IN RE INTESTATE ESTATE OF THE DECEASED CONCEPCION GERONA. IGNACIO ARROYO, PETITIONER AND APPELLANT, VS. JACOBA GERONA ET AL., CLAIMANTS AND APPELLEES.

On
June 16, 1927, Concepcion Gerona died in Iloilo, leaving neither
ascendants nor descendants. She had suffered from mental alienation
from birth, and was at the time of her death under the guardianship of
her uncle, Ignacio Arroyo, her only relative on her mother’s side. On
her paternal side her surviving relatives were her aunts Clara,
Ciriaca, Jacoba, and Patricia, sisters of her deceased father, Blas
Gerona, together with Maria G. and Blas G., children of Victor Gerona,
a deceased brother of the aforesaid aunts. Shortly after the death of
Concepcion Gerona her uncle Ignacio secured an order closing the
guardianship, and on September 5, 1928, he instituted intestate
proceedings to wind up the estate. On October 8, 1928, he was declared
the owner of all her property and the proceedings were closed.

On July 9, 1929, Jacoba, Patricia, Ciriaca, and Clara Gerona filed a
petition in the cause, asking that two documents, Exhibits A and D,
dated respectively June 13, 1913, and September 27, 1928, be annulled,
that the order of October 8, 1928, adjudicating the estate to Ignacio
Arroyo, be set aside, and that a judicial administrator be appointed to
administer the estate. The Court of First Instance of Iloilo, believing
that the relief sought could only be obtained in an ordinary civil
action, ruled that it was without jurisdiction over the matter, and
dismissed the petition: From this order the petitioners appealed, and
the order dismissing the petition was here reversed and the cause
remanded for further proceedings. (Arroyo vs. Gerona, 54 Phil.,
909.) Upon the return of the record to the lower court the petitioners
filed an amended petition which differed from the original petition
only in the addition of a description of the property. The documents
referred to above, Exhibits A and D, are, first, a contract for the
distribution of the properties left by the parents of Concepcion
Gerona, and, secondly, a ratification of the same contract executed
after the death of Concepcion. The effect of said contracts, as they
stand, is to deprive the plaintiffs of further participation in the
estate of the decedent mentioned. Although the issue which lies at the
basis of this controversy is presented in a somewhat anomalous way, the
whole question resolves itself in its essence into a contention over
the validity of these agreements.

Concepcion Gerona was the
daughter of Blas Gerona and Manuela Arroyo, who died in 1895 and 1893,
respectively. Concepcion had one brother named Salvador, who died in
childhood in 1907, leaving no descendant. Blas Gerona and Manuela
Arroyo left a conjugal estate consisting of various parcels of real
property, which are the principal object of this controversy. Manuela
Arroyo also left paraphernal property, which, however, is not involved
in this lawsuit. Blas Gerona left no separate property. When Salvador
Gerona died in 1907, his property vested by law in his maternal
grandmother, Apolonia Lacson, she being then his only living ascendant.

After the death of Blas Gerona in 1895, his two orphaned children,
Salvador and Concepcion, passed into the care of their grandmother,
Apolonia Lacson; but this old lady leaned heavily of course upon her
son Ignacio, who naturally acquired and exercised the principal
authority in the care of the two minors and of their property. Indeed,
he acted during many of the years succeeding the death of their father
as a guardian appointed by the family council. Later he was legal
guardian of Concepcion.

Apolonia Lacson apparently had no
other property than such as she had acquired by inheritance from her
grandson Salvador; and when she died on December 25, 1912, the ordinary
rules of transmission by descent would have given one-half of this
property to Ignacio Arroyo and one-half to Concepcion Gerona. But
before Apolonia died she had executed a will, which was duly admitted
to probate on February 1, 1913, in the Court of First Instance of
Iloilo. By this will the testatrix gave to Concepcion Gerona only a
one-sixth part of the property derived from Salvador. The remainder she
left to her son Ignacio.

Meanwhile the Gerona kin, captained
by Victor Gerona, had become alert to the fact that they would
ultimately have an interest in the property that had pertained to their
deceased brother Blas. The title to that property was now mainly vested
in the demented girl, Concepcion, but it was obvious that she could
never personally enjoy more than so much of the income as was necessary
to maintain her in an asylum, leaving a residue which, in view of her
incapacity, could only accumulate for distant heirs. Now that her
grandmother was dead it seemed to the Geronas an opportune time to urge
upon Ignacio Arroyo the taking of some step that would enable them to
enter to some extent into the enjoyment of their part of the estate.
Perhaps the thought occurred to them that, being heirs within the third
degree, they were joint reservees with Concepcion Gerona, though, they
were not so near as she to the source from which the property had come.
It is not necessary for us here to make pronouncement upon that point.
Suffice it to say that these heirs, brother and sisters of Blas Gerona,
now began to press the desirability of adjusting the claims of the
Gerona heirs. Ignacio Arroyo assented to the proposition, and on June
13, 1913, about six months after the death of Apolonia Lacson, a
contract of partition, known to the record as Exhibit A, was executed
between Ignacio Arroyo, on the one part, and Victor, Jacoba, Clara,
Patricia, and Ciriaca Gerona, on the other. In the execution of this
agreement Victor Gerona acted for himself, but his four sisters were
severally represented by their respective attorneys-in-fact. Thus,
Jacoba Gerona was represented by her son, Miguel Gemarino, justice of
the peace of Guimbal; Patricia Gerona was represented by Pablo
Gemarino, a notary public; Ciriaca Gerona, by her husband Pedro
Gayatao; and Clara Gerona, by her husband Benito Garingalao.

The purpose of this agreement, as recited therein, was to enable the
parties to arrive at a compromise and amicable settlement regarding the
estate left by the spouses Blas Gerona and Manuela Arroyo; and in
paragraph 4 it is agreed that certain parcels of land, thirteen in
number, situated in Binalbagan, Isabela, and Guimbal, and particularly
described in an adjoined list, shall appertain to the five Geronas in
common. In paragraph 5 Ignacio Arroyo promises to pay to each of the
Geronas the sum of five hundred pesos, as soon as a certain fund should
be paid to him by the municipality of Iloilo. These sums were duly paid
in proper course to each of them. In addition to the aforesaid
obligations Ignacio Arroyo condoned a debt owing by Victor Gerona, as
lessee of the Hacienda Manolita, and any debt or debts owing
by the same individual to Ignacio Arroyo in any character. Ignacio
Arroyo furthermore obligated himself to support and care for Concepcion
Gerona with the full dignity of her station and rank. In paragraph 8 of
the contract it is stated that the remainder of the estate pertaining
to the spouses Blas Gerona and Manuela Arroyo, not specified in the
inventory attached to the deed, shall belong to Ignacio Arroyo; “and,
therefore, any property, right or interest that the incapacitated
Concepcion Gerona may or might have in and to the estate of said
spouses shall also belong to Ignacio Arroyo after her death, in virtue
and in consideration of these presents and of the obligations by him
assumed hereby.” Finally, the parties agreed to renounce any claim that
they might severally have against each other, with reference to the
estate which was the subject of division.

Intrinsically
considered, the division thus effected had the merit of being exactly
what both the parties desired. This applies even more particularly to
the Geronas than to Ignacio Arroyo. Time, and the changes to be brought
about by time, were destined to give a different complexion to the
situation, more especially in the feature of the contract now to be
mentioned. Among the properties which were assigned to Ignacio Arroyo
under this partition were four parcels of farm land amounting to about
1,350 hectares, located in the barrios of Soledad and Camang-camang, in
the municipality of Binalbagan, Occidental Negros. This land really
comprised three or four different parcels, but they were all commonly
thought of as comprising a part of the Hacienda Manolita.
This farm had been leased for many years to Victor Gerona, who had
gotten along with indifferent success and in the course of time had
succeeded in piling up an accumulated indebtedness for rent which
remained unpaid in the amount of something like ten thousand pesos when
the contract now under consideration was made. In the course of his
experience as an unsuccessful farmer Victor Gerona had formed the
belief that this land was bewitched,— naive opinion in which Ignacio
Arroyo apparently shared. Accordingly in the negotiations leading up to
the making of this partition, Victor Gerona insisted that this farm
should be assigned to Ignacio Arroyo. Perhaps the latter may have had a
little more discerning eye for the possibilities of the future. At any
rate Ignacio yielded to the insistence of the Geronas; and in the
course of a few years, great things occurred in this region, resulting
from the fact that the Binalbagan Sugar Central was built in that
municipality, and the resulting development of sugar lands, including
the Manolita property, raised the value of the farm into the hundreds
of thousands of pesos. Nevertheless eighteen years passed without the
Geronas evincing any dissatisfaction with this partition. In the
meanwhile, soon after the contract had been made, the Geronas proceeded
to partition among themselves the property which had thus been assigned
to them in common under the contract; and both the Geronas and Ignacio
Arroyo in time procured Torrens titles to the portions respectively
assigned to them.

Considered from a legal point of view the
contract Exhibit A exhibits the vital defect that it was an agreement
for the partition of the estate of a living person, made between those
who, in case of death, would be in a position to inherit the estate. It
was not a partition planned by the owner for the purpose of
dividing his estate properly among his living heirs. It was therefore
void under the second paragraph of article 1271 of the Civil Code. In
addition to this we have the further fact that the living owner of the
estate thus partitioned was a demented woman, to whom at least one of
the contracting parties stood in a fiduciary relation.

There
was therefore ample basis for the uneasiness which Ignacio Arroyo began
to manifest in time with respect to the security of the rights assured
to him under this contract. In this connection we find significant an
incident that occurred in 1919 in winding up the estate of his mother
Apolonia Lacson. Arroyo was the administrator of this estate, but the
proceedings had moved along slowly. In 1919 he submitted an inventory
of the decedent’s estate, and in this inventory the property that had
belonged to Blas Gerona and Manuela Arroyo figured as the property of
said decedent. In this inventory there was assigned to Concepcion
Gerona only that portion of this property which had been bequeathed to
her in the will of Apolonia Lacson, namely, a one-sixth interest. But
it will be remembered that in the will of Apolonia Lacson she disposed
only of the property which she had acquired from her grandson Salvador
Gerona. In other words the valuable interest which Concepcion Gerona
had inherited from her parents was conducted into the estate of
Apolonia Lacson. By this device half of the property left by Blas
Gerona and Manuela Arroyo was made to disappear apparently from the
thought of man.

Then, in order to get the court to approve
the settlement based upon the aforesaid inventory, Arroyo procured one
Mauro Ditching to be appointed guardian ad litem for
Concepcion Gerona. Ditching, as such guardian, formally receipted for
the share pertaining to his demented ward, and immediately resigned.
Ignacio Arroyo then qualified as her legal guardian and he continued to
discharge this office until her death. It will be noted that none of
the Geronas were parties to the consummation of this device, and of
course they were not bound by the decree. Furthermore, the trick was in
law ineffectual as against Concepcion Gerona because of the
confidential relations that existed between her and her uncle.

As already stated, Concepcion Gerona died on June 16, 1927, a
circumstance which served to precipitate the controversy which has
resulted. To Arroyo the problem presented was to obtain a ratification
or confirmation of the contract Exhibit A. This matter was accordingly
taken up, and on September 27, 1928, the contract (Exhibit D) was
entered into between Arroyo and the Gerona sisters. Victor Gerona being
now dead, his interest in the estate had descended to his two children,
Blas G. and Maria G. Gerona. This interest, it is important to note, is
not involved in the present lawsuit, as the two heirs mentioned have
been content, upon the payment of an independent consideration, to
acquiesce in the contract of June 13, 1913 (Exhibit A). We are
therefore concerned in the situation solely as it affects the Gerona
sisters.

When the suggestion for the ratification of the
original agreement was first raised by Ignacio Arroyo, the Geronas
showed no enthusiasm about the matter; and their reason was that they
feared that Ignacio Arroyo was setting afoot some scheme to disturb
them in the benefits that they had received under the contract Exhibit
A. They were far from being dissatisfied with that contract and were
determined to hold to what they had gotten. Nevertheless, when it was
explained to them that Arroyo was not intending to disturb them in
their previously acquired rights, the agreement Exhibit D was executed.

In this document the Geronas declared that, in their capacity as heirs
and next of kin of the deceased Concepcion Gerona, they ratified in all
its parts the deed of compromise and waiver of June 13, 1913 (Exhibit
A), and waived in favor of Ignacio Arroyo any right, interest or
participation that they had or might have in and to the estate left by
said Concepcion Gerona (par. 4); that to give effect to this waiver
they authorized Attorney Jose Evangelista to state to the court in
their name that they waived, as such heirs of Concepcion Gerona, in
favor of Ignacio Arroyo, any right they might have in the estate of
Concepcion Gerona, in conformity with the renunciation contained in the
document Exhibit A, whereby all of the estate of Concepcion Gerona, not
apportioned to the Gerona brothers, had been transferred to Ignacio
Arroyo, whom they likewise authorized to obtain from the court a
pronouncement as to his right to appropriate to himself the said estate
of Concepcion Gerona (par. 5); and that they expressly and specifically
waived in favor of Ignacio Arroyo any right, title or interest which
they had or might have in any other property standing in the name of
Concepcion Gerona (par. 6).

Directing our attention to the
c6nditions under which the contract Exhibit D was executed, we observe
that, for the appellees, it is contended that this ratification or
confirmation of the original contract Exhibit A was procured by
fraudulent representations; and in this connection it is claimed that
the appellant and his attorney falsely represented to the plaintiffs
that the estate of Concepcion Gerona, which was the subject of that
contract, had a value of only eighteen thousand pesos. We are of the
opinion that some such misrepresentation as this was made. Indeed, in
view of the process to which Arroyo had subjected Conception’s share in
the estate of her parents, namely, of passing it through the testate
proceedings of the estate of Apolonia Lacson, with the apparent result
of giving to Concepcion Gerona only a one-sixth part thereof, it was
but natural that the appellant should have represented that the
interest really pertaining to her was of a trivial value. But whether
the Geronas were in fact seriously misled by any such misrepresentation
is more questionable. The circumstance that really entitles the Geronas
to relief is that Arroyo had been in confidential relations with
Concepcion Gerona, as her uncle and guardian, and the Geronas were
dealing with him in that light, and as one in whom they had confidence.
It is a well established rule of equity that all dealings with
expectant heirs are presumptively invalid (2 Pom. Eq., 4 ed., sec.
953); also that, if a person who is placed in a fiduciary relation
towards another intentionally conceals a material fact with the purpose
of inducing the other to enter into an agreement, such concealment is
an actual fraud, and the agreement is void without the aid of any
presumption. (2 Pom. Eq. Jur., 4 ed., sec 956.) The Geronas were in no
sense implicated in the fraudulent device by which the property
inherited by Concepcion Gerona from her parents was passed through the
estate of Apolonia Lacson. That device was a fraud perpetrated by
Ignacio Arroyo upon his own ward and upon all who might derive an
interest by inheritance from her. The original contract Exhibit A, as
already suggested, was a mere nullity, and the circumstance that in
1919 Ignacio Arroyo dealt with the estate of his niece in the testacy
of Apolonia Lacson in the manner already stated shows clearly that he
placed little reliance upon that contract.

It is insisted
for the appellees that, inasmuch as the contract Exhibit A was void,
the ratification of said contract contained in Exhibit D was also a
nullity. But this contention overlooks the fact that, before the deed
of ratification was executed, death had removed Concepcion Gerona from
the scene of life. This circumstance removed the cause of nullity. A
null contract cannot of course be ratified as long as the cause of
nullity continues to exist, but when this cause is removed the parties
are free to contract as they please. Whether the contract Exhibit D be
viewed as a ratification, confirmation, or as a new contract, the
result is the same, namely, that the Geronas are bound by said contract
unless it was vitiated by fraud, actual or constructive.

Under the circumstances we have no hesitancy in declaring that the
appellees are entitled to relief from said contract, but the extent of
the relief which they should receive presents a question of some
difficulty; for we are confronted with a situation in which, in eager
haste to correct one wrong, we might commit another equally obnoxious
to equity and the sense of justice.

The proper key to the
solution of the case is found in the circumstance that the appellees
have appealed to us as a court of equity, to be relieved from a
contract which is prima facie binding against them. Under such
circumstances the court has full power to grant relief to the extent
necessary to correct the wrong that has been suffered by the appellees,
without permitting them to inflict unnecessary damage upon others.
Fortunately the case supplies the proper clue for what we consider the
correct solution of the case.

In considering the
significance of the acts done in this case, as affecting the rights of
the respective parties, it is important to bear in mind that we are
concerned with two interests which have different histories, although
the threads have at no time been disentangled from each other. We refer
to the different hereditary shares of the two heirs, Salvador and
Concepcion Gerona, in the estates of their deceased parents. Each of
these shares consisted of two elements, one inherited from the mother
Manuela Arroyo, upon her death in 1893, and the other inherited from
Blas Gerona, upon his death in 1895. The property thus inherited by
Salvador and Concepcion was never partitioned, and when Salvador died
in 1907 his share was inherited, as we have already seen, by his
grandmother Apolonia Lacson. In the hands of the latter this property
was reservable under article 811 of the Civil Code, and the interest
thus inherited by Apolonia Lacson from Salvador should have been
reserved for Concepcion Gerona. But, as we have already seen, Apolonia
Lacson made a will, and, ignoring the reservable character of the
property, devised only an undivided one-sixth interest therein to
Concepcion. This was an infraction of the rules of descent prejudicial
to Concepcion, and it is manifest that the devise was invalid in so far
as it conveyed to Ignacio Arroyo an interest which should have been
inherited by Concepcion. Now, it was shortly after the death of
Apolonia Lacson that the contract Exhibit A, bearing date of June 13,
1913, was executed. In the execution of this document the contracting
parties of course had principally in mind the facts then affecting
their rights, namely, the death of Salvador Gerona and Apolonia Lacson.

On the other hand, the one-half interest which Concepcion Gerona had
inherited from her parents, Blas Gerona and Manuela Arroyo, remained in
her until her death, unaffected by the death of Salvador Gerona and
Apolonia Lacson. Therefore, bearing in mind at all times that the
contract Exhibit A, of June 13, 1913, was a nullity, it becomes
manifest that the appellees stand in a much better position with
respect to the interest which Concepcion acquired by inheritance from
her own parents than they do in respect to the interest which they seek
to derive from Salvador through Apolonia Lacson and Concepcion Gerona.
The situation is undoubtedly somewhat confused because the parties
attempted to deal with both interests in the same contract, and without
advertence to the character of the different rights involved therein;
but the difference, when attention is once drawn to the matter, is
quite apparent.

The result is, and so is our opinion, that
the appellees can not be permitted to recover any of the property
formerly vested in Salvador Gerona. Good reason for refusing to permit
this recovery is found in the fact that the appellees were active and
efficient agents in the making of the contract by which the estate of
the living Concepcion Gerona was apparently stripped of that property.
They were therefore, as to this interest, equally in wrong with the
individual whom they now seek to despoil of the larger portion of his
gain. As to this interest we think that the deed of ratification or
confirmation, Exhibit D, should be held effective.

As to the
half interest directly inherited by Concepcion Gerona from the estate
of her deceased parents, the appellees are in a different position.
They had no part in the act of Ignacio Arroyo by which he attempted to
despoil his demented ward of five-sixths of this interest, that is, by
conducting it through the channel of the testate proceedings of his
mother into himself. The non-participation of the appellees in that act
and their evident ignorance of its effects upon their hereditary
rights, clearly entitle them to relief as to this part of the property
involved.

In the course of these proceedings the fact has
come to light that Ignacio Arroyo in life transferred a large part of
the property which is involved in this lawsuit, and as to which he had
acquired Torrens titles, to his son Jose Maria Arroyo. The act by which
any such transfer was made constitutes no obstacle to this proceeding,
although when the administration is under way proper steps will have to
be taken to hold the estate of Ignacio Arroyo liable, if the property
itself cannot be reached, for any responsibility which may be properly
fixed upon him or his successors, in conformity with this decision.

The appealed decision of June 30, 1931, will therefore be affirmed in
appointing an administrator over the estate of Concepcion Gerona,
thereby abrogating the resolution of October 8, 1928, authorizing the
summary distribution of her property. The amendatory order of July 2,
1931, is also affirmed in so far as it makes a declaration of nullity
concerning the contract Exhibit A, of June 13, 1913. But the
declaration with respect to the document Exhibit D, of the date of
September 27, 1928, must be modified to the extent that the appellees
are bound thereby, in so far as relates to the interest formerly vested
in Salvador Gerona. In other respects the declaration of nullity made
by the trial court concerning said contract is correct; and, as thus
modified, the appealed judgment is affirmed. So ordered, without costs.

Villamor, Ostrand, Villa-Real, Abad Santos, Vickers, Imperial, and Butte, JJ., concur.

Justice Hull participated
in this case, but on account of his absence on leave at the time of the
promulgation of the decision, no statement of his conclusions appears
appended to the opinion of the court, but he authorized the undersigned
to certify that he voted to reverse the judgment and dismiss the
complaint on the ground that the contract of September 27, 1928, is
valid and should be enforced.—Street, J.