Heirs of Pedro Reganon vs. Imperial

Property under custodia legis is now attachable under the new Rules of Court, subject to the mode set forth in Rule 57, Section 7, which requires filing a copy of the order of attachment with the proper court and serving notice upon the custodian. The death of a ward necessarily terminates the guardianship, and the rights to the succession are transmitted to the heirs from the moment of death, making their shares attachable for execution purposes.

The plaintiffs-appellees are the heirs of Pedro Reganon, who obtained a judgment for recovery of ownership and possession of land against defendant-appellant Rufino Imperial. The defendant's father, Eulogio Imperial, was a former U.S. veteran who had been under guardianship, with the Philippine National Bank as guardian, and whose monthly allowances from the United States Veterans Administration (USVA) had accumulated into a residuary estate. The guardianship proceedings were pending before Branch I of the Court of First Instance of Zamboanga del Norte in Sp. Proc. No. R-145.

On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership and possession of about one hectare of a parcel of land (Lot No. 1 or Lot No. 4952, situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7.9954 hectares), with damages, against Rufino Imperial. Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, 1963 filed a motion to declare him in default, which the trial court granted on April 10, 1963. On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court acting as Commissioner, and on May 6, 1963, the court rendered a decision declaring the plaintiffs lawful owners of the land, ordering the defendant to vacate the portion occupied by him and restore peaceful possession to the plaintiffs, and sentencing him to pay P1,929.20 and costs.

On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution, which was granted on December 9, 1963. The Deputy Provincial Sheriff submitted on February 8, 1964 a return reporting the garnishment and sale of a carabao and goat belonging to the defendant for P153.00, and the attachment and sale of defendant's parcel of land covered by Tax Declaration No. 4694 for P500.00 — both sales having been made to the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del Norte in Sp. Proc. No. R-145. On May 25, 1964, the heirs of Eulogio Imperial, one of whom is the defendant, executed a Deed of Extrajudicial Partition of the residuary estate, apportioning P1,471.97 as defendant Rufino Imperial's share.

Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for issuance of an alias writ of execution and of an order directing the manager of the Philippine National Bank-Dipolog Branch to hold the share of the defendant and deliver the same to the provincial sheriff to be applied to the satisfaction of the balance of the money judgment. This was granted on June 9, 1964. On June 17, 1964, the Deputy Provincial Sheriff issued a sheriff's notification for levy addressed to the defendant, giving notice of the garnishment of his rights, interests, shares and participation over the residuary estate of the late Eulogio Imperial, consisting of the money deposited in the Philippine National Bank-Dipolog Branch.

The defendant, through counsel, appearing for the first time before the trial court, filed on June 24, 1964 a motion for reconsideration of the order dated June 9, 1964 and to quash the alias writ of execution. This was denied on July 14, 1964, and his second motion for reconsideration was likewise denied on August 11, 1964, prompting the appeal to the Supreme Court.

• Custodia Legis: Defendant-appellant argued that the property of an incompetent under guardianship is in custodia legis and therefore cannot be attached.
• Exemption from Execution: Defendant-appellant argued that the residuary estate of Eulogio Imperial, a former U.S. veteran, having been set aside from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, is exempt from execution.

N/A — The decision does not recount the plaintiffs-appellees' arguments in detail beyond their motions for execution and opposition to the defendant's motions for reconsideration.

• Custodia Legis: Whether, upon the death of a ward, the money accumulated in his guardianship proceedings and deposited in a bank is still considered in custodia legis and therefore cannot be attached.
• Exemption from Execution: Whether the residuary estate of a U.S. veteran, which consists of the aggregate accumulated sum from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, is exempt from execution.

• Custodia Legis: No. The guardianship proceedings had been ordered conditionally closed, and upon the ward's death, the rights to his succession were transmitted to his heirs. The property was no longer in custodia legis and was therefore attachable under Rule 57, Section 7 of the new Rules of Court.
• Exemption from Execution: No. The pension or allowance is a right personalissima that ceases upon the recipient's death, and the execution of the Deed of Extrajudicial Partition converted the property into that of the individual heirs, no longer exempt from execution.

• Custodia Legis: The Court acknowledged that under the old Rules of Court, property under custodia legis could not be attached, citing Asia Banking Corporation vs. Elser, 54 Phil. 994. However, the new Rules of Court, effective January 1, 1964, now specifically provide for the procedure to be followed when what is attached is in custodia legis: "If the property sought to be attached is in custodia legis, copy of the order of attachment shall be filed with the proper court and notice of the attachment served upon the custodian of such property" (Rule 57, Sec. 7, last par.). The clear import of this new provision is that property under custodia legis is now attachable, subject to the mode set forth in said rule. Moreover, the death of the ward necessarily terminates the guardianship, and all powers and duties of the guardian cease, except the duty to make a proper accounting and settlement in the probate court. The guardianship proceedings was ordered conditionally closed by Branch I of the Court of First Instance of Zamboanga del Norte in its order of February 8, 1964, which directed the guardian to deposit the residuary estate with its bank agency in Dipolog preparatory to eventual distribution to the heirs, and upon proof of deposit, the guardian was to be relieved from responsibility and the proceeding considered closed and terminated. The condition was fulfilled on March 13, 1964 when the PNB-Manila deposited the residuary estate with the PNB-Dipolog Branch. When Eulogio Imperial died on September 13, 1962, the rights to his succession — from the moment of his death — were transmitted to his heirs, one of whom is the defendant-appellant. The Court cited Cuevas vs. Abesamis, 71 Phil. 147, for the proposition that where the heir is of legal age and the estate is not burdened with any debts, the heir immediately succeeds by force of law to the dominion, ownership, and possession of the properties of his predecessor. The interest of an heir in the estate of a deceased person may be attached for purposes of execution, even if the estate is in the process of settlement before the courts, as settled in De Borja, et al. vs. De Borja, et al., L-14851, Aug. 31, 1961. The Deed of Extrajudicial Partition executed on May 25, 1964 suffices to settle the entire estate, provided all the requisites for its validity are fulfilled under Section 1, Rule 74 of the new Rules of Court, even without court approval. The estate for all practical purposes has been settled, and the heirs are at full liberty to withdraw the residuary estate from the bank and divide it among themselves. The only reason they have not done so is the alleged illegal withdrawal of P1,080.00 by one Gloria Gomez, which incident is on appeal before the Court of Appeals — but this appeal does not detract from the fact that the guardianship proceedings is closed and terminated and the residuary estate no longer under custodia legis.

• Exemption from Execution: The Court reasoned that any pension, annuity, or gratuity granted by a Government to its officers or employees in recognition of past services rendered is primordially aimed at tiding them over during their old age and/or disability. This is therefore a right personalissima, purely personal because founded on necessity. Where the recipient dies, the necessity motivating or underlying its grant necessarily ceases to be. Even more so in this case where the law providing for the exemption — Republic Act No. 360, approved June 9, 1949 — is calculated to benefit U.S. veterans residing here, and is therefore merely a manifestation of comity. Furthermore, the heirs of Eulogio Imperial, one of whom is the appellant, have already executed a Deed of Extrajudicial Partition — the end result of which is that the property is no longer the property of the estate but of the individual heirs. Citing Alcala vs. Panganiban, et al., 19 Phil. 520: "When the heirs by mutual agreement have divided the estate among themselves, one of the heirs cannot therefore secure the appointment of an administrator to take charge of and administer the estate or a part thereof. The property is no longer the property of the estate, but of the individual heirs, whether it remains undivided or not."

• Custodia legis and attachment — Under the new Rules of Court (effective January 1, 1964), property under custodia legis is now attachable, subject to the mode set forth in Rule 57, Section 7, which requires filing a copy of the order of attachment with the proper court and serving notice of the attachment upon the custodian of such property. This supersedes the old rule under Asia Banking Corporation vs. Elser that property under custodia legis cannot be attached.

• Termination of guardianship upon death of ward — The death of the ward necessarily terminates the guardianship, and thereupon all powers and duties of the guardian cease, except the duty to make a proper accounting and settlement in the probate court. Once the guardianship is closed and terminated, the residuary estate is no longer under custodia legis.

• Transmission of succession rights — The rights to the succession of a person are transmitted from the moment of death (Article 777, New Civil Code). Where the heir is of legal age and the estate is not burdened with any debts, the heir immediately succeeds by force of law to the dominion, ownership, and possession of the properties of his predecessor and consequently stands legally in the shoes of the latter.

• Pension as right personalissima — Any pension, annuity, or gratuity granted by a Government to its officers or employees in recognition of past services rendered is a right personalissima, purely personal because founded on necessity. Where the recipient dies, the necessity motivating or underlying its grant necessarily ceases to be.

• Effect of extrajudicial partition — When the heirs by mutual agreement have divided the estate among themselves, the property is no longer the property of the estate but of the individual heirs, whether it remains undivided or not. The exemption from execution ceases once the property becomes that of the individual heirs.

• "The clear import of this new provision is that property under custodia legis is now attachable, subject to the mode set forth in said rule." — This passage states the controlling rule on attachment of property in custodia legis under the new Rules of Court, distinguishing the case from the old rule under Asia Banking Corporation vs. Elser.

• "The death of the ward necessarily terminates the guardianship, and thereupon all powers and duties of the guardian cease, except the duty, which remains, to make a proper accounting and settlement in the probate court." — This excerpt defines the effect of the ward's death on the guardianship proceedings, which was central to the Court's conclusion that the estate was no longer in custodia legis.

• "The rights to the succession of a person are transmitted from the moment of death, and where, as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir immediately succeeds, by force of law, to the dominion, ownership, and possession of the properties of his predecessor and consequently stands legally in the shoes of the latter." — This passage articulates the doctrine of automatic transmission of succession rights, which supported the attachability of the defendant's share.

• "Any pension, annuity, or gratuity granted by a Government to its officers or employees in recognition of past services rendered, is primordially aimed at tiding them over during their old age and/or disability. This is therefore a right personalissima, purely personal because founded on necessity." — This excerpt defines the nature of pensions as personal rights that cease upon the recipient's death, defeating the exemption claim.

• Asia Banking Corporation vs. Elser, 54 Phil. 994 — Distinguished; held that property under custodia legis could not be attached, but this was under the old Rules of Court, which has been superseded by the new Rules of Court provision on attachment of property in custodia legis.
• Cuevas vs. Abesamis, 71 Phil. 147 — Followed; cited for the proposition that where the heir is of legal age and the estate is not burdened with debts, the heir immediately succeeds to the dominion, ownership, and possession of the properties of his predecessor.
• De Borja, et al. vs. De Borja, et al., L-14851, Aug. 31, 1961 — Followed; cited for the settled rule that the interest of an heir in the estate of a deceased person may be attached for purposes of execution, even if the estate is in the process of settlement before the courts.
• Alcala vs. Panganiban, et al., 19 Phil. 520 — Followed; cited for the rule that when heirs by mutual agreement have divided the estate among themselves, the property is no longer the property of the estate but of the individual heirs.
• Butte vs. Uy & Sons, L-15499, Feb. 28, 1962 — Cited in connection with Article 777 of the New Civil Code on transmission of succession rights from the moment of death.

• Rule 57, Section 7, last paragraph, new Rules of Court — Provides the procedure for attaching property in custodia legis: "If the property sought to be attached is in custodia legis, copy of the order of attachment shall be filed with the proper court and notice of the attachment served upon the custodian of such property." The Court applied this provision to hold that property under custodia legis is now attachable.
• Article 777, New Civil Code — Provides that the rights to the succession of a person are transmitted from the moment of death. The Court applied this to hold that Eulogio Imperial's rights were transmitted to his heirs upon his death on September 13, 1962.
• Section 1, Rule 74, new Rules of Court — Governs extrajudicial partition of estates. The Court cited this provision to hold that the Deed of Extrajudicial Partition executed by the heirs suffices to settle the entire estate, provided all requisites for validity are fulfilled.
• Republic Act No. 360, approved June 9, 1949 — The law providing for the exemption of USVA benefits, calculated to benefit U.S. veterans residing in the Philippines. The Court held that this exemption is merely a manifestation of comity and ceases upon the recipient's death.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concurred.

N/A — No dissenting opinions are noted in the text.