Philippine Commercial and Industrial Bank, Administrator of the Testate Estate of

Charles Newton Hodges, vs. Hon. Venicio Escolin (CFI-Iloilo) and Avelina A. Magno;
Testate Estate of the late Linnie Jane Hodges. Testate Estate of the late Charles Newton
Hodges.
March 29, 1974, Barredo, J.
*Full text is more or less 100 pages… SC itself was clueless as to some facts so it copied
entire pleadings into the decision and PCIB raised 78 assignments of errors.

Case summary: The Hodges lived in the Philippines for almost 50 years and died leaving
substantial properties in Iloilo and in the US (they were childless). Mrs. Hodges died 5 years
before the husband, providing in her will that while her estate would go to him, upon his death,
the remainder should pass to her siblings. The court held that this testamentary provision,
while probably ineffectual as a substitution under the Civil Code, is not actually a substitution,
but is a valid and simultaneous institution of heirs, though the passing of title to the inheritance
to the others (the siblings) was made to depend on a resolutory condition (the husband’s
death). Case was remanded to the trial court for the determination of the proper application of
the renvoi principle (conflict of laws between Philippines and Texas law), and the proper
distribution of Linnie’s, Charles’, and their conjugal estates.

FACTS:
• Charles Newton Hodges and Linnie Jane Hodges were originally from Texas, USA. During
their marriage, they had acquired and accumulated considerable assets and properties in
the Philippines and in Oklahoma and Texas in the US.
- They both lived, worked and were domiciled in Iloilo City for around 50 years.
• Before her death, Linnie Jane executed a will leaving her estate, less her debts and funeral
expenses, to her husband Charles.
- It was provided in the will that should Charles die, the remainder of her estate shall go
to her brothers and sisters, share and share alike.
- Should any of the brothers and sisters die before the husband, Mrs. Hodges willed that
the heirs of the said sibling be substituted in the deceased’s sibling’s place.
• When Mrs. Hodges died, Charles took the will to probate court, and was appointed
Executor, then later, Special Administrator.
- He moved to be allowed to continue administering the family business, as per Linnie
Jane’s wishes, and to engage in sales, conveyances, leases, mortgages and other
necessary transactions.
- He also filed the necessary and appurtenant administration/accounting records, and
income tax returns for the estate.
- Charles named 7 brothers and sisters of Linnie Jane as her heirs (Esta, Emma,
Leonard, Aline, David, Sadie, Era and Nimroy), but the order admitting the will to
probate unfortunately omitted one of the heirs, Roy Higdon, so Charles filed a verified
motion to have Roy’s name included.
• As an executor, he was bound to file tax returns for the estate he was administering under
American law. He did file such as estate tax return on August 8, 1958.
- In such tax return he answered "Yes" to the question as to whether he was
contemplating "renouncing the will".
 - On the question as to what property interests passed to him as the surviving spouse, he
answered:
“None, except for purposes of administering the Estate, paying debts, taxes and
other legal charges. It is the intention of the surviving husband of deceased to
distribute the remaining property and interests of the deceased in their
Community estate to the devisees and legatees named in the will when the
debts, liabilities, taxes and expenses of administration are finally determined and
paid.”

• Charles died in Iloilo in December 1962 without having liquidated Linnie’s estate, which
includes her share in the conjugal partnership.
- A longtime employee of the Hodges, Avelina Magno, was appointed Administratrix (for
Linnie’s estate) and a Special Administratrix (for Charles’).

- Magno was appointed, but later Harold Davies (representative of Charles’ heirs in the
US) was designated Co-Special Administrator, who was then replaced by one Joe
Hodges, Charles’ nephew.
- One Atty. Mirasol was also appointed as co-administrator, and an order of probate and
letters of administration were issued to Hodges and Mirasol.

• At this point, the SC could not entirely ascertain the facts due to the gaps in the allegations
and it was convinced that the parties representing both estates had cooked up a modus
operandi to settle money matters (a settlement with records the Court never saw)—which,
however, went awry, with more and more heirs from the US flocking to Iloilo, and lawyers
filing their respective claims for retainer fees.

• Much later, PCIB became the administrator of Charles’ estate, asserting a claim to all of his
estate, including those properties/assets that passed to him upon Linnie Jane’s death.

• Avelina Magno opposed this, as Linnie Jane’s other heirs (the HIGDONS) would be
prejudiced, so she continued acting in her capacity as administrator (entering into sales and
other such conveyances).

• For these acts, the PCIB dismissed her as an employee of Charles’ estate, to which she
responded by locking up the premises being used by PCIB as offices, which were among
the estate’s properties.

PCIB’s Claims
Mrs. Hodges’ will should be governed by Philippine Law, with respect to the order of
succession, the amount of successional rights, and the intrinsic validity of its
testamentary provisions.
• Mrs. Hodges intended Philippine laws to govern her Will.
• Article 16, NCC, provides that "the national law of the person whose succession is
under consideration, whatever may be the nature of the property and regardless of the
country wherein said property may be found", shall prevail.
• However, the Conflict of Law of Texas, which is the "national law" of the testatrix, Linnie
Jane Hodges, provide that the domiciliary law (Philippine law) should govern the
testamentary dispositions and successional rights over movables, and the law of the
situs of the property (also Philippine law as to properties located in the Philippines) as
regards immovables.
• Thus applying the "Renvoi Doctrine", as approved and applied in the Christensen case
(1963), Philippine law should apply.
• Under Philippine and Texas law, the conjugal or community estate of spouses shall,
upon dissolution, be divided equally between them. Thus, upon Mrs. Hodges’ death, ½
of the entirety of the assets of the Hodges spouses constituting their conjugal estate
pertained automatically to Charles, not by way of inheritance, but in his own right as
partner in the conjugal partnership.
• The other one-half (1/2) portion forming part of Linnie’s estate, cannot, under a clear
and specific provision of her Will, be enhanced or increased by income, earnings, rents,
or emoluments accruing after her death. “All rents, emoluments and income from said
estate shall belong to him (C. N. Hodges) and he is further authorized to use any part of
the principal of said estate as he may need or desire."
• Articles 900, 995 and 1001 provide that the surviving spouse of a deceased leaving no
ascendants or descendants is entitled, as a matter of right and by way of irrevocable
legitime, to at least one-half (1/2) of the estate of the deceased, and no testamentary
disposition by the deceased can legally and validly affect this right of the surviving
spouse. In fact, her husband is entitled to said one-half (1/2) portion of her estate by
way of legitime. (Article 886)
• Clearly, therefore, immediately upon the death of Linnie Jane Hodges, C. N. Hodges
was the owner of at least 3/4 or 75% percent of all of the conjugal assets of the
spouses: 50% by way of conjugal partnership share, and 1/4 or 25% by way of
inheritance and legitime) plus all "rents, emoluments and income" accruing to said
conjugal estate from the moment of Linnie Jane Hodges' death.
• In his capacity as sole heir and successor to Linnie’s estate, Charles appropriated to
himself the entirety of her estate. He operated all the assets, engaged in business and
performed all acts in connection with the entirety of the conjugal estate, in his own name
alone, just as he had been operating, engaging and doing while the late Linnie Jane
Hodges was still alive. Upon his death on December 25, 1962, therefore, all said
conjugal assets were in his sole possession and control, and registered in his name
alone, not as executor, but as exclusive owner of all said assets.
• As the sole and exclusive heir, Charles did not need to liquidate the estate.
Neither was there any asset left to Linnie’s estate at the time of Charles’ death, though
Linnie’s estate may have referred to “all of the rest, residue and remainder of my estate”
which would go to her siblings in the event of Charles death. The provision is thus void
and invalid at least as to Philippine assets.

• The substitution provided for by paragraph four of the Will of Linnie Jane Hodges is not
fideicommissary substitution, because there is clearly no obligation on the part of C. N.
Hodges as the first heir designated, to preserve the properties for the substitute heirs.
• It is a simple substitution. However, in order that a simple substitution can be valid, 3
alternative conditions must be present, namely, that the first designated heir (1) should
 die before the testator; or (2) should not wish to accept the inheritance; or (3) should be
incapacitated to do so.
- None of these conditions apply to C. N. Hodges, and, therefore, the substitution
provided for by the above-quoted provision of the Will is not authorized by the Code,
and, therefore, it is void. Manresa even said, “when another heir is designated to inherit
upon the death of a first heir, the second designation can have effect only in case the
first instituted heir dies before the testator, whether or not that was the true intention of
said testator.”

Avelina Magno’s contentions

• The applicable law was that of Texas under which there was no system of legitime,
thus, teh estate of Mrs. Hodges could not be less than her share or ½ of the
conjugal partnership properties.
• Linnie Jane merely gave Charles a life-estate or a usufruct over all her estate and gave a
vested remainder-estate or the naked title over the same estate, to her relatives.
• After Linnie’s death, Charles, as administrator and executor of the will, unequivocably and
clearly through oral and written declarations and sworn public statements, renounced,
disclaimed and repudiated his life-estate and usufruct.
• Since there was no separation or segregation of the interests of Linnie and Charles in the
combined conjugal estate, as there has been no such separation or segregation, and
because of Charles’ repudiation, both interests have continually earned exactly the same
amount of rents, emoluments and income.
ISSUES:
1. W/N Texas Law should apply (how should the estate be partitioned) – SC held
that since there was no evidence as to what the applicable Texas laws were and
such being a question of fact, CASE IS REMANDED
2. Is Mrs. Hodges’ disposition in favor of her siblings void? – NO

RULING:

1. The parties disagreed as to how Article 16 of the Civil Code should be applied.
• On the one hand, PCIB claimed that inasmuch as Linnie was a resident of the Philippines
at the time of her death, under said Article 16, construed in relation to the pertinent laws of
Texas and the principle of renvoi, what should be applied here should be the rules of
succession under the Civil Code, and, therefore, her estate could consist of no more than
one-fourth of the said conjugal properties, the other fourth being, as already explained,
the legitime of her husband (Art. 900) which she could not have disposed of nor burdened
with any condition (Art. 872).
• On the other hand, Avelina denied that Linnie died a resident of the Philippines, since
allegedly she never changed nor intended to change her original residence of birth in
Texas, United States of America, and contends that, anyway, regardless of the question
of her residence, she being indisputably a citizen of Texas, under said Article 16 of the
Civil Code, the distribution of her estate is subject to the laws of said State which,
according to her, do not provide for any legitime, hence, Linnie’s brothers and sisters are
 entitled to the remainder of the whole of her share of the conjugal partnership properties
consisting of one-half thereof.
- Avelina further maintained that, in any event, Charles had renounced his rights under
the will in favor of his co-heirs, as allegedly proven by the documents touching on the
point already mentioned earlier, the genuineness and legal significance of which PCIB
questioned.
• The Court cannot decide on the claims, though, for neither the evidence submitted by the
parties appeared to be adequate enough for it to render an intelligent comprehensive and
just resolution.
• No clear and reliable proof of what in fact the possibly applicable laws of Texas are, was
presented (take note of judicial notice in case of foreign laws).
• The question as to what the pertinent laws of Texas are and what would be the
estate of Mrs. hodges under them is one of fact. Considering the respective positions
of the parties in respect of the issue, it can be deemed as settled that the free portion of
said estate that could possibly descend to her brothers and sisters by virtue of her will
may not be less than ¼ of the conjugal estate, it appearing that the difference in the
stands of the parties has reference solely to the legitime of Hodges. PCIB views that
under the Texas Laws, there is such a legitime of ¼ of the said conjugal estate and while
Magno contends that there is none.
• In Justice, therefore, to all the parties concerned, these and all other relevant matters
should first be threshed out fully in the trial court in the proceedings thereafter to be held
for the purpose of ascertaining and adjudicating and/or distributing the estate of Mrs.
Hodges to her heirs in accordance with her duly probated will.
• Linnie’s estate is the remainder of 1/4 of the conjugal partnership properties, considering
that even PCIB did not maintain that the application of the laws of Texas would result in
the other heirs of Mrs. Hodges not inheriting anything under her will.
• And since PCIB's representations in regard to the laws of Texas virtually constitute
admissions of fact, PCIB is not permitted to contradict them or subsequently take a
position contradictory to or inconsistent with them.
• In other words, whatever the result may be in the subsequent proceedings on the
matter would no longer be of any consequence since PCIB would be in estoppel
already to claim that the estate of Mrs. Hodges should be less than as contended by it
because admissions by a party related to the effects of foreign laws, which have to be
proven in our courts, create estoppel.
• All this court can decide on in connection with the petition for certiorari and
prohibition are:
1) That regardless of which laws are applied, whether PH or Texas, and regardless of
w/n it can be proven by competent evidence that Mr. Hodges renounced his
inheritance, it is apparent from the inventory submitted by Mr. Hodges as executor of
his wife’s estate, that there are properties which should constitute the estate of Mrs.
Hodges and ought to be disposed of or distributed among her heirs pursuant to her
will;
2) That inasmuch as the question of what the pertinent laws of Texas are applicable to
the situation is one of fact, it is now beyond controversy for all future purposes that
whatever be the provisions of the Texas laws, the estate of Mrs. Hodges is at least ¼
of the conjugal estate of the spouses.
 • The only question that remains to be settled in the remand to the court below are:
(1) whether or not the applicable laws of Texas do provide in effect for more, such as, when
there is no legitime provided therein
(2) whether or not Hodges has validly waived his whole inheritance from Mrs. Hodges.\
• The question as to what the laws of Texas are governing the matters in issue is one of
fact.
• It is a well-settled rule that foreign laws may not be taken judicial notice of and have to be
proven like any other fact in dispute between the parties in any proceeding.

2. To a certain extent, PCIB’s contention that Mrs. Hodges’ testamentary substitution,

when viewed as a substitution, may not be given effect, is correct.
• Indeed, legally speaking, Linnie’s will provide neither for a simple/vulgar substitution under
Article 859 of the Civil Code nor for a fideicommissary substitution under Article 863
thereof.
- There is no simple/vulgar substitution because there is no provision for either (1)
predecease of the testator by the designated heir or (2) refusal or (3) incapacity of the
latter to accept the inheritance, as required by Article 859; and neither is there a
fideicommissary substitution therein because no obligation is imposed thereby upon
Hodges to preserve the estate or any part thereof for anyone else.
- But from these premises, it is not correct to jump to the conclusion, as PCIB does, that
the testamentary dispositions in question are therefore inoperative and invalid.
• The error in PCIB's position lies in the fact that it views the said disposition exclusively in
the light of substitutions covered by the Civil Code section on that subject, (Section 3,
Chapter 2, Title IV, Book III) when it is obvious that substitution occurs only when another
heir is appointed in a will "so that he may enter into inheritance in default of the heir
originally instituted," (Article 857) and, in the present case, no such possible default is
contemplated.
• The brothers and sisters of Mrs. Hodges are not substitutes because under her will, they
are not to inherit what Mr. Hodges cannot, would not or may not inherit, but what he would
not dispose of from his inheritance; rather, therefore, they are also heirs instituted
simultaneously with Hodges, subject, however, to certain conditions, partially resolutory
insofar as Hodges was concerned and correspondingly suspensive with reference to his
brothers and sisters-in-law.
- It is partially resolutory, since it bequeaths unto Hodges the whole of her estate to be
owned and enjoyed by him as universal and sole heir with absolute dominion over
them only during his lifetime, which means that while he could completely and
absolutely dispose of any portion thereof inter vivos to anyone other than himself, he
was not free to do so mortis causa, and all his rights to what might remain upon his
death would cease entirely upon the occurrence of that contingency.
- The right of his brothers and sisters-in-law to the inheritance, although vested already
upon the death of Mrs. Hodges, would automatically become operative upon the
occurrence of the death of Mr. Hodges.

• Contrary to Avelina’s view, however, it was not only the usufruct of Linnie’s estate that she
bequeathed to Charles during his lifetime, but the full ownership thereof, although the
same was to last also during his lifetime only, even as there was no restriction whatsoever
 against his disposing or conveying the whole or any portion thereof to anybody other than
himself.
- The Court saw no legal impediment to this kind of institution, except that it cannot apply
to the legitime of Charles as the surviving spouse, consisting of one-half of the estate,
considering that Linnie had no surviving ascendants nor descendants. (Arts. 872, 900,
and 904.)
• The Court also held, however, that the estate of Mrs. Hodges inherited by her brothers
and sisters could be more than what is stated in this decision, but this would depend on
(1) whether upon the proper application of the principle of renvoi in relation to Article 16 of
the Civil Code and the pertinent laws of Texas, it will appear that Hodges had no legitime
as contended by Magno, and (2) whether or not it can be held that Hodges had legally
and effectively renounced his inheritance from his wife.
• Under the circumstances and in the state of the record of these cases, the Court is
not in a position to make a final ruling, whether of fact or of law, on any of these two
issues, and We, therefore, reserve said issues for further proceedings and resolution in
the first instance by the court a quo, as hereinabove indicated.
• We reiterate, however, that pending such further proceedings, as matters stand at this
stage, Our considered opinion is that it is undisputed that since, under the terms of the will
of Mrs. Hodges, her husband could not have anyway legally adjudicated or caused to be
adjudicated to himself her whole share of their conjugal partnership, albeit he could have
disposed any part thereof during his lifetime, the resulting estate of Mrs. Hodges cannot
be less than ¼ of the conjugal partnership properties, as of the time of her death, minus
what have been gratuitously disposed of therefrom by Hodges in favor of third persons
since then, for even if it were assumed that under Article 16 of the Civil Code and
applying renvoi the laws of the Philippines are the ones ultimately applicable, such ¼
share would be her free disposable portion, taking into account already the legitime of her
husband under Article 900 of the Civil Code.

DISPOSITIVE PORTION: Remand for determination of proper application of Art. 16, CC

(renvoi), and of Charles’ alleged renunciation of his ineritance under Linnie’s will. Avelina
remains to be the administrator of Linnie’s estate. The said estate consists of ¼ of the
community properties of the said spouses, as of the time of Linnie’s death on May 23, 1957,
minus whatever the husband had already gratuitously disposed of in favor of third persons
from said date until his death, provided, first, that with respect to remunerative dispositions, the
proceeds thereof shall continue to be part of the wife's estate, unless subsequently disposed of
gratuitously to third parties by the husband, and second, that should the purported renunciation
be declared legally effective, no deductions whatsoever are to be made from said estate. PCIB
and Avelina should act thenceforth always conjointly, never independently from each other, as
administrators.