Lucerna Vda. de Tupas v. Branch XLIII, RTC of Negros Occidental

An inter vivos donation to a stranger is collationable and chargeable to the donor’s freely disposable portion; if it exceeds that portion and impairs the legitime of a compulsory heir, it is inofficious and must be reduced to the extent of the excess. The fact that the donated property is no longer in the donor’s estate at death, or was his capital or separate property, does not prevent reduction.

Partenza Lucerna was the widow of Epifanio R. Tupas, who died childless and left her as his only surviving compulsory heir; his will was admitted to probate in Special Proceedings No. 13994. The Civil Code limits donations to what the donor can give by will, and the dispute turns on how that limit, the legitime, and collation apply to an inter vivos donation to a corporation.

Epifanio R. Tupas died on August 20, 1978 in Bacolod City, childless, leaving his widow, Partenza Lucerna, as his only surviving compulsory heir. He left a will dated May 18, 1976, which was admitted to probate on September 30, 1980 in Special Proceedings No. 13994 of the CFI of Negros Occidental. Among the assets listed in his will were lots Nos. 837, 838, and 839 of the Sagay Cadastre, admittedly his private capital.

At the time of his death, however, these lots were no longer owned by him, he having donated them the year before, on August 2, 1977, to Tupas Foundation, Inc., which thereafter obtained title to said lots.

Claiming that the donation had left her practically destitute of any inheritance, Tupas’ widow brought suit against Tupas Foundation, Inc. in the same CFI of Negros Occidental, docketed as Civil Case No. 16089, to have the donation declared inofficious insofar as it prejudiced her legitime, reducible “by one-half or such proportion as ... (might be deemed) justified ...” and the resulting deduction restored and conveyed or delivered to her. The complaint also prayed for attorney’s fees and such other relief as might be proper. The parties stipulated to the facts above stated.

• Inofficious Donation: Petitioner claimed that the donation had left her practically destitute of any inheritance and was inofficious insofar as it prejudiced her legitime, so it should be reduced by one-half or such proportion as might be justified and the resulting deduction restored and conveyed or delivered to her.

• Inofficious Donation and Collation: Whether an inter vivos donation to a stranger is collationable and chargeable to the donor’s freely disposable portion, so that it may be reduced if inofficious and prejudicial to the compulsory heir’s legitime.
• Property No Longer in Estate: Whether the fact that the donated property was no longer part of the donor’s hereditary estate at the time of death prevents its collation and reduction.
• Separate Capital: Whether the fact that the donated lots were the donor’s capital or separate property prevents a claim that the donation is inofficious.
• Computation and Remand: Whether the case must be remanded for determination of the legitime and the freely disposable portion, and of any excess in the donation, under the Civil Code rules.

• Inofficious Donation and Collation: Yes. An inter vivos donation to a stranger is collationable and chargeable to the freely disposable portion; if it exceeds that portion and impairs the legitime, it is inofficious and reducible to the excess.
• Property No Longer in Estate: No. The donated property’s absence from the estate at death cannot prevent collation, since collation contemplates and particularly applies to gifts inter vivos.
• Separate Capital: No. The lots being the donor’s capital or separate property is of no moment, because inofficiousness asserts that the donor gave more than he could give, not that he gave what was not his.
• Computation and Remand: Remand was necessary. The donation must be measured against the freely disposable portion after determining the hereditary estate and legitime under Articles 908, 909, and 910; the required data were not before the SC.

• Inofficious Donation and Collation: The SC started from Article 752, which limits donations to what the donor can give by will. Under Article 771, any excess is deemed inofficious and the donation is reducible to the extent of the excess, without prejudice to its taking effect during the donor’s lifetime or the donee’s appropriating the fruits. Such a donation is collationable: its value is imputable into the hereditary estate at the donor’s death to determine the legitime of compulsory heirs and the freely disposable portion. The SC held this applies to donations to strangers as well as to compulsory heirs, despite Article 1061’s language seeming to limit collation to the latter. It relied on Liguez vs. Honorable Court of Appeals, et al., which held that forced heirs may have an inofficious donation set aside and that collationable gifts under Article 818 include gifts to strangers. Since the donation to Tupas Foundation, Inc. was to a stranger, it was chargeable to the freely disposable portion and reducible if it exceeded that portion and impaired the widow’s legitime.
• Property No Longer in Estate: The SC rejected the Trial Court’s ground that the donated properties were no longer part of the hereditary estate at death. It held that this fact cannot prevent the property from being brought to collation. Collation contemplates and particularly applies to gifts inter vivos; the value of the donated property at the time it was made is added to the net hereditary estate for purposes of determining the legitime and free portion.
• Separate Capital: The SC also rejected the Trial Court’s ground that the lots were Epifanio’s capital or separate estate. A claim of inofficiousness does not assert that the donor gave what was not his; it asserts that he gave more than what was within his power to give. Therefore, the separate or capital nature of the lots did not bar reduction.
• Computation and Remand: The SC outlined the Civil Code procedure under Articles 908, 909, and 910: (1) determine the value of the property remaining at the testator’s death; (2) determine the obligations, debts, and charges to be paid or deducted; (3) determine the difference between assets and liabilities, giving the hereditary estate; (4) add to the net value the value, at the time they were made, of donations subject to collation; and (5) determine the amount of the legitimes from the total. Deducting the legitimes from the net hereditary estate leaves the freely disposable portion by which the donation is measured. If the donation’s value at the time it was made does not exceed that difference, it stands; if it does, it is inofficious as to the excess and must be reduced by that excess, which shall be returned or reverted to the petitioner as the sole compulsory heir. The SC could not make this determination because it required data not before the SC and might necessitate production of evidence in the Trial Court, so it remanded.

• Inofficious Donation — A donor cannot give by donation more than he can give by will; the excess is inofficious and the donation is reducible to the extent of the excess under Article 771, without prejudice to its taking effect in the donor’s lifetime or the donee’s appropriating the fruits. The SC applied this to the donation to Tupas Foundation, Inc.
• Collation of Donations to Strangers — An inter vivos donation, including one made to a stranger, is collationable; its value at the time it was made is imputed into the hereditary estate at the donor’s death to determine the legitime and the freely disposable portion. Article 1061’s language seeming to limit collation to compulsory heirs does not exclude donations to strangers. The SC applied this to the foundation’s donation.
• Inofficiousness Does Not Challenge Ownership — A claim of inofficiousness does not assert that the donor gave what was not his, but that he gave more than what was within his power to give. The SC thus held that the lots being the donor’s capital or separate property did not prevent reduction.
• Computation of Legitime and Freely Disposable Portion — The SC outlined the following step-by-step procedure:
  • Determine the value of the property remaining at the time of the testator’s death.
  • Determine the obligations, debts, and charges that have to be paid out or deducted from that value.
  • Determine the difference between the assets and liabilities, giving rise to the hereditary estate.
  • Add to the net value the value, at the time they were made, of donations subject to collation.
  • Determine the amount of the legitimes by getting from the total the portion that the law provides as the legitime of each compulsory heir.
  • Deduct the legitimes from the net value of the hereditary estate to leave the freely disposable portion by which the donation is measured.
  • If the donation’s value at the time it was made does not exceed the freely disposable portion, it stands; if it does, it is inofficious as to the excess and must be reduced by that excess.

• “A person's prerogative to make donations is subject to certain limitations, one of which is that he cannot give by donation more than he can give by will (Art. 752, Civil Code).” — This states the basic limitation on donations that grounds the SC’s ruling.
• “If he does, so much of what is donated as exceeds what he can give by will is deemed inofficious and the donation is reducible to the extent of such excess, though without prejudice to its taking effect in the donor's lifetime or the donee's appropriating the fruits of the thing donated (Art. 771, Civil Code).” — This defines the effect of an excessive donation and the extent of reduction.
• “The fact, therefore, that the donated property no longer actually formed part of the estate of the donor at the time of his death cannot be asserted to prevent its being brought to collation.” — This rejects the Trial Court’s no-longer-in-estate ground.
• “The further fact that the lots donated were admittedly capital or separate property of the donor is of no moment, because a claim of inofficiousness does not assert that the donor gave what was not his, but that he gave more than what was within his power to give.” — This rejects the Trial Court’s separate-capital ground.

• Liguez vs. Honorable Court of Appeals, et al., 102 Phil. 577, 686 — The SC relied on it as a long-established rule that forced heirs may have an inofficious donation set aside and that collationable gifts include gifts made to strangers.

• Article 752, Civil Code — Limits donations to what the donor can give by will; the SC used it as the basis for holding that a donation exceeding that limit is inofficious.
• Article 771, Civil Code — Provides that the excess over what the donor can give by will is deemed inofficious and the donation is reducible to the extent of the excess, without prejudice to its lifetime effect or the donee’s appropriation of fruits; applied to the donation.
• Article 1061, Civil Code — The Trial Court used it to say a donation to a stranger was not subject to collation; the SC rejected that reading, holding that donations to strangers are collationable despite the article’s language.
• Articles 908, 909, and 910, Civil Code — Provide the rules for determining the legitime and the freely disposable portion; the SC used them to outline the computation and to remand the case.
• Article 909, second and third paragraphs, and Article 911, No. (1), Civil Code — Cited by the SC as the law charging a donation to a stranger to the freely disposable portion of the donor’s estate.