of all said assets.
usufruct over all her estate, and gave a vested
 As the sole and exclusive heir, Charles did not
remainder-estate or the naked title over the
need to liquidate the estate. Neither was there
same estate, to her relatives.
any asset left to Linnie’s estate at the time of
 After Linnie’s death, Charles, as administrator
Charles’ death, though Linnie’s estate may have
and executor of the will, unequivocably and
referred to “all of the rest, residue and
clearly through oral and written declarations
remainder of my estate” which would go to her
and sworn public statements, renounced,
siblings in the event of Charles death. The
disclaimed and repudiated his life-estate and
provision is thus void and invalid at least as to
usufruct.
Philippine assets.
  Since there was no separation or segregation of heir with absolute dominion over them only during his
the interests of Linnie and Charles in the lifetime, which means that while he could completely
combined conjugal estate, as there has been no and absolutely dispose of any portion thereof inter
such separation or segregation, and because of vivos to anyone other than himself, he was not free to do
Charles’ repudiation, both interests have so mortis causa, and all his rights to what might remain
continually earned exactly the same amount of upon his death would cease entirely upon the
rents, emoluments and income. occurrence of that contingency, inasmuch as the right of
his brothers and sisters-in-law to the inheritance,
Issue: although vested already upon the death of Mrs. Hodges,
1. Is Linnie’s disposition in favor of her siblings would automatically become operative upon the
void? / WON there is testamentary substitution occurrence of the death of Hodges in the event of actual
– NO existence of any remainder of her estate then.

Incidental to the main topic: Contrary to Avelina’s view, however, it was not the
2. How should the estate be usufruct alone of Linnie’s estate, as contemplated in
partitioned/liquidated? – REMAND Article 869, that she bequeathed to Charles during his
3. WON TEXAS LAWS APPLY – NO. lifetime, but the full ownership thereof, although the
RULING: same was to last also during his lifetime only, even as
1. To a certain extent, PCIB’s contention that Linnie’s there was no restriction whatsoever against his
testamentary substitution, when viewed as a disposing or conveying the whole or any portion thereof
substitution, may not be given effect, is correct. Indeed, to anybody other than himself. The Court saw no legal
legally speaking, Linnie’s will provides neither for a impediment to this kind of institution, except that it
simple or vulgar substitution under Article 859 of the cannot apply to the legitime of Charles as the surviving
Civil Code nor for a fideicommissary substitution under spouse, consisting of one-half of the estate, considering
Article 863 thereof. There is no vulgar substitution that Linnie had no surviving ascendants nor
because there is no provision for either (1) predecease of descendants. (Arts. 872, 900, and 904.)
the testator by the designated heir or (2) refusal or (3)
incapacity of the latter to accept the inheritance, as Hodges’ acts of administration and accounting strongly
required by Article 859; and neither is there a negate PCIB’s claims that he had adjudicated to himself
fideicommissary substitution therein because no all of Linnie’s estate. While he may have used language
obligation is imposed thereby upon Hodges to preserve like “herein executor (being) the only devisee or legatee
the estate or any part thereof for anyone else. But from of the deceased, in accordance with the last will and
these premises, it is not correct to jump to the testament already probated… there is no other person
conclusion, as PCIB does, that the testamentary interested in the Philippines of the time and place of
dispositions in question are therefore inoperative and examining herein account to be given notice,” he
invalid. would’ve known that doing so would impute bad faith
unto him. Also, in his very motions, Hodges asserted the
The error in PCIB's position lies simply in the fact that it rights of Linnie’s named heirs. He even moved to
views the said disposition exclusively in the light of include Roy’s name included in the probate court’s
substitutions covered by the Civil Code section on that order, lest Roy’s heirs think that they had been omitted.
subject, (Section 3, Chapter 2, Title IV, Book III) when it
is obvious that substitution occurs only when another Thus, he recognized, in his own way, the separate
heir is appointed in a will "so that he may enter into identity of his wife’s estate from his own share of the
inheritance in default of the heir originally instituted," conjugal partnership up to the time of his death, more
(Article 857) and, in the present case, no such possible than 5 years after that of his wife. He never considered
default is contemplated. The brothers and sisters of Mrs. the whole estate as a single one belonging exclusively to
Hodges are not substitutes for Hodges because, under himself. The only conclusion one can gather from this is
her will, they are not to inherit what Hodges cannot, that he could have been preparing the basis for the
would not or may not inherit, but what he would not eventual transmission of his wife's estate, or, at least, so
dispose of from his inheritance; rather, therefore, they much thereof as he would not have been able to dispose
are also heirs instituted simultaneously with Hodges, of during his lifetime, to her brothers and sisters in
subject, however, to certain conditions, partially accordance with her expressed desire, as intimated in his
resolutory insofar as Hodges was concerned and tax return in the US. And assuming that he did pay the
correspondingly suspensive with reference to his corresponding estate and inheritance taxes in the
brothers and sisters-in-law. It is partially resolutory, Philippines on the basis of his being sole heir, such
since it bequeaths unto Hodges the whole of her estate payment is not necessarily inconsistent with his
to be owned and enjoyed by him as universal and sole recognition of the rights of his co-heirs. The Court thus
viewed that under the peculiar provisions of his wife's application of the laws of Texas would result in the other heirs of
will, and for purposes of the applicable inheritance tax Mrs. Hodges not inheriting anything under her will. And since
PCIB's representations in regard to the laws of Texas virtually
laws, Hodges had to be considered as her sole heir,
constitute admissions of fact which the other parties and the Court
pending the actual transmission of the remaining are being made to rely and act upon, PCIB is not permitted to
portion of her estate to her other heirs, upon the contradict them or subsequently take a position contradictory to or
eventuality of his death, and whatever adjustment might inconsistent with them.
be warranted should there be any such remainder then
is a matter that could well be taken care of by the The only question that remains to be settled in the remand to the
court below are:
internal revenue authorities in due time. The Court also
(1) whether or not the applicable laws of Texas do provide in effect
considered as basis of Charles’ intentions several for more, such as, when there is no legitime provided therein
questionnaires in solemn forms in filing estate taxes (2) whether or not Hodges has validly waived his whole
abroad, though they have not been introduced in inheritance from Mrs. Hodges.
evidence (!!!), only referred to several times by the
parties. In the course of the deliberations, it was brought out by some
members of the Court that to avoid or, at least, minimize further
protracted legal controversies between the respective heirs of the
It is obvious, though, that Charles’ procrastinating in Hodges spouses, it is imperative to elucidate on the possible
settling Linnie’s estate, and his sole administration of it, consequences of dispositions made by Charles after Linnie’s death,
commingled his and his co-heirs interests, making it from the mass of the unpartitioned estates without any express
difficult to properly make an accounting of their shares. indication in the pertinent documents as to whether his intention
is to dispose of part of his inheritance from his wife or part of his
PCIB, then, cannot administer the properties on its own.
own share of the conjugal estate as well as of those made by PCIB
What would be just and proper is for both after the death of Hodges. After a long discussion, the consensus
administrators of the two estates to act conjointly until arrived at was as follows:
after said estates have been segregated from each other.
2. The parties were in disagreement as to how Article 16 of the (1) any such dispositions made gratuitously in favor of third
Civil Code should be applied. On the one hand, PCIB claimed that parties, whether these be individuals, corporations or foundations,
inasmuch as Linnie was a resident of the Philippines at the time of shall be considered as intended to be of properties constituting
her death, under said Article 16, construed in relation to the part of Hodges' inheritance from his wife, it appearing from the
pertinent laws of Texas and the principle of renvoi, what should be tenor of his motions of May 27 and December 11, 1957 that in
applied here should be the rules of succession under the Civil asking for general authority to make sales or other disposals of
Code, and, therefore, her estate could consist of no more than one- properties under the jurisdiction of the court, which include his
fourth of the said conjugal properties, the other fourth being, as own share of the conjugal estate, he was not invoking particularly
already explained, the legitime of her husband (Art. 900) which his right over his own share, but rather his right to dispose of any
she could not have disposed of nor burdened with any condition part of his inheritance pursuant to the will of his wife;
(Art. 872). On the other hand, Avelina denied that Linnie died a
resident of the Philippines, since allegedly she never changed nor (2) as regards sales, exchanges or other remunerative transfers, the
intended to change her original residence of birth in Texas, United proceeds of such sales or the properties taken in by virtue of such
States of America, and contends that, anyway, regardless of the exchanges, shall be considered as merely the products of "physical
question of her residence, she being indisputably a citizen of changes" of the properties of her estate which the will expressly
Texas, under said Article 16 of the Civil Code, the distribution of authorizes Hodges to make, provided that whatever of said
her estate is subject to the laws of said State which, according to products should remain with the estate at the time of the death of
her, do not provide for any legitime, hence, Linnie’s brothers and Hodges should go to her brothers and sisters;
sisters are entitled to the remainder of the whole of her share of the (3) the dispositions made by PCIB after the death of Hodges must
conjugal partnership properties consisting of one-half thereof. naturally be deemed as covering only the properties belonging to
Avelina further maintained that, in any event, Charles had his estate considering that being only the administrator of the
renounced his rights under the will in favor of his co-heirs, as estate of Hodges, PCIB could not have disposed of properties
allegedly proven by the documents touching on the point already belonging to the estate of his wife. Neither could such dispositions
mentioned earlier, the genuineness and legal significance of which be considered as involving conjugal properties, for the simple
PCIB questioned. reason that the conjugal partnership automatically ceased when
Linnie died, and by the peculiar provision of her will, under
The Court cannot decide on the claims, though, for neither the discussion, the remainder of her share descended also
evidence submitted by the parties appeared to be adequate automatically upon the death of Hodges to her brothers and
enough for it to render an intelligent comprehensive and just sisters, thus outside of the scope of PCIB's administration.
resolution. No clear and reliable proof of what in fact the possibly Accordingly, these constructions of Linnie’s will should be
applicable laws of Texas are, was presented (Remember judicial adhered to by the trial court in its final order of adjudication and
notice in case of foreign laws?). Then also, the genuineness of distribution and/or partition of the two estates in question.
documents relied upon by Avelina is disputed. In Justice,
therefore, to all the parties concerned, these and all other relevant Disposition
matters should first be threshed out fully in the trial court in the Remand for determination of proper application of Art. 16, CC
proceedings thereafter to be held for the purpose of ascertaining (renvoi), and of Charles’ alleged renunciation of his ineritance under
and adjudicating and/or distributing the estate of Mrs. Hodges to Linnie’s will. Avelina remains to be the administrator of Linnie’s
her heirs in accordance with her duly probated will. estate. The said estate consists of ¼ of the community properties of the
said spouses, as of the time of Linnie’s death on May 23, 1957, minus
Linnie’s estate is the remainder of 1/4 of the conjugal partnership whatever the husband had already gratuitously disposed of in favor of
properties, considering that even PCIB did not maintain that the third persons from said date until his death, provided, first, that with
respect to remunerative dispositions, the proceeds thereof shall in mind because the estate of Linnie Hodges consists of her
continue to be part of the wife's estate, unless subsequently disposed of share in the conjugal properties, is still under administration
gratuitously to third parties by the husband, and second, that should and until now has not been distributed by order of the court.
the purported renunciation be declared legally effective, no deductions
whatsoever are to be made from said estate. PCIB and Avelina should
act thenceforth always conjointly, never independently from each The reference in both the main and separate opinions to a one-
other, as administrators. fourth portion of the conjugal properties as Linnie Hodges’
minimum share is a misnomer and is evidently meant only to
CONCURRING OPINIONS indicate that if her husband should eventually be declared
entitled to a legitime, then the disposition made by Linnie
Hodges in favor of her collateral relatives would be valid only
Fernando—concurred with procedural aspect of the decision.
as to one-half of her share, or one-fourth of the conjugal
properties, since the remainder, which constitutes such
Teehankee—agreed with most parts but had substantial
legitime, would necessarily go to her husband in absolute
differences in the reasoning:
ownership, unburdened by any substitution, term or
C. N. Hodges could not validly make gratuitous dispositions of
condition, resolutory or otherwise. And until the estate is
any part or all of his wife's estate — "completely and
finally settled and adjudicated to the heirs who may be found
absolutely dispose of any portion thereof inter vivos to anyone
entitled to it, the administration must continue to cover
other than himself" in the language of the main opinion — and
Linnie's entire conjugal share.
thereby render ineffectual and nugatory her institution of her
brothers and sisters as her designated heirs to succeed to
her whole estate "at the death of (her) husband."
Digest by Pia
If according to the main opinion, Hodges could not make such
gratuitous "complete and absolute dispositions" of his wife
Linnie's estate "mortis causa," it would seem that by the same
token and rationale he was likewise proscribed by the will
from making such dispositions of Linnie's estate inter vivos.

I believe that the two questions

of renvoi and renunciation should be
resolved preferentially and expeditiously by the probate
court ahead of the partition and segregation of
the minimum one-fourth of the conjugal or community
properties constituting Linnie Jane Hodges' separate estate,
which task considering that it is now seventeen (17) years since
Linnie Jane Hodges' death and her conjugal estate with C. N.
Hodges has remained unliquidated up to now might take a
similar number of years to unravel with the numerous items,
transactions and details of the sizable estates involved.

Such partition of the minimum one-fourth would not be final,

since if the two prejudicial questions of renvoi and
renunciation were resolved favorably to Linnie's estate meaning
to say that if it should be held that C. N. Hodges is not entitled
to any legitime of her estate and at any rate he had totally
renounced his inheritance under the will), then Linnie's estate
would consist not only of the minimum one-fourth but one-
half of the conjugal or community properties of the Hodges
spouses, which would require again the partition and
segregation of still another one-fourth of said properties
to complete Linnie's separate estate.

Justice Teehankee also drew up suggested guidelines for application

in the probate court. Please see original case.

Makalintal, CJ. –
Regardless of whether or not C. N. Hodges was entitled to a
legitime in his deceased wife's estate — which question, still to
be decided by the said probate court, may depend upon what
is the law of Texas and upon its applicability in the present
case — the said estate consists of one-half, not one-fourth, of
the conjugal properties. There is neither a minimum of one-
fourth nor a maximum beyond that. It is important to bear this