G.R. No. 89783 February 19, 1992
MARIANO B. LOCSIN, ET AL., petitioners, vs. THE HON. COURT OF APPEALS, JOSE JAUCIAN, ET AL., respondents.

FACTS

The case involves the estate of the spouses Mariano Locsin and Catalina Jaucian, who died without children. Mariano willed all his properties to Catalina as his universal heir. The spouses allegedly had a verbal agreement that upon both their deaths, their respective properties would revert to their own blood relatives. After Mariano’s death, Catalina, over several years, executed deeds of sale and donation transferring various properties, originally belonging to Mariano, to his nephews and nieces, the petitioners herein. After Catalina’s death, her relatives, the private respondents, filed an action for annulment of these transfers and for reconveyance, claiming the transfers were made without consideration and violated the alleged mutual agreement between the spouses.
The Regional Trial Court and the Court of Appeals ruled in favor of the respondents, declaring the transfers invalid. The appellate court found that Catalina had no right to dispose of Mariano’s properties, which she held in trust for his heirs, and that the transfers were simulated for lack of valuable consideration. The petitioners elevated the case to the Supreme Court via a petition for review.

ISSUE

The primary issue is whether the transfers (sales and donations) of properties executed by Catalina Jaucian in favor of the Locsin petitioners are valid and binding.

RULING

The Supreme Court reversed the Court of Appeals and upheld the validity of the transfers. The Court clarified that upon Mariano’s death, his will was duly probated, and Catalina became the absolute owner of the properties bequeathed to her, not a mere trustee. The legal logic is grounded in the principle of succession: by institution under a will, the heir acquires a direct and immediate right to the estate from the moment of the testator’s death. Catalina, as the instituted universal heir, became the absolute owner of Mariano’s estate. The alleged verbal pact between the spouses for the properties to revert to their respective families was unenforceable as it constituted a prohibited testamentary disposition under a mutual will, which is void under Article 781 of the Civil Code. A will is essentially personal and revocable; such a reciprocal agreement cannot bind the surviving spouse’s right of ownership and disposition.
Furthermore, the Court found that the transactions were supported by valuable consideration, either through the stated prices in the deeds of sale or the liberality in the deeds of donation. The participation of Catalina’s own trusted relatives and legal adviser in preparing and witnessing the documents negated any claim of simulation or vitiated consent. Finally, the action had prescribed. Whether viewed as an action based on fraud or for injury to rights, it prescribed in four years from the registration of the deeds, which served as constructive notice to the whole world, including the respondents. The complaint, filed decades after the transactions and six years after Catalina’s death, was therefore barred by prescription.