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PERSONS REVIEW ASSIGNMENT 10 Page 1

[G.R. No. L-387. October 25, 1946.]


BALBINA MENDOZA, recurrente, contra PACIANO DIZON, en su capacidad
como Auditor General, recurrido.

Covers the file on the application filed on the request submitted originally before this
Court by Balbina Mendoza, appellant,in which the Assembly requested that, under
the faculty' which confers on us the rule 45 of the Rules of the Courts, let us look at
the opinion issued by the hall resorted Paciano Dizon in his concept of auditor
general, in the case of the gratification or gratuity of the deceased Juan M. Cuevas,
legitimate child of the appellant.
In 1932 Cuevas married Florence Cocadiz. This marriage was definitively dissolved
on march 21, 1944 by virtue of a decree divorce issued by the Court of First Instance
in Batangas on that date. There was no offspring. It is not disputed that Balbina
Mendoza, the appellant, it is the kinswoman (nearest relative) to the deceased and,
therefore, with the right to pass, to the exclusion of the brothers and nephews that he
himself has left it.
In December 7, 1945 the President of the Philippines of Commonwealth issued
Administrative Order No. 27 in which under certain conditions is available to the
bonuses or gratuities to officials and employees of the Government National who had
been in active service in December 8, 1941, have been or not called to return to their
jobs after the liberation.The Administrative Order was issued by the President
"Virtue of the authority to my conferred by the existing law (referred to the
emergency powers) and to carry out the recommendations of the Committee
established under the Joint Resolution No. 5 The Congress of the Philippines 47/226
adopted July 28, 1945." chanrobles virtual law library
Before December 7, or 4 of the month, because the appellant had directed an instance
to the Auditor General, accompanied by the corresponding documents that the
claimed,stating the circumstances of their kinship with the deceased Juan M. Cuevas
and a list of the estates of this, including certain amounts of money in power of the
Government, the Banco Filipino national and of the Bank's Postal Savings, and
asking for accordingly " It is designated as the kinswoman nearest in order to enable
terms receive without delay any amount that is due to her deceased
son. . . ." chanrobles virtual law library
Florence Cocadiz, divorced wife, has not appeared officially before the Auditor
General, nor has it presented any instance.chanroblesvirtualawlibrary chanrobles
virtual law library

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The record demonstrates that at the beginning the Auditor General Delegate raised
the issue in consultation to the Justice Department to seek an opinion, among other
points, on whether "the divorced wife referred to here has any right to the
gratification or gratuity to the deceased husband under the Administrative Order No.
27 Dated December 7, 1945, considering that the gratuity is equivalent to their
salaries for the months of January and February, 1942. The Department of Justice
give the requested opinion, among other reasons because the query related to a
hypothetical case, taking into account that there was no conflict of reclamations,
because the divorced wife was not a claimant, not having more instance than the one
submitted by Balbina Mendoza, the mother survivor.w library
Later - 12 March 1946 - the Auditor General Delegate, making use of course powers
conferred on it by article 262 of the Administrative Code, solved the substance of the
instance of Balbina Mendoza, dictating the following judgment: chanrobles virtual
law library
Memorandum for Auditor Pedro Rivera
Central office chanrobles virtual law library
As the gratuity of the late Juan M. Cuevas under Administrative Order No. 27, dated
December 7, 1945, corresponds to his salary for the months of January and February,
1942, during which his marriage with Florencia Cocadiz in 1932 was not yet
dissolved, the decree of their divorce having been issued by the Court of First
Instance of Batangas only on March 21, 1944, the said gratuity should be deemed to
be a part of their conjugal estate. Only one-half thereof may, therefore, be paid to his
surviving mother, the herein claimant, who is hereby designated as his next of kin,
the other half being payable to his divorced wife as her share.
(Sgd.) Juan Concon
Deputy Auditor General
In this ruling, the petitioner timely filed his appeal, which we now proceed to decide.
The Attorney General, in his brief filed on behalf of the Government
commission raises the complaints between the parties in the following summary,
made with appropriate brevity and fairness:
The question raised by the appellant is whether the reward (gratuity)
payable to the decedent Jun Cuevas under Administrative Order No. 27
dated December 7, 1945, belongs to his vacant inheritance, or whether
such gratuity should be considered as goods belonging to the acquisitions of

PERSONS REVIEW ASSIGNMENT 10 Page 2


the deceased and his wife divorced. The Government, itself, has no interest
in the issue, supports the obligation to pay the gratuity and is willing to do it
that is declared entitled to them.
The appellant argues that the Administrative Order No. 27, the
payment of gratuities disponerel, use this word and not another,
that gratuity is synonymous or equivalent freely given gift or present, that
the consideration paid in this Administrative Order only become
enforceable and payable from its enactment, and that therefore the
deceased's right to receive such gratuities Caves remain effective long after
having become final decree by which divorce from his wife. After mature
deliberation, this representation is felt compelled, for the reasons given by
the appellant and others that later will be exposed, to give their adhesion to
the view that the gratuities as an issue must belong to the heritage and tone
of the late Cuevas . (Case of the Attorney General, pages 2 and
3.). lawphil.net
We judge according to law successful and the findings and conclusions of the
Attorney General.
Bonuses or gratuities should governed the concerned that the law provides,
that is, by Order No. 27 administrator had character and strength under the
emergency powers granted by the Legislature to the President of the Philippines in
the wake of war, according to the Constitution. Article 1090 of Civil Code stipulates
that "the law obligations are not presumed. It s enforceable only those expressly set
forth in this Code or in law special and shall governed by the precepts of the law that
established there,.... "
However, the said Order Management uses the word gratuity that has a
meaning known, categorical and conclusive on the law and jurisprudence. Provide
for a rapid authority of gratuity as an equivalent and not salary, wages or other
remuneration. It means gift, award, present, something that is given and received by
lucrative title. In this case the difference accentuate the two concepts when one
considers that Congress, in its Joint Resolution No. 5 adopted on July 28, 1945,
recommended the study of "ways and means to pay the back salaries, gratuities,
bonuses or other emoluments of the loyal and deserving employees of the
Commonwealth.... " The fact, therefore, that the President chose the term gratuity ,
leaving completely the other words, it indicates that a concession is well calculated,
clearly shows the intention to limit the scope of the privilege strictly to the letter of
the law. When no ambiguity in the phraseology of the law, the judicial function is
necessarily literalist, ministerial - does not have to make subtle and deductions,
playing with concepts such as the minstrel with its cups. . . .

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What was said by the auditor's opinion on reviving gratuity in question


corresponds to Cuevas salaries for the months of January and February 1942 and,
bearing, the divorced wife is entitled to half the time because the spouses were not
even legally divorced, has absolutely no foundation, for there is nothing in
Administrative Order No. 27 to say that gratuities are specifically granted therein to
the months mentioned. The terms of the arrangement are as follows:
"The gratuities herein Shall Be Authorized equivalent to two months' basic salary at
the rates received on December 8 Actually, 1941. "It is clear that the phrase "two
months" is placed here for purposes of computation or quantity in determination of
the gratuity, and so may correspond to 2 months. 1942, 1943 or 1944, as any other 2
months 1945, and after of liberation.
It seems superfluous to say that the decision in the said case has nothing to do
with the question of whether officials and Commonwealth Government employees in
active service at the outbreak of war had passed or back wages, whether or not
during enemy occupation, or the other questions if the Government of the Republic
or not you pay such salary obligations, none of these issues before us can have the
determination and resolution.
On merits of the above, amending appeal subject to the opinion and states that
the appellant has receive the total amount of the gratuity belongs to the
deceasedJohn M. Cuevas, subject of course to any valid claim against the property of
the deceased under the laws on good of the dead. No charge. So ordered.
Moran, CJ, Fair, Paul, Perfect, Bengzon, Tuason Padilla, JJ., Concur.

PERSONS REVIEW ASSIGNMENT 10 Page 3


The defendant the Manila Railroad Company, answering the complaint, denies each
and every allegation thereof and, by way of special defense, alleges that the plaintiff
Aleko E. Lilius, with the cooperation of his wife and coplaintiff, negligently and
recklessly drove his car, and prays that it be absolved from the complaint.
The following facts have been proven at the trial, some without question and the
others by a preponderance of evidence, to wit:
G.R. No. L-39587

March 24, 1934

ALEKO E. LILIUS, ET AL., plaintiffs-appellants,


vs.
THE MANILA RAILROAD COMPANY, defendant-appellant.
VILLA-REAL, J.:
This case involves two appeals, one by the defendant the Manila Railroad Company,
and the other by the plaintiffs Aleko E. Lilius et al., from the judgment rendered by
the Court of First Instance of Manila, the dispositive part of which reads as follows:
Wherefore, judgment is rendered ordering the defendant company to pay to
the plaintiffs, for the purposes above stated, the total amount of P30,865,
with the costs of the suit. And although the suit brought by the plaintiffs has
the nature of a joint action, it must be understood that of the amount
adjudicated to the said plaintiffs in this judgment, the sum of P10,000
personally belongs to the plaintiff Sonja Maria Lilius; the sum of P5,000, to
the plaintiff Brita Marianne Lilius; the sum of P250, to Dr. Marfori of the
Calauan Hospital, Province of Laguna, and the balance to the plaintiff Aleko
E. Lilius.
In support of its appeal, the appellant the Manila Railroad Company assigns nine
alleged errors committed by the trial court in its said judgment, which will be
discussed in the course of this decision.
As a ground of their appeal, the appellants Aleko E. Lilius et al., in turn, assign two
alleged errors as committed by the same court a quo in its judgment in question,
which will be discussed later.
This case originated from a complaint filed by Aleko E. Lilius et al., praying, under
the facts therein alleged, that the Manila Railroad Company be ordered to pay to said
plaintiffs, by way of indemnity for material and moral damages suffered by them
through the fault and negligence of the said defendant entity's employees, the sum of
P50,000 plus legal interest thereon from the date of the filing of the complaint, with
costs.

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The plaintiff Aleko E. Lilius has, for many years, been a well-known and reputed
journalist, author and photographer. At the time of the collision in question, he was a
staff correspondent in the Far East of the magazines The American Weekly of New
York and The Sphere of London.
Some of his works have been translated into various languages. He had others in
preparation when the accident occurred. According to him, his writings netted him a
monthly income of P1,500. He utilized the linguistic ability of his wife Sonja Maria
Lilius, who translated his articles and books into English, German, and Swedish.
Furthermore, she acted as his secretary.
At about 7 o'clock on the morning of May 10, 1931, the plaintiff, his wife Sonja
Maria Lilius, and his 4-year old daughter Brita Marianne Lilius, left Manila in their
Studebaker car driven by the said plaintiff Aleko E. Lilius for the municipality
of Pagsanjan, Province of Laguna, on a sight-seeing trip. It was the first time that he
made said trip although he had already been to many places, driving his own car, in
and outside the Philippines. Where the road was clear and unobstructed, the plaintiff
drove at the rate of from 19 to 25 miles an hour. Prior thereto, he had made the trip as
far as Calauan, but never from Calauan to Pagsanjan, via Dayap. He was entirely
unacquainted with the conditions of the road at said points and had no knowledge of
the existence of a railroad crossing at Dayap. Before reaching the crossing in
question, there was nothing to indicate its existence and inasmuch as there were
many houses, shrubs and trees along the road, it was impossible to see an
approaching train. At about seven or eight meters from the crossing, coming from
Calauan, the plaintiff saw an autotruck parked on the left side of the road. Several
people, who seemed to have alighted from the said truck, were walking on the
opposite side. He slowed down to about 12 miles an hour and sounded his horn for
the people to get out of the way. With his attention thus occupied, he did not see the
crossing but he heard two short whistles. Immediately afterwards, he saw a huge
black mass fling itself upon him, which turned out to be locomotive No. 713 of the
defendant company's train coming eastward from Bay to Dayap station. The
locomotive struck the plaintiff's car right in the center. After dragging the said car a
distance of about ten meters, the locomotive threw it upon a siding. The force of the
impact was so great that the plaintiff's wife and daughter were thrown from the car
and were picked up from the ground unconscious and seriously hurt. In spite of the
efforts of engineer Andres Basilio, he was unable to stop the locomotive until after it
had gone about seventy meters from the crossing.

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On the afternoon of the same day, the plaintiff's entered St. Paul's Hospital in the
City of Manila where they were treated by Dr. Waterous. The plaintiff Aleko E.
Lilius suffered from a fractured nose, a contusion above the left eye and a lacerated
wound on the right leg, in addition to multiple contusions and scratches on various
parts of the body. As a result of the accident, the said plaintiff was highly nervous
and very easily irritated, and for several months he had great difficulty in
concentrating his attention on any matter and could not write articles nor short stories
for the newspapers and magazines to which he was a contributor, thus losing for
some time his only means of livelihood.
The plaintiff Sonja Maria Lilius suffered from fractures of the pelvic bone, the tibia
and fibula of the right leg, below the knee, and received a large lacerated wound on
the forehead. She underwent two surgical operations on the left leg for the purpose of
joining the fractured bones but said operations notwithstanding, the leg in question
still continues deformed. In the opinion of Dr. Waterous, the deformity is permanent
in character and as a result the plaintiff will have some difficulty in walking. The
lacerated wound, which she received on her forehead, has left a disfiguring scar.
The child Brita Marianne Lilius received two lacerated wounds, one on the forehead
and the other on the left side of the face, in addition to fractures of both legs, above
and below the knees. Her condition was serious and, for several days, she was
hovering between life and death. Due to a timely and successful surgical operation,
she survived her wounds. The lacerations received by the child have left deep scars
which will permanently disfigure her face, and because of the fractures of both legs,
although now completely cured, she will be forced to walk with some difficulty and
continuous extreme care in order to keep her balance.
Prior to the accident, there had been no notice nor sign of the existence of the
crossing, nor was there anybody to warn the public of approaching trains. The
flagman or switchman arrived after the collision, coming from the station with a red
flag in one hand and a green one in the other, both of which were wound on their
respective sticks. The said flagman and switchman had many times absented himself
from his post at the crossing upon the arrival of a train. The train left Bay station a
little late and therefore traveled at great speed.
Upon examination of the oral as well as of the documentary evidence which the
parties presented at the trial in support of their respective contentions, and after
taking into consideration all the circumstances of the case, this court is of the opinion
that the accident was due to negligence on the part of the defendant-appellant
company, for not having had on that occasion any semaphore at the crossing at
Dayap, to serve as a warning to passers-by of its existence in order that they might
take the necessary precautions before crossing the railroad; and, on the part of its
employees the flagman and switchman, for not having remained at his post at the
crossing in question to warn passers-by of the approaching train; the stationmaster,
for failure to send the said flagman and switchman to his post on time; and the

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engineer, for not having taken the necessary precautions to avoid an accident, in view
of the absence of said flagman and switchman, by slackening his speed and
continuously ringing the bell and blowing the whistle before arriving at the crossing.
Although it is probable that the defendant-appellant entity employed the diligence of
a good father of a family in selecting its aforesaid employees, however, it did not
employ such diligence in supervising their work and the discharge of their duties
because, otherwise, it would have had a semaphore or sign at the crossing and, on
previous occasions as well as on the night in question, the flagman and switchman
would have always been at his post at the crossing upon the arrival of a train. The
diligence of a good father of a family, which the law requires in order to avoid
damage, is not confined to the careful and prudent selection of subordinates or
employees but includes inspection of their work and supervision of the discharge of
their duties.
However, in order that a victim of an accident may recover indemnity for damages
from the person liable therefor, it is not enough that the latter has been guilty of
negligence, but it is also necessary that the said victim has not, through his own
negligence, contributed to the accident, inasmuch as nobody is a guarantor of his
neighbor's personal safety and property, but everybody should look after them,
employing the care and diligence that a good father of a family should apply to his
own person, to the members of his family and to his property, in order to avoid any
damage. It appears that the herein plaintiff-appellant Aleko E. Lilius took all
precautions which his skill and the presence of his wife and child suggested to him in
order that his pleasure trip might be enjoyable and have a happy ending, driving his
car at a speed which prudence demanded according to the circumstances and
conditions of the road, slackening his speed in the face of an obstacle and blowing
his horn upon seeing persons on the road, in order to warn them of his approach and
request them to get out of the way, as he did when he came upon the truck parked on
the left hand side of the road seven or eight meters from the place where the accident
occurred, and upon the persons who appeared to have alighted from the said truck. If
he failed to stop, look and listen before going over the crossing, in spite of the fact
that he was driving at 12 miles per hour after having been free from obstacles, it was
because, his attention having been occupied in attempting to go ahead, he did not see
the crossing in question, nor anything, nor anybody indicating its existence, as he
knew nothing about it beforehand. The first and only warning, which he received of
the impending danger, was two short blows from the whistle of the locomotive
immediately preceding the collision and when the accident had already become
inevitable.
In view of the foregoing considerations, this court is of the opinion that the defendant
the Manila Railroad Company alone is liable for the accident by reason of its own
negligence and that of its employees, for not having employed the diligence of a
good father of a family in the supervision of the said employees in the discharge of
their duties.

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The next question to be decided refers to the sums of money fixed by the court a quo
as indemnities for damages which the defendant company should pay to the
plaintiffs-appellants.
With respect to the plaintiff-appellant Aleko E. Lilius, although this court believes
his claim of a net income of P1,500 a month to be somewhat exaggerated, however,
the sum of P5,000, adjudicated to him by the trial court as indemnity for damages, is
reasonable.
As to the sum of P10,635 which the court awards to the plaintiffs by way of
indemnity for damages, the different items thereof representing doctor's fees, hospital
and nursing services, loss of personal effects and torn clothing, have duly been
proven at the trial and the sum in question is not excessive, taking into consideration
the circumstances in which the said expenses have been incurred.
Taking into consideration the fact that the plaintiff Sonja Maria Lilius, wife of the
plaintiff Aleko E. Lilius is in the language of the court, which saw her at the trial
"young and beautiful and the big scar, which she has on her forehead caused by
the lacerated wound received by her from the accident, disfigures her face and that
the fracture of her left leg has caused a permanent deformity which renders it very
difficult for her to walk", and taking into further consideration her social standing,
neither is the sum of P10,000, adjudicated to her by the said trial court by way of
indemnity for patrimonial and moral damages, excessive. In the case of Gutierrez vs.
Gutierrez (56 Phil., 177), the right leg of the plaintiff Narciso Gutierrez was fractured
as a result of a collision between the autobus in which he was riding and the
defendant's car, which fractured required medical attendance for a considerable
period of time. On the day of the trial the fracture had not yet completely healed but
it might cause him permanent lameness. The trial court sentenced the defendants to
indemnify him in the sum of P10,000 which this court reduced to P5,000, in spite of
the fact that the said plaintiff therein was neither young nor good-looking, nor had he
suffered any facial deformity, nor did he have the social standing that the herein
plaintiff-appellant Sonja Maria Lilius enjoys.1vvphi1.ne+
As to the indemnity of P5,000 in favor of the child Brita Marianne Lilius, daughter
of Aleko E. Lilius and Sonja Maria Lilius, neither is the same excessive, taking into
consideration the fact that the lacerations received by her have left deep scars that
permanently disfigure her face and that the fractures of both her legs permanently
render it difficult for her to walk freely, continuous extreme care being necessary in
order to keep her balance in addition to the fact that all of this unfavorably and to a
great extent affect her matrimonial future.
With respect to the plaintiffs' appeal, the first question to be decided is that raised by
the plaintiff Aleko E. Lilius relative to the insufficiency of the sum of P5,000 which
the trial court adjudicated to him by way of indemnity for damages consisting in the
loss of his income as journalist and author as a result of his illness. This question has

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impliedly been decided in the negative when the defendant-appellant entity's petition
for the reduction of said indemnity was denied, declaring it to be reasonable.
As to the amount of P10,000 claimed by the plaintiff Aleko E. Lilius as damages for
the loss of his wife's services in his business as journalist and author, which services
consisted in going over his writings, translating them into English, German and
Swedish, and acting as his secretary, in addition to the fact that such services formed
part of the work whereby he realized a net monthly income of P1,500, there is no
sufficient evidence of the true value of said services nor to the effect that he needed
them during her illness and had to employ a translator to act in her stead.
The plaintiff Aleko E. Lilius also seeks to recover the sum of P2,500 for the loss of
what is called Anglo-Saxon common law "consortium" of his wife, that is, "her
services, society and conjugal companionship", as a result of personal injuries which
she had received from the accident now under consideration.
In the case of Goitia vs. Campos Rueda (35 Phil., 252, 255, 256), this court,
interpreting the provisions of the Civil Marriage Law of 1870, in force in these
Islands with reference to the mutual rights and obligations of the spouses, contained
in articles 44-48 thereof, said as follows:
The above quoted provisions of the Law of Civil Marriage and the Civil
Code fix the duties and obligations of the spouses. The spouses must be
faithful to, assist, and support each other. The husband must live with and
protect his wife. The wife must obey and live with her husband and follow
him when he changes his domicile or residence, except when he removes to
a foreign country. . . .
Therefore, under the law and the doctrine of this court, one of the husband's rights is
to count on his wife's assistance. This assistance comprises the management of the
home and the performance of household duties, including the care and education of
the children and attention to the husband upon whom primarily devolves the duty of
supporting the family of which he is the head. When the wife's mission was
circumscribed to the home, it was not difficult to assume, by virtue of the marriage
alone, that she performed all the said tasks and her physical incapacity always
redounded to the husband's prejudice inasmuch as it deprived him of her assistance.
However, nowadays when women, in their desire to be more useful to society and to
the nation, are demanding greater civil rights and are aspiring to become man's equal
in all the activities of life, commercial and industrial, professional and political,
many of them spending their time outside the home, engaged in their businesses,
industry, profession and within a short time, in politics, and entrusting the care of
their home to a housekeeper, and their children, if not to a nursemaid, to public or
private institutions which take charge of young children while their mothers are at
work, marriage has ceased to create the presumption that a woman complies with the
duties to her husband and children, which the law imposes upon her, and he who

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seeks to collect indemnity for damages resulting from deprivation of her domestic
services must prove such services. In the case under consideration, apart from the
services of his wife Sonja Maria Lilius as translator and secretary, the value of which
has not been proven, the plaintiff Aleko E. Lilius has not presented any evidence
showing the existence of domestic services and their nature, rendered by her prior to
the accident, in order that it may serve as a basis in estimating their value.
Furthermore, inasmuch as a wife's domestic assistance and conjugal companionship
are purely personal and voluntary acts which neither of the spouses may be
compelled to render (Arroyo vs. Vazquez de Arroyo, 42 Phil., 54), it is necessary for
the party claiming indemnity for the loss of such services to prove that the person
obliged to render them had done so before he was injured and that he would be
willing to continue rendering them had he not been prevented from so doing.
In view of the foregoing considerations this court is of the opinion and so holds: (1)
That a railroad company which has not installed a semaphore at a crossing an does
not see to it that its flagman and switchman faithfully complies with his duty of
remaining at the crossing when a train arrives, is guilty of negligence and is civilly
liable for damages suffered by a motorist and his family who cross its line without
negligence on their part; (2) that an indemnity of P10,000 for a permanent deformity
on the face and on the left leg, suffered by a young and beautiful society woman, is
not excessive; (3) that an indemnity of P5,000 for a permanent deformity on the face
and legs of a four-year old girl belonging to a well-to-do family, is not excessive; and
(4) that in order that a husband may recover damages for deprivation of his wife's
assistance during her illness from an accident, it is necessary for him to prove the
existence of such assistance and his wife's willingness to continue rendering it had
she not been prevented from so doing by her illness.
The plaintiffs-appellants are entitled to interest of 6 percent per annum on the amount
of the indemnities adjudicated to them, from the date of the appealed judgment until
this judgment becomes final, in accordance with the provisions of section 510 of Act
No. 190.
Wherefore, not finding any error in the judgment appealed from, it is hereby affirmed
in toto, with the sole modification that interest of 6 per cent per annum from the date
of the appealed judgment until this judgment becomes final will be added to the
indemnities granted, with the costs of both instances against the appellant. So
ordered.

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PERSONS REVIEW ASSIGNMENT 10 Page 7

G.R. No. L-28589 January 8, 1973


RAFAEL ZULUETA, ET AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.
RESOLUTION
CONCEPCION, C.J.:
Both parties in this case have moved for the reconsideration of the decision of this
Court promulgated on February 29, 1972. Plaintiffs maintain that the decision
appealed from should be affirmed in toto. The defendant, in turn, prays that the
decision of this Court be "set aside ... with or without a new trial, ... and that the
complaint be dismissed, with costs; or, in the alternative, that the amount of the
award embodied therein be considerably reduced." .
Subsequently to the filing of its motion for reconsideration, the defendant filed a
"petition to annul proceedings and/or to order the dismissal of plaintiffs-appellees'
complaint" upon the ground that "appellees' complaint actually seeks the recovery of
only P5,502.85 as actual damages, because, for the purpose of determining the
jurisdiction of the lower court, the unspecified sums representing items of alleged
damages, may not be considered, under the settled doctrines of this Honorable
Court," and "the jurisdiction of courts of first instance when the complaint in the
present case was filed on Sept. 30, 1965" was limited to cases "in which the demand,
exclusive of interest, or the value of the property in controversy amounts to more
than ten thousand pesos" and "the mere fact that the complaint also prays for
unspecified moral damages and attorney's fees, does not bring the action within the
jurisdiction of the lower court."
We find no merit in this contention. To begin with, it is not true that "the unspecified
sums representing items or other alleged damages, may not be considered" for the
purpose of determining the jurisdiction of the court "under the settled doctrines of
this Honorable Court." In fact, not a single case has been cited in support of this
allegation.
Secondly, it has been held that a clam for moral damages is one not susceptible of
pecuniary estimation. 1 In fact, Article 2217 of the Civil Code of the Philippines

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explicitly provides that "(t)hough incapable of pecuniary computation, moral


damages may be recovered if they are the proximate result of the defendant's
wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" pursuant
to Article 2216 of the same Code "in order that moral ... damages may be
adjudicated." And "(t)he assessment of such damages ... is left to the discretion of the
court" - said article adds - "according to the circumstances of each case." Appellees'
complaint is, therefore, within the original jurisdiction of courts of first instance,
which includes "all civil actions in which the subject of the litigation is not capable
of pecuniary estimation." 2
Thirdly, in its answer to plaintiffs' original and amended complainants, defendant had
set up a counterclaim in the aggregate sum of P12,000, which is, also, within the
original jurisdiction of said courts, thereby curing the alleged defect if any, in
plaintiffs' complaint. 3
We need not consider the jurisdictional controversy as to the
amount the appellant sues to recover because the counterclaim
interposed establishes the jurisdiction of the District Court.
Merchants' Heat & Light Co. v. James B. Clow & Sons, 204 U.S.
286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis Mercantile Co. v.
Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S. 620, 30
S Ct. 575, 54 L. Ed. 641. ... . 4
... courts have said that "when the jurisdictional amount is in
question, the tendering of a counterclaim in an amount which in
itself, or added to the amount claimed in the petition, makes up a
sum equal to the amount necessary to the jurisdiction of this court,
jurisdiction is established, whatever may be the state of the
plaintiff's complaint." American Sheet & Tin Plate Co. v. Winzeler
(D.C.) 227 F. 321, 324. 5
Thus, in Ago v. Buslon, 6 We held:
... . Then, too, petitioner's counterclaim for P37,000.00 was, also,
within the exclusive original jurisdiction of the latter courts, and
there are ample precedents to the effect that "although the original
claim involves less than the jurisdictional amount, ... jurisdiction
can be sustained if the counterclaim (of the compulsory type)"
such as the one set up by petitioner herein, based upon the
damages allegedly suffered by him in consequence of the filing of
said complaint "exceeds the jurisdictional amount." (Moore
Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg vs. Pacific
Mutual Life Ins. Co. of California, 69 Fed. [2d] 97; Home Life Ins.
Co. vs. Sipp., 11 Fed. [2d]474; American Sheet & Tin Plate Co. vs.
Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life

PERSONS REVIEW ASSIGNMENT 10 Page 8


Ins. Co., 41 P. 2d. 537, 2 Cal. 2d. 446; Emery vs. Pacific
Employees Ins. Co., 67 P. 2d. 1046, 8 Cal. 2d. 663).
Needless to say, having not only failed to question the jurisdiction of the trial court
either in that court or in this Court, before the rendition of the latter's decision,
and even subsequently thereto, by filing the aforementioned motion for
reconsideration and seeking the reliefs therein prayed for but, also, urged both
courts to exercise jurisdiction over the merits of the case, defendant is now estopped
from impugning said jurisdiction. 7
Before taking up the specific questions raised in defendant's motion for
reconsideration, it should be noted that the same is mainly predicated upon the
premise that plaintiffs' version is inherently incredible, and that this Court should
accept the theory of the defense to the effect that petitioner was off-loaded because
of a bomb-scare allegedly arising from his delay in boarding the aircraft and
subsequent refusal to open his bags for inspection. We need not repeat here the
reasons given in Our decision for rejecting defendant's contention and not disturbing
the findings of fact of His Honor, the Trial Judge, who had the decided advantage
denied to Us of observing the behaviour of the witnesses in the course of the trial
and found those of the plaintiffs worthy of credence, not the evidence for the
defense.
It may not be amiss however, to stress the fact that, in his written report, made in
transit from Wake to Manila or immediately after the occurrence and before the
legal implications or consequences thereof could have been the object of mature
deliberation, so that it could, in a way, be considered as part of the res gestae
Capt. Zentner stated that Zulueta had been off-loaded "due to drinking" and
"belligerent attitude," thereby belying the story of the defense about said alleged
bomb-scare, and confirming the view that said agent of the defendant had acted out
of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal to be
bullied by him. Indeed, had there been an iota of truth in said story of the defense,
Capt. Zentner would have caused every one of the passengers to be frisked or
searched and the luggage of all of them examined as it is done now before
resuming the flight from Wake Island. His failure to do so merely makes the
artificious nature of defendant's version more manifest. Indeed, the fact that Mrs.
Zulueta and Miss Zulueta were on board the plane shows beyond doubt that Mr.
Zulueta could not possibly have intended to blow it up.
The defense tries to explain its failure to introduce any evidence to contradict the
testimony of Mr. Zulueta as to why he had gone to the beach and what he did there,
alleging that, in the very nature of things, nobody else could have witnessed it.
Moreover, the defense insists, inter alia, that the testimony of Mr. Zulueta is
inherently incredible because he had no idea as to how many toilets the plane had; it
could not have taken him an hour to relieve himself in the beach; there were eight (8)
commodes at the terminal toilet for men ; if he felt the need of relieving himself, he

8 | Page

would have seen to it that the soldiers did not beat him to the terminal toilets; he did
not tell anybody about the reason for going to the beach, until after the plane had
taken off from Wake.
We find this pretense devoid of merit. Although Mr. Zulueta had to look for a
secluded place in the beach to relieve himself, beyond the view of others, defendant's
airport manager, whom Mr. Zulueta informed about it, soon after the departure of the
plane, could have forthwith checked the veracity of Mr. Zulueta's statement by asking
him to indicate the specific place where he had been in the beach and then
proceeding thereto for purposes of verification.
Then, again, the passenger of a plane seldom knows how many toilets it has. As a
general rule, his knowledge is limited to the toilets for the class first class or
tourist class in which he is. Then, too, it takes several minutes for the passengers
of big aircrafts, like those flying from the U.S. to the Philippines, to deplane.
Besides, the speed with which a given passenger may do so depends, largely, upon
the location of his seat in relation to the exit door. He cannot go over the heads of
those nearer than he thereto. Again, Mr. Zulueta may have stayed in the toilet
terminal for some time, expecting one of the commodes therein to be vacated soon
enough, before deciding to go elsewhere to look for a place suitable to his purpose.
But he had to walk, first, from the plane to the terminal building and, then, after
vainly waiting therein for a while, cover a distance of about 400 yards therefrom to
the beach, and seek there a place not visible by the people in the plane and in the
terminal, inasmuch as the terrain at Wake Island is flat. What is more, he must have
had to takeoff part, at least, of his clothing, because, without the facilities of a toilet,
he had to wash himself and, then, dry himself up before he could be properly attired
and walk back the 400 yards that separated him from the terminal building and/or the
plane. Considering, in addition to the foregoing, the fact that he was not feeling well,
at that time, We are not prepared to hold that it could not have taken him around an
hour to perform the acts narrated by him.
But, why asks the defendant did he not reveal the same before the plane took
off? The record shows that, even before Mr. Zulueta had reached the ramp leading to
the plane, Capt. Zentner was already demonstrating at him in an intemperate and
arrogant tone and attitude ("What do you think you are?), thereby impelling Mr.
Zulueta to answer back in the same vein. As a consequence, there immediately
ensued an altercation in the course of which each apparently tried to show that he
could not be cowed by the other. Then came the order of Capt. Zentner to off-load all
of the Zuluetas, including Mrs. Zulueta and the minor Miss Zulueta, as well as their
luggage, their overcoats and other effects handcarried by them; but, Mr. Zulueta
requested that the ladies be allowed to continue the trip. Meanwhile, it had taken
time to locate his four (4) pieces of luggage. As a matter of fact, only three (3) of
them were found, and the fourth eventually remained in the plane. In short, the issue
between Capt. Zentner and Mr. Zulueta had been limited to determining whether the
latter would allow himself to be browbeaten by the former. In the heat of the
altercation, nobody had inquired about the cause of Mr. Zulueta's delay in returning

PERSONS REVIEW ASSIGNMENT 10 Page 9


to the plane, apart from the fact that it was rather embarrassing for him to explain, in
the presence and within the hearing of the passengers and the crew, then assembled
around them, why he had gone to the beach and why it had taken him some time to
answer there a call of nature, instead of doing so in the terminal building.

"minimum of one week" revealed the intention to keep him there stranded that long,
for no other plane, headed for Manila, was expected within said period of time,
although Mr. Zulueta managed to board, days later, a plane that brought him to
Hawaii, whence he flew back to the Philippines, via Japan.

Defendant's motion for reconsideration assails: (1) the amount of damages awarded
as excessive; (2) the propriety of accepting as credible plaintiffs' theory; (3)
plaintiffs' right to recover either moral or exemplary damages; (4) plaintiffs' right to
recover attorney's fees; and (5) the non-enforcement of the compromise agreement
between the defendant and plaintiff's wife, Mrs. Zulueta. Upon the other hand,
plaintiffs' motion for reconsideration contests the decision of this Court reducing the
amount of damages awarded by the trial court to approximately one-half thereof,
upon the ground, not only that, contrary to the findings of this Court, in said
decision, plaintiff had not contributed to the aggravation of his altercation or incident
with Capt. Zentner by reacting to his provocation with extreme belligerency thereby
allowing himself to be dragged down to the level on which said agent of the
defendant had placed himself, but, also, because the purchasing power of our local
currency is now much lower than when the trial court rendered its appealed decision,
over five (5) years ago, on July 5, 1967, which is an undeniable and undisputed fact.
Precisely, for this reason, defendant's characterization as exorbitant of the aggregate
award of over P700,000 by way of damages, apart from attorney's fees in the sum of
P75,000, is untenable. Indeed, said award is now barely equivalent to around
100,000 U. S. dollars.

Neither may criminal cases, nor the cases for libel and slander cited in the
defendant's motion for reconsideration, be equated with the present case. Indeed, in
ordinary criminal cases, the award for damages is, in actual practice, of purely
academic value, for the convicts generally belong to the poorest class of society.
There is, moreover, a fundamental difference between said cases and the one at bar.
The Zuluetas had a contract of carriage with the defendant, as a common carrier,
pursuant to which the latter was bound, for a substantial monetary consideration
paid by the former, not merely to transport them to Manila, but, also, to do so with
"extraordinary diligence" or "utmost diligence." 9 The responsibility of the common
carrier, under said contract, as regards the passenger's safety, is of such a nature,
affecting as it does public interest, that it "cannot be dispensed with" or even
"lessened by stipulation, by the posting of notices, by statements on tickets, or
otherwise." 10 In the present case, the defendant did not only fail to comply with its
obligation to transport Mr. Zulueta to Manila, but, also, acted in a manner calculated
to humiliate him, to chastise him, to make him suffer, to cause to him the greatest
possible inconvenience, by leaving him in a desolate island, in the expectation that
he would be stranded there for a "minimum of one week" and, in addition thereto,
charged therefor $13.30 a day.

It further support of its contention, defendant cites the damages awarded in previous
cases to passengers of airlines, 8 as well as in several criminal cases, and some cases
for libel and slander. None of these cases is, however, in point. Said cases against
airlines referred to passengers who were merely constrained to take a tourist class
accommodation, despite the fact that they had first class tickets, and that although, in
one of such cases, there was proof that the airline involved had acted as it did to give
preference to a "white" passenger, this motive was not disclosed until the trial in
court. In the case at bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for
having dared to retort to defendant's agent in a tone and manner matching, if not
befitting his intemperate language and arrogant attitude. As a consequence, Capt.
Zentner's attempt to humiliate Rafael Zulueta had boomeranged against him
(Zentner), in the presence of the other passengers and the crew. It was, also, in their
presence that defendant's agent had referred to the plaintiffs as "monkeys," a racial
insult not made openly and publicly in the abovementioned previous cases against
airlines.

It is urged by the defendant that exemplary damages are not recoverable in quasidelicts, pursuant to Article 2231 of our Civil Code, except when the defendant has
acted with "gross negligence," and that there is no specific finding that it had so
acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the
circumstances heretofore adverted to, defendant's agents had acted with malice
aforethought and evident bad faith. If "gross negligence" warrants the award of
exemplary damages, with more reason is its imposition justified when the act
performed is deliberate, malicious and tainted with bad faith. Thus, in Lopez v.
PANAM, 11 We held:

In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft
and its passengers, but to retaliate and punish him for the embarrassment and loss of
face thus suffered by defendant's agent. This vindictive motive is made more
manifest by the note delivered to Mr. Zulueta by defendant's airport manager at Wake
Island, Mr. Sitton, stating that the former's stay therein would be "for a minimum of
one week," during which he would be charged $13.30 per day. This reference to a

Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary
damages was justified by the fact that the airline's "agent had acted in a wanton,
reckless and oppressive manner" in compelling Cuenca, upon arrival at Okinawa, to
transfer, over his objection, from the first class, where he was accommodated from
Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat of

9 | Page

The rationale behind exemplary or corrective damages is, as the


name implies, to provide an example or correction for public good.
Defendant having breached its contracts in bad faith, the court, as
stated earlier, may award exemplary damages in addition to moral
damages (Articles 2229, 2232, New Civil Code.)

PERSONS REVIEW ASSIGNMENT 10 Page 10


otherwise leaving him in Okinawa," despite the fact that he had paid in full the first
class fare and was issued in Manila a first class ticket.
Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not
liable for exemplary damages owing to acts of his agent unless the former has
participated in said acts or ratified the same. Said case involved, however, the
subsidiary civil liability of an employer arising from criminal acts of his employee,
and "exemplary damages ... may be imposed when the crime was committed with
one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in
point, for the case at bar involves a breach of contract, as well as a quasi-delict.
Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated
with the case at bar. The Palisoc case dealt with the liability of school officials for
damages arising from the death of a student (Palisoc) due to fist blows given by
another student (Daffon), in the course of a quarrel between them, while in a
laboratory room of the Manila Technical Institute. In an action for damages, the head
thereof and the teacher in charge of said laboratory were held jointly and severally
liable with the student who caused said death, for failure of the school to provide
"adequate supervision over the activities of the students in the school premises," to
protect them "from harm, whether at the hands of fellow students or other parties."
Such liability was predicated upon Article 2180 of our Civil Code, the pertinent part
of which reads:
ART. 2180. The obligation imposed by Article 2176 is demandable
not only for one's own acts or omissions, but also for those of
persons for whom one is responsible.
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades shall
be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody.
xxx xxx xxx
Obviously, the amount of damages warded in the Palisoc case is not and cannot serve
as the measure of the damages recoverable in the present case, the latter having been
caused directly and intentionally by an employee or agent of the defendant, whereas
the student who killed the young Palisoc was in no wise an agent of the school.
Moreover, upon her arrival in the Philippines, Mrs. Zulueta reported her husband's
predicament to defendant's local manager and asked him to forthwith have him (Mr.
Zulueta) brought to Manila, which defendant's aforementioned manager refused to
do, thereby impliedly ratifying the off-loading of Mr. Zulueta at Wake Island.

10 | P a g e

It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta
was bound to be present at the time scheduled for the departure of defendant's plane
and that he had, consequently, violated said contract when he did not show up at such
time. This argument might have had some weight had defendant's plane taken off
before Mr. Zulueta had shown up. But the fact is that he was ready, willing and able
to board the plane about two hours before it actually took off, and that he was
deliberately and maliciously off-loaded on account of his altercation with Capt.
Zentner. It should, also, be noted that, although Mr. Zulueta was delayed some 20 to
30 minutes, the arrival or departure of planes is often delayed for much longer
periods of time. Followed to its logical conclusion, the argument adduced by the
defense suggests that airlines should be held liable for damages due to the
inconvenience and anxiety, aside from actual damages, suffered by many passengers
either in their haste to arrive at the airport on scheduled time just to find that their
plane will not take off until later, or by reason of the late arrival of the aircraft at its
destination.
PANAM impugns the award of attorney's fees upon the ground that no penalty
should be imposed upon the right to litigate; that, by law, it may be awarded only in
exceptional cases; that the claim for attorney's fees has not been proven; and that said
defendant was justified in resisting plaintiff's claim "because it was patently
exorbitant."
Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim
for actual damages, the amount of which is not contested, plaintiffs did not ask any
specific sum by way of exemplary and moral damages, as well as attorney's fees, and
left the amount thereof to the "sound discretion" of the lower court. This, precisely, is
the reason why PANAM, now, alleges without justification that the lower court
had no jurisdiction over the subject matter of the present case.
Moreover, Article 2208 of our Civil Code expressly authorizes the award of
attorney's fees "when exemplary damages are awarded," as they are in this case
as well as "in any other case where the court deems it just and equitable that
attorney's fees ... be recovered," and We so deem it just and equitable in the present
case, considering the "exceptional" circumstances obtaining therein, particularly the
bad faith with which defendant's agent had acted, the place where and the conditions
under which Rafael Zulueta was left at Wake Island, the absolute refusal of
defendant's manager in Manila to take any step whatsoever to alleviate Mr. Zulueta's
predicament at Wake and have him brought to Manila which, under their contract
of carriage, was defendant's obligation to discharge with "extra-ordinary" or "utmost"
diligence and, the "racial" factor that had, likewise, tainted the decision of
defendant's agent, Capt. Zentner, to off-load him at Wake Island.
As regards the evidence necessary to justify the sum of P75,000 awarded as
attorney's fees in this case, suffice it to say that the quantity and quality of the
services rendered by plaintiffs' counsel appearing on record, apart from the nature of

PERSONS REVIEW ASSIGNMENT 10 Page 11


the case and the amount involved therein, as well as his prestige as one of the most
distinguished members of the legal profession in the Philippines, of which judicial
cognizance may be taken, amply justify said award, which is a little over 10% of the
damages (P700,000) collectible by plaintiffs herein. Indeed, the attorney's fees in this
case is proportionally much less than that adjudged in Lopez v. PANAM 16 in which
the judgment rendered for attorney's fees (P50,000) was almost 20% of the damages
(P275,000) recovered by the plaintiffs therein.
The defense assails the last part of the decision sought to be reconsidered, in which
relying upon Article 172 of our Civil Code, which provides that "(t)he wife cannot
bind the conjugal partnership without the husband's consent, except in cases provided
by law," and it is not claimed that this is one of such cases We denied a motion,
filed by Mrs. Zulueta, for the dismissal of this case, insofar as she is concerned - she
having settled all her differences with the defendant, which appears to have paid her
the sum of P50,000 therefor - "without prejudice to this sum being deducted from the
award made in said decision." Defendant now alleges that this is tantamount to
holding that said compromise agreement is both effective and ineffective.
This, of course, is not true. The payment is effective, insofar as it is deductible from
the award, and, because it is due (or part of the amount due) from the defendant, with
or without its compromise agreement with Mrs. Zulueta. What is ineffective is the
compromise agreement, insofar as the conjugal partnership is concerned. Mrs.
Zulueta's motion was for the dismissal of the case insofar as she was concerned, and
the defense cited in support thereof Article 113 of said Code, pursuant to which
"(t)he husband must be joined in all suits by or against the wife except: ... (2) If they
have in fact been separated for at least one year." This provision, We held, however,
refers to suits in which the wife is the principal or real party in interest, not to the
case at bar, "in which the husband is the main party in interest, both as the person
principally aggrieved and as administrator of the conjugal partnership ... he having
acted in this capacity in entering into the contract of carriage with PANAM and paid
the amount due to the latter, under the contract, with funds of the conjugal
partnership," to which the amounts recoverable for breach of said contract,
accordingly, belong. The damages suffered by Mrs. Zulueta were mainly an in
accident of the humiliation to which her husband had been subjected. The Court
ordered that said sum of P50,00 paid by PANAM to Mrs. Zulueta be deducted from
the aggregate award in favor of the plaintiffs herein for the simple reason that upon
liquidation of the conjugal partnership, as provided by law, said amount would have
to be reckoned with, either as part of her share in the partnership, or as part of the
support which might have been or may be due to her as wife of Rafael Zulueta. It
would surely be inane to sentence the defendant to pay the P700,000 due to the
plaintiffs and to direct Mrs. Zulueta to return said P50,000 to the defendant.
In this connection, it is noteworthy that, for obvious reasons of public policy, she is
not allowed by law to waive her share in the conjugal partnership, before the
dissolution thereof. 17 She cannot even acquire any property by gratuitous title,

11 | P a g e

without the husband's consent, except from her ascendants, descendants, parents-inlaw, and collateral relatives within the fourth degree. 18
It is true that the law favors and encourages the settlement of litigations by
compromise agreement between the contending parties, but, it certainly does not
favor a settlement with one of the spouses, both of whom are plaintiffs or defendants
in a common cause, such as the defense of the rights of the conjugal partnership,
when the effect, even if indirect, of the compromise is to jeopardize "the solidarity of
the family" which the
law 19 seeks to protect by creating an additional cause for the misunderstanding
that had arisen between such spouses during the litigation, and thus rendering more
difficult a reconciliation between them.
It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that
neither is there any evidence that the money used to pay the plane tickets came from
the conjugal funds and that the award to Mrs. Zulueta was for her personal suffering
or injuries. There was, however, no individual or specific award in favor of Mrs.
Zulueta or any of the plaintiffs. The award was made in their favor collectively.
Again, in the absence of said proof, the presumption is that the purpose of the trip
was for the common benefit of the plaintiffs and that the money had come from the
conjugal funds, for, unless there is proof to the contrary, it is presumed "(t)hat things
have happened according to the ordinary course of nature and the ordinary habits of
life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when the source
of the money used therefor is not established, even if the purchase had been made by
the wife. 22 And this is the rule obtaining in the Philippines. Even property registered,
under the Torrens system, in the name of one of the spouses, or in that of the wife
only, if acquired during the marriage, is presumed to belong to the conjugal
partnership, unless there is competent proof to the contrary. 23
PANAM maintains that the damages involved in the case at bar are not among those
forming part of the conjugal partnership pursuant to Article 153 of the Civil Code,
reading:
ART. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at
the expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;
(2) That which is obtained by the industry, or work, or as salary of
the spouses, or of either of them;
(3) The fruits, rents or interests received or due during the
marriage, coming from the common property or from the exclusive
property of each spouse.

PERSONS REVIEW ASSIGNMENT 10 Page 12


Considering that the damages in question have arisen from, inter alia, a breach of
plaintiffs' contract of carriage with the defendant, for which plaintiffs paid their fare
with funds presumably belonging to the conjugal partnership, We hold that said
damages fall under paragraph (1) of said Article 153, the right thereto having been
"acquired by onerous title during the marriage ... ." This conclusion is bolstered up
by Article 148 of our Civil Code, according to which:
ART. 148. The following shall be the exclusive property of each
spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative
title;
(3) That which is acquired by right of redemption or by exchange
with other property belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of
the husband.
The damages involved in the case at bar do not come under any of these provisions
or of the other provisions forming part of Chapter 3, Title VI, of Book I of the Civil
Code, which chapter is entitled "Paraphernal Property." What is more, if "(t)hat
which is acquired by right of redemption or by exchange with other property
belonging to only one of the spouses," and "(t)hat which is purchased with exclusive
money of the wife or of the husband," 24 belong exclusively to such wife or husband,
it follows necessarily that that which is acquired with money of the conjugal
partnership belongs thereto or forms part thereof. The rulings in Maramba v. Lozano
25
and Perez v. Lantin, 26 cited in defendant's motion for reconsideration, are, in effect,
adverse thereto. In both cases, it was merely held that the presumption under Article
160 of our Civil Code to the effect that all property of the marriage belong to the
conjugal partnership does not apply unless it is shown that it was acquired during
marriage. In the present case, the contract of carriage was concededly entered into,
and the damages claimed by the plaintiffs were incurred, during marriage. Hence, the
rights accruing from said contract, including those resulting from breach thereof by
the defendant, are presumed to belong to the conjugal partnership of Mr. and Mrs.
Zulueta. The fact that such breach of contract was coupled, also, with a quasi-delict
constitutes an aggravating circumstance and can not possibly have the effect of
depriving the conjugal partnership of such property rights.
Defendant insists that the use of conjugal funds to redeem property does not make
the property redeemed conjugal if the right of redemption pertained to the wife. In
the absence, however, of proof that such right of redemption pertains to the wife
and there is no proof that the contract of carriage with PANAM or the money paid

12 | P a g e

therefor belongs to Mrs. Zulueta the property involved, or the rights arising
therefrom, must be presumed, therefore, to form part of the conjugal partnership.
It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and
moral damages" awarded to a young and beautiful woman by reason of a scar in
consequence of an injury resulting from an automobile accident which disfigured
her face and fractured her left leg, as well as caused a permanent deformity, are her
paraphernal property. Defendant cites, also, in support of its contention the following
passage from Colin y Capitant:
No esta resuelta expresamente en la legislacion espaola la
cuestion de si las indemnizaciones debidas por accidentes del
trabaho tienen la consideracion de gananciales, o son bienes
particulares de los conyuges.
Inclinan a la solucion de que estas indemnizaciones deben ser
consideradas como gananciales, el hecho de que la sociedad
pierde la capacidad de trabajocon el accidente, que a ella le
pertenece, puesto que de la sociedad son losfrutos de ese trabajo;
en cambio, la consideracion de que igual manera que losbienes que
sustituyen a los que cada conyuge lleva al matrimonio como
propiostienen el caracter de propios, hace pensar que las
indemnizaciones que vengana suplir la capacidad de trabajo
aportada por cada conyuge a la sociedad, debenser juridicamente
reputadas como bienes propios del conyuge que haya sufrido
elaccidente. Asi se llega a la misma solucion aportada por la
jurisprudencia francesca. 28
This opinion is, however, undecisive, to say the least. It should be noted that Colin y
Capitant were commenting on the French Civil Code; that their comment referred to
indemnities due in consequence of "accidentes del trabajo "resulting in physical
injuries sustained by one of the spouses (which Mrs. Zulueta has not suffered); and
that said commentators admit that the question whether or not said damages are
paraphernal property or belong to the conjugal partnership is not settled under the
Spanish law. 29 Besides, the French law and jurisprudence to which the comments
of Planiol and Ripert, likewise, refer are inapposite to the question under
consideration, because they differ basically from the Spanish law in the treatment of
the property relations between husband and wife. Indeed, our Civil Code, like the
Spanish Civil Code, favors the system of conjugal partnership of gains. Accordingly,
the former provides that, "(i)n the absence of marriage settlements, or when the same
are void, the system of relative community or conjugal partnership of gains ... shall
govern the property relations between" the spouses. 30 Hence, "(a)ll property of the
marriage is presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife." 31

PERSONS REVIEW ASSIGNMENT 10 Page 13


No similar rules are found in the French Civil Code. What is more, under the
provisions thereof, the conjugal partnership exists only when so stipulated in the
"capitulaciones matrimoniales" or by way of exception. In the language of Manresa

Prescindimos de los preceptos de los Condigos de Francia, Italia,


Holanda, Portugal, Alemania y Suiza, porsue solo
excepcionalmente, o cuando asi se pacta en las capitulaciones,
admiten el sistema de gananciales. 32
Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered for
physical injuries suffered by the wife. In the case at bar, the party mainly injured,
although not physically, is the husband.
Accordingly, the other Philippine cases 33 and those from Louisiana whose civil
law is based upon the French Civil Code cited by the defendant, which similarly
refer to moral damages due to physical injuries suffered by the wife, are, likewise,
inapplicable to the case at bar.
We find, therefore, no plausible reason to disturb the views expressed in Our decision
promulgated on February 29, 1972.
WHEREFORE, the motions for reconsideration above-referred to should be, as they
are hereby denied.
Makalintal, Zaldivar, Fernando, Makasiar, Antonio and Esguerra, JJ., concur.

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PERSONS REVIEW ASSIGNMENT 10 Page 14


At the hearing, in addition to documentary and parol evidence, both parties submitted
the following agreed statement of facts of the court for consideration:
It is hereby stipulated and agreed by and between the parties in the aboveentitled action through their respective undersigned attorneys:
G.R. No. L-34583

October 22, 1931

THE BANK OF THE PHILIPPINE ISLANDS, administrator of the estate of


the late Adolphe Oscar Schuetze, plaintiff-appellant,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.
VILLA-REAL, J.:
The Bank of the Philippine Islands, as administrator of the estate of the deceased
Adolphe Oscar Schuetze, has appealed to this court from the judgment of the Court
of First Instance of Manila absolving the defendant Juan Posadas, Jr., Collector of
Internal Revenue, from the complaint filed against him by said plaintiff bank, and
dismissing the complaint with costs.
The appellant has assigned the following alleged errors as committed by the trial
court in its judgment, to wit:
1. The lower court erred in holding that the testimony of Mrs. Schuetze was
inefficient to established the domicile of her husband.
2. The lower court erred in holding that under section 1536 of the
Administrative Code the tax imposed by the defendant is lawful and valid.
3. The lower court erred in not holding that one-half () of the proceeds of
the policy in question is community property and that therefore no
inheritance tax can be levied, at least on one-half () of the said proceeds.
4. The lower court erred in not declaring that it would be unconstitutional to
impose an inheritance tax upon the insurance policy here in question as it
would be a taking of property without due process of law.
The present complaint seeks to recover from the defendant Juan Posadas, Jr.,
Collector of Internal Revenue, the amount of P1,209 paid by the plaintiff under
protest, in its capacity of administrator of the estate of the late Adolphe Oscar
Schuetze, as inheritance tax upon the sum of P20,150, which is the amount of an
insurance policy on the deceased's life, wherein his own estate was named the
beneficiary.

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1. That the plaintiff, Rosario Gelano Vda. de Schuetze, window of the late
Adolphe Oscar Schuetze, is of legal age, a native of Manila, Philippine
Islands, and is and was at all times hereinafter mentioned a resident of
Germany, and at the time of the death of her husband, the late Adolphe
Oscar Schuetze, she was actually residing and living in Germany;
2. That the Bank of the Philippine Islands, is and was at all times hereinafter
mentioned a banking institution duly organized and existing under and by
virtue of the laws of the Philippine Islands;
3. That on or about August 23, 1928, the herein plaintiff before notary
public Salvador Zaragoza, drew a general power appointing the abovementioned Bank of the Philippine Islands as her attorney-in-fact, and among
the powers conferred to said attorney-in-fact was the power to represent her
in all legal actions instituted by or against her;
4. That the defendant, of legal age, is and at all times hereinafter mentioned
the duly appointed Collector of Internal Revenue with offices at Manila,
Philippine Islands;
5. That the deceased Adolphe Oscar Schuetze came to the Philippine Islands
for the first time of March 31, 1890, and worked in the several German
firms as a mere employee and that from the year 1903 until the year 1918 he
was partner in the business of Alfredo Roensch;
6. That from 1903 to 1922 the said Adolphe Oscar Schuetze was in the habit
of making various trips to Europe;
7. That on December 3, 1927, the late Adolphe Oscar Schuetze coming from
Java, and with the intention of going to Bremen, landed in the Philippine
Islands where he met his death on February 2, 1928;
8. That on March 31, 1926, the said Adolphe Oscar Schuetze, while in
Germany, executed a will, in accordance with its law, wherein plaintiff was
named his universal heir;

PERSONS REVIEW ASSIGNMENT 10 Page 15


9. That the Bank of the Philippine Islands by order of the Court of First
Instance of Manila under date of May 24, 1928, was appointed
administrator of the estate of the deceased Adolphe Oscar Schuetze;
10. That, according to the testamentary proceedings instituted in the Court
of First Instance of Manila, civil case No. 33089, the deceased at the time of
his death was possessed of not only real property situated in the Philippine
Islands, but also personal property consisting of shares of stock in nineteen
(19) domestic corporations;
11. That the fair market value of all the property in the Philippine Islands
left by the deceased at the time of his death in accordance with the
inventory submitted to the Court of First Instance of Manila, civil case No.
33089, was P217,560.38;
12. That the Bank of the Philippine Islands, as administrator of the estate of
the deceased rendered its final account on June 19, 1929, and that said
estate was closed on July 16, 1929;
13. That among the personal property of the deceased was found lifeinsurance policy No. 194538 issued at Manila, Philippine Islands, on
January 14, 1913, for the sum of $10,000 by the Sun Life Assurance
Company of Canada, Manila branch, a foreign corporation duly organized
and existing under and by virtue of the laws of Canada, and duly authorized
to transact business in the Philippine Islands;
14. That in the insurance policy the estate of the said Adolphe Oscar
Schuetze was named the beneficiary without any qualification whatsoever;
15. That for five consecutive years, the deceased Adolphe Oscar Schuetze
paid the premiums of said policy to the Sun Life Assurance Company of
Canada, Manila branch;
16. That on or about the year 1918, the Sun Life Assurance Company of
Canada, Manila branch, transferred said policy to the Sun Life Assurance
Company of Canada, London branch;
17. That due to said transfer the said Adolphe Oscar Schuetze from 1918 to
the time of his death paid the premiums of said policy to the Sun Life
Assurance Company of Canada, London Branch;
18. That the sole and only heir of the deceased Adolphe Oscar Schuetze is
his widow, the plaintiff herein;

15 | P a g e

19. That at the time of the death of the deceased and at all times thereafter
including the date when the said insurance policy was paid, the insurance
policy was not in the hands or possession of the Manila office of the Sun
Life Assurance Company of Canada, nor in the possession of the herein
plaintiff, nor in the possession of her attorney-in-fact the Bank of the
Philippine Islands, but the same was in the hands of the Head Office of the
Sun Life Assurance Company of Canada, at Montreal, Canada;
20. That on July 13, 1928, the Bank of the Philippine Islands as
administrator of the decedent's estate received from the Sun Life Assurance
Company of Canada, Manila branch, the sum of P20,150 representing the
proceeds of the insurance policy, as shown in the statement of income and
expenses of the estate of the deceased submitted on June 18, 1929, by the
administrator to the Court of First Instance of Manila, civil case No. 33089;
21. That the Bank of the Philippine Islands delivered to the plaintiff herein
the said sum of P20,150;
22. That the herein defendant on or about July 5, 1929, imposed an
inheritance tax upon the transmission of the proceeds of the policy in
question in the sum of P20,150 from the estate of the late Adolphe Oscar
Schuetze to the sole heir of the deceased, or the plaintiff herein, which
inheritance tax amounted to the sum of P1,209;
23. That the Bank of the Philippine Islands as administrator of the
decedent's estate and as attorney-in-fact of the herein plaintiff, having been
demanded by the herein defendant to pay inheritance tax amounting to the
sum of P1,209, paid to the defendant under protest the above-mentioned
sum;
24. That notwithstanding the various demands made by plaintiff to the
defendant, said defendant has refused and refuses to refund to plaintiff the
above mentioned sum of P1,209;
25. That plaintiff reserves the right to adduce evidence as regards the
domicile of the deceased, and so the defendant, the right to present rebuttal
evidence;
26. That both plaintiff and defendant submit this stipulation of facts without
prejudice to their right to introduce such evidence, on points not covered by
the agreement, which they may deem proper and necessary to support their
respective contentions.
In as much as one of the question raised in the appeal is whether an insurance policy
on said Adolphe Oscar Schuetze's life was, by reason of its ownership, subject to the

PERSONS REVIEW ASSIGNMENT 10 Page 16


inheritance tax, it would be well to decide first whether the amount thereof is
paraphernal or community property.
According to the foregoing agreed statement of facts, the estate of Adolphe Oscar
Schuetze is the sole beneficiary named in the life-insurance policy for $10,000,
issued by the Sun Life Assurance Company of Canada on January 14, 1913. During
the following five years the insured paid the premiums at the Manila branch of the
company, and in 1918 the policy was transferred to the London branch.
The record shows that the deceased Adolphe Oscar Schuetze married the plaintiffappellant Rosario Gelano on January 16, 1914.
With the exception of the premium for the first year covering the period from
January 14, 1913 to January 14, 1914, all the money used for paying the premiums, i.
e., from the second year, or January 16, 1914, or when the deceased Adolphe Oscar
Schuetze married the plaintiff-appellant Rosario Gelano, until his death on February
2, 1929, is conjugal property inasmuch as it does not appear to have exclusively
belonged to him or to his wife (art. 1407, Civil Code). As the sum of P20,150 here in
controversy is a product of such premium it must also be deemed community
property, because it was acquired for a valuable consideration, during said Adolphe
Oscar Schuetze's marriage with Rosario Gelano at the expense of the common fund
(art. 1401, No. 1, Civil Code), except for the small part corresponding to the first
premium paid with the deceased's own money.
In his Commentaries on the Civil Code, volume 9, page 589, second edition,
Manresa treats of life insurance in the following terms, to wit:
The amount of the policy represents the premiums to be paid, and the right
to it arises the moment the contract is perfected, for at the moment the
power of disposing of it may be exercised, and if death occurs payment may
be demanded. It is therefore something acquired for a valuable
consideration during the marriage, though the period of its fulfillment,
depend upon the death of one of the spouses, which terminates the
partnership. So considered, the question may be said to be decided by
articles 1396 and 1401: if the premiums are paid with the exclusive property
of husband or wife, the policy belongs to the owner; if with conjugal
property, or if the money cannot be proved as coming from one or the other
of the spouses, the policy is community property.
The Supreme Court of Texas, United States, in the case of Martin vs. Moran (11 Tex.
Civ. A., 509) laid down the following doctrine:
COMMUNITY PROPERTY LIFE INSURANCE POLICY. A
husband took out an endowment life insurance policy on his life, payable
"as directed by will." He paid the premiums thereon out of community

16 | P a g e

funds, and by his will made the proceeds of the policy payable to his own
estate. Held, that the proceeds were community estate, one-half of which
belonged to the wife.
In In re Stan's Estate, Myr. Prob. (Cal.), 5, the Supreme Court of California laid
down the following doctrine:
A testator, after marriage, took out an insurance policy, on which he paid the
premiums from his salary. Held that the insurance money was community
property, to one-half of which, the wife was entitled as survivor.
In In re Webb's Estate, Myr. Prob. (Cal.), 93, the same court laid down the following
doctrine:
A decedent paid the first third of the amount of the premiums on his lifeinsurance policy out of his earnings before marriage, and the remainder
from his earnings received after marriage. Held, that one-third of the policy
belonged to his separate estate, and the remainder to the community
property.
Thus both according to our Civil Code and to the ruling of those North American
States where the Spanish Civil Code once governed, the proceeds of a life-insurance
policy whereon the premiums were paid with conjugal money, belong to the conjugal
partnership.
The appellee alleges that it is a fundamental principle that a life-insurance policy
belongs exclusively to the beneficiary upon the death of the person insured, and that
in the present case, as the late Adolphe Oscar Schuetze named his own estate as the
sole beneficiary of the insurance on his life, upon his death the latter became the sole
owner of the proceeds, which therefore became subject to the inheritance tax, citing
Del Val vs. Del Val (29 Phil., 534), where the doctrine was laid down that an heir
appointed beneficiary to a life-insurance policy taken out by the deceased, becomes
the absolute owner of the proceeds of such policy upon the death of the insured.
The estate of a deceased person cannot be placed on the same footing as an
individual heir. The proceeds of a life-insurance policy payable to the estate of the
insured passed to the executor or administrator of such estate, and forms part of its
assets (37 Corpus Juris, 565, sec. 322); whereas the proceeds of a life-insurance
policy payable to an heir of the insured as beneficiary belongs exclusively to said
heir and does not form part of the deceased's estate subject to administrator. (Del Val
vs. Del Val, supra; 37 Corpus Juris, 566, sec. 323, and articles 419 and 428 of the
Code of Commerce.)
Just as an individual beneficiary of a life-insurance policy taken out by a married
person becomes the exclusive owner of the proceeds upon the death of the insured

PERSONS REVIEW ASSIGNMENT 10 Page 17


even if the premiums were paid by the conjugal partnership, so, it is argued, where
the beneficiary named is the estate of the deceased whose life is insured, the
proceeds of the policy become a part of said estate upon the death of the insured even
if the premiums have been paid with conjugal funds.
In a conjugal partnership the husband is the manager, empowered to alienate the
partnership property without the wife's consent (art. 1413, Civil Code), a third
person, therefore, named beneficiary in a life-insurance policy becomes the absolute
owner of its proceeds upon the death of the insured even if the premiums should
have been paid with money belonging to the community property. When a married
man has his life insured and names his own estate after death, beneficiary, he makes
no alienation of the proceeds of conjugal funds to a third person, but appropriates
them himself, adding them to the assets of his estate, in contravention of the
provisions of article 1401, paragraph 1, of the Civil Code cited above, which
provides that "To the conjugal partnership belongs" (1) Property acquired for a
valuable consideration during the marriage at the expense of the common fund,
whether the acquisition is made for the partnership or for one of the spouses only."
Furthermore, such appropriation is a fraud practised upon the wife, which cannot be
allowed to prejudice her, according to article 1413, paragraph 2, of said Code.
Although the husband is the manager of the conjugal partnership, he cannot of his
own free will convert the partnership property into his own exclusive property.
As all the premiums on the life-insurance policy taken out by the late Adolphe Oscar
Schuetze, were paid out of the conjugal funds, with the exceptions of the first, the
proceeds of the policy, excluding the proportional part corresponding to the first
premium, constitute community property, notwithstanding the fact that the policy
was made payable to the deceased's estate, so that one-half of said proceeds belongs
to the estate, and the other half to the deceased's widow, the plaintiff-appellant
Rosario Gelano Vda. de Schuetze.
The second point to decide in this appeal is whether the Collector of Internal
Revenue has authority, under the law, to collect the inheritance tax upon one-half of
the life-insurance policy taken out by the late Adolphe Oscar Schuetze, which
belongs to him and is made payable to his estate.

According to the agreed statement of facts mentioned above, the plaintiff-appellant,


the Bank of the Philippine Islands, was appointed administrator of the late Adolphe
Oscar Schuetze's testamentary estate by an order dated March 24, 1928, entered by
the Court of First Instance of Manila. On July 13, 1928, the Sun Life Assurance
Company of Canada, whose main office is in Montreal, Canada, paid Rosario Gelano
Vda. de Schuetze upon her arrival at Manila, the sum of P20,150, which was the
amount of the insurance policy on the life of said deceased, payable to the latter's
estate. On the same date Rosario Gelano Vda. de Schuetze delivered the money to
said Bank of the Philippine Islands, as administrator of the deceased's estate, which
entered it in the inventory of the testamentary estate, and then returned the money to
said widow.
Section 1536 of the Administrative Code, as amended by section 10 of Act No. 2835
and section 1 of Act No. 3031, contains the following relevant provision:
SEC. 1536. Conditions and rate of taxation. Every transmission by
virtue of inheritance, devise, bequest, gift mortis causa or advance in
anticipation of inheritance, devise, or bequest of real property located in the
Philippine Islands and real rights in such property; of any franchise which
must be exercised in the Philippine Islands; of any shares, obligations, or
bonds issued by any corporation or sociedad anonima organized or
constituted in the Philippine Islands in accordance with its laws; of any
shares or rights in any partnership, business or industry established in the
Philippine Islands or of any personal property located in the Philippine
Islands shall be subject to the following tax:
xxx

xxx

xxx

In as much as the proceeds of the insurance policy on the life of the late Adolphe
Oscar Schuetze were paid to the Bank of the Philippine Islands, as administrator of
the deceased's estate, for management and partition, and as such proceeds were
turned over to the sole and universal testamentary heiress Rosario Gelano Vda. de
Schuetze, the plaintiff-appellant, here in Manila, the situs of said proceeds is the
Philippine Islands.
In his work "The Law of Taxation," Cooley enunciates the general rule governing the
levying of taxes upon tangible personal property, in the following words:
GENERAL RULE. The suits of tangible personal property, for purposes
of taxation may be where the owner is domiciled but is not necessarily so.
Unlike intangible personal property, it may acquire a taxation situs in a state
other than the one where the owner is domiciled, merely because it is
located there. Its taxable situs is where it is more or less permanently
located, regardless of the domicile of the owner. It is well settled that the
state where it is more or less permanently located has the power to tax it

17 | P a g e

PERSONS REVIEW ASSIGNMENT 10 Page 18


although the owner resides out of the state, regardless of whether it has been
taxed for the same period at the domicile of the owner, provided there is
statutory authority for taxing such property. It is equally well settled that the
state where the owner is domiciled has no power to tax it where the property
has acquired an actual situs in another state by reason of its more or less
permanent location in that state. ... (2 Cooley, The Law of Taxation, 4th ed.,
p. 975, par. 451.)
With reference to the meaning of the words "permanent" and "in transit," he has the
following to say:
PERMANENCY OF LOCATION; PROPERTY IN TRANSIT. In order
to acquire a situs in a state or taxing district so as to be taxable in the state
or district regardless of the domicile of the owner and not taxable in another
state or district at the domicile of the owner, tangible personal property must
be more or less permanently located in the state or district. In other words,
the situs of tangible personal property is where it is more or less
permanently located rather than where it is merely in transit or temporarily
and for no considerable length of time. If tangible personal property is more
or less permanently located in a state other than the one where the owner is
domiciled, it is not taxable in the latter state but is taxable in the state where
it is located. If tangible personal property belonging to one domiciled in one
state is in another state merely in transitu or for a short time, it is taxable in
the former state, and is not taxable in the state where it is for the time being.
....
Property merely in transit through a state ordinarily is not taxable there.
Transit begins when an article is committed to a carrier for transportation to
the state of its destination, or started on its ultimate passage. Transit ends
when the goods arrive at their destination. But intermediate these points
questions may arise as to when a temporary stop in transit is such as to
make the property taxable at the place of stoppage. Whether the property is
taxable in such a case usually depends on the length of time and the purpose
of the interruption of transit. . . . .

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. . . It has been held that property of a construction company, used in


construction of a railroad, acquires a situs at the place where used for an
indefinite period. So tangible personal property in the state for the purpose
of undergoing a partial finishing process is not to be regarded as in the
course of transit nor as in the state for a mere temporary purpose. (2 Cooley,
The Law of Taxation, 4th ed., pp. 982, 983 and 988, par. 452.)
If the proceeds of the life-insurance policy taken out by the late Adolphe Oscar
Schuetze and made payable to his estate, were delivered to the Bank of the
Philippine Islands for administration and distribution, they were not in transit but
were more or less permanently located in the Philippine Islands, according to the
foregoing rules. If this be so, half of the proceeds which is community property,
belongs to the estate of the deceased and is subject to the inheritance tax, in
accordance with the legal provision quoted above, irrespective of whether or not the
late Adolphe Oscar Schuetze was domiciled in the Philippine Islands at the time of
his death.
By virtue of the foregoing, we are of opinion and so hold: (1) That the proceeds of a
life-insurance policy payable to the insured's estate, on which the premiums were
paid by the conjugal partnership, constitute community property, and belong one-half
to the husband and the other half to the wife, exclusively; (2) that if the premiums
were paid partly with paraphernal and partly conjugal funds, the proceeds are
likewise in like proportion paraphernal in part and conjugal in part; and (3) that the
proceeds of a life-insurance policy payable to the insured's estate as the beneficiary,
if delivered to the testamentary administrator of the former as part of the assets of
said estate under probate administration, are subject to the inheritance tax according
to the law on the matter, if they belong to the assured exclusively, and it is immaterial
that the insured was domiciled in these Islands or outside.1awphil.net
Wherefore, the judgment appealed from is reversed, and the defendant is ordered to
return to the plaintiff the one-half of the tax collected upon the amount of P20,150,
being the proceeds of the insurance policy on the life of the late Adolphe Oscar
Schuetze, after deducting the proportional part corresponding to the first premium,
without special pronouncement of costs. So ordered.

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