G.R. No.

L-41715 June 18, 1976

ROSALIO BONILLA (a minor) SALVACION BONILLA
(a minor) and PONCIANO BONILLA (their father)
who represents the minors, petitioners,
vs.
LEON BARCENA, MAXIMA ARIAS BALLENA,
ESPERANZA BARCENA, MANUEL BARCENA,
AGUSTINA NERI, widow of JULIAN TAMAYO and
HON. LEOPOLDO GIRONELLA of the Court of First
Instance of Abra, respondents.
Federico Paredes for petitioners.
Demetrio V. Pre for private respondents.

MARTIN, J :
This is a petition for review
1
of the Order of the Court of
First Instance of Abra in Civil Case No. 856, entitled
Fortunata Barcena vs. Leon Barcena, et al., denying the
motions for reconsideration of its order dismissing the
complaint in the aforementioned case.
On March 31, 1975 Fortunata Barcena, mother of
minors Rosalio Bonilla and Salvacion Bonilla and wife of
Ponciano Bonilla, instituted a civil action in the Court of
First Instance of Abra, to quiet title over certain parcels
of land located in Abra.
On May 9, 1975, defendants filed a written motion to
dismiss the complaint, but before the hearing of the
motion to dismiss, the counsel for the plaintiff moved to
amend the complaint in order to include certain
allegations therein. The motion to amend the complaint
was granted and on July 17, 1975, plaintiffs filed their
amended complaint.
On August 4, 1975, the defendants filed another motion
to dismiss the complaint on the ground that Fortunata
Barcena is dead and, therefore, has no legal capacity to
sue. Said motion to dismiss was heard on August 14,
1975. In said hearing, counsel for the plaintiff confirmed
the death of Fortunata Barcena, and asked for
substitution by her minor children and her husband, the
petitioners herein; but the court after the hearing
immediately dismissed the case on the ground that a
dead person cannot be a real party in interest and has
no legal personality to sue.
On August 19, 1975, counsel for the plaintiff received a
copy of the order dismissing the complaint and on
August 23, 1975, he moved to set aside the order of the
dismissal pursuant to Sections 16 and 17 of Rule 3 of
the Rules of Court.
2

On August 28, 1975, the court denied the motion for
reconsideration filed by counsel for the plaintiff for lack
of merit. On September 1, 1975, counsel for deceased
plaintiff filed a written manifestation praying that the
minors Rosalio Bonilla and Salvacion Bonilla be allowed
to substitute their deceased mother, but the court
denied the counsel's prayer for lack of merit. From the
order, counsel for the deceased plaintiff filed a second
motion for reconsideration of the order dismissing the
complaint claiming that the same is in violation of
Sections 16 and 17 of Rule 3 of the Rules of Court but
the same was denied.
Hence, this petition for review.
The Court reverses the respondent Court and sets aside
its order dismissing the complaint in Civil Case No. 856
and its orders denying the motion for reconsideration of
said order of dismissal. While it is true that a person
who is dead cannot sue in court, yet he can be
substituted by his heirs in pursuing the case up to its
completion. The records of this case show that the
death of Fortunata Barcena took place on July 9, 1975
while the complaint was filed on March 31, 1975. This
means that when the complaint was filed on March 31,
1975, Fortunata Barcena was still alive, and therefore,
the court had acquired jurisdiction over her person. If
thereafter she died, the Rules of Court prescribes the
procedure whereby a party who died during the
pendency of the proceeding can be substituted. Under
Section 16, Rule 3 of the Rules of Court "whenever a
party to a pending case dies ... it shall be the duty of his
attorney to inform the court promptly of such death ...
and to give the name and residence of his executor,
administrator, guardian or other legal representatives."
This duty was complied with by the counsel for the
deceased plaintiff when he manifested before the
respondent Court that Fortunata Barcena died on July 9,
1975 and asked for the proper substitution of parties in
the case. The respondent Court, however, instead of
allowing the substitution, dismissed the complaint on the
ground that a dead person has no legal personality to
sue. This is a grave error. Article 777 of the Civil Code
provides "that the rights to the succession are
transmitted from the moment of the death of the
decedent." From the moment of the death of the
decedent, the heirs become the absolute owners of his
property, subject to the rights and obligations of the
decedent, and they cannot be deprived of their rights
thereto except by the methods provided for by law.
3

The moment of death is the determining factor when the
heirs acquire a definite right to the inheritance whether
such right be pure or contingent.
4
The right of the heirs
to the property of the deceased vests in them even
before judicial declaration of their being heirs in the
testate or intestate proceedings.
5
When Fortunata
Barcena, therefore, died her claim or right to the parcels
of land in litigation in Civil Case No. 856, was not
extinguished by her death but was transmitted to her
heirs upon her death. Her heirs have thus acquired
interest in the properties in litigation and became parties
in interest in the case. There is, therefore, no reason for
the respondent Court not to allow their substitution as
parties in interest for the deceased plaintiff.
Under Section 17, Rule 3 of the Rules of Court "after a
party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal
representative of the deceased to appear and be
substituted for the deceased, within such time as may
be granted ... ." The question as to whether an action
survives or not depends on the nature of the action and
the damage sued for.
6
In the causes of action which
survive the wrong complained affects primarily and
principally property and property rights, the injuries to
the person being merely incidental, while in the causes
of action which do not survive the injury complained of is
to the person, the property and rights of property
affected being incidental.
7
Following the foregoing
criterion the claim of the deceased plaintiff which is an
action to quiet title over the parcels of land in litigation
affects primarily and principally property and property
rights and therefore is one that survives even after her
death. It is, therefore, the duty of the respondent Court
to order the legal representative of the deceased plaintiff
to appear and to be substituted for her. But what the
respondent Court did, upon being informed by the
counsel for the deceased plaintiff that the latter was
dead, was to dismiss the complaint. This should not
have been done for under the same Section 17, Rule 3
of the Rules of Court, it is even the duty of the court, if
the legal representative fails to appear, to order the
opposing party to procure the appointment of a legal
representative of the deceased. In the instant case the
respondent Court did not have to bother ordering the
opposing party to procure the appointment of a legal
representative of the deceased because her counsel
has not only asked that the minor children be
substituted for her but also suggested that their uncle be
appointed as guardian ad litem for them because their
father is busy in Manila earning a living for the family.
But the respondent Court refused the request for
substitution on the ground that the children were still
minors and cannot sue in court. This is another grave
error because the respondent Court ought to have
known that under the same Section 17, Rule 3 of the
Rules of Court, the court is directed to appoint a
guardian ad litem for the minor heirs. Precisely in the
instant case, the counsel for the deceased plaintiff has
suggested to the respondent Court that the uncle of the
minors be appointed to act as guardian ad litem for
them. Unquestionably, the respondent Court has
gravely abused its discretion in not complying with the
clear provision of the Rules of Court in dismissing the
complaint of the plaintiff in Civil Case No. 856 and
refusing the substitution of parties in the case.
IN VIEW OF THE FOREGOING, the order of the
respondent Court dismissing the complaint in Civil Case
No. 856 of the Court of First Instance of Abra and the
motions for reconsideration of the order of dismissal of
said complaint are set aside and the respondent Court
is hereby directed to allow the substitution of the minor
children, who are the petitioners therein for the
deceased plaintiff and to appoint a qualified person as
guardian ad litem for them. Without pronouncement as
to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Esguerra and Muoz
Palma, JJ., concur.
Footnotes
1 Which this Court treats as special civil action as per its
Resolution dated February 11, 1976.
2 Section 16. Duty of Attorney upon which death,
incapacity or incompetency of party. - Whenever a party
to a pending case dies, becomes incapacitated or
incompetent, it shall be the duty of his attorney to inform
the court promptly of such death, incapacity or
incompetency, and to give the name and residence of
his executor, administrator, guardian or other legal
representative.
Section 17. Death of party.After a party dies and the
claim is not thereby extinguished, the court shall order,
upon proper notice, the legal representative of the
deceased to appear and to be substituted for deceased,
within a period of thirty (30) days, or within such time as
may be granted. If the legal representative fails to
appear within said time, the court may order the
opposing party to procure the appointment of a legal
representative of the within a time to be specified by the
court, and the representative shall immediately appear
for and on behalf of the interest of the deceased. The
court charges involved in procuring such appointment, if
defrayed by the opposing party, may be recovered as
costs. The heirs of the deceased may be allowed to be
substituted for the deceased, without requiring the
appointment of an executor or administrator and the
court may appoint guardian ad litem for the minor heirs.
3 Buan vs. Heirs of Buan, 53 Phil. 654.
4 Ibarle vs. Po, 92 Phil. 721.
5 Morales, et al. vs. Ybanez, 98 Phil. 677.
6 Iron Gate Bank vs. Brady, 184 U.S. 665, 22 SCT 529,
46 L. ed. 739.
7 Wenber vs. St. Paul City Co., 97 Feb. 140 R. 39
C.C.A. 79.
EN BANC
[G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON
SURETY CO., INC., claimant-Appellant.

D E C I S I O N
REYES, J. B. L., J .:
Appeal by Luzon Surety Co., Inc., from an order of the
Court of First Instance of Rizal, presided by Judge
Hermogenes Caluag, dismissing its claim against the
Estate of K. H. Hemady (Special Proceeding No. Q-293)
for failure to state a cause of action.
The Luzon Surety Co. had filed a claim against the
Estate based on twenty different indemnity agreements,
or counter bonds, each subscribed by a distinct principal
and by the deceased K. H. Hemady, a surety solidary
guarantor) in all of them, in consideration of the Luzon
Surety Co.s of having guaranteed, the various
principals in favor of different creditors. The twenty
counterbonds, or indemnity agreements, all contained
the following stipulations:chanroblesvirtuallawlibrary
Premiums. As consideration for this suretyship, the
undersigned jointly and severally, agree to pay the
COMPANY the sum of ________________ (P______)
pesos, Philippines Currency, in advance as premium
there of for every __________ months or fractions
thereof, this ________ or any renewal or substitution
thereof is in effect.
Indemnity. The undersigned, jointly and severally,
agree at all times to indemnify the COMPANY and keep
it indemnified and hold and save it harmless from and
against any and all damages, losses, costs, stamps,
taxes, penalties, charges, and expenses of whatsoever
kind and nature which the COMPANY shall or may, at
any time sustain or incur in consequence of having
become surety upon this bond or any extension,
renewal, substitution or alteration thereof made at the
instance of the undersigned or any of them or any order
executed on behalf of the undersigned or any of them;
chan roblesvirtualawlibraryand to pay, reimburse and
make good to the COMPANY, its successors and
assigns, all sums and amount of money which it or its
representatives shall pay or cause to be paid, or
become liable to pay, on account of the undersigned or
any of them, of whatsoever kind and nature, including
15% of the amount involved in the litigation or other
matters growing out of or connected therewith for
counsel or attorneys fees, but in no case less than P25.
It is hereby further agreed that in case of extension or
renewal of this ________ we equally bind ourselves for
the payment thereof under the same terms and
conditions as above mentioned without the necessity of
executing another indemnity agreement for the purpose
and that we hereby equally waive our right to be notified
of any renewal or extension of this ________ which may
be granted under this indemnity agreement.
Interest on amount paid by the Company. Any and all
sums of money so paid by the company shall bear
interest at the rate of 12% per annum which interest, if
not paid, will be accummulated and added to the capital
quarterly order to earn the same interests as the capital
and the total sum thereof, the capital and interest, shall
be paid to the COMPANY as soon as the COMPANY
shall have become liable therefore, whether it shall have
paid out such sums of money or any part thereof or not.
x x x x x x x x x
Waiver. It is hereby agreed upon by and between the
undersigned that any question which may arise between
them by reason of this document and which has to be
submitted for decision to Courts of Justice shall be
brought before the Court of competent jurisdiction in the
City of Manila, waiving for this purpose any other venue.
Our right to be notified of the acceptance and approval
of this indemnity agreement is hereby likewise waived.
x x x x x x x x x
Our Liability Hereunder. It shall not be necessary for
the COMPANY to bring suit against the principal upon
his default, or to exhaust the property of the principal,
but the liability hereunder of the undersigned indemnitor
shall be jointly and severally, a primary one, the same
as that of the principal, and shall be exigible
immediately upon the occurrence of such default. (Rec.
App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a
contingent claim, of the value of the twenty bonds it had
executed in consideration of the counterbonds, and
further asked for judgment for the unpaid premiums and
documentary stamps affixed to the bonds, with 12 per
cent interest thereon.
Before answer was filed, and upon motion of the
administratrix of Hemadys estate, the lower court, by
order of September 23, 1953, dismissed the claims of
Luzon Surety Co., on two
grounds:chanroblesvirtuallawlibrary (1) that the
premiums due and cost of documentary stamps were
not contemplated under the indemnity agreements to be
a part of the undertaking of the guarantor (Hemady),
since they were not liabilities incurred after the
execution of the counterbonds; chan
roblesvirtualawlibraryand (2) that whatever losses may
occur after Hemadys death, are not chargeable to his
estate, because upon his death he ceased to be
guarantor.
Taking up the latter point first, since it is the one more
far reaching in effects, the reasoning of the court below
ran as follows:chanroblesvirtuallawlibrary
The administratrix further contends that upon the death
of Hemady, his liability as a guarantor terminated, and
therefore, in the absence of a showing that a loss or
damage was suffered, the claim cannot be considered
contingent. This Court believes that there is merit in this
contention and finds support in Article 2046 of the new
Civil Code. It should be noted that a new requirement
has been added for a person to qualify as a guarantor,
that is:chanroblesvirtuallawlibrary integrity. As correctly
pointed out by the Administratrix, integrity is something
purely personal and is not transmissible. Upon the death
of Hemady, his integrity was not transmitted to his
estate or successors. Whatever loss therefore, may
occur after Hemadys death, are not chargeable to his
estate because upon his death he ceased to be a
guarantor.
Another clear and strong indication that the surety
company has exclusively relied on the personality,
character, honesty and integrity of the now deceased K.
H. Hemady, was the fact that in the printed form of the
indemnity agreement there is a paragraph entitled
Security by way of first mortgage, which was expressly
waived and renounced by the security company. The
security company has not demanded from K. H.
Hemady to comply with this requirement of giving
security by way of first mortgage. In the supporting
papers of the claim presented by Luzon Surety
Company, no real property was mentioned in the list of
properties mortgaged which appears at the back of the
indemnity agreement. (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present
Civil Code (Article 1311), as well as under the Civil
Code of 1889 (Article 1257), the rule is that
Contracts take effect only as between the parties, their
assigns and heirs, except in the case where the rights
and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law.
While in our successional system the responsibility of
the heirs for the debts of their decedent cannot exceed
the value of the inheritance they receive from him, the
principle remains intact that these heirs succeed not
only to the rights of the deceased but also to his
obligations. Articles 774 and 776 of the New Civil Code
(and Articles 659 and 661 of the preceding one)
expressly so provide, thereby confirming Article 1311
already quoted.
ART. 774. Succession is a mode of acquisition by
virtue of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are
transmitted through his death to another or others either
by his will or by operation of law.
ART. 776. The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death.
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme
Court ruled:chanroblesvirtuallawlibrary
Under the Civil Code the heirs, by virtue of the rights of
succession are subrogated to all the rights and
obligations of the deceased (Article 661) and cannot be
regarded as third parties with respect to a contract to
which the deceased was a party, touching the estate of
the deceased (Barrios vs. Dolor, 2 Phil. 44).
x x x x x x x x x
The principle on which these decisions rest is not
affected by the provisions of the new Code of Civil
Procedure, and, in accordance with that principle, the
heirs of a deceased person cannot be held to be third
persons in relation to any contracts touching the real
estate of their decedent which comes in to their hands
by right of inheritance; chan roblesvirtualawlibrarythey
take such property subject to all the obligations resting
thereon in the hands of him from whom they derive their
rights.
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p.
2874 and de Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision in our
Rules of Court that money debts of a deceased must be
liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is
that whatever payment is thus made from the estate is
ultimately a payment by the heirs and distributees, since
the amount of the paid claim in fact diminishes or
reduces the shares that the heirs would have been
entitled to receive.
Under our law, therefore, the general rule is that a
partys contractual rights and obligations are
transmissible to the successors. The rule is a
consequence of the progressive depersonalization of
patrimonial rights and duties that, as observed by
Victorio Polacco, has characterized the history of these
institutions. From the Roman concept of a relation from
person to person, the obligation has evolved into a
relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those
rare cases where the obligation is strictly personal, i.e.,
is contracted intuitu personae, in consideration of its
performance by a specific person and by no other. The
transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature
of the obligation of the surety or guarantor does not
warrant the conclusion that his peculiar individual
qualities are contemplated as a principal inducement for
the contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the latter as
surety in the counterbonds? Nothing but the
reimbursement of the moneys that the Luzon Surety Co.
might have to disburse on account of the obligations of
the principal debtors. This reimbursement is a payment
of a sum of money, resulting from an obligation to give;
chan roblesvirtualawlibraryand to the Luzon Surety Co.,
it was indifferent that the reimbursement should be
made by Hemady himself or by some one else in his
behalf, so long as the money was paid to it.
The second exception of Article 1311, p. 1, is
intransmissibility by stipulation of the parties. Being
exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must
be expressly established, or at the very least, clearly
inferable from the provisions of the contract itself, and
the text of the agreements sued upon nowhere indicate
that they are non-transferable.
(b) Intransmisibilidad por pacto. Lo general es la
transmisibilidad de darechos y obligaciones; chan
roblesvirtualawlibraryle excepcion, la intransmisibilidad.
Mientras nada se diga en contrario impera el principio
de la transmision, como elemento natural a toda
relacion juridica, salvo las personalisimas. Asi, para la
no transmision, es menester el pacto expreso, porque si
no, lo convenido entre partes trasciende a sus
herederos.
Siendo estos los continuadores de la personalidad del
causante, sobre ellos recaen los efectos de los vinculos
juridicos creados por sus antecesores, y para evitarlo, si
asi se quiere, es indespensable convension terminante
en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir
ms all de las personas que les dieron vida, y a ejercer
presion sobre los sucesores de esa persona; chan
roblesvirtualawlibrarycuando no se quiera esto, se
impone una estipulacion limitativa expresamente de la
transmisibilidad o de cuyos tirminos claramente se
deduzca la concresion del concreto a las mismas
personas que lo otorgon. (Scaevola, Codigo Civil,
Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who
enters into a contract is deemed to have contracted for
himself and his heirs and assigns, it is unnecessary for
him to expressly stipulate to that effect; chan
roblesvirtualawlibraryhence, his failure to do so is no
sign that he intended his bargain to terminate upon his
death. Similarly, that the Luzon Surety Co., did not
require bondsman Hemady to execute a mortgage
indicates nothing more than the companys faith and
confidence in the financial stability of the surety, but not
that his obligation was strictly personal.
The third exception to the transmissibility of obligations
under Article 1311 exists when they are not
transmissible by operation of law. The provision makes
reference to those cases where the law expresses that
the rights or obligations are extinguished by death, as is
the case in legal support (Article 300), parental authority
(Article 327), usufruct (Article 603), contracts for a piece
of work (Article 1726), partnership (Article 1830 and
agency (Article 1919). By contract, the articles of the
Civil Code that regulate guaranty or suretyship (Articles
2047 to 2084) contain no provision that the guaranty is
extinguished upon the death of the guarantor or the
surety.
The lower court sought to infer such a limitation from
Art. 2056, to the effect that one who is obliged to
furnish a guarantor must present a person who
possesses integrity, capacity to bind himself, and
sufficient property to answer for the obligation which he
guarantees. It will be noted, however, that the law
requires these qualities to be present only at the time of
the perfection of the contract of guaranty. It is self-
evident that once the contract has become perfected
and binding, the supervening incapacity of the guarantor
would not operate to exonerate him of the eventual
liability he has contracted; chan
roblesvirtualawlibraryand if that be true of his capacity to
bind himself, it should also be true of his integrity, which
is a quality mentioned in the article alongside the
capacity.
The foregoing concept is confirmed by the next Article
2057, that runs as follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be convicted in
first instance of a crime involving dishonesty or should
become insolvent, the creditor may demand another
who has all the qualifications required in the preceding
article. The case is excepted where the creditor has
required and stipulated that a specified person should
be guarantor.
From this article it should be immediately apparent that
the supervening dishonesty of the guarantor (that is to
say, the disappearance of his integrity after he has
become bound) does not terminate the contract but
merely entitles the creditor to demand a replacement of
the guarantor. But the step remains optional in the
creditor:chanroblesvirtuallawlibrary it is his right, not his
duty; chan roblesvirtualawlibraryhe may waive it if he
chooses, and hold the guarantor to his bargain. Hence
Article 2057 of the present Civil Code is incompatible
with the trial courts stand that the requirement of
integrity in the guarantor or surety makes the latters
undertaking strictly personal, so linked to his
individuality that the guaranty automatically terminates
upon his death.
The contracts of suretyship entered into by K. H.
Hemady in favor of Luzon Surety Co. not being
rendered intransmissible due to the nature of the
undertaking, nor by the stipulations of the contracts
themselves, nor by provision of law, his eventual liability
thereunder necessarily passed upon his death to his
heirs. The contracts, therefore, give rise to contingent
claims provable against his estate under section 5, Rule
87 (2 Moran, 1952 ed., p. 437; chan
roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil.
810, 814).
The most common example of the contigent claim is
that which arises when a person is bound as surety or
guarantor for a principal who is insolvent or dead. Under
the ordinary contract of suretyship the surety has no
claim whatever against his principal until he himself
pays something by way of satisfaction upon the
obligation which is secured. When he does this, there
instantly arises in favor of the surety the right to compel
the principal to exonerate the surety. But until the surety
has contributed something to the payment of the debt,
or has performed the secured obligation in whole or in
part, he has no right of action against anybody no
claim that could be reduced to judgment. (May vs. Vann,
15 Pla., 553; chan roblesvirtualawlibraryGibson vs.
Mithell, 16 Pla., 519; chan roblesvirtualawlibraryMaxey
vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7
Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs.
Nou, 63 Wis., 134.)
For Defendant administratrix it is averred that the above
doctrine refers to a case where the surety files claims
against the estate of the principal debtor; chan
roblesvirtualawlibraryand it is urged that the rule does
not apply to the case before us, where the late Hemady
was a surety, not a principal debtor. The argument
evinces a superficial view of the relations between
parties. If under the Gaskell ruling, the Luzon Surety
Co., as guarantor, could file a contingent claim against
the estate of the principal debtors if the latter should die,
there is absolutely no reason why it could not file such a
claim against the estate of Hemady, since Hemady is a
solidary co-debtor of his principals. What the Luzon
Surety Co. may claim from the estate of a principal
debtor it may equally claim from the estate of Hemady,
since, in view of the existing solidarity, the latter does
not even enjoy the benefit of exhaustion of the assets of
the principal debtor.
The foregoing ruling is of course without prejudice to the
remedies of the administratrix against the principal
debtors under Articles 2071 and 2067 of the New Civil
Code.
Our conclusion is that the solidary guarantors liability is
not extinguished by his death, and that in such event,
the Luzon Surety Co., had the right to file against the
estate a contingent claim for reimbursement. It becomes
unnecessary now to discuss the estates liability for
premiums and stamp taxes, because irrespective of the
solution to this question, the Luzon Suretys claim did
state a cause of action, and its dismissal was
erroneous.
Wherefore, the order appealed from is reversed, and the
records are ordered remanded to the court of origin,
with instructions to proceed in accordance with law.
Costs against the Administratrix- Appellee. SO
ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68053 May 7, 1990
LAURA ALVAREZ, FLORA ALVAREZ and
RAYMUNDO ALVAREZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE APELLATE
COURT and JESUS YANES, ESTELITA YANES,
ANTONIO YANES, ROSARIO YANES, and
ILUMINADO YANES, respondents.
Francisco G. Banzon for petitioner.
Renecio R. Espiritu for private respondents.

FERNAN, C.J .:
This is a petition for review on certiorari seeking the
reversal of: (a) the decision of the Fourth Civil Cases
Division of the Intermediate Appellate Court dated
August 31, 1983 in AC-G.R. CV No. 56626 entitled
"Jesus Yanes et al. v. Dr. Rodolfo Siason et al."
affirming the decision dated July 8, 1974 of the Court of
First Instance of Negros Occidental insofar as it ordered
the petitioners to pay jointly and severally the private
respondents the sum of P20,000.00 representing the
actual value of Lots Nos. 773-A and 773-B of the
cadastral survey of Murcia, Negros Occidental and
reversing the subject decision insofar as it awarded the
sums of P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees,
respectively and (b) the resolution of said appellate
court dated May 30, 1984, denying the motion for
reconsideration of its decision.
The real properties involved are two parcels of land
identified as Lot 773-A and Lot 773-B which were
originally known as Lot 773 of the cadastral survey of
Murcia, Negros Occidental. Lot 773, with an area of
156,549 square meters, was registered in the name of
the heirs of Aniceto Yanes under Original Certificate of
Title No. RO-4858 (8804) issued on October 9, 1917 by
the Register of Deeds of Occidental Negros (Exh. A).
Aniceto Yanes was survived by his children, Rufino,
Felipe and Teodora. Herein private respondents,
Estelita, Iluminado and Jesus, are the children of Rufino
who died in 1962 while the other private respondents,
Antonio and Rosario Yanes, are children of Felipe.
Teodora was survived by her child, Jovita (Jovito) Alib.
1

It is not clear why the latter is not included as a party in
this case.
Aniceto left his children Lots 773 and 823. Teodora
cultivated only three hectares of Lot 823 as she could
not attend to the other portions of the two lots which had
a total area of around twenty-four hectares. The record
does not show whether the children of Felipe also
cultivated some portions of the lots but it is established
that Rufino and his children left the province to settle in
other places as a result of the outbreak of World War II.
According to Estelita, from the "Japanese time up to
peace time", they did not visit the parcels of land in
question but "after liberation", when her brother went
there to get their share of the sugar produced therein,
he was informed that Fortunato Santiago, Fuentebella
(Puentevella) and Alvarez were in possession of Lot
773.
2

It is on record that on May 19, 1938, Fortunato D.
Santiago was issued Transfer Certificate of Title No. RF
2694 (29797) covering Lot 773-A with an area of 37,818
square meters.
3
TCT No. RF 2694 describes Lot 773-A
as a portion of Lot 773 of the cadastral survey of Murcia
and as originally registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of 118,831
square meters was also registered in the name of
Fortunato D. Santiago on September 6, 1938 Under
TCT No. RT-2695 (28192 ).
4
Said transfer certificate of
title also contains a certification to the effect that Lot
773-B was originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B
to Monico B. Fuentebella, Jr. in consideration of the sum
of P7,000.00.
5
Consequently, on February 20, 1956,
TCT Nos. T-19291 and T-19292 were issued in
Fuentebella's name.
6

After Fuentebella's death and during the settlement of
his estate, the administratrix thereof (Arsenia R. Vda. de
Fuentebella, his wife) filed in Special Proceedings No.
4373 in the Court of First Instance of Negros Occidental,
a motion requesting authority to sell Lots 773-A and
773-B.
7
By virtue of a court order granting said motion,
8
on March 24, 1958, Arsenia Vda. de Fuentebella sold
said lots for P6,000.00 to Rosendo Alvarez.
9
Hence, on
April 1, 1958 TCT Nos. T-23165 and T-23166 covering
Lots 773-A and 773-B were respectively issued to
Rosendo Alvarez.
10

Two years later or on May 26, 1960, Teodora Yanes
and the children of her brother Rufino, namely, Estelita,
Iluminado and Jesus, filed in the Court of First Instance
of Negros Occidental a complaint against Fortunato
Santiago, Arsenia Vda. de Fuentebella, Alvarez and the
Register of Deeds of Negros Occidental for the "return"
of the ownership and possession of Lots 773 and 823.
They also prayed that an accounting of the produce of
the land from 1944 up to the filing of the complaint be
made by the defendants, that after court approval of
said accounting, the share or money equivalent due the
plaintiffs be delivered to them, and that defendants be
ordered to pay plaintiffs P500.00 as damages in the
form of attorney's fees.
11

During the pendency in court of said case or on
November 13, 1961, Alvarez sold Lots 773-A, 773-B
and another lot for P25,000.00 to Dr. Rodolfo Siason.
12

Accordingly, TCT Nos. 30919 and 30920 were issued to
Siason,
13
who thereafter, declared the two lots in his
name for assessment purposes.
14

Meanwhile, on November 6, 1962, Jesus Yanes, in his
own behalf and in behalf of the other plaintiffs, and
assisted by their counsel, filed a manifestation in Civil
Case No. 5022 stating that the therein plaintiffs
"renounce, forfeit and quitclaims (sic) any claim,
monetary or otherwise, against the defendant Arsenia
Vda. de Fuentebella in connection with the above-
entitled case."
15

On October 11, 1963, a decision was rendered by the
Court of First Instance of Negros Occidental in Civil
Case No. 5022, the dispositive portion of which reads:
WHEREFORE, judgment is rendered, ordering the
defendant Rosendo Alvarez to reconvey to the plaintiffs
lots Nos. 773 and 823 of the Cadastral Survey of
Murcia, Negros Occidental, now covered by Transfer
Certificates of Title Nos. T-23165 and T-23166 in the
name of said defendant, and thereafter to deliver the
possession of said lots to the plaintiffs. No special
pronouncement as to costs.
SO ORDERED.
16

It will be noted that the above-mentioned manifestation
of Jesus Yanes was not mentioned in the aforesaid
decision.
However, execution of said decision proved
unsuccessful with respect to Lot 773. In his return of
service dated October 20, 1965, the sheriff stated that
he discovered that Lot 773 had been subdivided into
Lots 773-A and 773-B; that they were "in the name" of
Rodolfo Siason who had purchased them from Alvarez,
and that Lot 773 could not be delivered to the plaintiffs
as Siason was "not a party per writ of execution."
17

The execution of the decision in Civil Case No. 5022
having met a hindrance, herein private respondents (the
Yaneses) filed on July 31, 1965, in the Court of First
Instance of Negros Occidental a petition for the
issuance of a new certificate of title and for a declaration
of nullity of TCT Nos. T-23165 and T-23166 issued to
Rosendo Alvarez.
18
Thereafter, the court required
Rodolfo Siason to produce the certificates of title
covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he
purchased Lots 773-A, 773-B and 658, not Lots 773 and
823, "in good faith and for a valuable consideration
without any knowledge of any lien or encumbrances
against said properties"; that the decision in the
cadastral proceeding
19
could not be enforced against
him as he was not a party thereto; and that the decision
in Civil Case No. 5022 could neither be enforced against
him not only because he was not a party-litigant therein
but also because it had long become final and
executory.
20
Finding said manifestation to be well-
founded, the cadastral court, in its order of September
4, 1965, nullified its previous order requiring Siason to
surrender the certificates of title mentioned therein.
21

In 1968, the Yaneses filed an ex-parte motion for the
issuance of an alias writ of execution in Civil Case No.
5022. Siason opposed it.
22
In its order of September 28,
1968 in Civil Case No. 5022, the lower court, noting that
the Yaneses had instituted another action for the
recovery of the land in question, ruled that at the
judgment therein could not be enforced against Siason
as he was not a party in the case.
23

The action filed by the Yaneses on February 21, 1968
was for recovery of real property with damages.
24

Named defendants therein were Dr. Rodolfo Siason,
Laura Alvarez, Flora Alvarez, Raymundo Alvarez and
the Register of Deeds of Negros Occidental. The
Yaneses prayed for the cancellation of TCT Nos. T-
19291 and 19292 issued to Siason (sic) for being null
and void; the issuance of a new certificate of title in the
name of the Yaneses "in accordance with the sheriffs
return of service dated October 20, 1965;" Siason's
delivery of possession of Lot 773 to the Yaneses; and if,
delivery thereof could not be effected, or, if the issuance
of a new title could not be made, that the Alvarez and
Siason jointly and severally pay the Yaneses the sum of
P45,000.00. They also prayed that Siason render an
accounting of the fruits of Lot 773 from November 13,
1961 until the filing of the complaint; and that the
defendants jointly and severally pay the Yaneses moral
damages of P20,000.00 and exemplary damages of
P10,000.00 plus attorney's fees of P4, 000.00.
25

In his answer to the complaint, Siason alleged that the
validity of his titles to Lots 773-A and 773-B, having
been passed upon by the court in its order of September
4, 1965, had become res judicata and the Yaneses
were estopped from questioning said order.
26
On their
part, the Alvarez stated in their answer that the
Yaneses' cause of action had been "barred by res
judicata, statute of limitation and estoppel."
27

In its decision of July 8, 1974, the lower court found that
Rodolfo Siason, who purchased the properties in
question thru an agent as he was then in Mexico
pursuing further medical studies, was a buyer in good
faith for a valuable consideration. Although the Yaneses
were negligent in their failure to place a notice of lis
pendens "before the Register of Deeds of Negros
Occidental in order to protect their rights over the
property in question" in Civil Case No. 5022, equity
demanded that they recover the actual value of the land
because the sale thereof executed between Alvarez and
Siason was without court approval.
28
The dispositive
portion of the decision states:
IN VIEW OF THE FOREGOING CONSIDERATION,
judgment is hereby rendered in the following manner:
A. The case against the defendant Dr. Rodolfo Siason
and the Register of Deeds are (sic) hereby dismmissed,
B. The defendants, Laura, Flora and Raymundo, all
surnamed Alvarez being the legitimate children of the
deceased Rosendo Alvarez are hereby ordered to pay
jointly and severally the plaintiffs the sum of P20,000.00
representing the actual value of Lots Nos. 773-A and
773-B of Murcia Cadastre, Negros Occidental; the sum
of P2,000.00 as actual damages suffered by the plaintiff;
the sum of P5,000.00 representing moral damages and
the sum of P2.000 as attorney's fees, all with legal rate
of interest from date of the filing of this complaint up to
final payment.
C. The cross-claim filed by the defendant Dr. Rodolfo
Siason against the defendants, Laura, Flora and
Raymundo, all surnamed Alvarez is hereby dismissed.
D. Defendants, Laura, Flora and Raymundo, all
surnamed Alvarez are hereby ordered to pay the costs
of this suit.
SO ORDERED.
29

The Alvarez appealed to the then Intermediate
Appellate Court which in its decision of August 31, 1983
30
affirmed the lower court's decision "insofar as it
ordered defendants-appellants to pay jointly and
severally the plaintiffs-appellees the sum of P20,000.00
representing the actual value of Lots Nos. 773-A and
773-B of the cadastral survey of Murcia, Negros
Occidental, and is reversed insofar as it awarded the
sums of P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees,
respectively."
31
The dispositive portion of said decision
reads:
WHEREFORE, the decision appealed from is affirmed
insofar as it ordered defendants-appellants to pay jointly
and severally the plaintiffs- appellees the sum of
P20,000.00 representing the actual value of Lots Nos.
773-A and 773-B of the cadastral survey of Murcia,
Negros Occidental, and is reversed insofar as it
awarded the sums of P2,000.00, P5,000.00 and
P2,000.00 as actual damages, moral damages and
attorney's fees, respectively. No costs.
SO ORDERED.
32

Finding no cogent reason to grant appellants motion for
reconsideration, said appellate court denied the same.
Hence, the instant petition. ln their memorandum
petitioners raised the following issues:
1. Whethere or not the defense of prescription and
estoppel had been timely and properly invoked and
raised by the petitioners in the lower court.
2. Whether or not the cause and/or causes of action of
the private respondents, if ever there are any, as
alleged in their complaint dated February 21, 1968
which has been docketed in the trial court as Civil Case
No. 8474 supra, are forever barred by statute of
limitation and/or prescription of action and estoppel.
3. Whether or not the late Rosendo Alvarez, a
defendant in Civil Case No. 5022, supra and father of
the petitioners become a privy and/or party to the waiver
(Exhibit 4-defendant Siason) in Civil Case No. 8474,
supra where the private respondents had unqualifiedly
and absolutely waived, renounced and quitclaimed all
their alleged rights and interests, if ever there is any, on
Lots Nos. 773-A and 773-B of Murcia Cadastre as
appearing in their written manifestation dated November
6, 1962 (Exhibits "4" Siason) which had not been
controverted or even impliedly or indirectly denied by
them.
4. Whether or not the liability or liabilities of Rosendo
Alvarez arising from the sale of Lots Nos. 773-A and
773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever
there is any, could be legally passed or transmitted by
operations (sic) of law to the petitioners without violation
of law and due process .
33

The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is
powerless and for that matter so is the Supreme Court,
to review the decision in Civil Case No. 5022 ordering
Alvarez to reconvey the lots in dispute to herein private
respondents. Said decision had long become final and
executory and with the possible exception of Dr. Siason,
who was not a party to said case, the decision in Civil
Case No. 5022 is the law of the case between the
parties thereto. It ended when Alvarez or his heirs failed
to appeal the decision against them.
34

Thus, it is axiomatic that when a right or fact has been
judicially tried and determined by a court of competent
jurisdiction, so long as it remains unreversed, it should
be conclusive upon the parties and those in privity with
them in law or estate.
35
As consistently ruled by this
Court, every litigation must come to an end. Access to
the court is guaranteed. But there must be a limit to it.
Once a litigant's right has been adjudicated in a valid
final judgment of a competent court, he should not be
granted an unbridled license to return for another try.
The prevailing party should not be harassed by
subsequent suits. For, if endless litigation were to be
allowed, unscrupulous litigations will multiply in number
to the detriment of the administration of justice.
36

There is no dispute that the rights of the Yaneses to the
properties in question have been finally adjudicated in
Civil Case No. 5022. As found by the lower court, from
the uncontroverted evidence presented, the Yaneses
have been illegally deprived of ownership and
possession of the lots in question.
37
In fact, Civil Case
No. 8474 now under review, arose from the failure to
execute Civil Case No. 5022, as subject lots can no
longer be reconveyed to private respondents Yaneses,
the same having been sold during the pendency of the
case by the petitioners' father to Dr. Siason who did not
know about the controversy, there being no lis pendens
annotated on the titles. Hence, it was also settled
beyond question that Dr. Siason is a purchaser in good
faith.
Under the circumstances, the trial court did not annul
the sale executed by Alvarez in favor of Dr. Siason on
November 11, 1961 but in fact sustained it. The trial
court ordered the heirs of Rosendo Alvarez who lost in
Civil Case No. 5022 to pay the plaintiffs (private
respondents herein) the amount of P20,000.00
representing the actual value of the subdivided lots in
dispute. It did not order defendant Siason to pay said
amount.
38

As to the propriety of the present case, it has long been
established that the sole remedy of the landowner
whose property has been wrongfully or erroneously
registered in another's name is to bring an ordinary
action in the ordinary court of justice for reconveyance
or, if the property has passed into the hands of an
innocent purchaser for value, for damages.
39
"It is one
thing to protect an innocent third party; it is entirely a
different matter and one devoid of justification if deceit
would be rewarded by allowing the perpetrator to enjoy
the fruits of his nefarious decided As clearly revealed by
the undeviating line of decisions coming from this Court,
such an undesirable eventuality is precisely sought to
be guarded against."
40

The issue on the right to the properties in litigation
having been finally adjudicated in Civil Case No. 5022 in
favor of private respondents, it cannot now be reopened
in the instant case on the pretext that the defenses of
prescription and estoppel have not been properly
considered by the lower court. Petitioners could have
appealed in the former case but they did not. They have
therefore foreclosed their rights, if any, and they cannot
now be heard to complain in another case in order to
defeat the enforcement of a judgment which has longing
become final and executory.
Petitioners further contend that the liability arising from
the sale of Lots No. 773-A and 773-B made by Rosendo
Alvarez to Dr. Rodolfo Siason should be the sole liability
of the late Rosendo Alvarez or of his estate, after his
death.
Such contention is untenable for it overlooks the
doctrine obtaining in this jurisdiction on the general
transmissibility of the rights and obligations of the
deceased to his legitimate children and heirs. Thus, the
pertinent provisions of the Civil Code state:
Art. 774. Succession is a mode of acquisition by virtue
of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are
transmitted through his death to another or others either
by his will or by operation of law.
Art. 776. The inheritance includes all the property, rights
and obligations of a person which are not extinguished
by his death.
Art. 1311. Contract stake effect only between the
parties, their assigns and heirs except in case where the
rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value
of the property received from the decedent.
As explained by this Court through Associate Justice
J.B.L. Reyes in the case of Estate of Hemady vs. Luzon
Surety Co., Inc.
41

The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision of our
Rules of Court that money debts of a deceased must be
liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is
that whatever payment is thus made from the state is
ultimately a payment by the heirs or distributees, since
the amount of the paid claim in fact diminishes or
reduces the shares that the heirs would have been
entitled to receive.
Under our law, therefore. the general rule is that a
party's contractual rights and obligations are
transmissible to the successors.
The rule is a consequence of the progressive
"depersonalization" of patrimonial rights and duties that,
as observed by Victorio Polacco has characterized the
history of these institutions. From the Roman concept of
a relation from person to person, the obligation has
evolved into a relation from patrimony to patrimony with
the persons occupying only a representative position,
barring those rare cases where the obligation is strictly
personal, i.e., is contracted intuitu personae, in
consideration of its performance by a specific person
and by no other.
xxx xxx xxx
Petitioners being the heirs of the late Rosendo Alvarez,
they cannot escape the legal consequences of their
father's transaction, which gave rise to the present claim
for damages. That petitioners did not inherit the property
involved herein is of no moment because by legal
fiction, the monetary equivalent thereof devolved into
the mass of their father's hereditary estate, and we have
ruled that the hereditary assets are always liable in their
totality for the payment of the debts of the estate.
42

It must, however, be made clear that petitioners are
liable only to the extent of the value of their inheritance.
With this clarification and considering petitioners'
admission that there are other properties left by the
deceased which are sufficient to cover the amount
adjudged in favor of private respondents, we see no
cogent reason to disturb the findings and conclusions of
the Court of Appeals.
WHEREFORE, subject to the clarification herein above
stated, the assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Bidin J., took no part.
[G.R. No. 146006. August 22, 2005]
LEE vs. QUEZON CITY RTC
THIRD DIVISION
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution
of this Court dated AUG 22 2005.
G.R. No. 146006 (JOSE C. LEE AND ALMA
AGGABAO, in their capacities as President and
corporate Secretary, respectively, of the Philippine
International Life Insurance Company, and FILIPINO
LOAN ASSISTANCE GROUP, vs. REGIONAL TRIAL
COURT OF QUEZON CITY, BRANCH 85 presided by
JUDGE PEDRO M. AREOLA, BRANCH CLERK OF
COURT JANICE Y. ANTERO, DEPUTY SHERIFFS
ADENAUER G. RIVERA and PEDRO L. BORJA, all of
the Regional Trial Court of Quezon City Branch 85, MA.
DIVINA ENDERES claiming to be Special
Administratrix, and other persons/public officers acting
for and in their behalf.)
This resolves the motion for reconsideration filed by
petitioners Jose C. Lee and Alma Aggabao of our
resolution dated April 22, 2005
[1]
cralaw finding the
petitioners guilty of indirect contempt.
Petitioners were cited for contempt for their refusal to
comply with the final and executory decision of this
Court dated February 23, 2004. Petitioners' non-
compliance, as president and corporate secretary,
respectively, of Philippine International Life Insurance
Company (Philinterlife), with the directives stated in the
orders we affirmed in our February 23, 2004 decision
was evident from the sheriff's report
[2]
cralaw and the
dilatory motion to suspend execution/period of
compliance by reason of alleged "supervening events"
which they filed
[3]
cralaw with the probate court.
Petitioners now come to us again, raising arguments
which have already been passed upon. Therefore, this
motion for reconsideration must be denied with finality.
At the outset, we must emphasize that petitioners have
already paid the fine imposed on them.
[4]
cralaw They
are bound by such payment which was made
unconditionally.
Petitioners dispute the following statement in our April
22, 2005 resolution:
We call particular attention to the fact that in our
February 23, 2004 decision, we noted that petitioners,
with the rest of the FLAG-controlled directors and
stockholders, increased the authorized capital stock of
Philinterlife, diluting in the process the 2,029 shares of
the estate representing 50.725% of Philinterlife. We
observed that this was obviously calculated to make it
difficult for the estate to reassume its controlling interest
in Philinterlife. Thus, we ruled that, considering the
nullity of the sale of the 2,029 shares to FLAG, the
increase in Philinterlife's authorized capital stock was
void ab initio. Consequently, any approval by the
Securities and Exchange Commission of this increase
would likewise be void ab initio.
[5]
cralaw
Petitioners take issue with the "50.725%"
[6]
cralaw figure
and claim that this is an "additional declaration" which
still has to be proved. This claim is incorrect. This
figure
[7]
cralaw is not an "additional declaration" as it was
mentioned in our February 23, 2004 decision.
[8]
cralaw It
was never challenged nor disputed.
Next, they assail our ruling that the increase in
Philinterlife's authorized capital stock was void ab initio.
Again, this is not the first time this matter was taken up.
As stated in our April 22, 2005 resolution, our February
23, 2004 decision held that:
It goes without saying that the increase in Philinterlife's
authorized capital stock, approved on the vote of
petitioners' non-existent shareholdings and obviously
calculated to make it difficult for Dr. Ortaez's estate to
reassume its controlling interest in Philinterlife, was
likewise void ab initio.
[9]
cralaw
In fact, petitioners questioned this when they sought a
reconsideration
[10]
cralaw of our February 23, 2004
decision. We denied their motion for reconsideration for
lack of merit in a resolution dated May 26,
2004.
[11]
cralaw
Petitioners argue that the nullification of the increase in
authorized capital stock of Philinterlife will adversely
affect the interests of stockholders who were not parties
to this case and are independent of petitioner Filipino
Loan Assistance Group (FLAG).
[12]
cralaw To nullify the
increase will deprive them of their property without due
process.
[13]
cralaw In addition, they assert that the
increases in authorized capital stock in 1987 and 2001
were done in compliance with governmental
requirements for insurance companies.
[14]
cralaw
By petitioners' own allegation, the so-called
"independent stockholders"
[15]
cralaw acquired their
shares in 1983.
[16]
cralaw Petitioners named the
following as stockholders independent and separate
from FLAG: Jose C. Lee, Rodrigo Gatchalian
(predecessor of Carmelita Tan), Benjamin Lee, Angel
Ong, Amparo Sarmiento, Jose Gachalian, Antonio
Gatchalian, Luis Gatchalia, Brenda Ortaez, Manuel
Hizon and Ma. Paz Lee.
Obviously, Jose C. Lee is a party to this case and
cannot escaped its effects.
[17]
cralaw The others,
although not parties to this case, cannot claim to be
unaware of the probate proceedings which commenced
in 1980 and which involved a big chunk of Philinterlife's
shares. Petitioners themselves admit that in 1983, the
estate's 2,029 shares represented 40.58% interest in
the company.
[18]
cralaw Moreover, these stockholders
participated in the management of the company: in
1983, Rodrigo Gatchalian was Philinerlife's president
and chairman of the board of directors while Amparo
Sarmiento was its corporate secretary and Benjamin
Lee, Jose Gatchalian and Brenda Ortaez were
members of the board
[19]
cralaw; in 1989, Angel Ong and
Ma. Paz Lee were also members of the board.
[20]
cralaw
It is incredible that they now claim to have no knowledge
of this case.
Even if they were not part of Philinterlife's management,
it is difficult to believe that they, as stockholders, never
bothered to inquire from their board and corporate
officers, who were all embroiled in the controversy (nor
were they apprised by these officers) of the
circumstances surrounding the 2,029 shares under
litigation. In any case, the information could have been
easily obtained by them since these facts appeared in
public judicial records. They were charged with
knowledge and could not feign ignorance of these facts
so as to escape the legal effects of the eventual
outcome of the controversy.
Besides, the time-honored legal maxim of caveat
emptor
[21]
cralaw should have placed these stockholders
on guard. They bought their shares, which could be
affected by the litigation embroiling Philinterlife, at their
own risk. It is safe to presume that, as prudent business
investors, they bought into the company only after a due
diligence audit and therefore should have been aware of
the legal consequences that could normally come with
the purchase of shares in a corporation entangled in a
bitter suit. Since they claim to be stockholders since
1983, they cannot now belatedly protest after the case,
which they had knowledge of, has been finally resolved.
The declaration that the increase in authorized capital
stock was void ab initio flows naturally from our ruling
that the ownership of the 2,029 shares never left the
estate. Throughout the pendency of these proceedings
which commenced in 1980, the estate of Dr. Ortaez,
including the 2,029 shares of stock in Philinterlife, was
in custodia legis or under the custody and jurisdiction of
the court.
[22]
cralaw Where the estate of the deceased
person is already the subject of a testate or in testate
proceeding, the administrator cannot enter into any
transaction involving it without prior approval of the
probate court.
[23]
cralaw Clearly, the intention is to
protect the interests of the estate while the respective
rights of the parties are being litigated.
As shown by the figures provided by the petitioners, the
increases in authorized capital stock in 1987 and 2001,
both carried out without the approval of the probate
court, diluted the interest of the estate in Philinterlife.
For still unexplained reasons, the shares of the estate of
Dr. Ortaez in Philinterlife went down from
50.725%
[24]
cralaw in 1980 to 40.58% in 1983.
[25]
cralaw
Philinterlife's authorized capital stock was increased
from P5 million to P10 million in 1987. Consequently, in
1989, the estate's interest went down to
20.29%.
[26]
cralaw In 2001, the authorized capital stock
was again increased to P50 million. As a result, the
estate now owns a miniscule 4.05%.
[27]
cralaw
The law provides a mechanism by which the estate
could have preserved its proportionate interest in the
company.
[28]
cralaw For unexplained reasons, the
estate's interest was wittingly or unwittingly allowed to
shrink. To tolerate this situation will not only negate the
control of the probate court over assets brought into
custodia legis but will also frustrate the protection given
them.
We need not discuss the other issues raised for they
have already been exhaustively discussed in our April
22, 2005 resolution.
ACCORDINGLY, the motion for reconsideration is
hereby DENIED WITH FINALITY. No further pleadings
shall be entertained.
SO ORDERED.
Very truly yours,
(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-28040 August 18, 1972
TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE
BORJA, administrator-appellee; JOSE DE BORJA,
as administrator, CAYETANO DE BORJA, MATILDE
DE BORJA and CRISANTO DE BORJA (deceased)
as Children of Josefa Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special
Administratrix of the Testate Estate of Francisco de
Borja, appellant. .
G.R. No L-28568 August 18, 1972
TESTATE ESTATE OF THE LATE FRANCISCO DE
BORJA, TASIANA O. VDA. DE DE BORJA, special
Administratrix appellee,
vs.
JOSE DE BORJA, oppositor-appellant.
G.R. No. L-28611 August 18, 1972
TASIANA 0. VDA. DE BORJA, as Administratrix of
the Testate Estate of the late Francisco de Borja,
plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the Testate
Estate of the late Josefa Tangco, defendant-appellant.
L-28040
Pelaez, Jalandoni & Jamir for administrator-appellee.
Quiogue & Quiogue for appellee Matilde de Borja.
Andres Matias for appellee Cayetano de Borja.
Sevilla & Aquino for appellant.
L-28568
Sevilla & Aquino for special administratrix-appellee.
Pelaez, Jalandoni & Jamir for oppositor-appellant.
L-28611
Sevilla & Aquino for plaintiff-appellee.
Pelaez, Jalandoni & Jamir and David Gueverra for
defendant-appellant.

REYES, J.B.L., J .:p
Of these cases, the first, numbered L-28040 is an
appeal by Tasiana Ongsingco Vda. de de Borja, special
administratrix of the testate estate of Francisco de
Borja,
1
from the approval of a compromise agreement
by the Court of First Instance of Rizal, Branch I, in its
Special Proceeding No. R-7866, entitled, "Testate
Estate of Josefa Tangco, Jose de Borja, Administrator".
Case No. L-28568 is an appeal by administrator Jose
Borja from the disapproval of the same compromise
agreement by the Court of First Instance of Nueva Ecija,
Branch II, in its Special Proceeding No. 832, entitled,
"Testate Estate of Francisco de Borja, Tasiana O. Vda.
de de Borja, Special Administratrix".
And Case No. L-28611 is an appeal by administrator
Jose de Borja from the decision of the Court of First
Instance of Rizal, Branch X, in its Civil Case No. 7452,
declaring the Hacienda Jalajala Poblacion, which is the
main object of the aforesaid compromise agreement, as
the separate and exclusive property of the late
Francisco de Borja and not a conjugal asset of the
community with his first wife, Josefa Tangco, and that
said hacienda pertains exclusively to his testate estate,
which is under administrator in Special Proceeding No.
832 of the Court of First Instance of Nueva Ecija,
Branch II.
It is uncontested that Francisco de Borja, upon the
death of his wife Josefa Tangco on 6 October 1940,
filed a petition for the probate of her will which was
docketed as Special Proceeding No. R-7866 of the
Court of First Instance of Rizal, Branch I. The will was
probated on 2 April 1941. In 1946, Francisco de Borja
was appointed executor and administrator: in 1952, their
son, Jose de Borja, was appointed co-administrator.
When Francisco died, on 14 April 1954, Jose became
the sole administrator of the testate estate of his mother,
Josefa Tangco. While a widower Francisco de Borja
allegedly took unto himself a second wife, Tasiana
Ongsingco. Upon Francisco's death, Tasiana instituted
testate proceedings in the Court of First Instance of
Nueva Ecija, where, in 1955, she was appointed special
administratrix. The validity of Tasiana's marriage to
Francisco was questioned in said proceeding.
The relationship between the children of the first
marriage and Tasiana Ongsingco has been plagued
with several court suits and counter-suits; including the
three cases at bar, some eighteen (18) cases remain
pending determination in the courts. The testate estate
of Josefa Tangco alone has been unsettled for more
than a quarter of a century. In order to put an end to all
these litigations, a compromise agreement was entered
into on 12 October 1963,
2
by and between "[T]he heir
and son of Francisco de Borja by his first marriage,
namely, Jose de Borja personally and as administrator
of the Testate Estate of Josefa Tangco," and "[T]he heir
and surviving spouse of Francisco de Borja by his
second marriage, Tasiana Ongsingco Vda. de Borja,
assisted by her lawyer, Atty. Luis Panaguiton Jr." The
terms and conditions of the compromise agreement are
as follows:
A G R E E M E N T
THIS AGREEMENT made and entered into by and
between
The heir and son of Francisco de Borja by his first
marriage, namely, Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco,
A N D
The heir and surviving spouse of Francisco de Borja by
his second marriage, Tasiana Ongsingco Vda. de Borja,
assisted by her lawyer, Atty. Luis Panaguiton Jr.
W I T N E S S E T H
THAT it is the mutual desire of all the parties herein
terminate and settle, with finality, the various court
litigations, controversies, claims, counterclaims, etc.,
between them in connection with the administration,
settlement, partition, adjudication and distribution of the
assets as well as liabilities of the estates of Francisco
de Borja and Josefa Tangco, first spouse of Francisco
de Borja.
THAT with this end in view, the parties herein have
agreed voluntarily and without any reservations to enter
into and execute this agreement under the following
terms and conditions:
1. That the parties agree to sell the Poblacion portion of
the Jalajala properties situated in Jalajala, Rizal,
presently under administration in the Testate Estate of
Josefa Tangco (Sp. Proc. No. 7866, Rizal), more
specifically described as follows:
Linda al Norte con el Rio Puwang que la separa de la
jurisdiccion del Municipio de Pililla de la Provincia de
Rizal, y con el pico del Monte Zambrano; al Oeste con
Laguna de Bay; por el Sur con los herederos de
Marcelo de Borja; y por el Este con los terrenos de la
Familia Maronilla
with a segregated area of approximately 1,313 hectares
at the amount of P0.30 per square meter.
2. That Jose de Borja agrees and obligates himself to
pay Tasiana Ongsingco Vda. de de Borja the total
amount of Eight Hundred Thousand Pesos (P800,000)
Philippine Currency, in cash, which represent P200,000
as his share in the payment and P600,000 as pro-rata
shares of the heirs Crisanto, Cayetano and Matilde, all
surnamed de Borja and this shall be considered as full
and complete payment and settlement of her hereditary
share in the estate of the late Francisco de Borja as well
as the estate of Josefa Tangco, Sp. Proc. No. 832-
Nueva Ecija and Sp. Proc. No. 7866-Rizal, respectively,
and to any properties bequeathed or devised in her
favor by the late Francisco de Borja by Last Will and
Testament or by Donation Inter Vivos or Mortis Causa
or purportedly conveyed to her for consideration or
otherwise. The funds for this payment shall be taken
from and shall depend upon the receipt of full payment
of the proceeds of the sale of Jalajala, "Poblacion."
3. That Tasiana Ongsingco Vda. de de Borja hereby
assumes payment of that particular obligation incurred
by the late Francisco de Borja in favor of the
Rehabilitation Finance Corporation, now Development
Bank of the Philippines, amounting to approximately
P30,000.00 and also assumes payment of her 1/5 share
of the Estate and Inheritance taxes on the Estate of the
late Francisco de Borja or the sum of P3,500.00, more
or less, which shall be deducted by the buyer of
Jalajala, "Poblacion" from the payment to be made to
Tasiana Ongsingco Vda. de Borja under paragraph 2 of
this Agreement and paid directly to the Development
Bank of the Philippines and the heirs-children of
Francisco de Borja.
4. Thereafter, the buyer of Jalajala "Poblacion" is hereby
authorized to pay directly to Tasiana Ongsingco Vda. de
de Borja the balance of the payment due her under
paragraph 2 of this Agreement (approximately
P766,500.00) and issue in the name of Tasiana
Ongsingco Vda. de de Borja, corresponding certified
checks/treasury warrants, who, in turn, will issue the
corresponding receipt to Jose de Borja.
5. In consideration of above payment to Tasiana
Ongsingco Vda. de de Borja, Jose de Borja personally
and as administrator of the Testate Estate of Josefa
Tangco, and Tasiana Ongsingco Vda. de de Borja, for
themselves and for their heirs, successors, executors,
administrators, and assigns, hereby forever mutually
renounce, withdraw, waive, remise, release and
discharge any and all manner of action or actions,
cause or causes of action, suits, debts, sum or sums of
money, accounts, damages, claims and demands
whatsoever, in law or in equity, which they ever had, or
now have or may have against each other, more
specifically Sp. Proceedings Nos. 7866 and 1955, CFI-
Rizal, and Sp. Proc. No. 832-Nueva Ecija, Civil Case
No. 3033, CFI Nueva Ecija and Civil Case No. 7452-
CFI, Rizal, as well as the case filed against Manuel
Quijal for perjury with the Provincial Fiscal of Rizal, the
intention being to completely, absolutely and finally
release each other, their heirs, successors, and assigns,
from any and all liability, arising wholly or partially,
directly or indirectly, from the administration, settlement,
and distribution of the assets as well as liabilities of the
estates of Francisco de Borja and Josefa Tangco, first
spouse of Francisco de Borja, and lastly, Tasiana
Ongsingco Vda. de de Borja expressly and specifically
renounce absolutely her rights as heir over any
hereditary share in the estate of Francisco de Borja.
6. That Tasiana Ongsingco Vda. de de Borja, upon
receipt of the payment under paragraph 4 hereof, shall
deliver to the heir Jose de Borja all the papers, titles and
documents belonging to Francisco de Borja which are in
her possession and said heir Jose de Borja shall issue
in turn the corresponding receive thereof.
7. That this agreement shall take effect only upon the
fulfillment of the sale of the properties mentioned under
paragraph 1 of this agreement and upon receipt of the
total and full payment of the proceeds of the sale of the
Jalajala property "Poblacion", otherwise, the non-
fulfillment of the said sale will render this instrument
NULL AND VOID AND WITHOUT EFFECT
THEREAFTER.
IN WITNESS WHEREOF, the parties hereto have her
unto set their hands in the City of Manila, Philippines,
the 12th of October, 1963.
On 16 May 1966, Jose de Borja submitted for Court
approval the agreement of 12 October 1963 to the Court
of First Instance of Rizal, in Special Proceeding No. R-
7866; and again, on 8 August 1966, to the Court of First
Instance of Nueva Ecija, in Special Proceeding No. 832.
Tasiana Ongsingco Vda. de de Borja opposed in both
instances. The Rizal court approved the compromise
agreement, but the Nueva Ecija court declared it void
and unenforceable. Special administratrix Tasiana
Ongsingco Vda. de de Borja appealed the Rizal Court's
order of approval (now Supreme Court G.R. case No. L-
28040), while administrator Jose de Borja appealed the
order of disapproval (G.R. case No. L-28568) by the
Court of First Instance of Nueva Ecija.
The genuineness and due execution of the
compromised agreement of 12 October 1963 is not
disputed, but its validity is, nevertheless, attacked by
Tasiana Ongsingco on the ground that: (1) the heirs
cannot enter into such kind of agreement without first
probating the will of Francisco de Borja; (2) that the
same involves a compromise on the validity of the
marriage between Francisco de Borja and Tasiana
Ongsingco; and (3) that even if it were valid, it has
ceased to have force and effect.
In assailing the validity of the agreement of 12 October
1963, Tasiana Ongsingco and the Probate Court of
Nueva Ecija rely on this Court's decision in Guevara vs.
Guevara. 74 Phil. 479, wherein the Court's majority held
the view that the presentation of a will for probate is
mandatory and that the settlement and distribution of an
estate on the basis of intestacy when the decedent left a
will, is against the law and public policy. It is likewise
pointed out by appellant Tasiana Ongsingco that
Section 1 of Rule 74 of the Revised Rules explicitly
conditions the validity of an extrajudicial settlement of a
decedent's estate by agreement between heirs, upon
the facts that "(if) the decedent left no will and no debts,
and the heirs are all of age, or the minors are
represented by their judicial and legal representatives
..." The will of Francisco de Borja having been submitted
to the Nueva Ecija Court and still pending probate when
the 1963 agreement was made, those circumstances, it
is argued, bar the validity of the agreement.
Upon the other hand, in claiming the validity of the
compromise agreement, Jose de Borja stresses that at
the time it was entered into, on 12 October 1963, the
governing provision was Section 1, Rule 74 of the
original Rules of Court of 1940, which allowed the
extrajudicial settlement of the estate of a deceased
person regardless of whether he left a will or not. He
also relies on the dissenting opinion of Justice Moran, in
Guevara vs. Guevara, 74 Phil. 479, wherein was
expressed the view that if the parties have already
divided the estate in accordance with a decedent's will,
the probate of the will is a useless ceremony; and if they
have divided the estate in a different manner, the
probate of the will is worse than useless.
The doctrine of Guevara vs. Guevara, ante, is not
applicable to the case at bar. This is apparent from an
examination of the terms of the agreement between
Jose de Borja and Tasiana Ongsingco. Paragraph 2 of
said agreement specifically stipulates that the sum of
P800,000 payable to Tasiana Ongsingco
shall be considered as full complete payment
settlement of her hereditary share in the estate of the
late Francisco de Borja as well as the estate of Josefa
Tangco, ... and to any properties bequeathed or devised
in her favor by the late Francisco de Borja by Last Will
and Testament or by Donation Inter Vivos or Mortis
Causa or purportedly conveyed to her for consideration
or otherwise.
This provision evidences beyond doubt that the ruling in
the Guevara case is not applicable to the cases at bar.
There was here no attempt to settle or distribute the
estate of Francisco de Borja among the heirs thereto
before the probate of his will. The clear object of the
contract was merely the conveyance by Tasiana
Ongsingco of any and all her individual share and
interest, actual or eventual in the estate of Francisco de
Borja and Josefa Tangco. There is no stipulation as to
any other claimant, creditor or legatee. And as a
hereditary share in a decedent's estate is transmitted or
vested immediately from the moment of the death of
such causante or predecessor in interest (Civil Code of
the Philippines, Art. 777)
3
there is no legal bar to a
successor (with requisite contracting capacity) disposing
of her or his hereditary share immediately after such
death, even if the actual extent of such share is not
determined until the subsequent liquidation of the
estate.
4
Of course, the effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the
vendor heir. However, the aleatory character of the
contract does not affect the validity of the transaction;
neither does the coetaneous agreement that the
numerous litigations between the parties (the approving
order of the Rizal Court enumerates fourteen of them,
Rec. App. pp. 79-82) are to be considered settled and
should be dismissed, although such stipulation, as
noted by the Rizal Court, gives the contract the
character of a compromise that the law favors, for
obvious reasons, if only because it serves to avoid a
multiplicity of suits.
It is likewise worthy of note in this connection that as the
surviving spouse of Francisco de Borja, Tasiana
Ongsingco was his compulsory heir under article 995 et
seq. of the present Civil Code. Wherefore, barring
unworthiness or valid disinheritance, her successional
interest existed independent of Francisco de Borja's last
will and testament and would exist even if such will were
not probated at all. Thus, the prerequisite of a previous
probate of the will, as established in the Guevara and
analogous cases, can not apply to the case of Tasiana
Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered
into by and between "Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco" on
the one hand, and on the other, "the heir and surviving
spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear that the
transaction was binding on both in their individual
capacities, upon the perfection of the contract, even
without previous authority of the Court to enter into the
same. The only difference between an extrajudicial
compromise and one that is submitted and approved by
the Court, is that the latter can be enforced by execution
proceedings. Art. 2037 of the Civil Code is explicit on
the point:
8. Art. 2037. A compromise has upon the parties the
effect and authority of res judicata; but there shall be no
execution except in compliance with a judicial
compromise.
It is argued by Tasiana Ongsingco that while the
agreement Annex A expressed no definite period for its
performance, the same was intended to have a
resolutory period of 60 days for its effectiveness. In
support of such contention, it is averred that such a limit
was expressly stipulated in an agreement in similar
terms entered into by said Ongsingco with the brothers
and sister of Jose de Borja, to wit, Crisanto, Matilde and
Cayetano, all surnamed de Borja, except that the
consideration was fixed at P600,000 (Opposition,
Annex/Rec. of Appeal, L-28040, pp. 39- 46) and which
contained the following clause:
III. That this agreement shall take effect only upon the
consummation of the sale of the property mentioned
herein and upon receipt of the total and full payment of
the proceeds of the sale by the herein owner heirs-
children of Francisco de Borja, namely, Crisanto,
Cayetano and Matilde, all surnamed de Borja; Provided
that if no sale of the said property mentioned herein is
consummated, or the non-receipt of the purchase price
thereof by the said owners within the period of sixty (60)
days from the date hereof, this agreement will become
null and void and of no further effect.
Ongsingco's argument loses validity when it is
considered that Jose de Borja was not a party to this
particular contract (Annex 1), and that the same
appears not to have been finalized, since it bears no
date, the day being left blank "this day of October
1963"; and while signed by the parties, it was not
notarized, although plainly intended to be so done, since
it carries a proposed notarial ratification clause.
Furthermore, the compromise contract with Jose de
Borja (Annex A), provides in its par. 2 heretofore
transcribed that of the total consideration of P800, 000
to be paid to Ongsingco, P600,000 represent the
"prorata share of the heirs Crisanto, Cayetano and
Matilde all surnamed de Borja" which corresponds to the
consideration of P600,000 recited in Annex 1, and that
circumstance is proof that the duly notarized contract
entered into wit Jose de Borja under date 12 October
1963 (Annex A), was designed to absorb and supersede
the separate unformalize agreement with the other three
Borja heirs. Hence, the 60 days resolutory term in the
contract with the latter (Annex 1) not being repeated in
Annex A, can not apply to the formal compromise with
Jose de Borja. It is moreover manifest that the
stipulation that the sale of the Hacienda de Jalajala was
to be made within sixty days from the date of the
agreement with Jose de Borja's co-heirs (Annex 1) was
plainly omitted in Annex A as improper and ineffective,
since the Hacienda de Jalajala (Poblacion) that was to
be sold to raise the P800,000 to be paid to Ongsingco
for her share formed part of the estate of Francisco de
Borja and could not be sold until authorized by the
Probate Court. The Court of First Instance of Rizal so
understood it, and in approving the compromise it fixed
a term of 120 days counted from the finality of the order
now under appeal, for the carrying out by the parties for
the terms of the contract.
This brings us to the plea that the Court of First Instance
of Rizal had no jurisdiction to approve the compromise
with Jose de Borja (Annex A) because Tasiana
Ongsingco was not an heir in the estate of Josefa
Tangco pending settlement in the Rizal Court, but she
was an heir of Francisco de Borja, whose estate was
the object of Special Proceeding No. 832 of the Court of
First Instance of Nueva Ecija. This circumstance is
irrelevant, since what was sold by Tasiana Ongsingco
was only her eventual share in the estate of her late
husband, not the estate itself; and as already shown,
that eventual share she owned from the time of
Francisco's death and the Court of Nueva Ecija could
not bar her selling it. As owner of her undivided
hereditary share, Tasiana could dispose of it in favor of
whomsoever she chose. Such alienation is expressly
recognized and provided for by article 1088 of the
present Civil Code:
Art. 1088. Should any of the heirs sell his hereditary
rights to a stranger before the partition, any or all of the
co-heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the sale,
provided they do so within the period of one month from
the time they were notified in writing of the sale of the
vendor.
If a sale of a hereditary right can be made to a stranger,
then a fortiori sale thereof to a coheir could not be
forbidden.
Tasiana Ongsingco further argues that her contract with
Jose de Borja (Annex "A") is void because it amounts to
a compromise as to her status and marriage with the
late Francisco de Borja. The point is without merit, for
the very opening paragraph of the agreement with Jose
de Borja (Annex "A") describes her as "the heir and
surviving spouse of Francisco de Borja by his second
marriage, Tasiana Ongsingco Vda. de de Borja", which
is in itself definite admission of her civil status. There is
nothing in the text of the agreement that would show
that this recognition of Ongsingco's status as the
surviving spouse of Francisco de Borja was only made
in consideration of the cession of her hereditary rights.
It is finally charged by appellant Ongsingco, as well as
by the Court of First Instance of Nueva Ecija in its order
of 21 September 1964, in Special Proceedings No. 832
(Amended Record on Appeal in L-28568, page 157),
that the compromise agreement of 13 October 1963
(Annex "A") had been abandoned, as shown by the fact
that, after its execution, the Court of First Instance of
Nueva Ecija, in its order of 21 September 1964, had
declared that "no amicable settlement had been arrived
at by the parties", and that Jose de Borja himself, in a
motion of 17 June 1964, had stated that the proposed
amicable settlement "had failed to materialize".
It is difficult to believe, however, that the amicable
settlement referred to in the order and motion above-
mentioned was the compromise agreement of 13
October 1963, which already had been formally signed
and executed by the parties and duly notarized. What
the record discloses is that some time after its
formalization, Ongsingco had unilaterally attempted to
back out from the compromise agreement, pleading
various reasons restated in the opposition to the Court's
approval of Annex "A" (Record on Appeal, L-20840,
page 23): that the same was invalid because of the
lapse of the allegedly intended resolutory period of 60
days and because the contract was not preceded by the
probate of Francisco de Borja's will, as required by this
Court's Guevarra vs. Guevara ruling; that Annex "A"
involved a compromise affecting Ongsingco's status as
wife and widow of Francisco de Borja, etc., all of which
objections have been already discussed. It was natural
that in view of the widow's attitude, Jose de Borja should
attempt to reach a new settlement or novatory
agreement before seeking judicial sanction and
enforcement of Annex "A", since the latter step might
ultimately entail a longer delay in attaining final remedy.
That the attempt to reach another settlement failed is
apparent from the letter of Ongsingco's counsel to Jose
de Borja quoted in pages 35-36 of the brief for appellant
Ongsingco in G.R. No. 28040; and it is more than
probable that the order of 21 September 1964 and the
motion of 17 June 1964 referred to the failure of the
parties' quest for a more satisfactory compromise. But
the inability to reach a novatory accord can not
invalidate the original compromise (Annex "A") and
justifies the act of Jose de Borja in finally seeking a
court order for its approval and enforcement from the
Court of First Instance of Rizal, which, as heretofore
described, decreed that the agreement be ultimately
performed within 120 days from the finality of the order,
now under appeal.
We conclude that in so doing, the Rizal court acted in
accordance with law, and, therefore, its order should be
upheld, while the contrary resolution of the Court of First
Instance of Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that the
time elapsed in the appeal has affected her unfavorably,
in that while the purchasing power of the agreed price of
P800,000 has diminished, the value of the Jalajala
property has increased. But the fact is that her delay in
receiving the payment of the agreed price for her
hereditary interest was primarily due to her attempts to
nullify the agreement (Annex "A") she had formally
entered into with the advice of her counsel, Attorney
Panaguiton. And as to the devaluation de facto of our
currency, what We said in Dizon Rivera vs. Dizon, L-
24561, 30 June 1970, 33 SCRA 554, that "estates
would never be settled if there were to be a revaluation
with every subsequent fluctuation in the values of
currency and properties of the estate", is particularly
opposite in the present case.
Coming now to Case G.R. No. L-28611, the issue is
whether the Hacienda de Jalajala (Poblacion),
concededly acquired by Francisco de Borja during his
marriage to his first wife, Josefa Tangco, is the
husband's private property (as contended by his second
spouse, Tasiana Ongsingco), or whether it forms part of
the conjugal (ganancial) partnership with Josefa
Tangco. The Court of First Instance of Rizal (Judge
Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in
favor of its conjugal character established by Article 160
of the Civil Code.
We are of the opinion that this question as between
Tasiana Ongsingco and Jose de Borja has become
moot and academic, in view of the conclusion reached
by this Court in the two preceding cases (G.R. No. L-
28568), upholding as valid the cession of Tasiana
Ongsingco's eventual share in the estate of her late
husband, Francisco de Borja, for the sum of P800,000
with the accompanying reciprocal quit-claims between
the parties. But as the question may affect the rights of
possible creditors and legatees, its resolution is still
imperative.
It is undisputed that the Hacienda Jalajala, of around
4,363 hectares, had been originally acquired jointly by
Francisco de Borja, Bernardo de Borja and Marcelo de
Borja and their title thereto was duly registered in their
names as co-owners in Land Registration Case No. 528
of the province of Rizal, G.L.R.O. Rec. No. 26403 (De
Barjo vs. Jugo, 54 Phil. 465). Subsequently, in 1931, the
Hacienda was partitioned among the co-owners: the
Punta section went to Marcelo de Borja; the
Bagombong section to Bernardo de Borja, and the part
in Jalajala proper (Poblacion) corresponded to
Francisco de Borja (V. De Borja vs. De Borja 101 Phil.
911, 932).
The lot allotted to Francisco was described as
Una Parcela de terreno en Poblacion, Jalajala: N.
Puang River; E. Hermogena Romero; S. Heirs of
Marcelo de Borja O. Laguna de Bay; containing an area
of 13,488,870 sq. m. more or less, assessed at
P297,410. (Record on Appeal, pages 7 and 105)
On 20 November 1962, Tasiana O. Vda. de Borja, as
Administratrix of the Testate Estate of Francisco de
Borja, instituted a complaint in the Court of First
Instance of Rizal (Civil Case No. 7452) against Jose de
Borja, in his capacity as Administrator of Josefa Tangco
(Francisco de Borja's first wife), seeking to have the
Hacienda above described declared exclusive private
property of Francisco, while in his answer defendant
(now appellant) Jose de Borja claimed that it was
conjugal property of his parents (Francisco de Borja and
Josefa Tangco), conformably to the presumption
established by Article 160 of the Philippine Civil Code
(reproducing Article 1407 of the Civil Code of 1889), to
the effect that:
Art. 160. All 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.
Defendant Jose de Borja further counterclaimed for
damages, compensatory, moral and exemplary, as well
as for attorney's fees.
After trial, the Court of First Instance of Rizal, per Judge
Herminio Mariano, held that the plaintiff had adduced
sufficient evidence to rebut the presumption, and
declared the Hacienda de Jalajala (Poblacion) to be the
exclusive private property of the late Francisco de Borja,
and his Administratrix, Tasiana Ongsingco Vda. de
Borja, to be entitled to its possession. Defendant Jose
de Borja then appealed to this Court.
The evidence reveals, and the appealed order admits,
that the character of the Hacienda in question as owned
by the conjugal partnership De Borja-Tangco was
solemnly admitted by the late Francisco de Borja no
less than two times: first, in the Reamended Inventory
that, as executor of the estate of his deceased wife
Josefa Tangco, he filed in the Special Proceedings No.
7866 of the Court of First Instance of Rizal on 23 July
1953 (Exhibit "2"); and again, in the Reamended
Accounting of the same date, also filed in the
proceedings aforesaid (Exhibit "7"). Similarly, the
plaintiff Tasiana O. Vda. de Borja, herself, as oppositor
in the Estate of Josefa Tangco, submitted therein an
inventory dated 7 September 1954 (Exhibit "3") listing
the Jalajala property among the "Conjugal Properties of
the Spouses Francisco de Borja and Josefa Tangco".
And once more, Tasiana Ongsingco, as administratrix of
the Estate of Francisco de Borja, in Special Proceedings
No. 832 of the Court of First Instance of Nueva Ecija,
submitted therein in December, 1955, an inventory
wherein she listed the Jalajala Hacienda under the
heading "Conjugal Property of the Deceased Spouses
Francisco de Borja and Josefa Tangco, which are in the
possession of the Administrator of the Testate Estate of
the Deceased Josefa Tangco in Special Proceedings
No. 7866 of the Court of First Instance of Rizal" (Exhibit
"4").
Notwithstanding the four statements aforesaid, and the
fact that they are plain admissions against interest made
by both Francisco de Borja and the Administratrix of his
estate, in the course of judicial proceedings in the Rizal
and Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal community, the
Court below declared that the Hacienda de Jalajala
(Poblacion) was not conjugal property, but the private
exclusive property of the late Francisco de Borja. It did
so on the strength of the following evidences: (a) the
sworn statement by Francis de Borja on 6 August 1951
(Exhibit "F") that
He tomado possession del pedazo de terreno ya
delimitado (equivalente a 1/4 parte, 337 hectareas)
adjunto a mi terreno personal y exclusivo (Poblacion de
Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of
Bernardo de Borja, that the entire Hacienda had been
bought at a foreclosure sale for P40,100.00, of which
amount P25,100 was contributed by Bernardo de Borja
and P15,000. by Marcelo de Borja; that upon receipt of
a subsequent demand from the provincial treasurer for
realty taxes the sum of P17,000, Marcelo told his
brother Bernardo that Francisco (son of Marcelo)
wanted also to be a co-owner, and upon Bernardo's
assent to the proposal, Marcelo issue a check for
P17,000.00 to pay the back taxes and said that the
amount would represent Francisco's contribution in the
purchase of the Hacienda. The witness further testified
that
Marcelo de Borja said that that money was entrusted to
him by Francisco de Borja when he was still a bachelor
and which he derived from his business transactions.
(Hearing, 2 February 1965, t.s.n., pages 13-15)
(Emphasis supplied)
The Court below, reasoning that not only Francisco's
sworn statement overweighed the admissions in the
inventories relied upon by defendant-appellant Jose de
Borja since probate courts can not finally determine
questions of ownership of inventoried property, but that
the testimony of Gregorio de Borja showed that
Francisco de Borja acquired his share of the original
Hacienda with his private funds, for which reason that
share can not be regarded as conjugal partnership
property, but as exclusive property of the buyer,
pursuant to Article 1396(4) of Civil Code of 1889 and
Article 148(4) of the Civil Code of the Philippines.
The following shall be the exclusive property of each
spouse:
xxx xxx xxx
(4) That which is purchased with exclusive money of the
wife or of the husband.
We find the conclusions of the lower court to be
untenable. In the first place, witness Gregorio de Borja's
testimony as to the source of the money paid by
Francisco for his share was plain hearsay, hence
inadmissible and of no probative value, since he was
merely repeating what Marcelo de Borja had told him
(Gregorio). There is no way of ascertaining the truth of
the statement, since both Marcelo and Francisco de
Borja were already dead when Gregorio testified. In
addition, the statement itself is improbable, since there
was no need or occasion for Marcelo de Borja to explain
to Gregorio how and when Francisco de Borja had
earned the P17,000.00 entrusted to Marcelo. A ring of
artificiality is clearly discernible in this portion of
Gregorio's testimony.
As to Francisco de Borja's affidavit, Exhibit "F", the
quoted portion thereof (ante, page 14) does not clearly
demonstrate that the "mi terreno personal y exclusivo
(Poblacion de Jalajala, Rizal) " refers precisely to the
Hacienda in question. The inventories (Exhibits 3 and 4)
disclose that there were two real properties in Jalajala
owned by Francisco de Borja, one of 72.038 sq. m.,
assessed at P44,600, and a much bigger one of
1,357.260.70 sq. m., which is evidently the Hacienda de
Jalajala (Poblacion). To which of these lands did the
affidavit of Francisco de Borja (Exhibit "F") refer to? In
addition, Francisco's characterization of the land as "mi
terreno personal y exclusivo" is plainly self-serving, and
not admissible in the absence of cross examination.
It may be true that the inventories relied upon by
defendant-appellant (Exhibits "2", "3", "4" and "7") are
not conclusive on the conjugal character of the property
in question; but as already noted, they are clear
admissions against the pecuniary interest of the
declarants, Francisco de Borja and his executor-widow,
Tasiana Ongsingco, and as such of much greater
probative weight than the self-serving statement of
Francisco (Exhibit "F"). Plainly, the legal presumption in
favor of the conjugal character of the Hacienda de
Jalajala (Poblacion) now in dispute has not been
rebutted but actually confirmed by proof. Hence, the
appealed order should be reversed and the Hacienda
de Jalajala (Poblacion) declared property of the conjugal
partnership of Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the
lower court that claims for damages should be ventilated
in the corresponding special proceedings for the
settlement of the estates of the deceased, the same
requires no pro announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed order of
the Court of First Instance of Rizal in Case No. L-28040
is hereby affirmed; while those involved in Cases Nos.
L-28568 and L-28611 are reversed and set aside. Costs
against the appellant Tasiana Ongsingco Vda. de Borja
in all three (3) cases.
Concepcion, C.J., Makalintal, Zaldivar, Castro,
Teehankee, Barredo, Makasiar, Antonio and Esguerra,
JJ., concur.
Fernando, J., took no part.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15499 February 28, 1962
ANGELA M. BUTTE, plaintiff-appellant,
vs.
MANUEL UY and SONS, INC., defendant-appellee.
Delgado, Flores and Macapagal for plaintiff-appellant.
Pelaez and Jalandoni for defendant-appellee.
REYES, J.B.L., J .:
Appeal from a decision of the Court of First instance of
Manila dismissing the action for legal redemption filed
by plaintiff-appellant.
It appears that Jose V. Ramirez, during his lifetime, was
a co-owner of a house and lot located at Sta. Cruz,
Manila, as shown by Transfer Certificate of Title No.
52789, issued in the name of the following co-owners:
Marie Garnier Vda. de Ramirez, 1/6; Jose V. Ramirez,
1/6; Jose E. Ramirez, 1/6; Rita de Ramirez, 1/6; and
Jose Ma. Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died.
Subsequently, Special Proceeding No. 15026 was
instituted to settle his estate, that included the one-sixth
(1/6) undivided share in the aforementioned property.
And although his last will and testament, wherein he
bequeathed his estate to his children and grandchildren
and one-third (1/3) of the free portion to Mrs. Angela M.
Butte, hereinafter referred to as plaintiff-appellant, has
been admitted to probate, the estate proceedings are
still pending up to the present on account of the claims
of creditors which exceed the assets of the deceased.
The Bank of the Philippine Islands was appointed
judicial administrator.
Meanwhile, on December 9, 1958, Mrs. Marie Garnier
Vda. de Ramirez, one of the co-owners of the late Jose
V. Ramirez in the Sta. Cruz property, sold her undivided
1/6 share to Manuel Uy & Sons, Inc. defendant-
appellant herein, for the sum of P500,000.00. After the
execution by her attorney-in-fact, Mrs. Elsa R.
Chambers, of an affidavit to the effect that formal
notices of the sale had been sent to all possible
redemptioners, the deed of sale was duly registered and
Transfer Certificate of Title No. 52789 was cancelled in
lieu of which a new one was issued in the name of the
vendee and the other-co-owners.
On the same day (December 9, 1958), Manuel Uy &
Sons, Inc. sent a letter to the Bank of the Philippine
Islands as judicial administrator of the estate of the late
Jose V. Ramirez informing it of the above-mentioned
sale. This letter, together with that of the bank, was
forwarded by the latter to Mrs. Butte c/o her counsel
Delgado, Flores & Macapagal, Escolta, Manila, and
having received the same on December 10, 1958, said
law office delivered them to plaintiff-appellant's son, Mr.
Miguel Papa, who in turn personally handed the letters
to his mother, Mrs. Butte, on December 11 and 12,
1958. Aside from this letter of defendant-appellant, the
vendor, thru her attorney-in-fact Mrs. Chambers, wrote
said bank on December 11, 1958 confirming vendee's
letter regarding the sale of her 1/6 share in the Sta. Cruz
property for the sum of P500,000.00. Said letter was
received by the bank on December 15, 1958 and having
endorsed it to Mrs. Butte's counsel, the latter received
the same on December 16, 1958. Appellant received
the letter on December 19, 1958.
On January 15, 1959, Mrs. Angela M. Butte, thru Atty.
Resplandor Sobretodo, sent a letter and a Philippine
National Bank cashier's check in the amount of
P500,000.00 to Manuel Uy & Sons, Inc. offering to
redeem the 1/6 share sold by Mrs. Marie Garnier Vda.
de Ramirez. This tender having been refused, plaintiff
on the same day consigned the amount in court and
filed the corresponding action for legal redemption.
Without prejudice to the determination by the court of
the reasonable and fair market value of the property
sold which she alleged to be grossly excessive, plaintiff
prayed for conveyance of the property, and for actual,
moral and exemplary damages.
After the filing by defendant of its answer containing a
counterclaim, and plaintiff's reply thereto, trial was held,
after which the court rendered decision on May 13,
1959, dismissing plaintiff's complaint on the grounds
that she has no right to redeem the property and that, if
ever she had any, she exercised the same beyond the
statutory 30-day period for legal redemptions provided
by the Civil Code. The counterclaim of defendant for
damages was likewise dismissed for not being
sufficiently established. Both parties appealed directly to
this Court.
Based on the foregoing facts, the main issues posed in
this appeal are: (1) whether or not plaintiff-appellant,
having been bequeathed 1/3 of the free portion of the
estate of Jose V. Ramirez, can exercise the right of
legal redemption over the 1/6 share sold by Mrs. Marie
Garnier Vda. de Ramirez despite the presence of the
judicial administrator and pending the final distribution of
her share in the testate proceedings; and (2) whether or
not she exercised the right of legal redemption within
the period prescribed by law.
The applicable law involved in the present case is
contained in Articles 1620, p. 1, and 1623 of the Civil
Code of the Philippines, which read as follows:
ART. 1620. A co-owner of a thing may exercise the right
of redemption in case the shares of all the other-co-
owners or of any of them, are sold to a third person. If
the price of the alienation is grossly excessive, the
redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the
right of redemption, they may only do so in proportion to
the share they may respectively have in the thing owned
in common. (1522a)
ART. 1623. The right of legal predemption or
redemption shall not be exercised except within thirty
days from the notice in writing by the respective vendor,
or by the vendor, as the case may be. The deed of sale
shall not be accorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has
given written notice thereof at all possible
redemptioners.
The right of redemption of co-owners excludes that of
adjoining owners. (1524a)
That the appellant Angela M. Butte is entitled to
exercise the right of legal redemption is clear. As
testamentary heir of the estate of J.V. Ramirez, she and
her co-heirs acquired an interest in the undivided one-
sixth (1/6) share owned by her predecessor (causante)
in the Santa Cruz property, from the moment of the
death of the aforesaid co-owner, J.V. Ramirez. By law,
the rights to the succession of a deceased persons are
transmitted to his heirs from the moment of his death,
and the right of succession includes all property rights
and obligations that survive the decedent.
ART. 776. The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death. (659)
ART. 777. The rights to the succession are transmitted
from the moment of the death of the decedent. (657a)
ART. 947. The legatee or devisee acquires a right to the
pure and simple legacies or devisees from the death of
the testator, and transmits it to his heirs. (881a)
The principle of transmission as of the time of the
predecessor's death is basic in our Civil Code, and is
supported by other related articles. Thus, the capacity of
the heir is determined as of the time the decedent died
(Art. 1034); the legitime is to be computed as of the
same moment(Art. 908), and so is the in officiousness of
the donation inter vivos (Art. 771). Similarly, the legacies
of credit and remission are valid only in the amount due
and outstanding at the death of the testator (Art.
935),and the fruits accruing after that instant are
deemed to pertain to the legatee (Art. 948).
As a consequence of this fundamental rule of
succession, the heirs of Jose V. Ramirez acquired his
undivided share in the Sta. Cruz property from the
moment of his death, and from that instant, they
became co-owners in the aforesaid property, together
with the original surviving co-owners of their decedent
(causante). A co-owner of an undivided share is
necessarily a co-owner of the whole. Wherefore, any
one of the Ramirez heirs, as such co-owner, became
entitled to exercise the right of legal redemption
(retracto de comuneros) as soon as another co-owner
(Maria Garnier Vda. de Ramirez) had sold her undivided
share to a stranger, Manuel Uy & Sons, Inc. This right of
redemption vested exclusively in consideration of the
redemptioner's share which the law nowhere takes into
account.
The situation is in no wise altered by the existence of a
judicial administrator of the estate of Jose V. Ramirez
while under the Rules of Court the administrator has the
right to the possession of the real and personal estate of
the deceased, so far as needed for the payment of the
decedent's debts and the expenses of administration
(sec. 3, Rule 85), and the administrator may bring or
defend actions for the recovery or protection of the
property or rights of the deceased (sec. 2, Rule 88),
such rights of possession and administration do not
include the right of legal redemption of the undivided
share sold to Uy & Company by Mrs. Garnier Ramirez.
The reason is obvious: this right of legal redemption
only came into existence when the sale to Uy & Sons,
Inc. was perfected, eight (8) years after the death of
Jose V. Ramirez, and formed no part of his estate. The
redemption right vested in the heirs originally, in their
individual capacity, they did not derivatively acquire it
from their decedent, for when Jose V. Ramirez died,
none of the other co-owners of the Sta. Cruz property
had as yet sold his undivided share to a stranger.
Hence, there was nothing to redeem and no right of
redemption; and if the late Ramirez had no such right at
his death, he could not transmit it to his own heirs. Much
less could Ramirez acquire such right of redemption
eight years after his death, when the sale to Uy & Sons,
Inc. was made; because death extinguishes civil
personality, and, therefore, all further juridical capacity
to acquire or transmit rights and obligations of any kind
(Civil Code of the Phil., Art. 42).
It is argued that the actual share of appellant Mrs. Butte
in the estate of Jose V. Ramirez has not been
specifically determined as yet, that it is still contingent;
and that the liquidation of estate of Jose V. Ramirez
may require the alienation of the decedent's undivided
portion in the Sta. Cruz property, in which event Mrs.
Butte would have no interest in said undivided portion.
Even if it were true, the fact would remain that so long
as that undivided share remains in the estate, the heirs
of Jose V. Ramirez own it, as the deceased did own it
before his demise, so that his heirs are now as much
co-owners of the Sta. Cruz property as Jose V. Ramirez
was himself a co-owner thereof during his lifetime. As
co-owners of the property, the heirs of Jose V. Ramirez,
or any one of them, became personally vested with right
of legal redemption as soon as Mrs. Garnier sold her
own pro-indiviso interest to Uy & Sons. Even if
subsequently, the undivided share of Ramirez (and of
his heirs) should eventually be sold to satisfy the
creditors of the estate, it would not destroy their
ownership of it before the sale, but would only convey or
transfer it as in turn sold (of it actually is sold) to pay his
creditors. Hence, the right of any of the Ramirez heirs to
redeem the Garnier share will not be retroactively
affected. All that the law requires is that the legal
redemptioner should be a co-owner at the time the
undivided share of another co-owner is sold to a
stranger. Whether or not the redemptioner will continue
being a co-owner after exercising the legal redemptioner
is irrelevant for the purposes of law.
Nor it can be argued that if the original share of Ramirez
is sold by the administrator, his heirs would stand in law
as never having acquired that share. This would only be
true if the inheritance is repudiated or the heir's quality
as such is voided. But where the heirship is undisputed,
the purchaser of hereditary property is not deemed to
have acquired the title directly from the deceased
Ramirez, because a dead man can not convey title, nor
from the administrator who owns no part of the estate;
the purchaser can only derive his title from the Ramirez
heirs, represented by the administrator, as their trustee
or legal representative.
The right of appellant Angela M. Butte to make the
redemption being established, the next point of inquiry is
whether she had made or tendered the redemption price
within the 30 days from notices as prescribed by law.
This period, be it noted, is peremptory, because the
policy of the law is not to leave the purchaser's title in
uncertainty beyond the established 30-day period. In
considering whether or not the offer to redeem was
timely, we think that the notice given by the vendee
(buyer) should not be taken into account. The text of
Article 1623 clearly and expressly prescribes that the
thirty days for making the redemption are to be counted
from notice in writing by the vendor. Under the old law
(Civ. Code of 1889, Art. 1524), it was immaterial who
gave the notice; so long as the redeeming co-owner
learned of the alienation in favor of the stranger, the
redemption period began to run. It is thus apparent that
the Philippine legislature in Article 1623 deliberately
selected a particular method of giving notice, and that
method must be deemed exclusive (39 Am. Jur., 237;
Payne vs. State, 12 S.W. [2d] 528). As ruled in Wampler
vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.]
275)
Why these provisions were inserted in the statute we
are not informed, but we may assume until the contrary
is shown, that a state of facts in respect thereto existed,
which warranted the legislature in so legislating.
The reasons for requiring that the notice should be
given by the seller, and not by the buyer, are easily
divined. The seller of an undivided interest is in the best
position to know who are his co-owners that under the
law must be notified of the sale. Also, the notice by the
seller removes all doubts as to the fact of the sale, its
perfection; and its validity, the notice being a
reaffirmation thereof, so that the party need not
entertain doubt that the seller may still contest the
alienation. This assurance would not exist if the notice
should be given by the buyer.
The notice which became operative is that given by Mrs.
Chambers, in her capacity as attorney-in-fact of the
vendor Marie Garnier Vda. de Ramirez. Under date of
December 11, 1958, she wrote the Administrator Bank
of the Philippine Islands that her principal's one-sixth
(1/6) share in the Sta. Cruz property had been sold to
Manuel Uy & Sons, Inc. for P500,000.00. The Bank
received this notice on December 15, 1958, and on the
same day endorsed it to Mrs. Butte, care of Delgado,
Flores and Macapagal (her attorneys), who received the
same on December 16, 1958. Mrs. Butte tendered
redemption and upon the vendee's refusal, judicially
consigned the price of P500,000.00 on January 15,
1959. The latter date was the last one of the thirty days
allowed by the Code for the redemption, counted by
excluding December 16, 1958 and including January 15,
1959, pursuant to Article 13 of the Civil Code.
Therefore, the redemption was made in due time.
The date of receipt of the vendor's notice by the
Administrator Bank (December 15) can not be counted
as determining the start of thirty days; for the
Administrator of the estate was not a proper
redemptioner, since, as previously shown, the right to
redeem the share of Marie Garnier did not form part of
the estate of Jose V. Ramirez.
We find no jurisdiction for appellant's claim that the
P500,000,00. paid by Uy & Sons, Inc. for the Garnier
share is grossly excessive. Gross excess cannot be
predicated on mere individual estimates of market price
by a single realtor.
The redemption and consignation having been properly
made, the Uy counterclaim for damages and attorney's
fees predicated on the assumption that plaintiff's action
was clearly unfounded, becomes untenable.
PREMISES CONSIDERED, the judgment appealed
from is hereby reversed and set aside, and another one
entered:
(a) Declaring the consignation of P500,000,00 made by
appellant Angela M. Butte duly and properly made;
(b) Declaring that said appellant properly exercised in
due time the legal redemption of the one-sixth (1/6)
undivided portion of the land covered by Certificate of
Title No. 59363 of the Office of the Register of Deeds of
the City of Manila, sold on December 9, 1958 by Marie
Garnier Vda. de Ramirez to appellant Manuel Uy &
Sons, Inc.
(c) Ordering appellant Manuel Uy & Sons, Inc. to accept
the consigned price and to convey to Angela M. Butte
the undivided portion above referred to, within 30 days
from the time our decision becomes final, and
subsequently to account for the rentals and fruits of the
redeemed share from and after January 15, 1958, until
its conveyance; and.
(d) Ordering the return of the records to the court of
origin for further proceedings conformable to this
opinion.
Without finding as to costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador,
Concepcion, Barrera and Dizon, JJ., concur.
Paredes and De Leon, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4963 January 29, 1953
MARIA USON, plaintiff-appellee,
vs.
MARIA DEL ROSARIO, CONCEPCION NEBREDA,
CONRADO NEBREDA, DOMINADOR NEBREDA,
AND FAUSTINO NEBREDA, Jr., defendants-
appellants.
Priscilo Evangelista for appellee.
Brigido G. Estrada for appellant.
BAUTISTA ANGELO, J .:
This is an action for recovery of the ownership and
possession of five (5) parcels of land situated in the
Municipality of Labrador, Province of Pangasinan, filed
by Maria Uson against Maria del Rosario and her four
children named Concepcion, Conrado, Dominador, and
Faustino, surnamed Nebreda, who are all of minor age,
before the Court of First Instance of Pangasinan.
Maria Uson was the lawful wife of Faustino Nebreda
who upon his death in 1945 left the lands involved in
this litigation. Faustino Nebreda left no other heir except
his widow Maria Uson. However, plaintiff claims that
when Faustino Nebreda died in 1945, his common-law
wife Maria del Rosario took possession illegally of said
lands thus depriving her of their possession and
enjoyment.
Defendants in their answer set up as special defense
that on February 21, 1931, Maria Uson and her
husband, the late Faustino Nebreda, executed a public
document whereby they agreed to separate as husband
and wife and, in consideration of their separation, Maria
Uson was given a parcel of land by way of alimony and
in return she renounced her right to inherit any other
property that may be left by her husband upon his death
(Exhibit 1).
After trial, at which both parties presented their
respective evidence, the court rendered decision
ordering the defendants to restore to the plaintiff the
ownership and possession of the lands in dispute
without special pronouncement as to costs. Defendants
interposed the present appeal.
There is no dispute that Maria Uson, plaintiff-appellee, is
the lawful wife of Faustino Nebreda, former owner of the
five parcels of lands litigated in the present case. There
is likewise no dispute that Maria del Rosario, one of the
defendants-appellants, was merely a common-law wife
of the late Faustino Nebreda with whom she had four
illegitimate children, her now co-defendants. It likewise
appears that Faustino Nebreda died in 1945 much prior
to the effectivity of the new Civil Code. With this
background, it is evident that when Faustino Nebreda
died in 1945 the five parcels of land he was seized of at
the time passed from the moment of his death to his
only heir, his widow Maria Uson (Article 657, old Civil
Code).As this Court aptly said, "The property belongs to
the heirs at the moment of the death of the ancestor as
completely as if the ancestor had executed and
delivered to them a deed for the same before his death"
(Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that
moment, therefore, the rights of inheritance of Maria
Uson over the lands in question became vested.
The claim of the defendants that Maria Uson had
relinquished her right over the lands in question
because she expressly renounced to inherit any future
property that her husband may acquire and leave upon
his death in the deed of separation they had entered
into on February 21, 1931, cannot be entertained for the
simple reason that future inheritance cannot be the
subject of a contract nor can it be renounced (1
Manresa, 123, sixth edition; Tolentino on Civil Code, p.
12; Osorio vs. Osorio and Ynchausti Steamship Co., 41
Phil., 531).
But defendants contend that, while it is true that the four
minor defendants are illegitimate children of the late
Faustino Nebreda and under the old Civil Code are not
entitled to any successional rights, however, under the
new Civil Code which became in force in June, 1950,
they are given the status and rights of natural children
and are entitled to the successional rights which the law
accords to the latter (article 2264 and article 287, new
Civil Code), and because these successional rights
were declared for the first time in the new code, they
shall be given retroactive effect even though the event
which gave rise to them may have occurred under the
prior legislation (Article 2253, new Civil Code).
There is no merit in this claim. Article 2253 above
referred to provides indeed that rights which are
declared for the first time shall have retroactive effect
even though the event which gave rise to them may
have occurred under the former legislation, but this is so
only when the new rights do not prejudice any vested or
acquired right of the same origin. Thus, said article
provides that "if a right should be declared for the first
time in this Code, it shall be effective at once, even
though the act or event which gives rise thereto may
have been done or may have occurred under the prior
legislation, provided said new right does not prejudice or
impair any vested or acquired right, of the same origin."
As already stated in the early part of this decision, the
right of ownership of Maria Uson over the lands in
question became vested in 1945 upon the death of her
late husband and this is so because of the imperative
provision of the law which commands that the rights to
succession are transmitted from the moment of death
(Article 657, old Civil Code). The new right recognized
by the new Civil Code in favor of the illegitimate children
of the deceased cannot, therefore, be asserted to the
impairment of the vested right of Maria Uson over the
lands in dispute.
As regards the claim that Maria Uson, while her
deceased husband was lying in state, in a gesture of
pity or compassion, agreed to assign the lands in
question to the minor children for the reason that they
were acquired while the deceased was living with their
mother and Maria Uson wanted to assuage somewhat
the wrong she has done to them, this much can be said;
apart from the fact that this claim is disputed, we are of
the opinion that said assignment, if any, partakes of the
nature of a donation of real property, inasmuch as it
involves no material consideration, and in order that it
may be valid it shall be made in a public document and
must be accepted either in the same document or in a
separate one (Article 633, old Civil Code). Inasmuch as
this essential formality has not been followed, it results
that the alleged assignment or donation has no valid
effect.
WHEREFORE, the decision appealed from is affirmed,
without costs.
Paras, C.J., Pablo, Bengzon, Padilla, Tuason,
Montemayor, Reyes, Jugo and Labrador, JJ., concur.
BLAS VS. SANTOS 1 SCRA 899
SCRA 899 Succession Promise
Sometime before 1898, Simeon Blas married Marta
Cruz with whom he had three children. He also had
grandchildren from his children with Marta Cruz. In
1898, Marta Cruz died. In 1899, Blas married Maxima
Santos (they had no children) but the properties he and
his former wife acquired during the first marriage were
not liquidated.
In 1936, Simeon Blas executed a will disposing half of
his properties in favor of Maxima the other half for
payment of debts, Blas also named a few devisees and
legatees therein. In lieu of this, Maxima executed a
document whereby she intimated that she understands
the will of her husband; that she promises that shell be
giving, upon her death, one-half of the properties shell
be acquiring to the heirs and legatees named in the will
of his husband; that she can select or choose any of
them depending upon the respect, service, and
treatment accorded to her by said
legatees/heirs/devisees.
In 1937, Simeon Blas died. In 1956, Maxima died and
Rosalina Santos became administratrix of her estate. In
the same year, Maria Gervacio Blas, child of Simeon
Blas in his first marriage, together with three other
grandchildren of Simeon Blas (heirs of Simeon Blas),
learned that Maxima did not fulfill her promise as it was
learned that Maxima only disposed not even one-tenth
of the properties she acquired from Simeon Blas.
The heirs are now contending that they did not partition
Simeon Blas property precisely because Maxima
promised that theyll be receiving properties upon her
death.
ISSUE: Whether or not the heirs should receive
properties based on the promise of Maxima.
HELD: Yes. The promise is valid and enforceable upon
her death. Though it is not a will (it lacks the formality)
nor a donation, it is still enforceable because said
promise was actually executed to avoid litigation
(partition of Simeon Blas estate) hence it is a
compromise.
It is not disputed that this document was prepared at the
instance of Simeon Blas for the reason that the conjugal
properties of his first marriage had not been liquidated.
It is an obligation or promise made by the maker to
transmit one-half of her share in the conjugal properties
acquired with her husband, which properties are stated
or declared to be conjugal properties in the will of the
husband.
Justice Bautista Angelo, dissenting:
It should be noted that Maxima Santos promise to
transmit is predicated on the condition that she can
freely choose and select from among the heirs and
legatees of her husband those to whom she would like
to give and bequeath depending on the respect, service
and companionship that they may render to her. Her
commitment is not an absolute promise to give to all but
only to whom she may choose and select. And here this
promise has been substantially complied with when she
disposed one-tenth of the property to some legatees
named in Simeons will.
PhilippineLaw.info Jurisprudence 1970 June
PhilippineLaw.info Jurisprudence SCRA Vol. 33

THIRD DIVISION
[G.R. No. 125888. August 13, 1998]
SPOUSES ERNESTO and EVELYN SICAD, petitioners,
vs. COURT OF APPEALS, CATALINO VALDERRAMA,
JUDY CRISTINA M. VALDERRAMA and JESUS
ANTONIO VALDERRAMA, respondents.
DECISION
NARVASA, C.J.:
The issue raised in the appeal by certiorari at bar
centers on the character of a deed of donation executed
by the late Aurora Virto Vda. De Montinola of the City of
Iloilo as either inter vivos or mortis causa. That deed,
entitled DEED OF DONATION INTER VIVOS,i[1] was
executed by Montinola on December 11, 1979. It
named as donees her grandchildren, namely: Catalino
Valderrama, Judy Cristina M. Valderrama and Jesus
Antonio Valderrama; and treated of a parcel of land, Lot
3231 of the Cadastral Survey of Panay, Capiz, covered
by Transfer Certificate Title No. T-16105 in the name of
Montinola. The deed also contained the signatures of
the donees in acknowledgment of the acceptance of the
donation.
Montinolas Secretary, Gloria Salvilla, afterwards
presented the deed for recording in the Property
Registry, and the Register of Deeds cancelled TCT No.
T-16105 (the donors title) and, in it place, issued TCT
No. T-16622 on February 7, 1980, in the names of the
donees.ii[2] Montinola however retained the owners
duplicate copy of the new title (No. T-16622), as well as
the property itself, until she transferred the same ten
(10) years later, on July 10, 1990, to the spouses,
Ernesto and Evelyn Sicad.
On March 12, 1987, Aurora Montinola drew up a deed
of revocation of the donation,iii[3] and caused it to be
annotated as an adverse claim on TCT No. T-16622
(issued, as aforestated, in her grandchildrens names).
Then on August 24, 1990, she filed a petition with the
Regional Trial Court in Roxas City for the cancellation of
said TCT No. T-16622 and the reinstatement of TCT
No. T-16105 (in her name), the case being docketed as
Special Proceeding No. 3311. Her petition was founded
on the theory that the donation to her three (3)
grandchildren was one mortis causa which thus had to
comply with the formalities of a will; and since it had not,
the donation was void and could not effectively serve as
basis for the cancellation of TCT No. T-16105 and the
issuance in its place of TCT No. T-16622.
The donees (Montinolas grandchildren) opposed the
petition. In their opposition dated August 29, 1990, they
averred that the donation in their favor was one inter
vivos which, having fully complied with the requirements
therefor set out in Article 729 of the Civil Code, was
perfectly valid and efficacious. They also expressed
doubt about the sincerity of their grandmothers intention
to recover the donated property, since she had not
pursued the matter of its revocation after having it
annotated as an adverse claim.
The case, originally treated as a special proceeding,
was subsequently considered by the lower Court as an
ordinary civil action in view of the allegations and issues
raised in the pleadings. Pre-trial was had, followed by
trial on the merits which was concluded with the filing of
the parties memoranda. The Trial Court then rendered
judgment on March 27, 1991, holding that the donation
was indeed one inter vivos, and dismissing Aurora
Montinolas petition for lack of merit.iv[4] The matter of
its revocation was not passed upon.
Montinola elevated the case to the Court of Appeals, her
appeal being docketed as CA-G.R. CV No. 33202. She
however died on March 10, 1993,v[5] while appeal was
pending.
Shortly after Montinolas demise, a Manifestation and
Motion dated March 31, 1993 was filed by Ernesto
Sicad and Evelyn Bofill-Sicad, herein petitioners,vi[6] in
which they (a) alleged that they had become the owners
of the property covered by TCT No. T-16622 in virtue of
a deed of definite sale dated May 25, 1992
accomplished by Montinola in their favor, which was
confirmed by an affidavit dated November 26, 1997
also executed by the latter, and (b) prayed that they be
substituted as appellants and allowed to prosecute the
case in their own behalf.
Another motion was subsequently presented under date
of April 7, 1993, this time by the legal heirs of Aurora
Montinola, namely: Ofelia M. de Leon, Estela M. Jaen
and Teresita M. Valderrma. They declared that they
were not interested in pursuing the case, and asked that
the appeal be withdrawn. Montinolas counsel opposed
the motion.
On June 21, 1993, the Court of Appeals issued a
Resolution: (a) ordering the substitution of the persons
above mentioned Ofelia M. de Leon, Estela M. Jaen
and Teresita M. Valderama as plaintiffs-appellant in
place of the late Aurora Montinola, as well as the joinder
of the spouses Ernesto and Evelyn Bofill-Sicad as
additional appellants;vii[7] and (b) denying the motion
for the withdrawal of the appeal.
On June 30, 1995, the Eighth Division of the Court of
Appeals promulgated its Decision on the case affirming
the judgment of the Regional Trial Court;viii[8] and on
July 31, 1996, it denied the separate motions for
reconsideration filed by Ofelia M. de Leon, Estela M.
Jaen, and Teresita M. Valderrama, on the one hand,
and by the spouses, Ernest and Evelyn Sicad, on the
other.ix[9]
The Sicad Spouses have appealed to this Court; and
here, they contend that the following errors were
committed by the Appellate Tribunal, to wit:
1) ** in ruling that the donation was inter vivos and in
not giving due weight to the revocation of the
donation; and
2) ** in not ordering that the case be remanded for
further reception of evidence.x[10]
The Comment filed for private respondents (the donees)
under date of December 19, 1996 deals with what they
consider the principal issue in this case ** (i.e.) whether
the donation is mortis causa or inter vivos and set forth
the argument that the donor clearly intended to effect
the immediate transfer of ownership to the donees, that
the prohibition in the deed of donation against selling
the property within ten (10) years after the death of the
donor does not indicate that the donation is mortis
causa, that the donors alleged act of physically
keeping the title does not suggest any intention to defer
the effectivity of the donation, that the payment of real
property taxes is consistent with the donors reservation
of the right of usufruct, that the donors intent is not
determined by ** (her) self-serving post execution
declarations, the donation was never effectively
revoked, and petitioners have waived their right to
question the proceedings in the trial court.xi[11]
The Reply of the Sicad Spouses dated March 14, 1997
reiterates their thesis that the donation was mortis
causa, that the circumstances surrounding the
execution of the deed, and the subsequent actions of
the donor incontrovertibly signify the donors intent to
transfer the property only after her death, that the donor
did not intend to give effect to the donation, and that
the procedure adopted by the Trial Court in the case
was fatally defective.xii[12] A Rejoinder dated April 3,
1997 was then submitted by the Valderamas, traversing
the assertions of the Reply.xiii[13]
Considering the focus of the opposing parties, and their
conflicting theories, on the intention of Aurora Montinola
in executing the document entitled Deed of Donation
Inter Vivos, it is needful to review the circumstances of
the signing of that document by Montinola, as ostensible
donor, and her grandchildren, as ostensible donees.
The evidence establishes that on December 11, 1979,
when the deed of donation prepared by Montinols
lawyer (Atty. Treas) was read and explained by the
latter to the parties. Montinola expressed her wish that
the donation take effect only after ten (10) years from
her death, and that the deed include a prohibition on the
sale of the poperty for such period. Accordingly, a new
proviso was inserted in the deed reading: however, the
donees shall not sell or encumber the properties herein
donated within 10 years after the death of the
donor.xiv[14] The actuality of the subsequent insertion
of this new proviso is apparent on the face of the
instrument; the intercalation is easily perceived and
identified it was clearly typed on a different machine,
and is crammed into the space between the penultimate
paragraph of the deed and that immediately preceding
it.xv[15]
Not only did Aurora Montinola ordered the insertion in
the deed of that restrictive proviso, but also, after
recordation of the deed of donation, she never stopped
treating the property as her own. She continued, as
explicitly authorized in the deed itself, to possess he
property, enjoy its fruits and otherwise exercise the
rights of dominion, paying the property taxes as they fell
due all these she did until she transferred the property
to the Sicad Spouses on July 10, 1990. She did not
give the new certificate of title to the ostensible donees
but retained too, until she delivered it to the Sicads on
the occasion of the sale of the property to them. In any
event, the delivery of the title to the donees would have
served no useful purpose since, as just stated, they
were prohibited to effect any sale or encumbrance
thereof for a period of ten (10) years after the
ostensible donors decease. And consistent with these
acts denoting retention of ownership of the property was
Montinolas openly expressed view that the donation
was ineffectual and could not be given affect even after
ten (10) years from her death. For this view she sought
to obtain judicial approval. She brought suit on August
24, 1990 to cancel TCT no. T-16622 (issued to her
grandchildren) premised precisely on the invalidity of the
donation for failure to comply with the requisites of
testamentary dispositions. Before that, she attempted
to undo the conveyance to her grandchildren by
execution a deed of revocation of the donation on
March 12, 1987, and causing annotation thereof as an
adverse claim on said TCT No. T-16622. She also
exercised indisputable acts of ownership over said
property by executing, as just stated, deeds intended to
pass title over it to third parties petitioner
herein.xvi[16]
As already intimated, the real nature of a deed is to be
ascertained by both its language and the intention of the
parties as demonstrated by the circumstances attendant
upon its execution. In this respect, case law has laid
down significant parameters. Thus, in a decision
handed down in 1946,xvii[17] this Court construed a
deed purporting to be a donation inter vivos to be in
truth one mortis causa because it stipulated (like the
one now being inquired into) that all rents, proceeds,
fruits, of the donated properties shall remain for the
exclusive benefit and disposal of the donor, Margarita
David, during her lifetime; and that, without the
knowledge and consent of the donor, the donated
properties could not be disposed of in any way, whether
by sale, mortgage, barter, or in any other way possible.
On these essential premises, the Court said, such a
donation must be deemed one mortis causa, because
the combined effect of the circumstances surrounding
the execution of the deed of donation and of the above-
quoted clauses thereof ** (was that) the most essential
elements of ownership the right to dispose of the
donated properties and the right to enjoy the products,
profits, possession remained with Margarita David
during her lifetime, and would accrue to the donees only
after Margarita Davids death. So, too, in the case at
bar, did these rights remain with Aurora Montinola
during her lifetime, and could not pass to the donees
until ten (10) years after her death.
In another case decided in 1954 involving similar issue,
Bonsato v. Court of Appeals,xviii[18] this Court
emphasized that the decisive characteristics of a
donation mortis causa, which it had taken into account
in David v. Sison, were that the donor not only reserved
for herself all the fruits of the property allegedly
conveyed, but what is even more important, especially
provided that without knowledge and consent of the
donor, the donated properties could not be disposed of
in any way,; thereby denying to the transferees the most
essential attribute of ownership, the power to dispose of
the properties.
A donation which purports to be one inter vivos but
withholds form the donee that right to dispose of the
donated property during the donors lifetime is in truth
one mortis causa. In a donation mortis causa the right
of disposition is not transferred to the donee while the
donor is still alive.xix[19]
In the instant case, nothing of any consequence was
transferred by the deed of donation in question to
Montinolas grandchildren, the ostensible donees. They
did not get possession of the property donated. They
did not acquire the right to the fruits thereof, or any other
right of dominion over the property. More importantly,
they did not acquire the right to dispose of the property
this would accrue to them only after ten (10) years
from Montinolas death. Indeed, they never even laid
hands on the certificate of title to the same. They were
therefore simply paper owners of the donated
property. All these circumstances, including, to repeat,
the explicit provisions of the deed of donation
reserving the exercise of rights of ownership to the
donee and prohibiting the sale or encumbrance of the
property until ten (10) years after her death ineluctably
lead to the conclusion that the donation in question was
a donation mortis causa, contemplating a transfer of
ownership to the donees only after the donors demise.
The case of Alejandro v. Geraldezxx[20] cited by the
Court of Appeals in support of its challenged judgment
is not quite relevant. For in the deed of donation there
in issue, there was a partial relinquishment of the right
to dispose of the property, in the event only that this
became necessary to defray the expenses and support
of the donors. That limited right to dispose of the
donated lots, said this Court, implies that ownership
had passed to ** (the donees) by means of the donation
and **, therefore, the donation was already effective
during the donors lifetime. That is the characteristic of
a donation inter vivos. On the other hand, in the case
at bar, the donees were expressly prohibited to make
any disposition of any nature or for any purpose
whatever during the donors lifetime, and until ten (10)
years after her death a prohibition which, it may be
added, makes inapplicable the ruling in Castro v. Court
of Appealsxxi[21] where no such prohibition was
imposed, and the donor retained only the usufruct over
the property.
The Valderramas argument that the donation is inter
vivos in character and that the prohibition against their
disposition of the donated property is merely a condition
which, if violated, would give cause for its revocation,
begs the question. It assumes that they have the right
to make a disposition of the property, which they do not.
The argument also makes no sense, because if they
had the right to dispose of the property and did in fact
dispose of it to a third person, the revocation of the
donation they speak of would be of no utility or benefit to
the donor, since such a revocation would not
necessarily result in the restoration of the donors
ownership and enjoyment of the property.
It is also error to suppose that the donation under review
should be deemed one inter vivos simply because
founded on considerations of love and affection. In
Alejandro v. Geraldez, supra,xxii[22] this Court also
observed that the fact that the donation is given in
consideration of love and affection ** is not a
characteristic of donation inter vivos (solely) because
transfers mortis causa may also be made for the same
reason. Similarly, in Bonsato v. Court of Appeals,
supra, this Court opined that the fact that the
conveyance was due to the affection of the donor to the
donees and services rendered by the latter,is of no
particular significance in determining whether the deeds,
Exh. 1 and 2, constitute transfers inter vivos or not,
because a legacy may have identical
motivation.xxiii[23]
Finally, it is germane to advert to the legal principle in
Article 1378 of the Civil Code to the effect that in the
case of doubt relative to a gratuitous contract, the
construction must be that entailing the least
transmission of rights and interests.xxiv[24]
The donation in question, though denominated inter
vivos, is in truth one mortis causa; it is void because the
essential requisites for its validity have not been
complied with.
WHEREFORE, the Decision of the Court of Appeals in
CA-G.R. CV No. 33202 dated June 30, 1995 as well as
the Resolution denying reconsideration thereof and the
Decision of the Regional Trial Court in Special Case No.
3311 are SET ASIDE. The Deed of Donation Inter
Vivos (Exh. A) executed by Aurora Virto Vda. De
Montinola on December 11, 1979 in favor of Catalino M.
Valderrama, Judy Cristina M. Valderrama and Jesus
Antonio M. Valderrama is declared null and void. The
Register of Deed of Roxas City is directed to cancel
Transfer Certificate of Title No. T-16622, revive and
reinstate Transfer Certificate of Title No. T-16105.
SO ORDERED.
Romero, Kapunan, and Purisima, JJ., concur.

G.R. No. L-24561, Dizon-Rivera v. Dizon et al., 33
SCRA 554
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
DECISION
June 30, 1970
G.R. No. L-24561
MARINA DIZON-RIVERA, executrix-appellee,
vs.
ESTELA DIZON, TOMAS V. DIZON, BERNARDITA
DIZON, JOSEFINA DIZON, ANGELINA DIZON and
LILIA DIZON, oppositors-appellants.
Punzalan, Yabut & Eusebio for executrix-appellee.
Leonardo Abola for oppositors-appellants.
Teehankee, J .:
Appeal from orders of the Court of First Instance of
Pampanga approving the Executrix-appellee's project of
partition instead of Oppositors-Appellants' proposed
counter-project of partition. 1
On January 28, 1961, the testatrix, Agripina J. Valdez, a
widow, died in Angeles, Pampanga, and was survived
by seven compulsory heirs, to wit, six legitimate children
named Estela Dizon, Tomas V. Dizon, Bernardita Dizon,
Marina Dizon (herein executrix-appellee), Angelina
Dizon and Josefina Dizon, and a legitimate
granddaughter named Lilia Dizon, who is the only
legitimate child and heir of Ramon Dizon, a pre-
deceased legitimate son of the said decedent. Six of
these seven compulsory heirs (except Marina Dizon, the
executrix-appellee) are the oppositors-appellants.
The deceased testatrix left a last will executed on
February 2, 1960 and written in the Pampango dialect.
Named beneficiaries in her will were the above-named
compulsory heirs, together with seven other legitimate
grandchildren, namely Pablo Rivera, Jr., Gilbert D.
Garcia, Cayetano Dizon, Francisco Rivera, Agripina
Ayson, Jolly Jimenez and Laureano Tiambon.
In her will, the testatrix divided, distributed and disposed
of all her properties appraised at P1,801,960.00 (except
two small parcels of land appraised at P5,849.60,
household furniture valued at P2,500.00, a bank deposit
in the sum of P409.95 and ten shares of Pampanga
Sugar Development Company valued at P350.00)
among her above-named heirs.
Testate proceedings were in due course commenced 2
and by order dated March 13, 1961, the last will and
testament of the decedent was duly allowed and
admitted to probate, and the appellee Marina Dizon-
Rivera was appointed executrix of the testatrix' estate,
and upon her filing her bond and oath of office, letters
testamentary were duly issued to her.
After the executrix filed her inventory of the estate, Dr.
Adelaido Bernardo of Angeles, Pampanga was
appointed commissioner to appraise the properties of
the estate. He filed in due course his report of appraisal
and the same was approved in toto by the lower court
on December 12, 1963 upon joint petition of the parties.
The real and personal properties of the testatrix at the
time of her death thus had a total appraised value of
P1,811,695.60, and the legitime of each of the seven
compulsory heirs amounted to P129,362.11. 3 (/7 of
the half of the estate reserved for the legitime of
legitimate children and descendants). 4 In her will, the
testatrix "commanded that her property be divided" in
accordance with her testamentary disposition, whereby
she devised and bequeathed specific real properties
comprising practically the entire bulk of her estate
among her six children and eight grandchildren. The
appraised values of the real properties thus respectively
devised by the testatrix to the beneficiaries named in
her will, are as follows:
1. Estela Dizon ....................................... P 98,474.80
2. Angelina Dizon .................................. 106,307.06
3. Bernardita Dizon .................................. 51,968.17
4. Josefina Dizon ...................................... 52,056.39
5. Tomas Dizon ....................................... 131,987.41
6. Lilia Dizon .............................................. 72,182.47
7. Marina Dizon ..................................... 1,148,063.71
8. Pablo Rivera, Jr. ...................................... 69,280.00
9. Lilia Dizon, Gilbert Garcia,
Cayetano Dizon, Francisco Rivera,
Agripina Ayson, Dioli or Jolly
Jimenez, Laureano Tiamzon ................. 72,540.00
Total Value ...................... P1,801,960.01
The executrix filed her project of partition dated
February 5, 1964, in substance adjudicating the estate
as follows:
(1) with the figure of P129,254.96 as legitime for a basis
Marina (exacultrix-appellee) and Tomas (appellant) are
admittedly considered to have received in the will more
than their respective legitime, while the rest of the
appellants, namely, Estela, Bernardita, Angelina,
Josefina and Lilia received less than their respective
legitime;
(2) thus, to each of the latter are adjudicated the
properties respectively given them in the will, plus cash
and/or properties, to complete their respective legitimes
to P129,254.96; (3) on the other hand, Marina and
Tomas are adjudicated the properties that they received
in the will less the cash and/or properties necessary to
complete the prejudiced legitime mentioned in number 2
above;
(4) the adjudications made in the will in favor of the
grandchildren remain untouched.
On the other hand oppositors submitted their own
counter-project of partition dated February 14, 1964,
wherein they proposed the distribution of the estate on
the following basis:
(a) all the testamentary dispositions were proportionally
reduced to the value of one-half () of the entire estate,
the value of the said one-half () amounting to
P905,534.78; (b) the shares of the Oppositors-
Appellants should consist of their legitime, plus the
devises in their favor proportionally reduced; (c) in
payment of the total shares of the appellants in the
entire estate, the properties devised to them plus other
properties left by the Testatrix and/or cash are
adjudicated to them; and (d) to the grandchildren who
are not compulsory heirs are adjudicated the properties
respectively devised to them subject to reimbursement
by Gilbert D. Garcia, et al., of the sums by which the
devise in their favor should be proportionally reduced.
Under the oppositors' counter-project of partition, the
testamentary disposition made by the testatrix of
practically her whole estate of P1,801,960.01, as above
stated, were proposed to be reduced to the amounts set
forth after the names of the respective heirs and
devisees totalling one-half thereof as follows:
1. Estela Dizon ........................................... P 49,485.56
2. Angelina Dizon ......................................... 53,421.42
3. Bernardita Dizon ....................................... 26,115.04
4. Josefina Dizon .......................................... 26,159.38
5. Tomas V. Dizon ......................................... 65,874.04
6. Lilia Dizon .................................................. 36,273.13
7. Marina Dizon ........................................... 576,938.82
8. Pablo Rivera, Jr. ......................................... 34,814.50
9. Grandchildren Gilbert Garcia et al .......... 36,452.80
T o t a l ................................................... P905,534.78
while the other half of the estate (P905,534.78) would
be deemed as constituting the legitime of the executrix-
appellee and oppositors-appellants, to be divided
among them in seven equal parts of P129,362.11 as
their respective legitimes.
The lower court, after hearing, sustained and approved
the executrix' project of partition, ruling that "(A)rticles
906 and 907 of the New Civil Code specifically provide
that when the legitime is impaired or prejudiced, the
same shall be completed and satisfied. While it is true
that this process has been followed and adhered to in
the two projects of partition, it is observed that the
executrix and the oppositors differ in respect to the
source from which the portion or portions shall be taken
in order to fully restore the impaired legitime. The
proposition of the oppositors, if upheld, will substantially
result in a distribution of intestacy, which is in
controversion of Article 791 of the New Civil Code"
adding that "the testatrix has chosen to favor certain
heirs in her will for reasons of her own, cannot be
doubted. This is legally permissible within the limitation
of the law, as aforecited." With reference to the payment
in cash of some P230,552.38, principally by the
executrix as the largest beneficiary of the will to be paid
to her five co-heirs, the oppositors (excluding Tomas
Dizon), to complete their impaired legitimes, the lower
court ruled that "(T)he payment in cash so as to make
the proper adjustment to meet with the requirements of
the law in respect to legitimes which have been
impaired is, in our opinion, a practical and valid solution
in order to give effect to the last wishes of the testatrix."
From the lower court's orders of approval, oppositors-
appellants have filed this appeal, and raise anew the
following issues: .
1. Whether or not the testamentary dispositions made in
the testatrix' will are in the nature of devises imputable
to the free portion of her estate, and therefore subject to
reduction;
2. Whether the appellants are entitled to the devise plus
their legitime under Article 1063, or merely to demand
completion of their legitime under Article 906 of the Civil
Code; and
3. Whether the appellants may be compelled to accept
payment in cash on account of their legitime, instead of
some of the real properties left by the Testatrix;
which were adversely decided against them in the
proceedings below.
The issues raised present a matter of determining the
avowed intention of the testatrix which is "the life and
soul of a will." 5 In consonance therewith, our Civil Code
included the new provisions found in Articles 788 and
791 thereof that "(I)f a testamentary disposition admits
of different interpretations, in case of doubt, that
interpretation by which the disposition is to be operative
shall be preferred" and "(T)he words of a will are to
receive an interpretation which will give to every
expression some effect, rather than one which will
render any of the expressions inoperative; and of two
modes of interpreting a will, that is to be preferred which
will prevent intestacy." In Villanueva vs. Juico 6 for
violation of these rules of interpretation as well as of
Rule 123, section 59 of the old Rules of Court, 7 the
Court, speaking through Mr. Justice J.B.L. Reyes,
overturned the lower court's decision and stressed that
"the intention and wishes of the testator, when clearly
expressed in his will, constitute the fixed law of
interpretation, and all questions raised at the trial,
relative to its execution and fulfillment, must be settled
in accordance therewith, following the plain and literal
meaning of the testator's words, unless it clearly
appears that his intention was otherwise." 8
The testator's wishes and intention constitute the first
and principal law in the matter of testaments, and to
paraphrase an early decision of the Supreme Court of
Spain, 9 when expressed clearly and precisely in his
last will amount to the only law whose mandate must
imperatively be faithfully obeyed and complied with by
his executors, heirs and devisees and legatees, and
neither these interested parties nor the courts may
substitute their own criterion for the testator's will.
Guided and restricted by these fundamental premises,
the Court finds for the appellee.
1. Decisive of the issues at bar is the fact that the
testatrix' testamentary disposition was in the nature of a
partition of her estate by will. Thus, in the third
paragraph of her will, after commanding that upon her
death all her obligations as well as the expenses of her
last illness and funeral and the expenses for probate of
her last will and for the administration of her property in
accordance with law, be paid, she expressly provided
that "it is my wish and I command that my property be
divided" in accordance with the dispositions immediately
thereafter following, whereby she specified each real
property in her estate and designated the particular heir
among her seven compulsory heirs and seven other
grandchildren to whom she bequeathed the same. This
was a valid partition 10 of her estate, as contemplated
and authorized in the first paragraph of Article 1080 of
the Civil Code, providing that "(S)hould a person make a
partition of his estate by an act inter vivos or by will,
such partition shall be respected, insofar as it does not
prejudice the legitime of the compulsory heirs." This
right of a testator to partition his estate is subject only to
the right of compulsory heirs to their legitime. The Civil
Code thus provides the safeguard for the right of such
compulsory heirs:
ART. 906. Any compulsory heir to whom the testator
has left by any title less than the legitime belonging to
him may demand that the same be fully satisfied.
ART. 907. Testamentary dispositions that impair or
diminish the legitime of the compulsory heirs shall be
reduced on petition of the same, insofar as they may be
inofficious or excessive.
This was properly complied with in the executrix-
appellee's project of partition, wherein the five
oppositors-appellants namely Estela, Bernardita,
Angelina, Josefina and Lilia, were adjudicated the
properties respectively distributed and assigned to them
by the testatrix in her will, and the differential to
complete their respective legitimes of P129,362.11 each
were taken from the cash and/or properties of the
executrix-appellee, Marina, and their co-oppositor-
appellant, Tomas, who admittedly were favored by the
testatrix and received in the partition by will more than
their respective legitimes.
2. This right of a testator to partition his estate by will
was recognized even in Article 1056 of the old Civil
Code which has been reproduced now as Article 1080
of the present Civil Code. The only amendment in the
provision was that Article 1080 "now permits any person
(not a testator, as under the old law) to partition his
estate by act inter vivos." 11 This was intended to repeal
the then prevailing doctrine 12 that for a testator to
partition his estate by an act inter vivos, he must first
make a will with all the formalities provided by law.
Authoritative commentators doubt the efficacy of the
amendment 13 but the question does not here concern
us, for this is a clear case of partition by will, duly
admitted to probate, which perforce must be given full
validity and effect. Aside from the provisions of Articles
906 and 907 above quoted, other codal provisions
support the executrix-appellee's project of partition as
approved by the lower court rather than the counter-
project of partition proposed by oppositors-appellants
whereby they would reduce the testamentary disposition
or partition made by the testatrix to one-half and limit the
same, which they would consider as mere devises or
legacies, to one-half of the estate as the disposable free
portion, and apply the other half of the estate to
payment of the legitimes of the seven compulsory heirs.
Oppositors' proposal would amount substantially to a
distribution by intestacy and pro tanto nullify the
testatrix' will, contrary to Article 791 of the Civil Code. It
would further run counter to the provisions of Article
1091 of the Civil Code that "(A) partition legally made
confers upon each heir the exclusive ownership of the
property adjudicated to him."
3. In Habana vs. Imbo, 14 the Court upheld the
distribution made in the will of the deceased testator
Pedro Teves of two large coconut plantations in favor of
his daughter, Concepcion, as against adverse claims of
other compulsory heirs, as being a partition by will,
which should be respected insofar as it does not
prejudice the legitime of the compulsory heirs, in
accordance with Article 1080 of the Civil Code. In
upholding the sale made by Concepcion to a stranger of
the plantations thus partitioned in her favor in the
deceased's will which was being questioned by the
other compulsory heirs, the Court ruled that
"Concepcion Teves by operation of law, became the
absolute owner of said lots because 'A partition legally
made confers upon each heir the exclusive ownership of
the property adjudicated to him' (Article 1091, New Civil
Code), from the death of her ancestors, subject to rights
and obligations of the latter, and, she can not be
deprived of her rights thereto except by the methods
provided for by law (Arts. 657, 659, and 661, Civil
Code). 15 Concepcion Teves could, as she did, sell the
lots in question as part of her share of the proposed
partition of the properties, especially when, as in the
present case, the sale has been expressly recognized
by herself and her co-heirs ..."
4. The burden of oppositors' contention is that the
testamentary dispositions in their favor are in the nature
of devises of real property, citing the testatrix' repeated
use of the words "I bequeath" in her assignment or
distribution of her real properties to the respective heirs.
From this erroneous premise, they proceed to the
equally erroneous conclusion that "the legitime of the
compulsory heirs passes to them by operation of law
and that the testator can only dispose of the free
portion, that is, the remainder of the estate after
deducting the legitime of the compulsory heirs ... and all
testamentary dispositions, either in the nature of
institution of heirs or of devises or legacies, have to be
taken from the remainder of the testator's estate
constituting the free portion." 16
Oppositors err in their premises, for the adjudications
and assignments in the testatrix' will of specific
properties to specific heirs cannot be considered all
devises, for it clearly appear from the whole context of
the will and the disposition by the testatrix of her whole
estate (save for some small properties of little value
already noted at the beginning of this opinion) that her
clear intention was to partition her whole estate through
her will. The repeated use of the words "I bequeath" in
her testamentary dispositions acquire no legal
significance, such as to convert the same into devises to
be taken solely from the free one-half disposable portion
of the estate. Furthermore, the testatrix' intent that her
testamentary dispositions were by way of adjudications
to the beneficiaries as heirs and not as mere devisees,
and that said dispositions were therefore on account of
the respective legitimes of the compulsory heirs is
expressly borne out in the fourth paragraph of her will,
immediately following her testamentary adjudications in
the third paragraph in this wise: "FOURTH: I likewise
command that in case any of those I named as my heirs
in this testament any of them shall die before I do, his
forced heirs under the law enforced at the time of my
death shall inherit the properties I bequeath to said
deceased." 17
Oppositors' conclusions necessarily are in error. The
testamentary dispositions of the testatrix, being
dispositions in favor of compulsory heirs, do not have to
be taken only from the free portion of the estate, as
contended, for the second paragraph of Article 842 of
the Civil Code precisely provides that "(O)ne who has
compulsory heirs may dispose of his estate provided he
does not contravene the provisions of this Code with
regard to the legitime of said heirs." And even going by
oppositors' own theory of bequests, the second
paragraph of Article 912 Civil Code covers precisely the
case of the executrix-appellee, who admittedly was
favored by the testatrix with the large bulk of her estate
in providing that "(T)he devisee who is entitled to a
legitime may retain the entire property, provided its
value does not exceed that of the disposable portion
and of the share pertaining to him as legitime." For
"diversity of apportionment is the usual reason for
making a testament; otherwise, the decedent might as
well die intestate." 18 Fundamentally, of course, the
dispositions by the testatrix constituted a partition by
will, which by mandate of Article 1080 of the Civil Code
and of the other cited codal provisions upholding the
primacy of the testator's last will and testament, have to
be respected insofar as they do not prejudice the
legitime of the other compulsory heirs.
Oppositors' invoking of Article 1063 of the Civil Code
that "(P)roperty left by will is not deemed subject to
collation, if the testator has not otherwise provided, but
the legitime shall in any case remain unimpaired" and
invoking of the construction thereof given by some
authorities that "'not deemed subject to collation' in this
article really means not imputable to or chargeable
against the legitime", while it may have some plausibility
19 in an appropriate case, has no application in the
present case. Here, we have a case of a distribution and
partition of the entire estate by the testatrix, without her
having made any previous donations during her lifetime
which would require collation to determine the legitime
of each heir nor having left merely some properties by
will which would call for the application of Articles 1061
to 1063 of the Civil Code on collation. The amount of the
legitime of the heirs is here determined and undisputed.
5. With this resolution of the decisive issue raised by
oppositors-appellants, the secondary issues are likewise
necessarily resolved. Their right was merely to demand
completion of their legitime under Article 906 of the Civil
Code and this has been complied with in the approved
project of partition, and they can no longer demand a
further share from the remaining portion of the estate,
as bequeathed and partitioned by the testatrix
principally to the executrix-appellee.
Neither may the appellants legally insist on their legitime
being completed with real properties of the estate
instead of being paid in cash, per the approved project
of partition. The properties are not available for the
purpose, as the testatrix had specifically partitioned and
distributed them to her heirs, and the heirs are called
upon, as far as feasible to comply with and give effect to
the intention of the testatrix as solemnized in her will, by
implementing her manifest wish of transmitting the real
properties intact to her named beneficiaries, principally
the executrix-appellee. The appraisal report of the
properties of the estate as filed by the commissioner
appointed by the lower court was approved in toto upon
joint petition of the parties, and hence, there cannot be
said to be any question - and none is presented - as to
fairness of the valuation thereof or that the legitime of
the heirs in terms of cash has been understated. The
plaint of oppositors that the purchasing value of the
Philippine peso has greatly declined since the testatrix'
death in January, 1961 provides no legal basis or
justification for overturning the wishes and intent of the
testatrix. The transmission of rights to the succession
are transmitted from the moment of death of the
decedent (Article 777, Civil Code) and accordingly, the
value thereof must be reckoned as of then, as
otherwise, estates would never be settled if there were
to be a revaluation with every subsequent fluctuation in
the values of the currency and properties of the estate.
There is evidence in the record that prior to November
25, 1964, one of the oppositors, Bernardita, accepted
the sum of P50,000.00 on account of her inheritance,
which, per the parties' manifestation, 20 "does not in
any way affect the adjudication made to her in the
projects of partition of either party as the same is a mere
advance of the cash that she should receive in both
projects of partition." The payment in cash by way of
making the proper adjustments in order to meet the
requirements of the law on non-impairment of legitimes
as well as to give effect to the last will of the testatrix
has invariably been availed of and sanctioned. 21 That
her co-oppositors would receive their cash differentials
only now when the value of the currency has declined
further, whereas they could have received them earlier,
like Bernardita, at the time of approval of the project of
partition and when the peso's purchasing value was
higher, is due to their own decision of pursuing the
present appeal.
ACCORDINGLY, the orders appealed from are hereby
affirmed. Without cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,
Zaldivar, Castro, Fernando, Barredo and Villamor, JJ.,
concur.
# Footnotes
1 Appeal was directed to this Court, as the value of the
estate exceeded P200,000.00, in accordance with the
then subsisting provisions of Sec. 17, third paragraph,
subsec. 5, now eliminated by Rep. Act 5440 enacted on
Sept. 9, 1968.
2 Sp. Proc. No. 1582 of the Court of First Instance of
Pampanga.
3 These figures are those of oppositors-appellants
which are adopted for purposes of this decision. Per
appellee's brief, p. 3, executrix-appellee sums up the
value of the estate P1,809,569.55, and therefore the
legitime of each of the seven (7) forced heirs at
P129,254.96. While there is thus a slight difference in
the valuation of the estate and legitime of the forced
heirs (a difference of P2,126.05 for the whole estate and
of P107.15 in each legitime), the same is of no
importance... because the issue involved in this appeal
is not the value of the estate but the manner it should be
distributed among the heirs." (Notes in parentheses
supplied)
4 Art. 888, Civil Code.
5 Santos vs. Madarang, 27 Phil. 209.
6 L-15737, Feb. 28, 1962; 4 SCRA 550.
7 "SEC. 59. Instrument construed so as to give effect to
all provisions. - In the construction of an instrument
where there are several provisions or particulars, such a
construction is, if possible, to be adopted as will give
effect to all." (now Rule 130, sec. 9)
8 Citing in In re Estate of Calderon, 26 Phil. 333.
9 Tribunal Supremo of Spain, sentencia of 20 Marzo
1918.
10 ART. 1079. Partition, in general, is the separation,
division and assignment of a thing held in common
among those to whom it may belong. The thing itself
may be divided, or its value. (n)
11 Romero vs. Villamor, 102 Phil. 641 (1957).
12 Legasto vs. Versoza, 54 Phil. 766 (1930); Fajardo vs.
Fajardo, 54 Phil. 842 (1930).
13 Reyes and Puno, Vol. III, p. 216; Tolentino, Vol. III,
pp. 538-540.
14 L-15598 and L-16726, March 31, 1964; 10 SCRA
471.
15 See Arts. 776 and 777 Phil. Civil Code. The latter
article provides that "(T)he rights to the succession are
transmitted from the moment of the death of the
decedent."
16 Appellants' brief, pp. 15-16.
17 Rec. on Appeal, p. 20; emphasis supplied.
18 Icasiano vs. Icasiano, L-18979, June 30, 1964; 11
SCRA 422.
19 III Tolentino's Civil Code, 1961 ed., p. 518.
20 Record on Appeal, p. 107.
21 See Arts. 955, 1080 and 1104, Civil Code.
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA
BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors
appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-
appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et
al.
J. R. Balonkita for appellee People's Bank & Trust
Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J .:
This is a direct appeal to Us, upon a question purely of
law, from an order of the Court of First Instance of
Manila dated April 30, 1964, approving the project of
partition filed by the executor in Civil Case No. 37089
therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the
State of Texas and of the United States." By his first
wife, Mary E. Mallen, whom he divorced, he had five
legitimate children: Edward A. Bellis, George Bellis (who
pre-deceased him in infancy), Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman; by his second
wife, Violet Kennedy, who survived him, he had three
legitimate children: Edwin G. Bellis, Walter S. Bellis and
Dorothy Bellis; and finally, he had three illegitimate
children: Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in
the Philippines, in which he directed that after all taxes,
obligations, and expenses of administration are paid for,
his distributable estate should be divided, in trust, in the
following order and manner: (a) $240,000.00 to his first
wife, Mary E. Mallen; (b) P120,000.00 to his three
illegitimate children, Amos Bellis, Jr., Maria Cristina
Bellis, Miriam Palma Bellis, or P40,000.00 each and (c)
after the foregoing two items have been satisfied, the
remainder shall go to his seven surviving children by his
first and second wives, namely: Edward A. Bellis, Henry
A. Bellis, Alexander Bellis and Anna Bellis Allsman,
Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis,
in equal shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a
resident of San Antonio, Texas, U.S.A. His will was
admitted to probate in the Court of First Instance of
Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of
the will, paid all the bequests therein including the
amount of $240,000.00 in the form of shares of stock to
Mary E. Mallen and to the three (3) illegitimate children,
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma
Bellis, various amounts totalling P40,000.00 each in
satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time
according as the lower court approved and allowed the
various motions or petitions filed by the latter three
requesting partial advances on account of their
respective legacies.
On January 8, 1964, preparatory to closing its
administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and
Project of Partition" wherein it reported, inter alia, the
satisfaction of the legacy of Mary E. Mallen by the
delivery to her of shares of stock amounting to
$240,000.00, and the legacies of Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis in the amount of
P40,000.00 each or a total of P120,000.00. In the
project of partition, the executor pursuant to the
"Twelfth" clause of the testator's Last Will and
Testament divided the residuary estate into seven
equal portions for the benefit of the testator's seven
legitimate children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam
Palma Bellis filed their respective oppositions to the
project of partition on the ground that they were
deprived of their legitimes as illegitimate children and,
therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice
to him, proof of service of which is evidenced by the
registry receipt submitted on April 27, 1964 by the
executor.
1

After the parties filed their respective memoranda and
other pertinent pleadings, the lower court, on April 30,
1964, issued an order overruling the oppositions and
approving the executor's final account, report and
administration and project of partition. Relying upon Art.
16 of the Civil Code, it applied the national law of the
decedent, which in this case is Texas law, which did not
provide for legitimes.
Their respective motions for reconsideration having
been denied by the lower court on June 11, 1964,
oppositors-appellants appealed to this Court to raise the
issue of which law must apply Texas law or
Philippine law.
In this regard, the parties do not submit the case on, nor
even discuss, the doctrine of renvoi, applied by this
Court in Aznar v. Christensen Garcia, L-16749, January
31, 1963. Said doctrine is usually pertinent where the
decedent is a national of one country, and a domicile of
another. In the present case, it is not disputed that the
decedent was both a national of Texas and a domicile
thereof at the time of his death.
2
So that even assuming
Texas has a conflict of law rule providing that the
domiciliary system (law of the domicile) should govern,
the same would not result in a reference back (renvoi) to
Philippine law, but would still refer to Texas law.
Nonetheless, if Texas has a conflicts rule adopting the
situs theory (lex rei sitae) calling for the application of
the law of the place where the properties are situated,
renvoi would arise, since the properties here involved
are found in the Philippines. In the absence, however, of
proof as to the conflict of law rule of Texas, it should not
be presumed different from ours.
3
Appellants' position is
therefore not rested on the doctrine of renvoi. As stated,
they never invoked nor even mentioned it in their
arguments. Rather, they argue that their case falls
under the circumstances mentioned in the third
paragraph of Article 17 in relation to Article 16 of the
Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render
applicable the national law of the decedent, in intestate
or testamentary successions, with regard to four items:
(a) the order of succession; (b) the amount of
successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed.
They provide that
ART. 16. Real property as well as personal property is
subject to the law of the country where it is situated.
However, intestate and testamentary successions, both
with respect to the order of succession and to the
amount of successional rights and to the intrinsic validity
of testamentary provisions, shall be regulated by the
national law of the person whose succession is under
consideration, whatever may he the nature of the
property and regardless of the country wherein said
property may be found.
ART. 1039. Capacity to succeed is governed by the law
of the nation of the decedent.
Appellants would however counter that Art. 17,
paragraph three, of the Civil Code, stating that
Prohibitive laws concerning persons, their acts or
property, and those which have for their object public
order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated,
or by determinations or conventions agreed upon in a
foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil
Code afore-quoted. This is not correct. Precisely,
Congress deleted the phrase, "notwithstanding the
provisions of this and the next preceding article" when
they incorporated Art. 11 of the old Civil Code as Art. 17
of the new Civil Code, while reproducing without
substantial change the second paragraph of Art. 10 of
the old Civil Code as Art. 16 in the new. It must have
been their purpose to make the second paragraph of
Art. 16 a specific provision in itself which must be
applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a
new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national
law of the decedent.
It is therefore evident that whatever public policy or
good customs may be involved in our System of
legitimes, Congress has not intended to extend the
same to the succession of foreign nationals. For it has
specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law.
Specific provisions must prevail over general ones.
Appellants would also point out that the decedent
executed two wills one to govern his Texas estate
and the other his Philippine estate arguing from this
that he intended Philippine law to govern his Philippine
estate. Assuming that such was the decedent's intention
in executing a separate Philippine will, it would not alter
the law, for as this Court ruled in Miciano v. Brimo, 50
Phil. 867, 870, a provision in a foreigner's will to the
effect that his properties shall be distributed in
accordance with Philippine law and not with his national
law, is illegal and void, for his national law cannot be
ignored in regard to those matters that Article 10 now
Article 16 of the Civil Code states said national law
should govern.
The parties admit that the decedent, Amos G. Bellis,
was a citizen of the State of Texas, U.S.A., and that
under the laws of Texas, there are no forced heirs or
legitimes. Accordingly, since the intrinsic validity of the
provision of the will and the amount of successional
rights are to be determined under Texas law, the
Philippine law on legitimes cannot be applied to the
testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby
affirmed in toto, with costs against appellants. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala,
Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Footnotes
1
He later filed a motion praying that as a legal heir he be
included in this case as one of the oppositors-
appellants; to file or adopt the opposition of his sisters to
the project of partition; to submit his brief after paying
his proportionate share in the expenses incurred in the
printing of the record on appeal; or to allow him to adopt
the briefs filed by his sisters but this Court resolved to
deny the motion.
2
San Antonio, Texas was his legal residence.
3
Lim vs. Collector, 36 Phil. 472; In re Testate Estate of
Suntay, 95 Phil. 500.
G.R. No. L-25966 November 1, 1926
In the matter of the estate of Tomas Rodriguez,
deceased. MANUEL TORRES, special administrator,
and LUZ LOPEZ DE BUENO, heir, appellee,
vs.
MARGARITA LOPEZ, opponent-appellant.
Marcaida, Capili and Ocampo and Camus, Delgado and
Recto for appellant.
Araneta and Zaragoza for appellee.

STREET, J .:
This appeal involves a controversy over one-half of the
estate of Tomas Rodriguez, decedent. The appellant,
Margarita Lopez, claims said half by the intestate
succession as next of kin and nearest heir; while the
appellee, Luz Lopez de Bueno, claims the same by
accredition and in the character of universal heir the will
of the decedent. The trial court decided the point of
controversy in favor of Luz Lopez de Bueno, and
Margariat Lopez appealed.
The facts necessary to an understanding of the case are
these: On January 3, 1924, Tomas Rodriguez executed
his last will and testament, in the second clause of
which he declared:
I institute as the only and universal heirs to all my
property, my cousin Vicente F. Lopez and his daughter
Luz Lopez de Bueno.
Prior to the time of the execution of this will the testator,
Tomas Rodriguez, had been judicially declared
incapable of taking care of himself and had been placed
under the care of his cousin Vicente F. Lopez, as
guardian. On January 7, 1924, or only four days after
the will above-mentioned was made, Vicente F. Lopez
died; and the testator, Tomas Rodriguez, died on
February 25, 1924, thereafter. At the time the will was
made Vicente F. Lopez had not presented his final
accounts as guardian, and no such accounts had been
presented by him at the time of his death. Margariat
Lopez was a cousin and nearest relative of the
decedent. The will referred to, and after having been
contested, has been admitted to probate by judicial
determination (Torres and Lopez de Bueno vs. Lopez,
48 Phil., 772).
Our discussion of the legal problem presented should
begin with article 753 of the Civil Code which in effect
declares that, with certain exceptions in favor of near
relatives, no testamentary provision shall be valid when
made by a ward in favor of his guardian before the final
accounts of the latter have been approved. This
provision is of undoubted application to the situation
before us; and the provision made in the will of Tomas
Rodriguez in favor of Vicente F. Lopez was not any
general incapacity on his part, but a special incapacity
due to the accidental relation of guardian and ward
existing between the parties.
We now pass to article 982 of the Civil Code, defining
the right of accretion. It is there declared, in effect, that
accretion take place in a testamentary succession, first
when the two or more persons are called to the same
inheritance or the same portion thereof without special
designation of shares; and secondly, when one of the
persons so called dies before the testator or renounces
the inheritance or is disqualifying to receive it. In the
case before us we have a will calling Vicente F. Lopez
and his daughter, Luz Lopez de Bueno, to the same
inheritance without special designation of shares. In
addition to this, one of the persons named as heir has
predeceased the testator, this person being also
disqualified to receive the estate even if he had been
alive at the time of the testator's death. This article (982)
is therefore also of exact application to the case in hand;
and its effect is to give to the survivor, Luz Lopez de
Bueno, not only the undivided half which she would
have received in conjunction with her father if he had
been alive and qualified to take, but also the half which
pertained to him. There was no error whatever,
therefore, in the order of the trial court declaring Luz
Lopez de Bueno entitled to the whole estate.
The argument in favor of the appellant supposes that
there has supervened a partial intestacy with respect to
the half of the estate which was intended for Vicente F.
Lopez and that this half has descended to the appellant,
Margarita Lopez, as next of kin and sole heir at law of
the decedent. In this connection attention is directed to
article 764 of the Civil Code wherein it is declared,
among other things, that a will may be valid even though
the person instituted as heir is disqualified to inherit. Our
attention is next invited to article 912 wherein it is
declared, among other things, that legal succession
takes place if the heir dies before the testator and also
when the heir instituted is disqualified to succeed. Upon
these provisions an argument is planted conducting to
the conclusion that the will of Tomas Rodriguez was
valid, notwithstanding the fact that one of the individuals
named as heirs in the will was disqualified to take, and
that as a consequence Margarita Lopez s entitled to
inherit the share of said disqualified heir.
We are the opinion that this contention is untenable and
that the appellee clearly has the better right. In playing
the provisions of the Code it is the duty of the court to
harmonize its provisions as far as possible, giving due
effect to all; and in case of conflict between two
provisions the more general is to be considered as
being limited by the more specific. As between articles
912 and 983, it is obvious that the former is the more
general of the two, dealing, as it does, with the general
topic of intestate succession while the latter is more
specific, defining the particular conditions under which
accretion takes place. In case of conflict, therefore, the
provisions of the former article must be considered
limited by the latter. Indeed, in subsection 3 of article
912 the provision with respect to intestate succession is
expressly subordinated to article 983 by the expression
"and (if) there is no right of accretion." It is true that the
same express qualification is not found in subsection 4
of article 912, yet it must be so understood, in view of
the rule of interpretation above referred to, by which the
more specific is held to control the general. Besides, this
interpretation supplies the only possible means of
harmonizing the two provisions. In addition to this,
article 986 of the Civil Code affords independent proof
that intestate succession to a vacant portion can only
occur when accretion is impossible.
The attorneys for the appellant direct attention to the
fact that, under paragraph 4 of article 912, intestate
succession occurs when the heir instituted is
disqualified to succeed (incapaz de suceder), while,
under the last provision in paragraph 2 of article 982,
accretion occurs when one of the persons called to
inherit under the will is disqualified to receive the
inheritance (incapaz de recibirla). A distinction is then
drawn between incapacity to succeed and incapacity to
take, and it is contended that the disability of Vicente F.
Lopez was such as to bring the case under article 912
rather than 982. We are of the opinion that the case
cannot be made to turn upon so refined an interpretation
of the language of the Code, and at any rate the
disability to which Vicente F. Lopez was subject was not
a general disability to succeed but an accidental
incapacity to receive the legacy, a consideration which
makes a case for accretion rather than for intestate
succession.
The opinions of the commentators, so far as they have
expressed themselves on the subject, tend to the
conclusion that the right of accretion with regard to
portions of an inheritance left vacant by the death or
disqualification of one of the heirs or his renunciation of
the inheritance is governed by article 912, without being
limited, to the extent supposed in appellant's brief, by
provisions of the Code relative to intestate succession
(Manresa, Comentarios al Codigo Civil Espaol, 4th ed.,
vol. VII, pp. 310, 311; id., 34; 13 Mucius Scaevola, pp.
372, 373, 285-287; 16 Mucius Scaevola, 186). Says
Escriche: "It is to be understood that one of the coheirs
or colegatees fails if nonexistent at the time of the
making of the will, or he renounces the inheritance or
legacy, if he dies before the testator, if the condition be
not fulfilled, or if he becomes otherwise incapacitated. . .
. (Diccionario de Legislacion y Jurisprudencia, vol. I, p.
225.)lawphil.net
In conclusion it may be worth observing that there has
always existed both in the civil and in the common law a
certain legal intendment, amounting to a mild
presumption, against partial intestacy. In Roman law, as
is well known, partial testacy systems a presumption
against it, a presumption which has its basis in the
supposed intention of the testator.
The judgment appealed from will be affirmed, and it is
so ordered, with costs against the appellant.
Avancea, C, J., Villamor, Ostrand, Johns, Romualdez
and Villa-Real, JJ., concur.
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and
RTC of SAN PEDRO, LAGUNA, BR. 31, respondents.
D E C I S I O N
PUNO, C.J .:
This is a Petition for Review on Certiorari under Rule 45
filed by the National Housing Authority (NHA) against
the Court of Appeals, the Regional Trial Court of San
Pedro Laguna, Branch 31, and private respondent
Segunda Almeida.
On June 28, 1959, the Land Tenure Administration
(LTA) awarded to Margarita Herrera several portions of
land which are part of the Tunasan Estate in San Pedro,
Laguna. The award is evidenced by an Agreement to
Sell No. 3787.
1
By virtue of Republic Act No. 3488, the
LTA was succeeded by the Department of Agrarian
Reform (DAR). On July 31, 1975, the DAR was
succeeded by the NHA by virtue of Presidential Decree
No. 757.
2
NHA as the successor agency of LTA is the
petitioner in this case.
The records show that Margarita Herrera had two
children: Beatriz Herrera-Mercado (the mother of private
respondent) and Francisca Herrera. Beatriz Herrera-
Mercado predeceased her mother and left heirs.
Margarita Herrera passed away on October 27, 1971.
3

On August 22, 1974, Francisca Herrera, the remaining
child of the late Margarita Herrera executed a Deed of
Self-Adjudication claiming that she is the only remaining
relative, being the sole surviving daughter of the
deceased. She also claimed to be the exclusive legal
heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a
Sinumpaang Salaysay dated October 7, 1960, allegedly
executed by Margarita Herrera. The pertinent portions of
which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83
taong gulang, balo, kasalukuyang naninirahan at
tumatanggap ng sulat sa Nayon ng San Vicente, San
Pedro Laguna, sa ilalim ng panunumpa ay malaya at
kusang loob kong isinasaysay at pinagtitibay itong mga
sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang
tirikan (SOLAR), tumatayo sa Nayon ng San Vicente,
San Pedro, Laguna, mayroong PITONG DAAN AT
PITUMPU'T ISANG (771) METRONG PARISUKAT ang
laki, humigit kumulang, at makikilala sa tawag na Lote
17, Bloke 55, at pag-aari ng Land Tenure
Administration;
2. Na ang nasabing lote ay aking binibile, sa
pamamagitan ng paghuhulog sa Land Tenure
Administration, at noong ika 30 ng Julio, 1959, ang
Kasunduang sa Pagbibile (AGREEMENT TO SELL No.
3787) ay ginawa at pinagtibay sa Lungsod ng Maynila,
sa harap ng Notario Publico na si G. Jose C. Tolosa, at
lumalabas sa kaniyang Libro Notarial bilang Documento
No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang
hanap buhay, ako ay nakatira at pinagsisilbihan nang
aking anak na si Francisca Herrera, at ang tinitirikan o
solar na nasasabi sa unahan ay binabayaran ng
kaniyang sariling cuarta sa Land Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito,
sakaling ako'y bawian na ng Dios ng aking buhay, ang
lupang nasasabi sa unahan ay aking ipinagkakaloob sa
nasabi kong anak na FRANCISCA HERRERA, Filipina,
nasa katamtamang gulang, kasal kay Macario Berroya,
kasalukuyang naninirahan at tumatanggap ng sulat sa
Nayong ng San Vicente, San Pedro Laguna, o sa
kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na
sakaling ako nga ay bawian na ng Dios ng aking buhay
ay KILALANIN, IGALANG at PAGTIBAYIN ang
nilalaman sa pangalan ng aking anak na si Francisca
Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng
hinlalaki ng kanan kong kamay sa ibaba nito at sa
kaliwang gilid ng unang dahon, dito sa Lungsod ng
Maynila, ngayong ika 7 ng Octubre, 1960.
4

The said document was signed by two witnesses and
notarized. The witnesses signed at the left-hand side of
both pages of the document with the said document
having 2 pages in total. Margarita Herrera placed her
thumbmark
5
above her name in the second page and at
the left-hand margin of the first page of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a
case for annulment of the Deed of Self-Adjudication
before the then Court of First Instance of Laguna,
Branch 1 in Binan, Laguna (now, Regional Trial Court
Branch 25). The case for annulment was docketed as
Civil Case No. B-1263.
6

On December 29, 1980, a Decision in Civil Case No. B-
1263 (questioning the Deed of Self-Adjudication) was
rendered and the deed was declared null and void.
7

During trial on the merits of the case assailing the Deed
of Self-Adjudication, Francisca Herrera filed an
application with the NHA to purchase the same lots
submitting therewith a copy of the "Sinumpaang
Salaysay" executed by her mother. Private respondent
Almeida, as heir of Beatriz Herrera-Mercado, protested
the application.
In a Resolution
8
dated February 5, 1986, the NHA
granted the application made by Francisca Herrera,
holding that:
From the evidence of the parties and the records of the
lots in question, we gathered the following facts: the lots
in question are portions of the lot awarded and sold to
the late Margarita Herrera on July 28, 1959 by the
defunct Land Tenure Administration; protestant is the
daughter of the late Beatriz Herrera Mercado who was
the sister of the protestee; protestee and Beatriz are
children of the late Margarita Herrera; Beatriz was the
transferee from Margarita of Lot Nos. 45, 46, 47, 48 and
49, Block 50; one of the lots transferred to Beatriz, e.g.
Lot 47, with an area of 148 square meters is in the
name of the protestant; protestant occupied the lots in
question with the permission of the protestee; protestee
is a resident of the Tunasan Homesite since birth;
protestee was born on the lots in question; protestee left
the place only after marriage but resided in a lot situated
in the same Tunasan Homesite; her (protestee) son
Roberto Herrera has been occupying the lots in
question; he has been there even before the death of
the late Margarita Herrera; on October 7, 1960,
Margarita Herrera executed a "Sinumpaang
Salaysay" whereby she waived or transferred all her
rights and interest over the lots in question in favor
of the protestee; and protestee had paid the lots in
question in full on March 8, 1966 with the defunct Land
Tenure Administration.
This Office finds that protestee has a better preferential
right to purchase the lots in question.
9

Private respondent Almeida appealed to the Office of
the President.
10
The NHA Resolution was affirmed by
the Office of the President in a Decision dated January
23, 1987.
11

On February 1, 1987, Francisca Herrera died. Her heirs
executed an extrajudicial settlement of her estate which
they submitted to the NHA. Said transfer of rights was
approved by the NHA.
12
The NHA executed several
deeds of sale in favor of the heirs of Francisca Herrera
and titles were issued in their favor.
13
Thereafter, the
heirs of Francisca Herrera directed Segunda Mercado-
Almeida to leave the premises that she was occupying.
Feeling aggrieved by the decision of the Office of the
President and the resolution of the NHA, private
respondent Segunda Mercado-Almeida sought the
cancellation of the titles issued in favor of the heirs of
Francisca. She filed a Complaint on February 8, 1988,
for "Nullification of Government Lot's Award," with
the Regional Trial Court of San Pedro, Laguna, Branch
31.
In her complaint, private respondent Almeida invoked
her forty-year occupation of the disputed properties, and
re-raised the fact that Francisca Herrera's declaration of
self-adjudication has been adjudged as a nullity
because the other heirs were disregarded. The
defendant heirs of Francisca Herrera alleged that the
complaint was barred by laches and that the decision of
the Office of the President was already final and
executory.
14
They also contended that the transfer of
purchase of the subject lots is perfectly valid as the
same was supported by a consideration and that
Francisca Herrera paid for the property with the use of
her own money.
15
Further, they argued that plaintiff's
occupation of the property was by mere tolerance and
that they had been paying taxes thereon.
16

The Regional Trial Court issued an Order dated June
14, 1988 dismissing the case for lack of jurisdiction.
17

The Court of Appeals in a Decision dated June 26, 1989
reversed and held that the Regional Trial Court had
jurisdiction to hear and decide the case involving "title
and possession to real property within its jurisdiction."
18

The case was then remanded for further proceedings on
the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a
Decision setting aside the resolution of the NHA and the
decision of the Office of the President awarding the
subject lots in favor of Francisca Herrera. It declared the
deeds of sale executed by NHA in favor of Herrera's
heirs null and void. The Register of Deeds of Laguna,
Calamba Branch was ordered to cancel the Transfer
Certificate of Title issued. Attorney's fees were also
awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang
Salaysay" was not an assignment of rights but a
disposition of property which shall take effect upon
death. It then held that the said document must first be
submitted to probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed
their respective motions for reconsideration which were
both denied on July 21, 1998 for lack of merit. They both
appealed to the Court of Appeals. The brief for the heirs
of Francisca Herrera was denied admission by the
appellate court in a Resolution dated June 14, 2002 for
being a "carbon copy" of the brief submitted by the NHA
and for being filed seventy-nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the
decision of the Regional Trial Court, viz:
There is no dispute that the right to repurchase the
subject lots was awarded to Margarita Herrera in 1959.
There is also no dispute that Margarita executed a
"Sinumpaang Salaysay" on October 7, 1960. Defendant
NHA claims that the "Sinumpaang Salaysay" is, in
effect, a waiver or transfer of rights and interest over the
subject lots in favor of Francisca Herrera. This Court is
disposed to believe otherwise. After a perusal of the
"Sinumpaang Salaysay" of Margarita Herrera, it can be
ascertained from its wordings taken in their ordinary and
grammatical sense that the document is a simple
disposition of her estate to take effect after her death.
Clearly the Court finds that the "Sinumpaang Salaysay"
is a will of Margarita Herrera. Evidently, if the intention
of Margarita Herrera was to merely assign her right over
the lots to her daughter Francisca Herrera, she should
have given her "Sinumpaang Salaysay" to the
defendant NHA or to Francisca Herrera for submission
to the defendant NHA after the full payment of the
purchase price of the lots or even prior thereto but she
did not. Hence it is apparent that she intended the
"Sinumpaang Salaysay" to be her last will and not an
assignment of rights as what the NHA in its resolution
would want to make it appear. The intention of Margarita
Herrera was shared no less by Francisca Herrera who
after the former's demise executed on August 22, 1974
a Deed of Self-Adjudication claiming that she is her sole
and legal heir. It was only when said deed was
questioned in court by the surviving heirs of Margarita
Herrera's other daughter, Beatriz Mercado, that
Francisca Herrera filed an application to purchase the
subject lots and presented the "Sinumpaang Salaysay"
stating that it is a deed of assignment of rights.
19

The Court of Appeals ruled that the NHA acted
arbitrarily in awarding the lots to the heirs of Francisca
Herrera. It upheld the trial court ruling that the
"Sinumpaang Salaysay" was not an assignment of
rights but one that involved disposition of property which
shall take effect upon death. The issue of whether it was
a valid will must first be determined by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE
NHA AND THE DECISION OF THE OFFICE OF THE
PRESIDENT HAVE ATTAINED FINALITY, AND IF SO,
WHETHER OR NOT THE PRINCIPLE OF
ADMINISTRATIVE RES JUDICATA BARS THE
COURT FROM FURTHER DETERMINING WHO
BETWEEN THE PARTIES HAS PREFERENTIAL
RIGHTS FOR AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS
JURISDICTION TO MAKE THE AWARD ON THE
SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE
SUBJECT LOTS BY THE NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower
court decisions in accordance with the hierarchy of
courts. But jurisprudence has also recognized the rule of
administrative res judicata: "the rule which forbids the
reopening of a matter once judicially determined by
competent authority applies as well to the judicial and
quasi-judicial facts of public, executive or administrative
officers and boards acting within their jurisdiction as to
the judgments of courts having general judicial powers .
. . It has been declared that whenever final adjudication
of persons invested with power to decide on the
property and rights of the citizen is examinable by the
Supreme Court, upon a writ of error or a certiorari, such
final adjudication may be pleaded as res judicata."
20
To
be sure, early jurisprudence were already mindful that
the doctrine of res judicata cannot be said to apply
exclusively to decisions rendered by what are usually
understood as courts without unreasonably
circumscribing the scope thereof and that the more
equitable attitude is to allow extension of the defense to
decisions of bodies upon whom judicial powers have
been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax
Appeals,
21
the Court held that the rule prescribing that
"administrative orders cannot be enforced in the courts
in the absence of an express statutory provision for that
purpose" was relaxed in favor of quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial
powers will always be subject to true judicial power
that which is held by the courts. Quasi-judicial power is
defined as that power of adjudication of an
administrative agency for the "formulation of a final
order."
22
This function applies to the actions, discretion
and similar acts of public administrative officers or
bodies who are required to investigate facts, or
ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action
and to exercise discretion of a judicial nature.
23

However, administrative agencies are not considered
courts, in their strict sense. The doctrine of separation of
powers reposes the three great powers into its three (3)
branchesthe legislative, the executive, and the
judiciary. Each department is co-equal and coordinate,
and supreme in its own sphere. Accordingly, the
executive department may not, by its own fiat, impose
the judgment of one of its agencies, upon the judiciary.
Indeed, under the expanded jurisdiction of the Supreme
Court, it is empowered to "determine whether or not
there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government."
24
Courts have an
expanded role under the 1987 Constitution in the
resolution of societal conflicts under the grave abuse
clause of Article VIII which includes that duty to check
whether the other branches of government committed
an act that falls under the category of grave abuse of
discretion amounting to lack or excess of jurisdiction.
25

Next, petitioner cites Batas Pambansa Blg. 129 or the
Judiciary Reorganization Act of 1980
26
where it is
therein provided that the Intermediate Appellate Court
(now, Court of Appeals) shall exercise the "exclusive
appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards, of the Regional Trial
Courts and Quasi-Judicial agencies, instrumentalities,
boards or commissions, except those falling within the
jurisdiction of the Supreme Court in accordance with the
Constitution"
27
and contends that the Regional Trial
Court has no jurisdiction to rule over awards made by
the NHA.
Well-within its jurisdiction, the Court of Appeals, in its
decision of August 28, 2003, already ruled that the issue
of the trial court's authority to hear and decide the
instant case has already been settled in the decision of
the Court of Appeals dated June 26, 1989 (which has
become final and executory on August 20, 1989 as per
entry of judgment dated October 10, 1989).
28
We find no
reason to disturb this ruling. Courts are duty-bound to
put an end to controversies. The system of judicial
review should not be misused and abused to evade the
operation of a final and executory judgment.
29
The
appellate court's decision becomes the law of the case
which must be adhered to by the parties by reason of
policy.
30

Next, petitioner NHA contends that its resolution was
grounded on meritorious grounds when it considered
the application for the purchase of lots. Petitioner
argues that it was the daughter Francisca Herrera who
filed her application on the subject lot; that it considered
the respective application and inquired whether she had
all the qualifications and none of the disqualifications of
a possible awardee. It is the position of the petitioner
that private respondent possessed all the qualifications
and none of the disqualifications for lot award and
hence the award was not done arbitrarily.
The petitioner further argues that assuming that the
"Sinumpaang Salaysay" was a will, it could not bind the
NHA.
31
That, "insofar as [the] NHA is concerned, it is an
evidence that the subject lots were indeed transferred
by Margarita Herrera, the original awardee, to Francisca
Herrera was then applying to purchase the same before
it."
32

We are not impressed. When the petitioner received the
"Sinumpaang Salaysay," it should have noted that the
effectivity of the said document commences at the time
of death of the author of the instrument; in her words
"sakaling ako'y bawian na ng Dios ng aking buhay"
Hence, in such period, all the interests of the person
should cease to be hers and shall be in the possession
of her estate until they are transferred to her heirs by
virtue of Article 774 of the Civil Code which provides
that:
Art. 774. Succession is a mode of acquisition by virtue
of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are
transmitted through his death to another or others
either by his will or by operation of law.
33

By considering the document, petitioner NHA should
have noted that the original applicant has already
passed away. Margarita Herrera passed away on
October 27, 1971.
34
The NHA issued its resolution
35
on
February 5, 1986. The NHA gave due course to the
application made by Francisca Herrera without
considering that the initial applicant's death would
transfer all her property, rights and obligations to the
estate including whatever interest she has or may have
had over the disputed properties. To the extent of the
interest that the original owner had over the property,
the same should go to her estate. Margarita Herrera had
an interest in the property and that interest should go to
her estate upon her demise so as to be able to properly
distribute them later to her heirsin accordance with a
will or by operation of law.
The death of Margarita Herrera does not extinguish her
interest over the property. Margarita Herrera had an
existing Contract to Sell
36
with NHA as the seller. Upon
Margarita Herrera's demise, this Contract to Sell was
neither nullified nor revoked. This Contract to Sell was
an obligation on both partiesMargarita Herrera and
NHA. Obligations are transmissible.
37
Margarita
Herrera's obligation to pay became transmissible at the
time of her death either by will or by operation of law.
If we sustain the position of the NHA that this document
is not a will, then the interests of the decedent should
transfer by virtue of an operation of law and not by virtue
of a resolution by the NHA. For as it stands, NHA
cannot make another contract to sell to other parties of
a property already initially paid for by the decedent.
Such would be an act contrary to the law on succession
and the law on sales and obligations.
38

When the original buyer died, the NHA should have
considered the estate of the decedent as the next
"person"
39
likely to stand in to fulfill the obligation to pay
the rest of the purchase price. The opposition of other
heirs to the repurchase by Francisca Herrera should
have put the NHA on guard as to the award of the lots.
Further, the Decision in the said Civil Case No. B-1263
(questioning the Deed of Self-Adjudication) which
rendered the deed therein null and void
40
should have
alerted the NHA that there are other heirs to the
interests and properties of the decedent who may claim
the property after a testate or intestate proceeding is
concluded. The NHA therefore acted arbitrarily in the
award of the lots.
We need not delve into the validity of the will. The issue
is for the probate court to determine. We affirm the
Court of Appeals and the Regional Trial Court which
noted that it has an element of testamentary disposition
where (1) it devolved and transferred property; (2) the
effect of which shall transpire upon the death of the
instrument maker.
41

IN VIEW WHEREOF, the petition of the National
Housing Authority is DENIED. The decision of the Court
of Appeals in CA-G.R. No. 68370 dated August 28,
2003, affirming the decision of the Regional Trial Court
of San Pedro, Laguna in Civil Case No. B-2780 dated
March 9, 1998, is hereby AFFIRMED.
No cost.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, JJ.,
concur.
G.R. No. 82027 March 29, 1990
ROMARICO G. VITUG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and
ROWENA FAUSTINO-CORONA, respondents.
Rufino B. Javier Law Office for petitioner.
Quisumbing, Torres & Evangelista for private
respondent.

SARMIENTO, J .:
This case is a chapter in an earlier suit decided by this
Court
1
involving the probate of the two wills of the late
Dolores Luchangco Vitug, who died in New York, U.
S.A., on November 10, 1980, naming private
respondent Rowena Faustino-Corona executrix. In our
said decision, we upheld the appointment of Nenita
Alonte as co-special administrator of Mrs. Vitug's estate
with her (Mrs. Vitug's) widower, petitioner Romarico G.
Vitug, pending probate.
On January 13, 1985, Romarico G. Vitug filed a motion
asking for authority from the probate court to sell certain
shares of stock and real properties belonging to the
estate to cover allegedly his advances to the estate in
the sum of P667,731.66, plus interests, which he
claimed were personal funds. As found by the Court of
Appeals,
2
the alleged advances consisted of
P58,147.40 spent for the payment of estate tax,
P518,834.27 as deficiency estate tax, and P90,749.99
as "increment thereto."
3
According to Mr. Vitug, he
withdrew the sums of P518,834.27 and P90,749.99 from
savings account No. 35342-038 of the Bank of America,
Makati, Metro Manila.
On April 12, 1985, Rowena Corona opposed the motion
to sell on the ground that the same funds withdrawn
from savings account No. 35342-038 were conjugal
partnership properties and part of the estate, and hence,
there was allegedly no ground for reimbursement. She
also sought his ouster for failure to include the sums in
question for inventory and for "concealment of funds
belonging to the estate."
4

Vitug insists that the said funds are his exclusive
property having acquired the same through a
survivorship agreement executed with his late wife and
the bank on June 19, 1970. The agreement provides:
We hereby agree with each other and with the BANK
OF AMERICAN NATIONAL TRUST AND SAVINGS
ASSOCIATION (hereinafter referred to as the BANK),
that all money now or hereafter deposited by us or any
or either of us with the BANK in our joint savings current
account shall be the property of all or both of us and
shall be payable to and collectible or withdrawable by
either or any of us during our lifetime, and after the
death of either or any of us shall belong to and be the
sole property of the survivor or survivors, and shall be
payable to and collectible or withdrawable by such
survivor or survivors.
We further agree with each other and the BANK that the
receipt or check of either, any or all of us during our
lifetime, or the receipt or check of the survivor or
survivors, for any payment or withdrawal made for our
above-mentioned account shall be valid and sufficient
release and discharge of the BANK for such payment or
withdrawal.
5

The trial courts
6
upheld the validity of this agreement
and granted "the motion to sell some of the estate of
Dolores L. Vitug, the proceeds of which shall be used to
pay the personal funds of Romarico Vitug in the total
sum of P667,731.66 ... ."
7

On the other hand, the Court of Appeals, in the petition
for certiorari filed by the herein private respondent, held
that the above-quoted survivorship agreement
constitutes a conveyance mortis causa which "did not
comply with the formalities of a valid will as prescribed
by Article 805 of the Civil Code,"
8
and secondly,
assuming that it is a mere donation inter vivos, it is a
prohibited donation under the provisions of Article 133
of the Civil Code.
9

The dispositive portion of the decision of the Court of
Appeals states:
WHEREFORE, the order of respondent Judge dated
November 26, 1985 (Annex II, petition) is hereby set
aside insofar as it granted private respondent's motion
to sell certain properties of the estate of Dolores L. Vitug
for reimbursement of his alleged advances to the estate,
but the same order is sustained in all other respects. In
addition, respondent Judge is directed to include
provisionally the deposits in Savings Account No.
35342-038 with the Bank of America, Makati, in the
inventory of actual properties possessed by the spouses
at the time of the decedent's death. With costs against
private respondent.
10

In his petition, Vitug, the surviving spouse, assails the
appellate court's ruling on the strength of our decisions
in Rivera v. People's Bank and Trust Co.
11
and Macam
v. Gatmaitan
12
in which we sustained the validity of
"survivorship agreements" and considering them as
aleatory contracts.
13

The petition is meritorious.
The conveyance in question is not, first of all, one of
mortis causa, which should be embodied in a will. A will
has been defined as "a personal, solemn, revocable and
free act by which a capacitated person disposes of his
property and rights and declares or complies with duties
to take effect after his death."
14
In other words, the
bequest or device must pertain to the testator.
15
In this
case, the monies subject of savings account No. 35342-
038 were in the nature of conjugal funds In the case
relied on, Rivera v. People's Bank and Trust Co.,
16
we
rejected claims that a survivorship agreement purports
to deliver one party's separate properties in favor of the
other, but simply, their joint holdings:
xxx xxx xxx
... Such conclusion is evidently predicated on the
assumption that Stephenson was the exclusive owner of
the funds-deposited in the bank, which assumption was
in turn based on the facts (1) that the account was
originally opened in the name of Stephenson alone and
(2) that Ana Rivera "served only as housemaid of the
deceased." But it not infrequently happens that a person
deposits money in the bank in the name of another; and
in the instant case it also appears that Ana Rivera
served her master for about nineteen years without
actually receiving her salary from him. The fact that
subsequently Stephenson transferred the account to the
name of himself and/or Ana Rivera and executed with
the latter the survivorship agreement in question
although there was no relation of kinship between them
but only that of master and servant, nullifies the
assumption that Stephenson was the exclusive owner of
the bank account. In the absence, then, of clear proof to
the contrary, we must give full faith and credit to the
certificate of deposit which recites in effect that the
funds in question belonged to Edgar Stephenson and
Ana Rivera; that they were joint (and several) owners
thereof; and that either of them could withdraw any part
or the whole of said account during the lifetime of both,
and the balance, if any, upon the death of either,
belonged to the survivor.
17

xxx xxx xxx
In Macam v. Gatmaitan,
18
it was held:
xxx xxx xxx
This Court is of the opinion that Exhibit C is an aleatory
contract whereby, according to article 1790 of the Civil
Code, one of the parties or both reciprocally bind
themselves to give or do something as an equivalent for
that which the other party is to give or do in case of the
occurrence of an event which is uncertain or will happen
at an indeterminate time. As already stated, Leonarda
was the owner of the house and Juana of the Buick
automobile and most of the furniture. By virtue of Exhibit
C, Juana would become the owner of the house in case
Leonarda died first, and Leonarda would become the
owner of the automobile and the furniture if Juana were
to die first. In this manner Leonarda and Juana
reciprocally assigned their respective property to one
another conditioned upon who might die first, the time of
death determining the event upon which the acquisition
of such right by the one or the other depended. This
contract, as any other contract, is binding upon the
parties thereto. Inasmuch as Leonarda had died before
Juana, the latter thereupon acquired the ownership of
the house, in the same manner as Leonarda would have
acquired the ownership of the automobile and of the
furniture if Juana had died first.
19

xxx xxx xxx
There is no showing that the funds exclusively belonged
to one party, and hence it must be presumed to be
conjugal, having been acquired during the existence of
the marita. relations.
20

Neither is the survivorship agreement a donation inter
vivos, for obvious reasons, because it was to take effect
after the death of one party. Secondly, it is not a
donation between the spouses because it involved no
conveyance of a spouse's own properties to the other.
It is also our opinion that the agreement involves no
modification petition of the conjugal partnership, as held
by the Court of Appeals,
21
by "mere stipulation"
22
and
that it is no "cloak"
23
to circumvent the law on conjugal
property relations. Certainly, the spouses are not
prohibited by law to invest conjugal property, say, by
way of a joint and several bank account, more
commonly denominated in banking parlance as an
"and/or" account. In the case at bar, when the spouses
Vitug opened savings account No. 35342-038, they
merely put what rightfully belonged to them in a money-
making venture. They did not dispose of it in favor of the
other, which would have arguably been sanctionable as
a prohibited donation. And since the funds were
conjugal, it can not be said that one spouse could have
pressured the other in placing his or her deposits in the
money pool.
The validity of the contract seems debatable by reason
of its "survivor-take-all" feature, but in reality, that
contract imposed a mere obligation with a term, the term
being death. Such agreements are permitted by the Civil
Code.
24

Under Article 2010 of the Code:
ART. 2010. By an aleatory contract, one of the parties
or both reciprocally bind themselves to give or to do
something in consideration of what the other shall give
or do upon the happening of an event which is
uncertain, or which is to occur at an indeterminate time.
Under the aforequoted provision, the fulfillment of an
aleatory contract depends on either the happening of an
event which is (1) "uncertain," (2) "which is to occur at
an indeterminate time." A survivorship agreement, the
sale of a sweepstake ticket, a transaction stipulating on
the value of currency, and insurance have been held to
fall under the first category, while a contract for life
annuity or pension under Article 2021, et sequentia, has
been categorized under the second.
25
In either case,
the element of risk is present. In the case at bar, the risk
was the death of one party and survivorship of the other.
However, as we have warned:
xxx xxx xxx
But although the survivorship agreement is per se not
contrary to law its operation or effect may be violative of
the law. For instance, if it be shown in a given case that
such agreement is a mere cloak to hide an inofficious
donation, to transfer property in fraud of creditors, or to
defeat the legitime of a forced heir, it may be assailed
and annulled upon such grounds. No such vice has
been imputed and established against the agreement
involved in this case.
26

xxx xxx xxx
There is no demonstration here that the survivorship
agreement had been executed for such unlawful
purposes, or, as held by the respondent court, in order
to frustrate our laws on wills, donations, and conjugal
partnership.
The conclusion is accordingly unavoidable that Mrs.
Vitug having predeceased her husband, the latter has
acquired upon her death a vested right over the
amounts under savings account No. 35342-038 of the
Bank of America. Insofar as the respondent court
ordered their inclusion in the inventory of assets left by
Mrs. Vitug, we hold that the court was in error. Being the
separate property of petitioner, it forms no more part of
the estate of the deceased.
WHEREFORE, the decision of the respondent appellate
court, dated June 29, 1987, and its resolution, dated
February 9, 1988, are SET ASIDE.
No costs.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and
Regalado JJ., concur.
SECOND DIVISION
[G.R. No. 131641. February 23, 2000]
NATIVIDAD P. NAZARENO, petitioner, vs. COURT
OF APPEALS, HON. NAPOLEON V. DILAG,
Presiding Judge, RTC-Cavite, Branch XV, ROMEO P.
NAZARENO and ELIZA NAZARENO, respondents.
D E C I S I O N
BELLOSILLO, J .:
A writ of execution must conform to the judgment to be
executed; it may not vary the terms of the judgment it
seeks to enforce. Nor may it go beyond the terms of the
judgment sought to be executed. Where the execution is
not in harmony with the judgment which gives it life, and
in fact exceeds it, it has pro tanto no validity. To
maintain otherwise would be to ignore the constitutional
provision against depriving a person of his property
without due process of law.1[1]
Adjudication of ownership necessarily includes delivery
of possession. Indeed, it would be defeating the ends of
justice should we require that for the parties to obtain



possession of the property duly adjudged to be theirs
from those who have no right to remain therein, they
must submit to court litigations anew.2[2] An exception
however exists where the actual possessor has shown a
valid right over the property enforceable even against
the owner thereof.3[3]
On 15 March 1985 Natividad Nazareno filed a
Complaint for Annulment of Sale and Damages against
spouses Romeo and Eliza Nazareno. Natividad avers in
her complaint that she is the sole and absolute owner of
a parcel of land located in Naic, Cavite, covered by TCT
No. 51798 of the Registry of Deeds of Cavite. Sometime
in April 1981 Natividads brother, Romeo, and his wife
Eliza convinced Natividad to lend them TCT No. 51798
to be used as collateral to a loan the proceeds of which
would be used in the completion of the construction of
the Naic Cinema on the subject property. Natividad
agreed on the condition that title to her property would
be returned within one (1) year from the completion of
the construction of the cinema. Accordingly, Natividad
executed a Deed of Absolute Sale in favor of spouses
Romeo and Eliza over the lot covered by TCT No.
51798. The sale, however, was simulated because
Natividad did not receive any consideration therefor.
The cinema was completed in November 1981 but
despite several demands by Natividad, spouses Romeo
and Eliza failed and refused to return Natividads title to
the property; instead, they had the property transferred
in their name. Consequently, TCT No. T-118276 was
issued in their name in lieu of TCT No. 51798.
Spouses Romeo and Eliza denied that the property
belonged to Natividad. On the contrary, they averred
that it originally formed part of the estate of the late
Maximino Nazareno, Jr., father of Romeo and Natividad.
According to Romeo, the property was his share in their
inheritance. As regards the deed of sale, he explained
that it was only resorted to for the purpose of carrying
out and implementing the transfer of the property
forming part of the estate of Maximino Nazareno Jr., the
distribution of which was entrusted to Natividad.
The trial court found for the spouses Romeo and Eliza
and ruled that although the Deed of Absolute Sale was
simulated, the same could be treated as an adjudication
and a conveyance to Romeo of his share in the estate
of his father.
But the Court of Appeals ruled otherwise. It found that
during pre-trial, the parties stipulated that the Deed of
Absolute Sale between Natividad and spouses Romeo
and Eliza was simulated as there was in fact no money
consideration. Consequently, the burden of proof was
shifted to Romeo to prove that the transfer was in reality
a conveyance of his share in the estate of his father. But
during trial, Romeo failed to prove this so-called
conveyance of his share. On the other hand, Natividad
satisfactorily showed that the property was previously
sold to her by their late father. Romeo failed to disprove
this fact. Neither did he successfully cause the deed of
sale executed by Maximino Nazareno Jr. in favor of





Natividad to be declared null and void. Resultingly, its
authenticity and validity remained unrebutted.
In short, the Court of Appeals did not sustain the trial
court and set aside its Decision. The Deed of Absolute
Sale executed by Natividad in favor of the spouses
Romeo and Eliza as well as TCT No. 118276 was
declared null and void. Hence, the Register of Deeds
was ordered to restore TCT No. 51798 under the name
of Natividad. The case was brought to us on a Petition
for Review on Certiorari but we denied the petition after
having ascertained that the appellate court committed
no reversible error. Thus, the Court of Appeals decision
became final and executory on 13 June 1996.
On 7 November 1996 Natividad filed a Manifestation
and Motion with the Regional Trial Court of Naic praying
for the issuance of a writ of execution as well as a writ of
possession. The spouses Romeo and Eliza filed an
Opposition contending that in her Complaint Natividad
never prayed that she be placed in possession of the
subject premises. Neither did the Court of Appeals order
that petitioner be placed in possession of the property.
On 21 February 1997 the trial court granted the writ of
execution prayed for but denied the issuance of a writ of
possession as it was not included in the decision of the
Court of Appeals. Natividads Motion for
Reconsideration was denied. Hence, recourse was
made to the Court of Appeals.
On 9 September 1997 the Court of Appeals denied the
petition thus -
Execution not in harmony with the judgment has no
validity. It must conform more particularly to that
ordained or decreed in the dispositive portion of the
decision, as the only portion of the decision that
becomes the subject of execution.
Therefore, to issue a writ of possession in favor of
petitioner in this case where possession was never
decreed in favor of petitioner, would be void x x x
Moreover, it is a settled rule that a writ of possession is
improper to eject another from possession unless
sought in connection with (1) a land registration
proceeding; (2) an extrajudicial foreclosure of real
property; (3) in a judicial foreclosure of property
provided that the mortgagor has possession and no
third party has intervened; and (4) in execution sales.
It is an undisputed fact that this case is for the
annulment of a private sale made by petitioner to private
respondent. This action is not a land registration case
nor a foreclosure of mortgage whether judicially or
extrajudicially nor was the subject property sold in
execution. Petitioner sought for the issuance of a writ of
possession in connection with a decision in a civil action
for annulment of a private sale and damages.4[4]
A Motion for Reconsideration was filed but the same
was denied; hence, the instant petition.



Obviously, we have no choice but to deny the petition.
Section 49 (c) of Rule 39 (now Sec. 47 (c) of Rule 39) of
the Rules of Court provides:
Sec. 49. Effect of judgments. - The effect of a judgment
or final order rendered by a court or judge of the
Philippines, having jurisdiction to pronounce the
judgment or order, may be as follows:
x x x x
(c) In any other litigation between the same parties or
their successors in interest, that only is deemed to have
been adjudged in a former judgment which appears
upon its face to have been so adjudged, or which was
actually and necessarily included therein or necessary
thereto.
From the aforestated, it is clear that a judgment is not
confined to what appears on the face of the decision,
but also to those necessarily included therein or
necessary thereto.5[5] Thus although the dispositive
portion of the decision of the Court of Appeals in CA-GR
CV No. 12856 provides -
WHEREFORE, judgment is hereby rendered
REVERSING the Decision appealed from and another is
hereby rendered as follows:
1. The "Deed of Absolute Sale of Registered Land"
(Exhibit "B") and Transfer Certificate of Title No. 118276
(Exhibit "F") under the name of the appellees are hereby
declared null and void;
2. The Register of Deeds is hereby ordered to restore
Transfer Certificate of Title No. 51798 under the name
of the appellant.6[6]
it is clear that the same resulted from the adjudication of
ownership over the disputed lot which is necessarily
included in the discussion. Thus, as explained by the
Court of Appeals -
In sum, then, Lot 504-A-3 covered by Transfer
Certificate of Title No. 51798 was owned by the
appellant in her own right as vendee and not appellee's
share in the estate of their deceased father.
Consequently, appellee's claim that the appellant
executed the "Deed of Absolute Sale" (Exhibit "B") for
the purpose of conveying to the appellee the latter's
share in the estate of their deceased father is utterly
bereft of factual basis x x x
Evidently, the decision of the Court of Appeals required
no writ of possession as the writ of execution would
suffice to place Natividad in possession of Lot 504-A-3.
A case in point is Perez v. Evite7[7] wherein the lower







court declared Evite as owner of the disputed land.
When the judgment became final and executory, Evite
moved for the issuance of a writ of execution which the
trial court granted. Perez moved to quash the writ
arguing that the writ was at variance with the decision
as the decision sought to be executed merely declared
Evite owner of the property and did not order its delivery
to him. Perez argued citing the cases of Jabon v.
Alo8[8] and Talens v. Garcia9[9] which held that
adjudication of ownership of the land did not include
possession thereof. In resolving in favor of Evite this
Court held -
x x x Considering that herein plaintiff-appellants have no
other claim to possession of the property apart from
their claim of ownership which was rejected by the lower
court and, consequently, has no right to remain thereon
after such ownership was adjudged to defendant-
appellees, the delivery of possession of the land should
be considered included in the decision. Indeed, it would
be defeating the ends of justice should we require that
for herein appellees to obtain possession of the property
duly adjudged to be theirs, from those who have no right
to remain therein, they must submit to court litigations
anew.
In the instant case, spouses Romeo and Eliza could not
use Jabon v. Alo and Talens v. Garcia to support their
contention that the adjudication of ownership over the
land does not necessarily include possession. As
already decreed in Perez v. Evite -
It may be observed that in both decisions (Jabon v. Alo
and Talens v. Garcia), this Court underscored the
possibility that the actual possessor has some rights
which must be respected and defined. It is thus evident
that the pronouncement was made having in mind
cases wherein the actual possessor has a valid right
over the property enforceable even against the owner
thereof. As example, we gave the cases of tenants and
lessees. However, it is our view that that above doctrine
may not be invoked in instances where no such right
may be appreciated in favor of the possessor. In the
instant case there appears in the appealed order of
June 30, 1959, the specific finding of the trial court that
"the plaintiffs have not given any reason why they are
retaining the possession of the property" x x x x This
factual finding cannot be reviewed in this instance as
the appeal has been taken to us directly on a question
of law x x x x
The same ruling would apply in the instant case. The
Court of Appeals categorically declared that the claim of
spouses Romeo and Eliza over the disputed lot has
utterly no factual basis. Therefore, they have no reason
to remain in possession of the property.
But the same could not be said of the Naic Cinema. The
matter of ownership and possession of the Naic Cinema
was never put in issue. Consequently, petitioner cannot
ask for a writ of possession to place her in physical
occupancy of the Naic Cinema. Being declared owner of
subject lot does not also mean that she is automatically





entitled to possession of all the improvements therein.
Otherwise, the actual possessor would be deprived of
his property without due process of law.
Finally, petitioner cannot validly claim possession over
the Naic Cinema since in her complaint and subsequent
pleadings, she has admitted not being the owner
thereof. On the contrary, she claims that the Naic
Cinema belongs to the estate of her father. On the other
hand, respondent spouses have asserted dominion over
the Naic Cinema. Plainly, petitioner cannot wrest
possession of the moviehouse from respondent
spouses through a mere writ of possession as she
herself even disclaims being the owner thereof.
Ownership over the Naic Cinema must be threshed out
in a proper proceeding. A mere prayer for the issuance
of a writ of possession will not suffice.
WHEREFORE, the petition is DENIED. The Decision of
the Court of Appeals denying the issuance of a writ of
possession is AFFIRMED. Costs against petitioner.
SO ORDERED.
Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.
Buena, J., on leave.
Heirs of Spouses REMEDIOS R. SANDEJAS and
ELIODORO P. SANDEJAS SR. -- ROBERTO R.
SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA
SANDEJAS MORELAND, BENJAMIN R. SANDEJAS,
REMEDIOS R. SANDEJAS; and heirs of SIXTO S.
SANDEJAS II, RAMON R. SANDEJAS, TERESITA R.
SANDEJAS, and ELIODORO R. SANDEJAS JR., all
represented by ROBERTO R. SANDEJAS, petitioners,
vs. ALEX A. LINA, respondent.
D E C I S I O N
PANGANIBAN, J.:
A contract of sale is not invalidated by the fact that it is
subject to probate court approval. The transaction
remains binding on the seller-heir, but not on the other
heirs who have not given their consent to it. In settling
the estate of the deceased, a probate court has
jurisdiction over matters incidental and collateral to the
exercise of its recognized powers. Such matters include
selling, mortgaging or otherwise encumbering realty
belonging to the estate. Rule 89, Section 8 of the Rules
of Court, deals with the conveyance of real property
contracted by the decedent while still alive. In contrast
with Sections 2 and 4 of the same Rule, the said
provision does not limit to the executor or administrator
the right to file the application for authority to sell,
mortgage or otherwise encumber realty under
administration. The standing to pursue such course of
action before the probate court inures to any person
who stands to be benefited or injured by the judgment or
to be entitled to the avails of the suit.
The Case

Before us is a Petition for Review under Rule 45 of the
Rules of Court, seeking to reverse and set aside the
Decisionxxv[1] dated April 16, 1999 and the
Resolutionxxvi[2] dated January 12, 2000, both
promulgated by the Court of Appeals in CA-GR CV No.
49491. The dispositive portion of the assailed Decision
reads as follows:xxvii[3]
WHEREFORE, for all the foregoing, [w]e hereby
MODIFY the [O]rder of the lower court dated January
13, 1995, approving the Receipt of Earnest Money With
Promise to Buy and Sell dated June 7, 1982, only to the
three-fifth (3/5) portion of the disputed lots covering the
share of [A]dministrator Eliodoro Sandejas, Sr. [in] the
property. The intervenor is hereby directed to pay
appellant the balance of the purchase price of the three-
fifth (3/5) portion of the property within thirty (30) days
from receipt of this [O]rder and x x x the administrator [is
directed] to execute the necessary and proper deeds of
conveyance in favor of appellee within thirty (30) days
thereafter.
The assailed Resolution denied reconsideration of the
foregoing disposition.
The Facts

The facts of the case, as narrated by the Court of
Appeals (CA), are as follows:xxviii[4]
On February 17, 1981, Eliodoro Sandejas, Sr. filed a
petition (Record, SP. Proc. No. R-83-15601, pp. 8-10) in
the lower court praying that letters of administration be
issued in his favor for the settlement of the estate of his
wife, REMEDIOS R. SANDEJAS, who died on April 17,
1955. On July 1, 1981, Letters of Administration [were
issued by the lower court appointing Eliodoro Sandejas,
Sr. as administrator of the estate of the late Remedios
Sandejas (Record, SP. Proc. No. R-83-15601, p. 16).
Likewise on the same date, Eliodoro Sandejas, Sr. took
his oath as administrator (Record, SP. Proc. No. R-83-
15601, p. 17). x x x.
On November 19, 1981, the 4th floor of Manila City Hall
was burned and among the records burned were the
records of Branch XI of the Court of First Instance of
Manila. As a result, [A]dministrator Eliodoro Sandejas,
Sr. filed a [M]otion for [R]econstitution of the records of
the case on February 9, 1983 (Record, SP. Proc. No. R-
83-15601, pp. 1-5). On February 16, 1983, the lower
court in its [O]rder granted the said motion (Record, SP.
Proc. No. R-83-15601, pp. 28-29).
On April 19, 1983, an Omnibus Pleading for motion to
intervene and petition-in-intervention was filed by
[M]ovant Alex A. Lina alleging among others that on
June 7, 1982, movant and [A]dministrator Eliodoro P.
Sandejas, in his capacity as seller, bound and obligated
himself, his heirs, administrators, and assigns, to sell
forever and absolutely and in their entirety the following
parcels of land which formed part of the estate of the
late Remedios R. Sandejas, to wit:
1. A parcel of land (Lot No. 22 Block No. 45 of the
subdivision plan Psd-21121, being a portion of Block 45
described on plan Psd-19508, G.L.R.O. Rec. No. 2029),
situated in the Municipality of Makati, province of Rizal,
containing an area of TWO HUNDRED SEVENTY (270)
SQUARE METERS, more or less, with TCT No. 13465;
2. A parcel of land (Lot No. 21 Block No. 45 of the
subdivision plan Psd-21141, being a portion of Block 45
described on plan Psd-19508 G.L.R.O. Rec. No. 2029),
situated in the Municipality of Makati, Province of Rizal,
containing an area of TWO HUNDRED SEVENTY (270)
SQUARE METERS, more or less, with TCT No. 13464;
3. A parcel of land (Lot No. 5 Block No. 45 of the
subdivision plan Psd-21141, being a portion of Block 45
described on plan Psd-19508 G.L.R.O. Rec. No. 2029),
situated in the Municipality of Makati, Province of Rizal,
containing an area of TWO HUNDRED EIGHT (208)
SQUARE METERS, more or less, with TCT No. 13468;
4. A parcel of land (Lot No. 6, Block No. 45 of the
subdivision plan Psd-21141, being a portion of Block 45
described on plan Psd-19508 G.L.R.O. Rec. No. 2029),
situated in the Municipality of Makati, Province of Rizal,
containing an area of TWO HUNDRED EIGHT (208)
SQUARE METERS, more or less, with TCT No. 13468;
The [R]eceipt of the [E]arnest [M]oney with [P]romise to
[S]ell and to [B]uy is hereunder quoted, to wit:
Received today from MR. ALEX A. LINA the sum of
ONE HUNDRED THOUSAND (P100,000.00) PESOS,
Philippine Currency, per Metropolitan Bank & Trust
Company Chec[k] No. 319913 dated today for
P100,000.00, x x x as additional earnest money for the
following:
x x x x x x x x x
all registered with the Registry of Deeds of the
[P]rovince of Rizal (Makati Branch Office) in the name of
SELLER ELIODORO SANDEJAS, Filipino Citizen, of
legal age, married to Remedios Reyes de Sandejas;
and which undersigned, as SELLER, binds and
obligates himself, his heirs, administrators and assigns,
to sell forever and absolutely in their entirety (all of the
four (4) parcels of land above described, which are
contiguous to each other as to form one big lot) to said
Mr. Alex A. Lina, who has agreed to buy all of them,
also binding on his heirs, administrators and assigns, for
the consideration of ONE MILLION (P1,000,000.00)
PESOS, Philippine Currency, upon such reasonable
terms of payment as may be agreed upon by them. The
parties have, however, agreed on the following terms
and conditions:
1. The P100,000.00 herein received is in addition
to the P70,000.00 earnest money already received by
SELLER from BUYER, all of which shall form part of,
and shall be deducted from, the purchase price of
P1,000,000.00, once the deed of absolute [sale] shall be
executed;
2. As a consideration separate and distinct from
the price, undersigned SELLER also acknowledges
receipt from Mr. Alex A. Lina of the sum of ONE
THOUSAND (P1,000.00) PESOS, Philippine Currency,
per Metropolitan Bank & Trust Company Check No.
319912 dated today and payable to SELLER for
P1,000.00;
3. Considering that Mrs. Remedios Reyes de
Sandejas is already deceased and as there is a pending
intestate proceedings for the settlement of her estate
(Spec. Proc. No. 138393, Manila CFI, Branch XI),
wherein SELLER was appointed as administrator of said
Estate, and as SELLER, in his capacity as administrator
of said Estate, has informed BUYER that he (SELLER)
already filed a [M]otion with the Court for authority to sell
the above parcels of land to herein BUYER, but which
has been delayed due to the burning of the records of
said Spec. Pro. No. 138398, which records are
presently under reconstitution, the parties shall have at
least ninety (90) days from receipt of the Order
authorizing SELLER, in his capacity as administrator, to
sell all THE ABOVE DESCRIBED PARCELS OF LAND
TO HEREIN BUYER (but extendible for another period
of ninety (90) days upon the request of either of the
parties upon the other), within which to execute the
deed of absolute sale covering all above parcels of land;
4. In the event the deed of absolute sale shall not
proceed or not be executed for causes either due to
SELLERS fault, or for causes of which the BUYER is
innocent, SELLER binds himself to personally return to
Mr. Alex A. Lina the entire ONE HUNDRED SEVENTY
THOUSAND ([P]170,000.00) PESOS in earnest money
received from said Mr. Lina by SELLER, plus fourteen
(14%) percentum interest per annum, all of which shall
be considered as liens of said parcels of land, or at least
on the share therein of herein SELLER;
5. Whether indicated or not, all of above terms and
conditions shall be binding on the heirs, administrators,
and assigns of both the SELLER (undersigned MR.
ELIODORO P. SANDEJAS, SR.) and BUYER (MR.
ALEX A. LINA). (Record, SP. Proc. No. R-83-15601,
pp. 52-54)
On July 17, 1984, the lower court issued an [O]rder
granting the intervention of Alex A. Lina (Record, SP.
Proc. No. R-83-15601, p. 167).
On January 7, 1985, the counsel for [A]dministrator
Eliodoro P. Sandejas filed a [M]anifestation alleging
among others that the administrator, Mr. Eliodoro P.
Sandejas, died sometime in November 1984 in Canada
and said counsel is still waiting for official word on the
fact of the death of the administrator. He also alleged,
among others that the matter of the claim of Intervenor
Alex A. Lina becomes a money claim to be filed in the
estate of the late Mr. Eliodoro P. Sandejas (Record, SP.
Proc. No. R-83-15601, p. 220). On February 15, 1985,
the lower court issued an [O]rder directing, among
others, that the counsel for the four (4) heirs and other
heirs of Teresita R. Sandejas to move for the
appointment of [a] new administrator within fifteen (15)
days from receipt of this [O]rder (Record, SP. Proc. No.
R-83-15601, p. 227). In the same manner, on
November 4, 1985, the lower court again issued an
order, the content of which reads:
On October 2, 1985, all the heirs, Sixto, Roberto,
Antonio, Benjamin all surnamed Sandejas were ordered
to move for the appointment of [a] new administrator.
On October 16, 1985, the same heirs were given a
period of fifteen (15) days from said date within which to
move for the appointment of the new administrator.
Compliance was set for October 30, 1985, no
appearance for the aforenamed heirs. The aforenamed
heirs are hereby ordered to show cause within fifteen
(15) days from receipt of this Order why this Petition for
Settlement of Estate should not be dismissed for lack of
interest and failure to comply with a lawful order of this
Court.
SO ORDERED. (Record, SP. Proc. No. R-83-15601,
p. 273)
On November 22, 1985, Alex A. Lina as petitioner filed
with the Regional Trial Court of Manila an Omnibus
Pleading for (1) petition for letters of administration [and]
(2) to consolidate instant case with SP. Proc. No. R-83-
15601 RTC-Branch XI-Manila, docketed therein as SP.
Proc. No. 85-33707 entitled IN RE: INTESTATE
ESTATE OF ELIODORO P. SANDEJAS, SR., ALEX A.
LINA PETITIONER, [for letters of administration]
(Record, SP. Proc. No. 85-33707, pp. 1-7). On
November 29, 1985, Branch XXXVI of the Regional Trial
Court of Manila issued an [O]rder consolidating SP.
Proc. No. 85-33707, with SP. Proc. No. R-83-15601
(Record, SP. Proc. No.85-33707, p. 13). Likewise, on
December 13, 1985, the Regional Trial Court of Manila,
Branch XI, issued an [O]rder stating that this Court has
no objection to the consolidation of Special Proceedings
No. 85-331707, now pending before Branch XXXVI of
this Court, with the present proceedings now pending
before this Branch (Record, SP. Proc. No. R-83-15601,
p. 279).
On January 15, 1986, Intervenor Alex A. Lina filed [a]
Motion for his appointment as a new administrator of the
Intestate Estate of Remedios R. Sandejas on the
following reasons:
5.01. FIRST, as of this date, [i]ntervenor has not
received any motion on the part of the heirs Sixto,
Antonio, Roberto and Benjamin, all surnamed Sandejas,
for the appointment of a new [a]dministrator in place of
their father, Mr. Eliodoro P. Sandejas, Sr.;
5.02. SECOND, since Sp. Proc. 85-33707, wherein the
[p]etitioner is herein Intervenor Alex A. Lina and the
instant Sp. PROC. R-83-15601, in effect are already
consolidated, then the appointment of Mr. Alex Lina as
[a]dministrator of the Intestate Estate of Remedios R.
Sandejas in instant Sp. Proc. R-83-15601, would be
beneficial to the heirs and also to the Intervenor;
5.03. THIRD, of course, Mr. Alex A. Lina would be
willing to give way at anytime to any [a]dministrator who
may be proposed by the heirs of the deceased
Remedios R. Sandejas, so long as such [a]dministrator
is qualified. (Record, SP. Proc. No. R-83-15601, pp.
281-283)
On May 15, 1986, the lower court issued an order
granting the [M]otion of Alex A. Lina as the new
[a]dministrator of the Intestate Estate of Remedios R.
Sandejas in this proceedings. (Record, SP. Proc. No.
R-83-15601, pp. 288-290)
On August 28, 1986, heirs Sixto, Roberto, Antonio and
Benjamin, all surnamed Sandejas, and heirs [sic] filed a
[M]otion for [R]econsideration and the appointment of
another administrator Mr. Sixto Sandejas, in lieu of
[I]ntervenor Alex A. Lina stating among others that it
[was] only lately that Mr. Sixto Sandejas, a son and heir,
expressed his willingness to act as a new administrator
of the intestate estate of his mother, Remedios R.
Sandejas (Record, SP. Proc. No. 85-33707, pp. 29-31).
On October 2, 1986, Intervenor Alex A. Lina filed his
[M]anifestation and [C]ounter [M]otion alleging that he
ha[d] no objection to the appointment of Sixto Sandejas
as [a]dministrator of the [i]ntestate [e]state of his mother
Remedios R. Sandejas (Sp. Proc. No. 85-15601),
provided that Sixto Sandejas be also appointed as
administrator of the [i]ntestate [e]state of his father,
Eliodoro P. Sandejas, Sr. (Spec. Proc. No. 85-33707),
which two (2) cases have been consolidated (Record,
SP. Proc. No. 85-33707, pp. 34-36). On March 30,
1987, the lower court granted the said [M]otion and
substituted Alex Lina with Sixto Sandejas as petitioner
in the said [P]etitions (Record, SP. Proc. No. 85-33707,
p.52). After the payment of the administrators bond
(Record, SP. Proc. No. 83-15601, pp. 348-349) and
approval thereof by the court (Record, SP. Proc. No. 83-
15601, p. 361), Administrator Sixto Sandejas on
January 16, 1989 took his oath as administrator of the
estate of the deceased Remedios R. Sandejas and
Eliodoro P. Sandejas (Record, SP. Proc. No. 83-15601,
p. 367) and was likewise issued Letters of
Administration on the same day (Record, SP. Proc. No.
83-15601, p. 366).
On November 29, 1993, Intervenor filed [an] Omnibus
Motion (a) to approve the deed of conditional sale
executed between Plaintiff-in-Intervention Alex A. Lina
and Elidioro [sic] Sandejas, Sr. on June 7, 1982; (b) to
compel the heirs of Remedios Sandejas and Eliodoro
Sandejas, Sr. thru their administrator, to execute a deed
of absolute sale in favor of [I]ntervenor Alex A. Lina
pursuant to said conditional deed of sale (Record, SP.
Proc. No. 83-15601, pp. 554-561) to which the
administrator filed a [M]otion to [D]ismiss and/or
[O]pposition to said omnibus motion on December 13,
1993 (Record, SP. Proc. No. 83-15601, pp. 591-603).
On January 13, 1995, the lower court rendered the
questioned order granting intervenors [M]otion for the
[A]pproval of the Receipt of Earnest Money with promise
to buy between Plaintiff-in-Intervention Alex A. Lina and
Eliodoro Sandejas, Sr. dated June 7, 1982 (Record, SP.
Proc. No. 83-15601, pp. 652-654). x x x.
The Order of the intestate courtxxix[5] disposed as
follows:
WHEREFORE, [i]ntervenors motion for the approval of
the Receipt Of Earnest Money With Promise To Sell
And To Buy dated June 7, 1982, is granted. The
[i]ntervenor is directed to pay the balance of the
purchase price amounting to P729,000.00 within thirty
(30) days from receipt of this Order and the
Administrator is directed to execute within thirty (30)
days thereafter the necessary and proper deeds of
conveyancing.xxx[6]
Ruling of the Court of Appeals

Overturning the RTC ruling, the CA held that the
contract between Eliodoro Sandejas Sr. and respondent
was merely a contract to sell, not a perfected contract of
sale. It ruled that the ownership of the four lots was to
remain in the intestate estate of Remedios Sandejas
until the approval of the sale was obtained from the
settlement court. That approval was a positive
suspensive condition, the nonfulfillment of which was
not tantamount to a breach. It was simply an event that
prevented the obligation from maturing or becoming
effective. If the condition did not happen, the obligation
would not arise or come into existence.
The CA held that Section 1, Rule 89xxxi[7] of the Rules
of Court was inapplicable, because the lack of written
notice to the other heirs showed the lack of consent of
those heirs other than Eliodoro Sandejas Sr. For this
reason, bad faith was imputed to him, for no one is
allowed to enjoy a claim arising from ones own
wrongdoing. Thus, Eliodoro Sr. was bound, as a matter
of justice and good faith, to comply with his contractual
commitments as an owner and heir. When he entered
into the agreement with respondent, he bound his
conjugal and successional shares in the property.
Hence, this Petition.xxxii[8]
Issues

In their Memorandum, petitioners submit the following
issues for our resolution:
a) Whether or not Eliodoro P. Sandejas Sr. is
legally obligated to convey title to the property referred
to in the subject document which was found to be in the
nature of a contract to sell where the suspensive
condition set forth therein [i.e.] court approval, was not
complied with;
b) Whether or not Eliodoro P. Sandejas Sr. was
guilty of bad faith despite the conclusion of the Court of
Appeals that the respondent [bore] the burden of
proving that a motion for authority to sell ha[d] been filed
in court;
c) Whether or not the undivided shares of Eliodoro
P. Sandejas Sr. in the subject property is three-fifth (3/5)
and the administrator of the latter should execute deeds
of conveyance therefor within thirty days from receipt of
the balance of the purchase price from the respondent;
and
d) Whether or not the respondents petition-in-
intervention was converted to a money claim and
whether the [trial court] acting as a probate court could
approve the sale and compel the petitioners to execute
[a] deed of conveyance even for the share alone of
Eliodoro P. Sandejas Sr.xxxiii[9]
In brief, the Petition poses the main issue of whether the
CA erred in modifying the trial courts Decision and in
obligating petitioners to sell 3/5 of the disputed
properties to respondent, even if the suspensive
condition had not been fulfilled. It also raises the
following collateral issues: (1) the settlement courts
jurisdiction; (2) respondent-intervenors standing to file
an application for the approval of the sale of realty in the
settlement case, (3) the decedents bad faith, and (4)
the computation of the decedents share in the realty
under administration.
This Courts Ruling

The Petition is partially meritorious.
Main Issue:

Obligation With a Suspensive Condition

Petitioners argue that the CA erred in ordering the
conveyance of the disputed 3/5 of the parcels of land,
despite the nonfulfillment of the suspensive condition --
court approval of the sale -- as contained in the Receipt
of Earnest Money with Promise to Sell and to Buy (also
referred to as the Receipt). Instead, they assert that
because this condition had not been satisfied, their
obligation to deliver the disputed parcels of land was
converted into a money claim.
We disagree. Petitioners admit that the agreement
between the deceased Eliodoro Sandejas Sr. and
respondent was a contract to sell. Not exactly. In a
contract to sell, the payment of the purchase price is a
positive suspensive condition. The vendors obligation
to convey the title does not become effective in case of
failure to pay.xxxiv[10]
On the other hand, the agreement between Eliodoro Sr.
and respondent is subject to a suspensive condition --
the procurement of a court approval, not full payment.
There was no reservation of ownership in the
agreement. In accordance with paragraph 1 of the
Receipt, petitioners were supposed to deed the disputed
lots over to respondent. This they could do upon the
courts approval, even before full payment. Hence, their
contract was a conditional sale, rather than a contract to
sell as determined by the CA.
When a contract is subject to a suspensive condition, its
birth or effectivity can take place only if and when the
condition happens or is fulfilled.xxxv[11] Thus, the
intestate courts grant of the Motion for Approval of the
sale filed by respondent resulted in petitioners
obligation to execute the Deed of Sale of the disputed
lots in his favor. The condition having been satisfied,
the contract was perfected. Henceforth, the parties
were bound to fulfill what they had expressly agreed
upon.
Court approval is required in any disposition of the
decedents estate per Rule 89 of the Rules of Court.
Reference to judicial approval, however, cannot
adversely affect the substantive rights of heirs to
dispose of their own pro indiviso shares in the co-
heirship or co-ownership.xxxvi[12] In other words, they
can sell their rights, interests or participation in the
property under administration. A stipulation requiring
court approval does not affect the validity and the
effectivity of the sale as regards the selling heirs. It
merely implies that the property may be taken out of
custodia legis, but only with the courts
permission.xxxvii[13] It would seem that the suspensive
condition in the present conditional sale was imposed
only for this reason.
Thus, we are not persuaded by petitioners argument
that the obligation was converted into a mere monetary
claim. Paragraph 4 of the Receipt, which petitioners
rely on, refers to a situation wherein the sale has not
materialized. In such a case, the seller is bound to
return to the buyer the earnest money paid plus interest
at fourteen percent per annum. But the sale was
approved by the intestate court; hence, the proviso does
not apply.
Because petitioners did not consent to the sale of their
ideal shares in the disputed lots, the CA correctly limited
the scope of the Receipt to the pro-indiviso share of
Eliodoro Sr. Thus, it correctly modified the intestate
courts ruling by excluding their shares from the ambit of
the transaction.
First Collateral Issue:

Jurisdiction of Settlement Court

Petitioners also fault the CA Decision by arguing, inter
alia, (a) jurisdiction over ordinary civil action seeking not
merely to enforce a sale but to compel performance of a
contract falls upon a civil court, not upon an intestate
court; and (b) that Section 8 of Rule 89 allows the
executor or administrator, and no one else, to file an
application for approval of a sale of the property under
administration.
Citing Gil v. Cancioxxxviii[14] and Acebedo v.
Abesamis,xxxix[15] petitioners contend that the CA
erred in clothing the settlement court with the jurisdiction
to approve the sale and to compel petitioners to execute
the Deed of Sale. They allege factual differences
between these cases and the instant case, as follows: in
Gil, the sale of the realty in administration was a clear
and an unequivocal agreement for the support of the
widow and the adopted child of the decedent; and in
Acebedo, a clear sale had been made, and all the heirs
consented to the disposition of their shares in the realty
in administration.
We are not persuaded. We hold that Section 8 of Rule
89 allows this action to proceed. The factual differences
alleged by petitioners have no bearing on the intestate
courts jurisdiction over the approval of the subject
conditional sale. Probate jurisdiction covers all matters
relating to the settlement of estates (Rules 74 & 86-91)
and the probate of wills (Rules 75-77) of deceased
persons, including the appointment and the removal of
administrators and executors (Rules 78-85). It also
extends to matters incidental and collateral to the
exercise of a probate courts recognized powers such as
selling, mortgaging or otherwise encumbering realty
belonging to the estate. Indeed, the rules on this point
are intended to settle the estate in a speedy manner, so
that the benefits that may flow from such settlement
may be immediately enjoyed by the heirs and the
beneficiaries.xl[16]
In the present case, the Motion for Approval was meant
to settle the decedents obligation to respondent; hence,
that obligation clearly falls under the jurisdiction of the
settlement court. To require respondent to file a
separate action -- on whether petitioners should convey
the title to Eliodoro Sr.s share of the disputed realty --
will unnecessarily prolong the settlement of the intestate
estates of the deceased spouses.
The suspensive condition did not reduce the conditional
sale between Eliodoro Sr. and respondent to one that
was not a definite, clear and absolute document of
sale, as contended by petitioners. Upon the
occurrence of the condition, the conditional sale became
a reciprocally demandable obligation that is binding
upon the parties.xli[17] That Acebedo also involved a
conditional sale of real propertyxlii[18] proves that the
existence of the suspensive condition did not remove
that property from the jurisdiction of the intestate court.
Second Collateral Issue: Intervenors Standing

Petitioners contend that under said Rule 89, only the
executor or administrator is authorized to apply for the
approval of a sale of realty under administration.
Hence, the settlement court allegedly erred in
entertaining and granting respondents Motion for
Approval.
We read no such limitation. Section 8, Rule 89 of the
Rules of Court, provides:
SEC. 8. When court may authorize conveyance of
realty which deceased contracted to convey. Notice.
Effect of deed.Where the deceased was in his lifetime
under contract, binding in law, to deed real property, or
an interest therein, the court having jurisdiction of the
estate may, on application for that purpose, authorize
the executor or administrator to convey such property
according to such contract, or with such modifications
as are agreed upon by the parties and approved by the
court; and if the contract is to convey real property to the
executor or administrator, the clerk of the court shall
execute the deed. x x x.
This provision should be differentiated from Sections 2
and 4 of the same Rule, specifically requiring only the
executor or administrator to file the application for
authority to sell, mortgage or otherwise encumber real
estate for the purpose of paying debts, expenses and
legacies (Section 2);xliii[19] or for authority to sell real or
personal estate beneficial to the heirs, devisees or
legatees and other interested persons, although such
authority is not necessary to pay debts, legacies or
expenses of administration (Section 4).xliv[20] Section 8
mentions only an application to authorize the
conveyance of realty under a contract that the deceased
entered into while still alive. While this Rule does not
specify who should file the application, it stands to
reason that the proper party must be one who is to be
benefited or injured by the judgment, or one who is to be
entitled to the avails of the suit.xlv[21]
Third Collateral Issue: Bad Faith

Petitioners assert that Eliodoro Sr. was not in bad faith,
because (a) he informed respondent of the need to
secure court approval prior to the sale of the lots, and
(2) he did not promise that he could obtain the approval.
We agree. Eliodoro Sr. did not misrepresent these lots
to respondent as his own properties to which he alone
had a title in fee simple. The fact that he failed to obtain
the approval of the conditional sale did not automatically
imply bad faith on his part. The CA held him in bad faith
only for the purpose of binding him to the conditional
sale. This was unnecessary because his being bound
to it is, as already shown, beyond cavil.
Fourth Collateral Issue: Computation of Eliodoros Share

Petitioners aver that the CAs computation of Eliodoro
Sr.s share in the disputed parcels of land was
erroneous because, as the conjugal partner of
Remedios, he owned one half of these lots plus a
further one tenth of the remaining half, in his capacity as
a one of her legal heirs. Hence, Eliodoros share should
be 11/20 of the entire property. Respondent poses no
objection to this computation.xlvi[22]
On the other hand, the CA held that, at the very least,
the conditional sale should cover the one half (1/2) pro
indiviso conjugal share of Eliodoro plus his one tenth
(1/10) hereditary share as one of the ten legal heirs of
the decedent, or a total of three fifths (3/5) of the lots in
administration.xlvii[23]
Petitioners computation is correct. The CA computed
Eliodoros share as an heir based on one tenth of the
entire disputed property. It should be based only on the
remaining half, after deducting the conjugal
share.xlviii[24]
The proper determination of the seller-heirs shares
requires further explanation. Succession laws and
jurisprudence require that when a marriage is dissolved
by the death of the husband or the wife, the decedents
entire estate under the concept of conjugal properties
of gains -- must be divided equally, with one half going
to the surviving spouse and the other half to the heirs of
the deceased.xlix[25] After the settlement of the debts
and obligations, the remaining half of the estate is then
distributed to the legal heirs, legatees and devices. We
assume, however, that this preliminary determination of
the decedents estate has already been taken into
account by the parties, since the only issue raised in this
case is whether Eliodoros share is 11/20 or 3/5 of the
disputed lots.
WHEREFORE, the Petition is hereby PARTIALLY
GRANTED. The appealed Decision and Resolution are
AFFIRMED with the MODIFICATION that respondent is
entitled to only a pro-indiviso share equivalent to 11/20
of the disputed lots.
SO ORDERED.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and
Sandoval-Gutierrez, JJ., concur.
EN BANC

[G.R. No. L-24434. January 17, 1968.]

HEIRS OF PEDRO REGANON, JOVENCIA
REGANON, MENCIAS REGANON, JOSEFA
REGANON, VIOLETA REGANON and FLORA
REGANON, Plaintiffs-Appellees, v. RUFINO
IMPERIAL, Defendant-Appellant.

Torcuato L. Galon for Plaintiffs-Appellees.

V. Lacaya, for Defendant-Appellant.

SYLLABUS

1. ATTACHMENT; PROPERTY IN CUSTODIA LEGIS;
NEW RULES OF COURT, EFFECT. Under the old
Rules it was held that property under custodial legis
cannot be attached. The New Rules, however,
specifically provides for the procedure to be followed in
case the property to be attached is in custodia legis.
The clear import of this new provisions is that property
under custodia legis is now attachable, subject to the
mode set forth in said rule. (Rule 57, Section 7)

2. ID.; ID.; EFFECT OF DEATH UPON
GUARDIANSHIP OF DECEASED WARD. The death
of the ward necessarily terminates the guardianship and
thereupon all powers and duties of the guardian cease,
except the duty which remains to make a proper
accounting and settlement in the probate court. Upon
the death of the ward, Eulogio Imperial on September
13, 1962, the rights to his succession from the moment
of his death were transmitted to his heirs.

3. SUCCESSION; AUTOMATIC TRANSMISSION OF
RIGHTS TO HEIRS, UPON MOMENT OF DEATH.
The rights to the succession of a person are transmitted
from the moment of death and, where, as in this case,
the heir is of legal age and the estate is not burdened
with any debts, said heir immediately succeeds, by force
of law to the dominion, ownership and possession of the
properties of his predecessor, and consequently stands
legally in shoes of the latter.

4. JUDGMENT; EXECUTION OF JUDGMENT;
INTERESTS OF AN HEIR, IN ESTATE OF DECEASED
PERSON, SUBJECT TO ATTACHMENT FOR
PURPOSES OF EXECUTION. The interest of an
heir, in the estate of a deceased person may be
attached for purpose of execution even if the estate is in
the process of settlement before the courts. This is a
settled matter in this jurisdiction.

5. SUCCESSION; EXTRAJUDICIAL PARTITION;
EFFECT. The Deed of Extrajudicial Partition
executed by the heirs on May 25, 1964, provided all the
requisites of its validity were fulfilled settled the entire
estate of the decedent and the heirs were at full liberty
to withdraw the residuary estate from the Philippine
National Bank Dipolog Branch, and divide it among
themselves.

6. ID.; EXEMPTION FROM EXECUTION OF
MONTHLY USVA ALLOWANCES, A RIGHT
PERSONALISSIMA, NOT TRANSMISSIBLE TO HEIRS
OF THE DECEASED VETERAN. Any pension,
annuity or gratuity granted by the Government in
recognition of past services rendered is primordially
aimed at tiding its beneficiaries during their old age
and/or disability. This right is personalissima, purely
personal, because founded on necessity. Where the
recipient dies, however, the motivating necessity
underlying the grant ceases to exist. With more reason
in this case where the law (Rep. Act 360) providing for
exemption from execution is intended to benefit US
veterans residing here and is merely a manifestation of
comity.

7. CIVIL LAW; PARTITION, EXTRAJUDICIAL; EFFECT
THEREOF. Where the heirs have divided the estate
among themselves through a Deed of Extra-Judicial
Partition, as in this case, the end result is that the
property is no longer that of the estate but of the
individual heirs. Thus, one of the heirs cannot thereafter
secure the appointment of an administrator to take
charge of and administer the estate or a part thereof,
which no longer pertains to the estate but to the
individual heirs, whether it remains undivided or not.

D E C I S I O N

BENGZON, J.P., J .:

This is an appeal from the orders dated June 9, 1964,
July 14, 1964 and August 11, 1964, respectively, of the
Court of First Instance of Zamboanga del Norte
(Dipolog, Branch II).

The facts of the case are admitted by both parties.

On February 22, 1963, the heirs of Pedro Reganon filed
a complaint for recovery of ownership and possession of
about one- hectare portion of a parcel of land (Lot No. 1
or Lot No. 4952, situated at Miasi, Polanco, Zamboanga
del Norte, covered by O.T.C. No. 1447, with an area of
7,9954 hectares), with damages, against Rufino
Imperial.

Defendant not having filed an answer within the
reglementary period, the plaintiffs on April 8, 1963 filed
a motion to declare the former in default. The trial court
granted the motion in its order dated April 10, 1963.

On April 23, 1963, the plaintiffs presented their evidence
ex parte before the Clerk of Court acting as
Commissioner.

The court a quo on May 6, 1963, rendered a decision
declaring the plaintiffs lawful owners of the land in
question and entitled to its peaceful possession and
enjoyment; ordering defendant immediately to vacate
the portion occupied by him and to restore the peaceful
possession thereof to plaintiffs; and sentencing
defendant to pay plaintiffs to amount of P1,929.20 and
the costs.

On November 29, 1963, the plaintiffs filed a motion for
issuance of a writ of execution. This was granted by the
trial court in its order of December 9, 1963.

The Deputy Provincial Sheriff submitted on February 8,
1964 a sheriffs return of proceedings reporting the
garnishment and sale of a carabao and goat belonging
to defendant for P153.00, and the attachment and sale
of defendants parcel of land covered by Tax
Declaration No. 4694, situated in Sicet, Polanco,
Zamboanga del Norte, for P500.00 both sales having
been made to the only bidder, plaintiffs counsel Atty.
Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank
deposited in the Philippine National Bank-Dipolog
Branch the residuary estate of its former ward, Eulogio
Imperial, in the sum of P10,303.80, pursuant to an order
of Branch I of the Court of First Instance of Zamboanga
del Norte in Sp. Proc. No. R-145.

On May 25, 1964, the heirs of said Eulogio Imperial, one
of whom is defendant, executed a Deed of Extrajudicial
Partition of the residuary estate, wherein was
apportioned P1,471.97 as defendant Rufino
Imperials share.

Informed of this development, the plaintiffs filed on June
5, 1964 an ex parte motion for issuance of an alias writ
of execution and of an order directing the manager, or
the representative, of the Philippine National Bank
Dipolog Branch, to hold the share of defendant and
deliver the same to the provincial sheriff of the province
to be applied to the satisfaction of the balance of the
money judgment. This was granted by the trial court
(Branch II) in its order dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued
a sheriffs notification for levy addressed to defendant,
giving notice of the garnishment of the rights, interests,
shares and participation that defendant may have over
the residuary estate of the late Eulogio Imperial,
consisting of the money deposited in the Philippine
National Bank Dipolog Branch.

Defendant, through counsel, appearing for the first time
before the trial court, on June 24, 1964 filed a motion for
reconsideration of the order dated June 9, 1964, and to
quash the alias writ of execution issued pursuant to it, to
which plaintiffs filed their opposition on July 6, 1964. On
July 14, 1964, the trial court denied defendants
aforesaid motion.

Defendants second motion for reconsideration likewise
having been denied by the trial court in its order of
August 11, 1964, defendant appealed to Us, raising the
following issues:chanrob1es virtual 1aw library

(1) Upon the death of a ward, is the money accumulated
in his guardianship proceedings and deposited in a
bank, still considered in custodia legis and therefore not
subject to attachment?

(2) Is the residuary estate of a U.S. veteran, which
consists in the aggregate accumulated sum from the
monthly allowances given him by the United States
Veterans Administration (USVA) during his lifetime,
exempt from execution?

Defendant-appellant argues that the property of an
incompetent under guardianship is in custodia legis and
therefore can not be attached.

It is true that in a former case 1 it was held that property
under custodia legis can not be attached. But this was
under the old Rules of Court. The new Rules of Court 2
now specifically provides for the procedure to be
followed in case what is attached is in custodia legis. 3
The clear import of this new provision is that property
under custodia legis is now attachable, subject to the
mode set forth in said rule.

Besides, the ward having died, the guardianship
proceedings no longer subsist:jgc:chanrobles.com.ph

"The death of the ward necessarily terminates the
guardianship, and thereupon all powers and duties of
the guardian cease, except the duty, which remains, to
make a proper accounting and settlement in the probate
court." 4

As a matter of fact, the guardianship proceedings was
ordered conditionally closed by Branch I of the Court of
First Instance of Zamboanga del Norte in which it was
pending, in its order of February 8, 1964, where it stated


"In the meantime, the guardian Philippine National Bank
is hereby directed to deposit the residuary estate of said
ward with its bank agency in Dipolog, this province, in
the name of the estate of the deceased ward Eulogio
Imperial, preparatory to the eventual distribution of the
same to the heirs when the latter shall be known, and
upon proof of deposit of said residuary estate, the
guardian Philippine National Bank shall forthwith be
relieved from any responsibility as such, and this
proceedings shall be considered closed and
terminated." 5

And the condition has long been fulfilled, because on
March 13, 1964 the Philippine National Bank Manila
deposited the residuary estate of the ward with the
Philippine National Bank-Dipolog Branch, evidenced by
a receipt attached to the records in Sp. Proc. No. R-
145. 6

When Eulogio Imperial died on September 13, 1962, the
rights to his succession from the moment of his death
were transmitted to his heirs, one of whom is his son
and heir, Defendant-Appellant herein. 7 This automatic
transmission can not but proceed with greater ease and
certainty than in this case where the parties agree that
the residuary estate is not burdened with any debt. For,

"The rights to the succession of a person are
transmitted from the moment of death, and where, as in
this case, the heir is of legal age and the estate is not
burdened with any debts, said heir immediately
succeeds, by force of law, to the dominion, ownership,
and possession of the properties of his predecessor,
and consequently stands legally in the shoes of the
latter." 8

That the interest of an heir in the estate of a deceased
person may be attached for purposes of execution, even
if the estate is in the process of settlement before the
courts, is already a settled matter in this jurisdiction. 9 It
is admitted that the heirs of Eulogio Imperial, including
herein defendant-appellant, have on May 25, 1964
executed a Deed of Extrajudicial Partition. This
instrument suffices to settle the entire estate of the
decedent provided all the requisites for its validity are
fulfilled 10 even without the approval of the court.
Therefore, the estate for all practical purposes has been
settled. The heirs are at full liberty to withdraw the
residuary estate from the Philippine National Bank-
Dipolog Branch and divide it among themselves. The
only reason they have not done so is because of the
alleged illegal withdrawal from said estate of the amount
of P1,080.00 by one Gloria Gomez by authority of
Branch I of the Court of first Instance of Zamboanga del
Norte, which incident is now on appeal before the Court
of Appeals. This appeal, however, does not detract any
from the fact that the guardianship proceedings is
closed and terminated and the residuary estate no
longer under custodia legis.

Finally, it is defendant-appellants position that the
residuary estate of Eulogio Imperial, a former U.S.
veteran, having been set aside from the monthly
allowances given him by the United States Veterans
Administration (USVA) during his lifetime, is exempt
from execution.

Any pension, annuity. or gratuity granted by a
Government to its officers or employees in recognition
of past services rendered, is primordially aimed at tiding
them over during their old age and/or disability. This is
therefore a right personalissima, purely personal
because founded on necessity. It requires no argument
to show that where the recipient dies, the necessity
motivating or underlying its grant necessarily ceases to
be. Even more so in this case where the law 11
providing for the exemption is calculated to benefit U.S.
veterans residing here, and is therefore merely a
manifestation of comity.

Besides, as earlier stated, the heirs of Eulogio Imperial,
one of whom is appellant, have already executed a
Deed of Extrajudicial Partition the end result of which
is that the property is no longer the property of the
estate but of the individual heirs. And it is settled
that:jgc:chanrobles.com.ph

"When the heirs by mutual agreement have divided the
estate among themselves, one of the heirs can not
thereafter secure the appointment of an administrator to
take charge of and administer the estate or a part
thereof. The property is no longer the property of the
estate, but of the individual heirs, whether it remains
undivided or not." 12

WHEREFORE, the orders appealed from are hereby
affirmed, with costs against defendant-appellant. So
ordered.

Concepcion, C.J., J.B.L., Reyes, Dizon, Makalintal,
Zaldivar, Sanchez, Ruiz Castro, Angeles and Fernando,
JJ., concur.

PhilippineLaw.info Jurisprudence 1967 June
PhilippineLaw.info Jurisprudence SCRA Vol. 20
G.R. No. L-25952, Salvador v. Enriquez, 20 SCRA
603
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
June 30, 1967
G.R. No. L-25952
MARGARITA SALVADOR, in her own behalf and as
Attorney-in-fact of CANDIDA SALVADOR, ET AL.,
petitioners,
vs.
THE HON. JUDGE ANDRES STA. MARIA,
DOMINADOR CARDENAS, REMEDIOS CABRERA,
ALBERTO M. K. JAMIR and SIMEON ENRIQUEZ,
respondents.
Arturo Joaquin for petitioners.
Pelaez, Jalandoni and Jamir and S. V. Enriquez, for
respondent Simeon Enriquez.
C. E. Medina and J. M. Locsin for respondent Philippine
National Bank.
Bala and Enriquez for the other respondents.
BENGZON, J.P., J .:
Seven parcels of titled land and two parcels of untitled
land, situated in Bigaa, Bulacan, were owned by
Celestino Salvador. In 1941, he executed a deed of sale
over them in favor of the spouses Alfonso Salvador and
Anatolia Halili. Alleging that the sale was void for lack of
consideration, he filed on May 12,1955, against said
vendees, a suit for reconveyance of said parcels of land
(CFI of Bulacan, Br. I, Civil Case No. 1082).
On April 27, 1956, Celestino Salvador died, testate. As
his alleged heirs, twenty-one persons
[[1]]
were on May
18, 1956 substituted as plaintiffs in the action for
reconveyance. And meanwhile, special proceedings for
the probate of his will and for letters testamentary was
instituted (CFI of Bulacan, Br. II, Sp. Proceedings No.
940). In said proceedings, Dominador Cardenas was
appointed on June 11, 1956 special administrator of
Celestino Salvador's testate estate.
On September 4, 1956 the administrator filed in Sp.
Proceedings No. 940 an inventory of properties of the
estate, covering the same parcels of land subject matter
of the reconveyance action. On September 7, 1956,
Celestino Salvador's will was admitted to probate and
Dominador Cardenas was appointed executor of said
will. Actual issuance of letters testamentary to him was
made on October 27, 1956.
Twenty-three (23) persons were instituted heirs in the
will. Of these, nine (9) were not among the twenty-one
(21) alleged relatives substituted in the reconveyance
case; and of the twenty-one (21) substituted alleged
heirs seven (7) were not instituted in the will. 2
In the suit for reconveyance, on November 26, 1956, the
Court (CFI of Bulacan, Br. I) rendered judgment,
ordering the defendants therein (the spouses Alfonso
and Anatolia), to reconvey the parcels of land to the
estate of Celestino Salvador. Appeal therefrom to the
Court of Appeals was interposed by said defendants.
On August 12, 1961, the Court of Appeals affirmed the
reconveyance judgment, with the correction that
reconveyance be in favor of the twenty-one (21) heirs
substituted as plaintiffs therein.
About three years later, pursuant to an order of the CFI
of Bulacan, Br. II, in the testacy proceedings, dated April
21, 1964, one of the parcels of land involved, Lot 6, was
sold so that with its proceeds debtors who filed claims
may be paid. The Philippine National Bank bought it at
P41,184.00. Said amount was then deposited in the
same bank by the administrator, subject to Court order.
On December 18, 1964, defendants in the suit for
reconveyance executed a deed of reconveyance over
the subject parcels of land, in favor of Celestino
Salvador's estate. Revoking the same as lot in
accordance with the final judgment therein, the CFI of
Bulacan, Br. I, on September 24, 1965, ordered a new
deed of reconveyance to be executed, in favor of the
twenty-one persons substituted as plaintiffs in that
action. Accordingly, on September 30, 1965, a new
deed of reconveyance was made, in favor of said
twenty-one (21) persons as heirs of Celestino.
Following this, on November 22, 1965, said Br. I,
ordered the corresponding title certificate (TCT No.
54639) in the administrator's name, cancelled; new title
certificate to be issued in the names of the same twenty-
one (21) persons. Said order was carried out, and TCT
No. 63734 was issued in the names of the twenty-one
persons. 3
On December 7, 1965, Br. I (reconveyance court)
ordered the Philippine National Bank to release the
P41,184.00 proceeds of the sale of Lot 6, to the twenty-
one (21) plaintiffs in the reconveyance case. Apparently,
although the passbook was given by the administrator to
said twenty-one persons, no release was made, as the
Philippine National Bank awaited Br. II's order.
Br. II, on March 1, 1966, approved the following claims
against the estate:
Taxes Nat'l. gov't P5,328.23
Atty's fees Atty. Enriquez 8,000.00
Atty's fees Atty. Jamir 12,000.00
Loan R. Cabrera 13,544.35
T O T A L . . . . . . . .

38,872.58
=========
On March 30, 1966, said Br. II (probate court), ordered
return of the passbook to the administrator; and release
to the administrator by the PNB of the P41,184.00, or so
much thereof is needed to pay the afore-stated debts of
the estate.
After failing to get reconsideration of said order, the
twenty-one (21) substituted heirs, on April 25, 1966,
filed with Us the present special civil action for certiorari
with preliminary injunction to assail the order to pay the
debts of the estate with the P41,184.00 proceeds of the
sale of Lot 6; and to question Br. II's (probate court)
power to dispose of the parcels of land involved in the
reconveyance suit in Br. I.
Raised are these issues: (1) Are the parcels of land and
the proceeds of the sale of one of them, properties of
the estate or not? (2) Does final judgment in the
reconveyance suit in favor of the twenty-one so-called
heirs who substituted Celestino Salvador, bar the
disposition of the reconveyed properties by the
settlement court?
It is a settled point of law that the right of heirs to
specific, distributive shares of inheritance does not
become finally determinable until all the debts of the
estate are paid. Until then, in the face of said claims,
their rights cannot be enforced, are inchoate, and
subject to the existence of a residue after payment of
the debts (Castellvi de Raquiza v. Castellvi, L-17630,
October 31, 1963; Jimoga-on v. Belmonte, 84 Phil. 545;
Sec. 1, Rule 90, Rules of Court).
Petitioners do not question the existence of the debts
abovementioned. They only contend that the properties
involved having been ordered by final judgment
reconveyed to them, not to the estate the same are not
properties of the estate but their own, and thus, not
liable for debts of the estate.
Said contention is self-refuting. Petitioners rely for their
rights on their alleged character as heirs of Celestino; as
such, they were substituted in the reconveyance case;
the reconveyance to them was reconveyance to them
as heirs of Celestino Salvador. It follows that the
properties they claim are, even by their own reasoning,
part of Celestino's estate. The right thereto as allegedly
his heirs would arise only if said parcels of land are part
of the estate of Celestino, not otherwise. Their having
received the same, therefore, in the reconveyance
action, was perforce in trust for the estate, subject to its
obligations. They cannot distribute said properties
among themselves as substituted heirs without the
debts of the estate being first satisfied.
At any rate, the proceeds of Lot 6 alone (P41,184.00)
appears more than sufficient to pay the debt
(P38,872.58); and there will remain the other parcels of
land not sold. As to the question of who will receive how
much as heirs, the same is properly determinable by the
settlement court, after payment of the debts (Pimentel v.
Palanca, 5 Phil. 436; Maningat v. Castillo, 75 Phil. 532;
Jimoga-on v. Belmonte, supra).
Wherefore, the petition for certiorari is denied, without
costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,
Zaldivar Sanchez and Castro JJ., concur.
G.R. No. L-25049, Ramirez, Ramirez and Eguaras v.
Baltazar et al., 24 SCRA 918
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
August 30, 1968
G.R. No. L-25049
FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE
EGUARAS, plaintiffs-appellants,
vs.
ARTEMIO BALTAZAR, ET AL., defendants-appellees.
Eduardo M. Peralta for plaintiffs-appellants.
Tomas P. Anonuevo for defendants-appellees Artemio
Baltazar and Susana Flores.
Tirso Caballero for defendant-appellee Artemio Diawan.
ANGELES, J .:
On appeal from an order dismissing the complaint, on
motion to dismiss, in Civil Case No. SC-319 of the Court
of First Instance of Laguna.
It appears that on 6 January 1959, Victoriana Eguaras
single, made and executed a real estate mortgage over
a parcel of land, owned by her in fee simple, as security
for a loan of P2,170.00 in favor of the spouses Artemio
Baltazar and Susana Flores.
Upon the demise of the mortgagor, the mortgagees, as
creditors of the deceased, on 16 September 1960 filed a
petition for the intestate proceedings of her estate, in the
Court of First Instance of Laguna, docketed as Civil
Case No. SC-99 wherein said mortgages, as petitioners,
alleged that Filemon Ramirez and Monica Ramirez are
the heirs of the deceased. Filemon Ramirez was
appointed administrator of the estate; however, having
failed to qualify, on 16 January 1961, the court
appointed Artemio Diawan, then a deputy clerk of court,
administrator of the estate who, in due time, qualified for
the office.
On 19 April 1961, the mortgagees, Artemio Baltazar and
Susana Flores, filed a complaint for foreclosure of the
aforesaid mortgage, against Artemio Diawan, in his
capacity as administrator of the estate, docketed as Civil
Case No. SC-292 of the Court of First Instance of
Laguna. The defendant-administrator was duly served
with summons but he failed to answer, whereupon, on
petition of the plaintiffs said defendant was declared in
default. The case was referred to a commissioner to
receive the evidence for the plaintiffs, and defendant-
administrator, as deputy clerk of court, acted as such
hearing commissioner.
On 16 August 1961, decision was rendered decreeing
the foreclosure of the mortgaged property and the sale
thereof, if, within ninety days from finality of the
decision, the obligation was not fully paid. The judgment
not having been satisfied, a writ of execution was issued
for the sale of the mortgaged property, and after
compliance with the requirements of the law regarding
the sending, posting and publication of the notice of
sale, the Sheriff sold the property at public auction to the
highest bidder, who happened to be the plaintiffs
themselves, for the sum of P2,888.50 covering the
amount of the judgment, plus the expenses of the sale
and the Sheriff's fees. On petition of the plaintiffs, the
sale was confirmed by the court on 26 January 1962.
On 6 February 1962, Filemon Ramirez, Monica Ramirez
and Jose Eguaras, the first two being the heirs named in
the petition for intestate proceedings, filed a complaint
designated "For the Annulment of all Proceedings in
said Civil Case No. SC-292 for the Foreclosure of the
Mortgage", against the spouses Artemio Baltazar and
Susana Flores, and Artemio Diawan, in his capacity as
administrator of the estate of Victoriana Eguaras,
deceased, and Silverio Talabis, in his capacity as
deputy provincial sheriff of Laguna, docketed as Civil
Case No. SC-319 of the Court of First Instance of
Laguna.
The facts hereinabove narrated are, succinctly,
contained in the complaint in said Civil Case No. SC-
319, with the additional averments that the defendant
Diawan, the deputy clerk of court appointed as
administrator of the intestate estate of the deceased,
acted in collusion with the other defendants Artemio
Baltazar and Susana Flores, deliberately and in fraud of
the plaintiffs: (a) in allowing the reglementary period
within which to file an answer to lapse without notifying
and/or informing the said plaintiffs of the complaint for
foreclosure, as a result of which he was declared in
default to the prejudice of the estate which he
represents; (b) that had the plaintiffs (Monica and
Filemon) been notified of the pendency of the case, the
defendant administrator could have interposed a
counterclaim because payment in the sum of P1,548.52
had been made and received by the mortgagees on
account of the debt; (c) in presiding as hearing officer in
the ex parte hearing in Civil Case No. 292, to receive
evidence for plaintiffs therein, notwithstanding the fact
that there was another deputy clerk of court available
who could have acted in his stead, as a result of which
an anomalous situation was created whereby he was a
defendant and at the same time a commissioner
receiving evidence against himself as administrator; (d)
in allowing judgment to become final without notifying
the plaintiffs; (e) in deliberately, allowing the 90-day
period within which to make payment to expire without
notifying the heirs, as a result of which the said heirs
were not afforded an opportunity to make payments
ordered by the Court in its decision; and (f) in refusing to
help the heirs seek postponement of the auction sale. It
is also alleged that it was only when the property
foreclosed was published for sale at public auction that
the heirs came to know about the foreclosure
proceedings.
The defendants spouses, Artemio Baltazar and Susana
Flores, filed a motion to dismiss the complaint on the
ground that the plaintiffs have no legal capacity to sue;
defendant Diawan likewise moved to dismiss on two
grounds: that plaintiffs have no legal capacity to sue and
that the complaint states no cause of action.
Despite vigorous opposition interposed by the plaintiffs
against the aforesaid motions to dismiss, the court, on
13 March 1962, dismissed the complaint with costs
against the plaintiffs, reasoning thus: that "upon
consideration of the evidence, said defendant could not
have offered any evidence to avoid the foreclosure of
the mortgage which the Court found to be in order.
Under the circumstances and with the apparent
disinterestedness of Filemon and Rolando to qualify as
administrator when appointed, there could not have
been any connivance and/or collusion between plaintiffs
in this case and Artemio Diawan as administrator"; and
that plaintiffs have no legal capacity to sue since their
status as legal heirs of the deceased has yet to be
determined precisely in Special Proceeding No. SC-99,
and until such status is so fixed by the Court, they have
no cause of action against defendants.
In that order of 13 March 1962, the court also denied
plaintiffs' petition for the issuance of a writ of preliminary
injunction to enjoin defendants from entering and taking
physical possession of the land in question on the
ground "that possession thereof was effected and
delivered by the Provincial Sheriff to Artemio Baltazar
and Susana Flores on February, 1962."
Reconsideration of the aforesaid order having been
denied, the plaintiffs took the present appeal where they
assigned the following errors: (1) in holding that
plaintiffs-appellants have no legal capacity to sue until
their status as legal heirs of the deceased is determined
in Special Proceeding No. SC-99; (2) in ruling that there
was no collusion or connivance among the defendants-
appellees, despite the fact that the issue in the motion to
dismiss is purely legal, not factual; and (3) in denying
the petition for a writ of preliminary injunction.
At the outset, let it be remembered that the defendants-
appellees, in availing themselves of the defense that the
plaintiffs-appellants had not been declared to be the
heirs of the deceased Victoriana Eguaras, have
overlooked the fact that the (defendants-appellees)
themselves in their petition for intestate proceedings
(Case SC-99) have alleged that Filemon Ramirez and
Monica Ramirez, two of herein plaintiffs-appellants, are
the heirs of the deceased. Insofar as defendants-
appellees are concerned, it is our opinion that they are
estopped from questioning the heirship of these two
named persons to the estate of the deceased.
There is no question that the rights to succession are
automatically transmitted to the heirs from the moment
of the death of the decedent.
[[1]]
While, as a rule, the
formal declaration or recognition to such successional
rights needs judicial confirmation, this Court has, under
special circumstances, protected these rights from
encroachments made or attempted before the judicial
declaration.
[[2]]
In Pascual vs. Pascual,
[[3]]
it was ruled
that although heirs have no legal standing in court upon
the commencement of testate or intestate proceedings,
this rule admits of an exception as "when the
administrator fails or refuses to act in which event the
heirs may act in his place."
A similar situation obtains in the case at bar. The
administrator is being charged to have been in collusion
and connivance with the mortgagees of a property of the
deceased, allowing its foreclosure without notifying the
heirs, to the prejudice of the latter. Since the ground for
the present action to annul the aforesaid foreclosure
proceedings is the fraud resulting from such insidious
machinations and collusion in which the administrator
has allegedly participated, it would be farfetched to
expect the said administrator himself to file the action in
behalf of the estate. And who else but the heirs, who
have an interest to assert and to protect, would bring the
action? Inevitably, this case should fall under the
exception, rather than the general rule that pending
proceedings for the settlement of the estate, the heirs
have no right to commence an action arising out of the
rights belonging to the deceased.
On the second point raised, We fully agree with the
plaintiffs-appellants that the lower court had gone too far
in practically adjudicating the case on the merits when it
made the observation that "there could not have been
any connivance and/or collusion between plaintiffs in
this case and Artemio Diawan as administrator." A
thorough scrutiny of the allegations in the motions to
dismiss filed by defendants-appellees does not indicate
that that question was ever put at issue therein. On the
other hand, the controversy on the existence or
inexistence of collusion between the parties as a result
of which judgment was rendered against the estate is
the very core of the complaint that was dismissed.
Undoubtedly, the cause of action is based on Section
30, Rule 132 of the Rules of Court.
We are not, however, in accord with the third assigned
error the denial of the motion for the issuance of
preliminary injunction for it puts at issue the factual
finding made by the lower court that the defendants had
already been placed in possession of the property. At
this stage of the proceeding, and considering the nature
of the case before Us, such a question is, at this time,
beyond the competence of the Court.
PREMISES CONSIDERED, the order appealed from is
hereby set aside insofar as it dismissed the complaint in
Civil Case No. SC-319, and the records be remanded to
the lower court for further proceedings. Costs against
defendants-appellees. The Clerk of Court is directed to
furnish a copy of this decision to the Department of
Justice for its information.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,
Zaldivar, Sanchez, Castro and Fernando, JJ., concur.
THIRD DIVISION

JOSELITO MUSNI PUNO
(as heir of the late Carlos Puno),
Petitioner,

G.R. No. 177066

Present:



- versus -




PUNO ENTERPRISES, INC., represented by
JESUSA PUNO,
Respondent.


YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.


Promulgated:

September 11, 2009

x------------------------------------------------------------------------------
------x


DECISION

NACHURA, J .:


Upon the death of a stockholder, the heirs do not
automatically become stockholders of the corporation;
neither are they mandatorily entitled to the rights and
privileges of a stockholder. This, we declare in this
petition for review on certiorari of the Court of Appeals
(CA) Decision10[1] dated October 11, 2006 and
Resolution dated March 6, 2007 in CA-G.R. CV No.
86137.

The facts of the case follow:




Carlos L. Puno, who died on June 25, 1963, was an
incorporator of respondent Puno Enterprises, Inc. On
March 14, 2003, petitioner Joselito Musni Puno,
claiming to be an heir of Carlos L. Puno, initiated a
complaint for specific performance against respondent.
Petitioner averred that he is the son of the deceased
with the latters common-law wife, Amelia Puno. As
surviving heir, he claimed entitlement to the rights and
privileges of his late father as stockholder of
respondent. The complaint thus prayed that respondent
allow petitioner to inspect its corporate book, render an
accounting of all the transactions it entered into from
1962, and give petitioner all the profits, earnings,
dividends, or income pertaining to the shares of Carlos
L. Puno.11[2]

Respondent filed a motion to dismiss on the ground that
petitioner did not have the legal personality to sue
because his birth certificate names him as Joselito
Musni Muno. Apropos, there was yet a need for a
judicial declaration that Joselito Musni Puno and
Joselito Musni Muno were one and the same.

The court ordered that the proceedings be held in
abeyance, ratiocinating that petitioners certificate of live
birth was no proof of his paternity and relation to Carlos
L. Puno.

Petitioner submitted the corrected birth certificate with
the name Joselito M. Puno, certified by the Civil
Registrar of the City of Manila, and the Certificate of
Finality thereof. To hasten the disposition of the case,
the court conditionally admitted the corrected birth
certificate as genuine and authentic and ordered
respondent to file its answer within fifteen days from the
order and set the case for pretrial.12[3]






On October 11, 2005, the court rendered a Decision, the
dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered
ordering Jesusa Puno and/or Felicidad Fermin
to allow the plaintiff to inspect the corporate
books and records of the company from 1962
up to the present including the financial
statements of the corporation.

The costs of copying shall be shouldered by the
plaintiff. Any expenses to be incurred by the
defendant to be able to comply with this order
shall be the subject of a bill of costs.

SO ORDERED.13[4]

On appeal, the CA ordered the dismissal of the
complaint in its Decision dated October 11, 2006.
According to the CA, petitioner was not able to establish
the paternity of and his filiation to Carlos L. Puno since
his birth certificate was prepared without the intervention
of and the participatory acknowledgment of paternity by
Carlos L. Puno. Accordingly, the CA said that petitioner
had no right to demand that he be allowed to examine
respondents books. Moreover, petitioner was not a
stockholder of the corporation but was merely claiming
rights as an heir of Carlos L. Puno, an incorporator of
the corporation. His action for specific performance
therefore appeared to be premature; the proper action
to be taken was to prove the paternity of and his filiation
to Carlos L. Puno in a petition for the settlement of the
estate of the latter.14[5]






Petitioners motion for reconsideration was
denied by the CA in its Resolution15[6] dated March 6,
2007.

In this petition, petitioner raises the following
issues:

I. THE HONORABLE COURT OF
APPEALS ERRED IN NOT RULING THAT THE
JOSELITO PUNO IS ENTITLED TO THE
RELIEFS DEMANDED HE BEING THE HEIR
OF THE LATE CARLOS PUNO, ONE OF THE
INCORPORATORS [OF] RESPONDENT
CORPORATION.

II. HONORABLE COURT OF
APPEALS ERRED IN RULING THAT
FILIATION OF JOSELITO PUNO, THE
PETITIONER[,] IS NOT DULY PROVEN OR
ESTABLISHED.

III. THE HONORABLE COURT ERRED
IN NOT RULING THAT JOSELITO MUNO AND
JOSELITO PUNO REFERS TO THE ONE AND
THE SAME PERSON.

IV. THE HONORABLE COURT OF
APPEALS ERRED IN NOT RULING THAT
WHAT RESPONDENT MERELY DISPUTES IS
THE SURNAME OF THE PETITIONER WHICH
WAS MISSPELLED AND THE FACTUAL
ALLEGATION E.G. RIGHTS OF PETITIONER
AS HEIR OF CARLOS PUNO ARE DEEMED
ADMITTED HYPOTHETICALLY IN THE
RESPONDENT[S] MOTION TO DISMISS.

V. THE HONORABLE COURT OF
APPEALS THEREFORE ERRED I[N]
DECREEING THAT PETITIONER IS NOT
ENTITLED TO INSPECT THE CORPORATE
BOOKS OF DEFENDANT
CORPORATION.16[7]







The petition is without merit. Petitioner failed to establish
the right to inspect respondent corporations books and
receive dividends on the stocks owned by Carlos L.
Puno.

Petitioner anchors his claim on his being an heir of the
deceased stockholder. However, we agree with the
appellate court that petitioner was not able to prove
satisfactorily his filiation to the deceased stockholder;
thus, the former cannot claim to be an heir of the latter.

Incessantly, we have declared that factual findings of
the CA supported by substantial evidence, are
conclusive and binding.17[8] In an appeal via certiorari,
the Court may not review the factual findings of the CA.
It is not the Courts function under Rule 45 of the Rules
of Court to review, examine, and evaluate or weigh the
probative value of the evidence presented.18[9]

A certificate of live birth purportedly identifying the
putative father is not competent evidence of paternity
when there is no showing that the putative father had a
hand in the preparation of the certificate. The local civil
registrar has no authority to record the paternity of an
illegitimate child on the information of a third
person.19[10] As correctly observed by the CA, only
petitioners mother supplied the data in the birth
certificate and signed the same. There was no evidence
that Carlos L. Puno acknowledged petitioner as his son.








As for the baptismal certificate, we have already
decreed that it can only serve as evidence of the
administration of the sacrament on the date specified
but not of the veracity of the entries with respect to the
childs paternity.20[11]

In any case, Sections 74 and 75 of the Corporation
Code enumerate the persons who are entitled to the
inspection of corporate books, thus

Sec. 74. Books to be kept; stock transfer agent.
x x x.

The records of all business transactions of the
corporation and the minutes of any meeting
shall be open to the inspection of any director,
trustee, stockholder or member of the
corporation at reasonable hours on business
days and he may demand, in writing, for a copy
of excerpts from said records or minutes, at his
expense.

x x x x

Sec. 75. Right to financial statements. Within
ten (10) days from receipt of a written request of
any stockholder or member, the corporation
shall furnish to him its most recent financial
statement, which shall include a balance sheet
as of the end of the last taxable year and a
profit or loss of statement for said taxable year,
showing in reasonable detail its assets and
liabilities and the result of its operations.21[12]


The stockholders right of inspection of the corporations
books and records is based upon his ownership of
shares in the corporation and the necessity for self-
protection. After all, a shareholder has the right to be





intelligently informed about corporate affairs.22[13]
Such right rests upon the stockholders underlying
ownership of the corporations assets and
property.23[14]

Similarly, only stockholders of record are entitled to
receive dividends declared by the corporation, a right
inherent in the ownership of the shares.24[15]

Upon the death of a shareholder, the heirs do not
automatically become stockholders of the corporation
and acquire the rights and privileges of the deceased as
shareholder of the corporation. The stocks must be
distributed first to the heirs in estate proceedings, and
the transfer of the stocks must be recorded in the books
of the corporation. Section 63 of the Corporation Code
provides that no transfer shall be valid, except as
between the parties, until the transfer is recorded in the
books of the corporation.25[16] During such interim
period, the heirs stand as the equitable owners of the
stocks, the executor or administrator duly appointed by
the court being vested with the legal title to the
stock.26[17] Until a settlement and division of the
estate is effected, the stocks of the decedent are held
by the administrator or executor.27[18] Consequently,
during such time, it is the administrator or executor who
is entitled to exercise the rights of the deceased as
stockholder.














Thus, even if petitioner presents sufficient evidence in
this case to establish that he is the son of Carlos L.
Puno, he would still not be allowed to inspect
respondents books and be entitled to receive dividends
from respondent, absent any showing in its transfer
book that some of the shares owned by Carlos L. Puno
were transferred to him. This would only be possible if
petitioner has been recognized as an heir and has
participated in the settlement of the estate of the
deceased.

Corollary to this is the doctrine that a determination of
whether a person, claiming proprietary rights over the
estate of a deceased person, is an heir of the deceased
must be ventilated in a special proceeding instituted
precisely for the purpose of settling the estate of the
latter. The status of an illegitimate child who claims to
be an heir to a decedents estate cannot be adjudicated
in an ordinary civil action, as in a case for the recovery
of property.28[19] The doctrine applies to the instant
case, which is one for specific performance to direct
respondent corporation to allow petitioner to exercise
rights that pertain only to the deceased and his
representatives.

WHEREFORE, premises considered, the petition is
DENIED. The Court of Appeals Decision dated October
11, 2006 and Resolution dated March 6, 2007 are
AFFIRMED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 165744 August 11, 2008
OSCAR C. REYES, petitioner,
vs.



HON. REGIONAL TRIAL COURT OF MAKATI, Branch
142, ZENITH INSURANCE CORPORATION, and
RODRIGO C. REYES, respondents.
D E C I S I O N
BRION, J .:
This Petition for Review on Certiorari under Rule 45 of
the Rules of Court seeks to set aside the Decision of the
Court of Appeals (CA)
1
promulgated on May 26, 2004 in
CA-G.R. SP No. 74970. The CA Decision affirmed the
Order of the Regional Trial Court (RTC), Branch 142,
Makati City dated November 29, 2002
2
in Civil Case No.
00-1553 (entitled "Accounting of All Corporate Funds
and Assets, and Damages") which denied petitioner
Oscar C. Reyes (Oscar) Motion to Declare Complaint
as Nuisance or Harassment Suit.
BACKGROUND FACTS
Oscar and private respondent Rodrigo C. Reyes
(Rodrigo) are two of the four children of the spouses
Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar,
and Rodrigo each owned shares of stock of Zenith
Insurance Corporation (Zenith), a domestic corporation
established by their family. Pedro died in 1964, while
Anastacia died in 1993. Although Pedros estate was
judicially partitioned among his heirs sometime in the
1970s, no similar settlement and partition appear to
have been made with Anastacias estate, which
included her shareholdings in Zenith. As of June 30,
1990, Anastacia owned 136,598 shares of Zenith; Oscar
and Rodrigo owned 8,715,637 and 4,250 shares,
respectively.
3

On May 9, 2000, Zenith and Rodrigo filed a complaint
4

with the Securities and Exchange Commission (SEC)
against Oscar, docketed as SEC Case No. 05-00-6615.
The complaint stated that it is "a derivative suit initiated
and filed by the complainant Rodrigo C. Reyes to
obtain an accounting of the funds and assets of
ZENITH INSURANCE CORPORATION which are now
or formerly in the control, custody, and/or possession of
respondent [herein petitioner Oscar] and to determine
the shares of stock of deceased spouses Pedro and
Anastacia Reyes that were arbitrarily and fraudulently
appropriated [by Oscar] for himself [and] which were not
collated and taken into account in the partition,
distribution, and/or settlement of the estate of the
deceased spouses, for which he should be ordered to
account for all the income from the time he took these
shares of stock, and should now deliver to his brothers
and sisters their just and respective shares."
5
[Emphasis
supplied.]
In his Answer with Counterclaim,
6
Oscar denied the
charge that he illegally acquired the shares of Anastacia
Reyes. He asserted, as a defense, that he purchased
the subject shares with his own funds from the unissued
stocks of Zenith, and that the suit is not a bona fide
derivative suit because the requisites therefor have not
been complied with. He thus questioned the SECs
jurisdiction to entertain the complaint because it pertains
to the settlement of the estate of Anastacia Reyes.
When Republic Act (R.A.) No. 8799
7
took effect, the
SECs exclusive and original jurisdiction over cases
enumerated in Section 5 of Presidential Decree (P.D.)
No. 902-A was transferred to the RTC designated as a
special commercial court.
8
The records of Rodrigos
SEC case were thus turned over to the RTC, Branch
142, Makati, and docketed as Civil Case No. 00-1553.
On October 22, 2002, Oscar filed a Motion to Declare
Complaint as Nuisance or Harassment Suit.
9
He
claimed that the complaint is a mere nuisance or
harassment suit and should, according to the Interim
Rules of Procedure for Intra-Corporate Controversies,
be dismissed; and that it is not a bona fide derivative
suit as it partakes of the nature of a petition for the
settlement of estate of the deceased Anastacia that is
outside the jurisdiction of a special commercial court.
The RTC, in its Order dated November 29, 2002 (RTC
Order), denied the motion in part and declared:
A close reading of the Complaint disclosed the presence
of two (2) causes of action, namely: a) a derivative suit
for accounting of the funds and assets of the corporation
which are in the control, custody, and/or possession of
the respondent [herein petitioner Oscar] with prayer to
appoint a management committee; and b) an action for
determination of the shares of stock of deceased
spouses Pedro and Anastacia Reyes allegedly taken by
respondent, its accounting and the corresponding
delivery of these shares to the parties brothers and
sisters. The latter is not a derivative suit and should
properly be threshed out in a petition for settlement of
estate.
Accordingly, the motion is denied. However, only the
derivative suit consisting of the first cause of action will
be taken cognizance of by this Court.
10

Oscar thereupon went to the CA on a petition for
certiorari, prohibition, and mandamus
11
and prayed that
the RTC Order be annulled and set aside and that the
trial court be prohibited from continuing with the
proceedings. The appellate court affirmed the RTC
Order and denied the petition in its Decision dated May
26, 2004. It likewise denied Oscars motion for
reconsideration in a Resolution dated October 21, 2004.
Petitioner now comes before us on appeal through a
petition for review on certiorari under Rule 45 of the
Rules of Court.
ASSIGNMENT OF ERRORS
Petitioner Oscar presents the following points as
conclusions the CA should have made:
1. that the complaint is a mere nuisance or harassment
suit that should be dismissed under the Interim Rules of
Procedure of Intra-Corporate Controversies; and
2. that the complaint is not a bona fide derivative suit but
is in fact in the nature of a petition for settlement of
estate; hence, it is outside the jurisdiction of the RTC
acting as a special commercial court.
Accordingly, he prays for the setting aside and
annulment of the CA decision and resolution, and the
dismissal of Rodrigos complaint before the RTC.
THE COURTS RULING
We find the petition meritorious.
The core question for our determination is whether the
trial court, sitting as a special commercial court, has
jurisdiction over the subject matter of Rodrigos
complaint. To resolve it, we rely on the judicial principle
that "jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations of
the complaint, irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein."
12

JURISDICTION OF SPECIAL COMMERCIAL
COURTS
P.D. No. 902-A enumerates the cases over which the
SEC (now the RTC acting as a special commercial
court) exercises exclusive jurisdiction:
SECTION 5. In addition to the regulatory and
adjudicative functions of the Securities and Exchange
Commission over corporations, partnership, and other
forms of associations registered with it as expressly
granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide
cases involving:
a) Devices or schemes employed by or any acts of the
board of directors, business associates, its officers or
partners, amounting to fraud and misrepresentation
which may be detrimental to the interest of the public
and/or of the stockholders, partners, members of
associations or organizations registered with the
Commission.
b) Controversies arising out of intra-corporate or
partnership relations, between and among stockholders,
members, or associates; between any or all of them and
the corporation, partnership or association of which they
are stockholders, members, or associates, respectively;
and between such corporation, partnership or
association and the State insofar as it concerns their
individual franchise or right to exist as such entity; and
c) Controversies in the election or appointment of
directors, trustees, officers, or managers of such
corporations, partnerships, or associations.
The allegations set forth in Rodrigos complaint
principally invoke Section 5, paragraphs (a) and (b)
above as basis for the exercise of the RTCs special
court jurisdiction. Our focus in examining the allegations
of the complaint shall therefore be on these two
provisions.
Fraudulent Devices and Schemes
The rule is that a complaint must contain a plain,
concise, and direct statement of the ultimate facts
constituting the plaintiffs cause of action and must
specify the relief sought.
13
Section 5, Rule 8 of the
Revised Rules of Court provides that in all averments
of fraud or mistake, the circumstances constituting
fraud or mistake must be stated with particularity.
14

These rules find specific application to Section 5(a) of
P.D. No. 902-A which speaks of corporate devices or
schemes that amount to fraud or misrepresentation
detrimental to the public and/or to the stockholders.
In an attempt to hold Oscar responsible for corporate
fraud, Rodrigo alleged in the complaint the following:
3. This is a complaintto determine the shares of
stock of the deceased spouses Pedro and Anastacia
Reyes that were arbitrarily and fraudulently
appropriated for himself [herein petitioner Oscar]
which were not collated and taken into account in the
partition, distribution, and/or settlement of the estate of
the deceased Spouses Pedro and Anastacia Reyes, for
which he should be ordered to account for all the
income from the time he took these shares of stock, and
should now deliver to his brothers and sisters their just
and respective shares with the corresponding equivalent
amount of P7,099,934.82 plus interest thereon from
1978 representing his obligations to the Associated
Citizens Bank that was paid for his account by his late
mother, Anastacia C. Reyes. This amount was not
collated or taken into account in the partition or
distribution of the estate of their late mother, Anastacia
C. Reyes.
3.1. Respondent Oscar C. Reyes, through other
schemes of fraud including misrepresentation,
unilaterally, and for his own benefit, capriciously
transferred and took possession and control of the
management of Zenith Insurance Corporation which
is considered as a family corporation, and other
properties and businesses belonging to Spouses Pedro
and Anastacia Reyes.
x x x x
4.1. During the increase of capitalization of Zenith
Insurance Corporation, sometime in 1968, the property
covered by TCT No. 225324 was illegally and
fraudulently used by respondent as a collateral.
x x x x
5. The complainant Rodrigo C. Reyes discovered that
by some manipulative scheme, the shareholdings of
their deceased mother, Doa Anastacia C. Reyes,
shares of stocks and [sic] valued in the corporate
books at P7,699,934.28, more or less, excluding
interest and/or dividends, had been transferred solely
in the name of respondent. By such fraudulent
manipulations and misrepresentation, the shareholdings
of said respondent Oscar C. Reyes abruptly increased
to P8,715,637.00 [sic] and becomes [sic] the majority
stockholder of Zenith Insurance Corporation, which
portion of said shares must be distributed equally
amongst the brothers and sisters of the respondent
Oscar C. Reyes including the complainant herein.
x x x x
9.1 The shareholdings of deceased Spouses Pedro
Reyes and Anastacia C. Reyes valued at
P7,099,934.28 were illegally and fraudulently
transferred solely to the respondents [herein
petitioner Oscar] name and installed himself as a
majority stockholder of Zenith Insurance Corporation
[and] thereby deprived his brothers and sisters of their
respective equal shares thereof including complainant
hereto.
x x x x
10.1 By refusal of the respondent to account of his
[sic] shareholdings in the company, he illegally and
fraudulently transferred solely in his name wherein
[sic] the shares of stock of the deceased Anastacia
C. Reyes [which] must be properly collated and/or
distributed equally amongst the children, including
the complainant Rodrigo C. Reyes herein, to their
damage and prejudice.
x x x x
11.1 By continuous refusal of the respondent to account
of his [sic] shareholding with Zenith Insurance
Corporation[,] particularly the number of shares of
stocks illegally and fraudulently transferred to him from
their deceased parents Sps. Pedro and Anastacia
Reyes[,] which are all subject for collation and/or
partition in equal shares among their children.
[Emphasis supplied.]
Allegations of deceit, machination, false pretenses,
misrepresentation, and threats are largely conclusions
of law that, without supporting statements of the facts to
which the allegations of fraud refer, do not sufficiently
state an effective cause of action.
15
The late Justice
Jose Feria, a noted authority in Remedial Law, declared
that fraud and mistake are required to be averred with
particularity in order to enable the opposing party to
controvert the particular facts allegedly constituting such
fraud or mistake.
16

Tested against these standards, we find that the
charges of fraud against Oscar were not properly
supported by the required factual allegations. While the
complaint contained allegations of fraud purportedly
committed by him, these allegations are not particular
enough to bring the controversy within the special
commercial courts jurisdiction; they are not statements
of ultimate facts, but are mere conclusions of law: how
and why the alleged appropriation of shares can be
characterized as "illegal and fraudulent" were not
explained nor elaborated on.
Not every allegation of fraud done in a corporate setting
or perpetrated by corporate officers will bring the case
within the special commercial courts jurisdiction. To fall
within this jurisdiction, there must be sufficient nexus
showing that the corporations nature, structure, or
powers were used to facilitate the fraudulent device or
scheme. Contrary to this concept, the complaint
presented a reverse situation. No corporate power or
office was alleged to have facilitated the transfer of the
shares; rather, Oscar, as an individual and without
reference to his corporate personality, was alleged to
have transferred the shares of Anastacia to his name,
allowing him to become the majority and controlling
stockholder of Zenith, and eventually, the corporations
President. This is the essence of the complaint read as
a whole and is particularly demonstrated under the
following allegations:
5. The complainant Rodrigo C. Reyes discovered that
by some manipulative scheme, the shareholdings of
their deceased mother, Doa Anastacia C. Reyes,
shares of stocks and [sic] valued in the corporate books
at P7,699,934.28, more or less, excluding interest
and/or dividends, had been transferred solely in the
name of respondent. By such fraudulent
manipulations and misrepresentation, the
shareholdings of said respondent Oscar C. Reyes
abruptly increased to P8,715,637.00 [sic] and
becomes [sic] the majority stockholder of Zenith
Insurance Corporation, which portion of said shares
must be distributed equally amongst the brothers and
sisters of the respondent Oscar C. Reyes including the
complainant herein.
x x x x
9.1 The shareholdings of deceased Spouses Pedro
Reyes and Anastacia C. Reyes valued at
P7,099,934.28 were illegally and fraudulently
transferred solely to the respondents [herein
petitioner Oscar] name and installed himself as a
majority stockholder of Zenith Insurance Corporation
[and] thereby deprived his brothers and sisters of their
respective equal shares thereof including complainant
hereto. [Emphasis supplied.]
In ordinary cases, the failure to specifically allege the
fraudulent acts does not constitute a ground for
dismissal since such defect can be cured by a bill of
particulars. In cases governed by the Interim Rules of
Procedure on Intra-Corporate Controversies, however, a
bill of particulars is a prohibited pleading.
17
It is
essential, therefore, for the complaint to show on its
face what are claimed to be the fraudulent corporate
acts if the complainant wishes to invoke the courts
special commercial jurisdiction.
We note that twice in the course of this case, Rodrigo
had been given the opportunity to study the propriety of
amending or withdrawing the complaint, but he
consistently refused. The courts function in resolving
issues of jurisdiction is limited to the review of the
allegations of the complaint and, on the basis of these
allegations, to the determination of whether they are of
such nature and subject that they fall within the terms of
the law defining the courts jurisdiction. Regretfully, we
cannot read into the complaint any specifically alleged
corporate fraud that will call for the exercise of the
courts special commercial jurisdiction. Thus, we cannot
affirm the RTCs assumption of jurisdiction over
Rodrigos complaint on the basis of Section 5(a) of P.D.
No. 902-A.
18

Intra-Corporate Controversy
A review of relevant jurisprudence shows a
development in the Courts approach in classifying what
constitutes an intra-corporate controversy. Initially, the
main consideration in determining whether a dispute
constitutes an intra-corporate controversy was limited to
a consideration of the intra-corporate relationship
existing between or among the parties.
19
The types of
relationships embraced under Section 5(b), as declared
in the case of Union Glass & Container Corp. v. SEC,
20

were as follows:
a) between the corporation, partnership, or association
and the public;
b) between the corporation, partnership, or association
and its stockholders, partners, members, or officers;
c) between the corporation, partnership, or association
and the State as far as its franchise, permit or license to
operate is concerned; and
d) among the stockholders, partners, or associates
themselves. [Emphasis supplied.]
The existence of any of the above intra-corporate
relations was sufficient to confer jurisdiction to the SEC,
regardless of the subject matter of the dispute. This
came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta
del Sol Mountain Reserve, Inc.,
21
the Court introduced
the nature of the controversy test. We declared in this
case that it is not the mere existence of an intra-
corporate relationship that gives rise to an intra-
corporate controversy; to rely on the relationship test
alone will divest the regular courts of their jurisdiction for
the sole reason that the dispute involves a corporation,
its directors, officers, or stockholders. We saw that there
is no legal sense in disregarding or minimizing the value
of the nature of the transactions which gives rise to the
dispute.
Under the nature of the controversy test, the incidents of
that relationship must also be considered for the
purpose of ascertaining whether the controversy itself is
intra-corporate.
22
The controversy must not only be
rooted in the existence of an intra-corporate
relationship, but must as well pertain to the enforcement
of the parties correlative rights and obligations under
the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the
controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate
controversy exists.
The Court then combined the two tests and declared
that jurisdiction should be determined by considering not
only the status or relationship of the parties, but also the
nature of the question under controversy.
23
This two-tier
test was adopted in the recent case of Speed
Distribution, Inc. v. Court of Appeals:
24

To determine whether a case involves an intra-
corporate controversy, and is to be heard and decided
by the branches of the RTC specifically designated by
the Court to try and decide such cases, two elements
must concur: (a) the status or relationship of the parties;
and (2) the nature of the question that is the subject of
their controversy.
The first element requires that the controversy must
arise out of intra-corporate or partnership relations
between any or all of the parties and the corporation,
partnership, or association of which they are
stockholders, members or associates; between any or
all of them and the corporation, partnership, or
association of which they are stockholders, members, or
associates, respectively; and between such corporation,
partnership, or association and the State insofar as it
concerns their individual franchises. The second
element requires that the dispute among the parties be
intrinsically connected with the regulation of the
corporation. If the nature of the controversy involves
matters that are purely civil in character, necessarily, the
case does not involve an intra-corporate controversy.
Given these standards, we now tackle the question
posed for our determination under the specific
circumstances of this case:
Application of the Relationship Test
Is there an intra-corporate relationship between the
parties that would characterize the case as an intra-
corporate dispute?
We point out at the outset that while Rodrigo holds
shares of stock in Zenith, he holds them in two
capacities: in his own right with respect to the 4,250
shares registered in his name, and as one of the heirs of
Anastacia Reyes with respect to the 136,598 shares
registered in her name. What is material in resolving the
issues of this case under the allegations of the
complaint is Rodrigos interest as an heir since the
subject matter of the present controversy centers on the
shares of stocks belonging to Anastacia, not on
Rodrigos personally-owned shares nor on his
personality as shareholder owning these shares. In this
light, all reference to shares of stocks in this case shall
pertain to the shareholdings of the deceased Anastacia
and the parties interest therein as her heirs.
Article 777 of the Civil Code declares that the
successional rights are transmitted from the moment of
death of the decedent. Accordingly, upon Anastacias
death, her children acquired legal title to her estate
(which title includes her shareholdings in Zenith), and
they are, prior to the estates partition, deemed co-
owners thereof.
25
This status as co-owners, however,
does not immediately and necessarily make them
stockholders of the corporation. Unless and until there is
compliance with Section 63 of the Corporation Code on
the manner of transferring shares, the heirs do not
become registered stockholders of the corporation.
Section 63 provides:
Section 63. Certificate of stock and transfer of shares.
The capital stock of stock corporations shall be divided
into shares for which certificates signed by the president
or vice-president, countersigned by the secretary or
assistant secretary, and sealed with the seal of the
corporation shall be issued in accordance with the by-
laws. Shares of stock so issued are personal property
and may be transferred by delivery of the certificate or
certificates indorsed by the owner or his attorney-in-fact
or other person legally authorized to make the transfer.
No transfer, however, shall be valid, except as
between the parties, until the transfer is recorded in
the books of the corporation so as to show the
names of the parties to the transaction, the date of
the transfer, the number of the certificate or
certificates, and the number of shares transferred.
[Emphasis supplied.]
No shares of stock against which the corporation holds
any unpaid claim shall be transferable in the books of
the corporation.
Simply stated, the transfer of title by means of
succession, though effective and valid between the
parties involved (i.e., between the decedents estate and
her heirs), does not bind the corporation and third
parties. The transfer must be registered in the books of
the corporation to make the transferee-heir a
stockholder entitled to recognition as such both by the
corporation and by third parties.
26

We note, in relation with the above statement, that in
Abejo v. Dela Cruz
27
and TCL Sales Corporation v.
Court of Appeals
28
we did not require the registration of
the transfer before considering the transferee a
stockholder of the corporation (in effect upholding the
existence of an intra-corporate relation between the
parties and bringing the case within the jurisdiction of
the SEC as an intra-corporate controversy). A marked
difference, however, exists between these cases and
the present one.
In Abejo and TCL Sales, the transferees held definite
and uncontested titles to a specific number of
shares of the corporation; after the transferee had
established prima facie ownership over the shares of
stocks in question, registration became a mere formality
in confirming their status as stockholders. In the present
case, each of Anastacias heirs holds only an undivided
interest in the shares. This interest, at this point, is still
inchoate and subject to the outcome of a settlement
proceeding; the right of the heirs to specific, distributive
shares of inheritance will not be determined until all the
debts of the estate of the decedent are paid. In short,
the heirs are only entitled to what remains after payment
of the decedents debts;
29
whether there will be residue
remains to be seen. Justice Jurado aptly puts it as
follows:
No succession shall be declared unless and until a
liquidation of the assets and debts left by the decedent
shall have been made and all his creditors are fully paid.
Until a final liquidation is made and all the debts are
paid, the right of the heirs to inherit remains inchoate.
This is so because under our rules of procedure,
liquidation is necessary in order to determine
whether or not the decedent has left any liquid
assets which may be transmitted to his heirs.
30

[Emphasis supplied.]
Rodrigo must, therefore, hurdle two obstacles before he
can be considered a stockholder of Zenith with respect
to the shareholdings originally belonging to Anastacia.
First, he must prove that there are shareholdings that
will be left to him and his co-heirs, and this can be
determined only in a settlement of the decedents
estate. No such proceeding has been commenced to
date. Second, he must register the transfer of the
shares allotted to him to make it binding against the
corporation. He cannot demand that this be done unless
and until he has established his specific allotment (and
prima facie ownership) of the shares. Without the
settlement of Anastacias estate, there can be no
definite partition and distribution of the estate to the
heirs. Without the partition and distribution, there can be
no registration of the transfer. And without the
registration, we cannot consider the transferee-heir a
stockholder who may invoke the existence of an intra-
corporate relationship as premise for an intra-corporate
controversy within the jurisdiction of a special
commercial court.
In sum, we find that insofar as the subject shares of
stock (i.e., Anastacias shares) are concerned Rodrigo
cannot be considered a stockholder of Zenith.
Consequently, we cannot declare that an intra-corporate
relationship exists that would serve as basis to bring this
case within the special commercial courts jurisdiction
under Section 5(b) of PD 902-A, as amended. Rodrigos
complaint, therefore, fails the relationship test.
Application of the Nature of Controversy Test
The body rather than the title of the complaint
determines the nature of an action.
31
Our examination of
the complaint yields the conclusion that, more than
anything else, the complaint is about the protection and
enforcement of successional rights. The controversy it
presents is purely civil rather than corporate, although it
is denominated as a "complaint for accounting of all
corporate funds and assets."
Contrary to the findings of both the trial and appellate
courts, we read only one cause of action alleged in the
complaint. The "derivative suit for accounting of the
funds and assets of the corporation which are in the
control, custody, and/or possession of the respondent
[herein petitioner Oscar]" does not constitute a separate
cause of action but is, as correctly claimed by Oscar,
only an incident to the "action for determination of the
shares of stock of deceased spouses Pedro and
Anastacia Reyes allegedly taken by respondent, its
accounting and the corresponding delivery of these
shares to the parties brothers and sisters." There can
be no mistake of the relationship between the
"accounting" mentioned in the complaint and the
objective of partition and distribution when Rodrigo
claimed in paragraph 10.1 of the complaint that:
10.1 By refusal of the respondent to account of [sic] his
shareholdings in the company, he illegally and
fraudulently transferred solely in his name wherein [sic]
the shares of stock of the deceased Anastacia C. Reyes
[which] must be properly collated and/or distributed
equally amongst the children including the complainant
Rodrigo C. Reyes herein to their damage and prejudice.
We particularly note that the complaint contained no
sufficient allegation that justified the need for an
accounting other than to determine the extent of
Anastacias shareholdings for purposes of distribution.
Another significant indicator that points us to the real
nature of the complaint are Rodrigos repeated claims of
illegal and fraudulent transfers of Anastacias shares by
Oscar to the prejudice of the other heirs of the
decedent; he cited these allegedly fraudulent acts as
basis for his demand for the collation and distribution of
Anastacias shares to the heirs. These claims tell us
unequivocally that the present controversy arose from
the parties relationship as heirs of Anastacia and not as
shareholders of Zenith. Rodrigo, in filing the complaint,
is enforcing his rights as a co-heir and not as a
stockholder of Zenith. The injury he seeks to remedy is
one suffered by an heir (for the impairment of his
successional rights) and not by the corporation nor by
Rodrigo as a shareholder on record.
More than the matters of injury and redress, what
Rodrigo clearly aims to accomplish through his
allegations of illegal acquisition by Oscar is the
distribution of Anastacias shareholdings without a prior
settlement of her estate an objective that, by law and
established jurisprudence, cannot be done. The RTC of
Makati, acting as a special commercial court, has no
jurisdiction to settle, partition, and distribute the estate of
a deceased. A relevant provision Section 2 of Rule 90
of the Revised Rules of Court that contemplates
properties of the decedent held by one of the heirs
declares:
Questions as to advancement made or alleged to
have been made by the deceased to any heir may be
heard and determined by the court having
jurisdiction of the estate proceedings; and the final
order of the court thereon shall be binding on the person
raising the questions and on the heir. [Emphasis
supplied.]
Worth noting are this Courts statements in the case of
Natcher v. Court of Appeals:
32

Matters which involve settlement and distribution of
the estate of the decedent fall within the exclusive
province of the probate court in the exercise of its
limited jurisdiction.
x x x x
It is clear that trial courts trying an ordinary action
cannot resolve to perform acts pertaining to a
special proceeding because it is subject to specific
prescribed rules. [Emphasis supplied.]
That an accounting of the funds and assets of Zenith to
determine the extent and value of Anastacias
shareholdings will be undertaken by a probate court and
not by a special commercial court is completely
consistent with the probate courts limited jurisdiction. It
has the power to enforce an accounting as a necessary
means to its authority to determine the properties
included in the inventory of the estate to be
administered, divided up, and distributed. Beyond this,
the determination of title or ownership over the subject
shares (whether belonging to Anastacia or Oscar) may
be conclusively settled by the probate court as a
question of collation or advancement. We had occasion
to recognize the courts authority to act on questions of
title or ownership in a collation or advancement situation
in Coca v. Pangilinan
33
where we ruled:
It should be clarified that whether a particular matter
should be resolved by the Court of First Instance in the
exercise of its general jurisdiction or of its limited
probate jurisdiction is in reality not a jurisdictional
question. In essence, it is a procedural question
involving a mode of practice "which may be waived."
As a general rule, the question as to title to property
should not be passed upon in the testate or intestate
proceeding. That question should be ventilated in a
separate action. That general rule has qualifications or
exceptions justified by expediency and convenience.
Thus, the probate court may provisionally pass upon in
an intestate or testate proceeding the question of
inclusion in, or exclusion from, the inventory of a piece
of property without prejudice to its final determination in
a separate action.
Although generally, a probate court may not decide
a question of title or ownership, yet if the interested
parties are all heirs, or the question is one of collation
or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the
rights of third parties are not impaired, the probate
court is competent to decide the question of
ownership. [Citations omitted. Emphasis supplied.]
In sum, we hold that the nature of the present
controversy is not one which may be classified as an
intra-corporate dispute and is beyond the jurisdiction of
the special commercial court to resolve. In short,
Rodrigos complaint also fails the nature of the
controversy test.
DERIVATIVE SUIT
Rodrigos bare claim that the complaint is a derivative
suit will not suffice to confer jurisdiction on the RTC (as
a special commercial court) if he cannot comply with the
requisites for the existence of a derivative suit. These
requisites are:
a. the party bringing suit should be a shareholder during
the time of the act or transaction complained of, the
number of shares not being material;
b. the party has tried to exhaust intra-corporate
remedies, i.e., has made a demand on the board of
directors for the appropriate relief, but the latter has
failed or refused to heed his plea; and
c. the cause of action actually devolves on the
corporation; the wrongdoing or harm having been or
being caused to the corporation and not to the particular
stockholder bringing the suit.
34

Based on these standards, we hold that the allegations
of the present complaint do not amount to a derivative
suit.
First, as already discussed above, Rodrigo is not a
shareholder with respect to the shareholdings originally
belonging to Anastacia; he only stands as a transferee-
heir whose rights to the share are inchoate and
unrecorded. With respect to his own individually-held
shareholdings, Rodrigo has not alleged any individual
cause or basis as a shareholder on record to proceed
against Oscar.
Second, in order that a stockholder may show a right to
sue on behalf of the corporation, he must allege with
some particularity in his complaint that he has
exhausted his remedies within the corporation by
making a sufficient demand upon the directors or other
officers for appropriate relief with the expressed intent to
sue if relief is denied.
35
Paragraph 8 of the complaint
hardly satisfies this requirement since what the rule
contemplates is the exhaustion of remedies within the
corporate setting:
8. As members of the same family, complainant Rodrigo
C. Reyes has resorted [to] and exhausted all legal
means of resolving the dispute with the end view of
amicably settling the case, but the dispute between
them ensued.
Lastly, we find no injury, actual or threatened, alleged to
have been done to the corporation due to Oscars acts.
If indeed he illegally and fraudulently transferred
Anastacias shares in his own name, then the damage is
not to the corporation but to his co-heirs; the wrongful
transfer did not affect the capital stock or the assets of
Zenith. As already mentioned, neither has Rodrigo
alleged any particular cause or wrongdoing against the
corporation that he can champion in his capacity as a
shareholder on record.
36

In summary, whether as an individual or as a derivative
suit, the RTC sitting as special commercial court has
no jurisdiction to hear Rodrigos complaint since what is
involved is the determination and distribution of
successional rights to the shareholdings of Anastacia
Reyes. Rodrigos proper remedy, under the
circumstances, is to institute a special proceeding for
the settlement of the estate of the deceased Anastacia
Reyes, a move that is not foreclosed by the dismissal of
his present complaint.
WHEREFORE, we hereby GRANT the petition and
REVERSE the decision of the Court of Appeals dated
May 26, 2004 in CA-G.R. SP No. 74970. The complaint
before the Regional Trial Court, Branch 142, Makati,
docketed as Civil Case No. 00-1553, is ordered
DISMISSED for lack of jurisdiction.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169129 March 28, 2007
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI
SANTOS, SPS.VICTORINO F. SANTOS, &
LAGRIMAS SANTOS, ERNESTO F. SANTOS, and
TADEO F. SANTOS, Petitioners,
vs.
SPS. JOSE LUMBAO and PROSERFINA LUMBAO,
Respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
Before this Court is a Petition for Review on Certiorari
under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul and set aside the Decision
1

and Resolution
2
of the Court of Appeals in CA-G.R. CV
No. 60450 entitled, Spouses Jose Lumbao and
Proserfina Lumbao v. Spouses Virgilio F. Santos and
Esperanza Lati, Spouses Victorino F. Santos and
Lagrimas F. Santos, Ernesto F. Santos and Tadeo F.
Santos, dated 8 June 2005 and 29 July 2005,
respectively, which granted the appeal filed by herein
respondents Spouses Jose Lumbao and Proserfina
Lumbao (Spouses Lumbao) and ordered herein
petitioners Spouses Virgilio F. Santos and Esperanza
Lati, Spouses Victorino F. Santos and Lagrimas F.
Santos, Ernesto F. Santos and Tadeo F. Santos to
reconvey to respondents Spouses Lumbao the subject
property and to pay the latter attorneys fees and
litigation expenses, thus, reversing the Decision
3
of the
Regional Trial Court (RTC) of Pasig City, dated 17 June
1998 which dismissed the Complaint for Reconveyance
with Damages filed by respondents Spouses Lumbao
for lack of merit.
Herein petitioners Virgilio, Victorino, Ernesto and Tadeo,
all surnamed Santos, are the legitimate and surviving
heirs of the late Rita Catoc Santos (Rita), who died on
20 October 1985. The other petitioners Esperanza Lati
and Lagrimas Santos are the daughters-in-law of Rita.
Herein respondents Spouses Jose Lumbao and
Proserfina Lumbao are the alleged owners of the 107-
square meter lot (subject property), which they
purportedly bought from Rita during her lifetime.
The facts of the present case are as follows:
On two separate occasions during her lifetime, Rita sold
to respondents Spouses Lumbao the subject property
which is a part of her share in the estate of her
deceased mother, Maria Catoc (Maria), who died
intestate on 19 September 1978. On the first occasion,
Rita sold 100 square meters of her inchoate share in her
mothers estate through a document denominated as
"Bilihan ng Lupa," dated 17 August 1979.
4
Respondents
Spouses Lumbao claimed the execution of the aforesaid
document was witnessed by petitioners Virgilio and
Tadeo, as shown by their signatures affixed therein. On
the second occasion, an additional seven square meters
was added to the land as evidenced by a document also
denominated as "Bilihan ng Lupa," dated 9 January
1981.
5

After acquiring the subject property, respondents
Spouses Lumbao took actual possession thereof and
erected thereon a house which they have been
occupying as exclusive owners up to the present. As the
exclusive owners of the subject property, respondents
Spouses Lumbao made several verbal demands upon
Rita, during her lifetime, and thereafter upon herein
petitioners, for them to execute the necessary
documents to effect the issuance of a separate title in
favor of respondents Spouses Lumbao insofar as the
subject property is concerned. Respondents Spouses
Lumbao alleged that prior to her death, Rita informed
respondent Proserfina Lumbao she could not deliver the
title to the subject property because the entire property
inherited by her and her co-heirs from Maria had not yet
been partitioned.
On 2 May 1986, the Spouses Lumbao claimed that
petitioners, acting fraudulently and in conspiracy with
one another, executed a Deed of Extrajudicial
Settlement,
6
adjudicating and partitioning among
themselves and the other heirs, the estate left by Maria,
which included the subject property already sold to
respondents Spouses Lumbao and now covered by
TCT No. 81729
7
of the Registry of Deeds of Pasig City.
On 15 June 1992, respondents Spouses Lumbao,
through counsel, sent a formal demand letter
8
to
petitioners but despite receipt of such demand letter,
petitioners still failed and refused to reconvey the
subject property to the respondents Spouses Lumbao.
Consequently, the latter filed a Complaint for
Reconveyance with Damages
9
before the RTC of Pasig
City.
Petitioners filed their Answer denying the allegations
that the subject property had been sold to the
respondents Spouses Lumbao. They likewise denied
that the Deed of Extrajudicial Settlement had been
fraudulently executed because the same was duly
published as required by law. On the contrary, they
prayed for the dismissal of the Complaint for lack of
cause of action because respondents Spouses Lumbao
failed to comply with the Revised Katarungang
Pambarangay Law under Republic Act No. 7160,
otherwise known as the Local Government Code of
1991, which repealed Presidential Decree No. 1508
10

requiring first resort to barangay conciliation.
Respondents Spouses Lumbao, with leave of court,
amended their Complaint because they discovered that
on 16 February 1990, without their knowledge,
petitioners executed a Deed of Real Estate Mortgage in
favor of Julieta S. Esplana for the sum of P30,000.00.
The said Deed of Real Estate Mortgage was annotated
at the back of TCT No. PT-81729 on 26 April 1991.
Also, in answer to the allegation of the petitioners that
they failed to comply with the mandate of the Revised
Katarungang Pambarangay Law, respondents Spouses
Lumbao said that the Complaint was filed directly in
court in order that prescription or the Statute of
Limitations may not set in.
During the trial, respondents Spouses Lumbao
presented Proserfina Lumbao and Carolina Morales as
their witnesses, while the petitioners presented only the
testimony of petitioner Virgilio.
The trial court rendered a Decision on 17 June 1998,
the dispositive portion of which reads as follows:
Premises considered, the instant complaint is hereby
denied for lack of merit.
Considering that [petitioners] have incurred expenses in
order to protect their interest, [respondents spouses
Lumbao] are hereby directed to pay [petitioners], to wit:
1) the amount of P30,000.00 as attorneys fees and
litigation expenses, and 2) costs of the suit.
11

Aggrieved, respondents Spouses Lumbao appealed to
the Court of Appeals. On 8 June 2005, the appellate
court rendered a Decision, thus:
WHEREFORE, premises considered, the present
appeal is hereby GRANTED. The appealed Decision
dated June 17, 1998 of the Regional Trial Court of Pasig
City, Branch 69 in Civil Case No. 62175 is hereby
REVERSED and SET ASIDE. A new judgment is
hereby entered ordering [petitioners] to reconvey 107
square meters of the subject [property] covered by TCT
No. PT-81729 of the Registry of Deeds of Pasig City,
Metro Manila, and to pay to [respondents spouses
Lumbao] the sum of P30,000.00 for attorneys fees and
litigation expenses.
No pronouncement as to costs.
12

Dissatisfied, petitioners filed a Motion for
Reconsideration of the aforesaid Decision but it was
denied in the Resolution of the appellate court dated 29
July 2005 for lack of merit.
Hence, this Petition.
The grounds relied upon by the petitioners are the
following:
I. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN REVERSING THE
DECISION OF THE TRIAL COURT, THEREBY
CREATING A VARIANCE ON THE FINDINGS OF
FACTS OF TWO COURTS.
II. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN ORDERING THE
PETITIONERS TO RECONVEY THE SUBJECT
[PROPERTY] TO THE RESPONDENTS [SPOUSES
LUMBAO] AND IN NOT RULING THAT THEY ARE
GUILTY OF LACHES, HENCE THEY CANNOT
RECOVER THE LOT ALLEGEDLY SOLD TO THEM.
III. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING HEREIN
PETITIONER[S] TO BE IN GOOD FAITH IN
EXECUTING THE "DEED OF EXTRAJUDICIAL
SETTLEMENT" DATED [2 MAY 1986].
IV. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING THAT
PETITIONERS ARE NOT LEGALLY BOUND TO
COMPLY WITH THE SUPPOSED BILIHAN NG LUPA
DATED [17 AUGUST 1979] AND [9 JANUARY 1981]
THAT WERE SUPPOSEDLY EXECUTED BY THE
LATE RITA CATOC.
V. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAOS] ACTION
FOR RECONVEYANCE WITH DAMAGES CANNOT
BE SUPPORTED WITH AN UNENFORCEABLE
DOCUMENTS, SUCH AS THE BILIHAN NG LUPA
DATED [17 AUGUST 1979] AND [9 JANUARY 1981].
VI. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAOS] COMPLAINT
FOR RECONVEYANCE IS DISMISSABLE (SIC) FOR
NON COMPLIANCE OF THE MANDATE OF [P.D. NO.]
1508, AS AMENDED BY Republic Act No. 7160.
VII. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAO] SHOULD BE
HELD LIABLE FOR PETITIONERS CLAIM FOR
DAMAGES AND ATTORNEY[]S FEES.
Petitioners ask this Court to scrutinize the evidence
presented in this case, because they claim that the
factual findings of the trial court and the appellate court
are conflicting. They allege that the findings of fact by
the trial court revealed that petitioners Virgilio and
Tadeo did not witness the execution of the documents
known as "Bilihan ng Lupa"; hence, this finding runs
counter to the conclusion made by the appellate court.
And even assuming that they were witnesses to the
aforesaid documents, still, respondents Spouses
Lumbao were not entitled to the reconveyance of the
subject property because they were guilty of laches for
their failure to assert their rights for an unreasonable
length of time. Since respondents Spouses Lumbao had
slept on their rights for a period of more than 12 years
reckoned from the date of execution of the second
"Bilihan ng Lupa," it would be unjust and unfair to the
petitioners if the respondents will be allowed to recover
the subject property.
Petitioners allege they are in good faith in executing the
Deed of Extrajudicial Settlement because even
respondents Spouses Lumbaos witness, Carolina
Morales, testified that neither petitioner Virgilio nor
petitioner Tadeo was present during the execution of the
"Bilihan ng Lupa," dated 17 August 1979 and 9 January
1981. Petitioners affirm that the Deed of Extrajudicial
Settlement was published in a newspaper of general
circulation to give notice to all creditors of the estate
subject of partition to contest the same within the period
prescribed by law. Since no claimant appeared to
interpose a claim within the period allowed by law, a title
to the subject property was then issued in favor of the
petitioners; hence, they are considered as holders in
good faith and therefore cannot be barred from entering
into any subsequent transactions involving the subject
property.
Petitioners also contend that they are not bound by the
documents denominated as "Bilihan ng Lupa" because
the same were null and void for the following reasons:
1) for being falsified documents because one of those
documents made it appear that petitioners Virgilio and
Tadeo were witnesses to its execution and that they
appeared personally before the notary public, when in
truth and in fact they did not; 2) the identities of the
properties in the "Bilihan ng Lupa," dated 17 August
1979 and 9 January 1981 in relation to the subject
property in litigation were not established by the
evidence presented by the respondents Spouses
Lumbao; 3) the right of the respondents Spouses
Lumbao to lay their claim over the subject property had
already been barred through estoppel by laches; and 4)
the respondents Spouses Lumbaos claim over the
subject property had already prescribed.
Finally, petitioners claim that the Complaint for
Reconveyance with Damages filed by respondents
Spouses Lumbao was dismissible because they failed
to comply with the mandate of Presidential Decree No.
1508, as amended by Republic Act No. 7160,
particularly Section 412 of Republic Act No. 7160.
Given the foregoing, the issues presented by the
petitioners may be restated as follows:
I. Whether or not the Complaint for Reconveyance with
Damages filed by respondents spouses Lumbao is
dismissible for their failure to comply with the mandate
of the Revised Katarungang Pambarangay Law under
R.A. No. 7160.
II. Whether or not the documents known as "Bilihan ng
Lupa" are valid and enforceable, thus, they can be the
bases of the respondents spouses Lumbaos action for
reconveyance with damages.
III. Whether or not herein petitioners are legally bound to
comply with the "Bilihan ng Lupa" dated 17 August 1979
and 9 January 1981 and consequently, reconvey the
subject property to herein respondents spouses
Lumbao.
It is well-settled that in the exercise of the Supreme
Courts power of review, the court is not a trier of facts
and does not normally undertake the re-examination of
the evidence presented by the contending parties during
the trial of the case considering that the findings of fact
of the Court of Appeals are conclusive and binding on
the Court.
13
But, the rule is not without exceptions.
There are several recognized exceptions
14
in which
factual issues may be resolved by this Court. One of
these exceptions is when the findings of the appellate
court are contrary to those of the trial court. This
exception is present in the case at bar.
Going to the first issue presented in this case, it is the
argument of the petitioners that the Complaint for
Reconveyance with Damages filed by respondents
Spouses Lumbao should be dismissed for failure to
comply with the barangay conciliation proceedings as
mandated by the Revised Katarungang Pambarangay
Law under Republic Act No. 7160. This argument
cannot be sustained.
Section 408 of the aforesaid law and Administrative
Circular No. 14-93
15
provide that all disputes between
parties actually residing in the same city or municipality
are subject to barangay conciliation. A prior recourse
thereto is a pre-condition before filing a complaint in
court or any government offices. Non-compliance with
the said condition precedent could affect the sufficiency
of the plaintiffs cause of action and make his complaint
vulnerable to dismissal on ground of lack of cause of
action or prematurity; but the same would not prevent a
court of competent jurisdiction from exercising its power
of adjudication over the case before it, where the
defendants failed to object to such exercise of
jurisdiction.
16

While it is true that the present case should first be
referred to the Barangay Lupon for conciliation because
the parties involved herein actually reside in the same
city (Pasig City) and the dispute between them involves
a real property, hence, the said dispute should have
been brought in the city in which the real property,
subject matter of the controversy, is located, which
happens to be the same city where the contending
parties reside. In the event that respondents Spouses
Lumbao failed to comply with the said condition
precedent, their Complaint for Reconveyance with
Damages can be dismissed. In this case, however,
respondents Spouses Lumbaos non-compliance with
the aforesaid condition precedent cannot be considered
fatal. Although petitioners alleged in their answer that
the Complaint for Reconveyance with Damages filed by
respondents spouses Lumbao should be dismissed for
their failure to comply with the condition precedent,
which in effect, made the complaint prematurely
instituted and the trial court acquired no jurisdiction to
hear the case, yet, they did not file a Motion to Dismiss
the said complaint.
Emphasis must be given to the fact that the petitioners
could have prevented the trial court from exercising
jurisdiction over the case had they filed a Motion to
Dismiss. However, instead of doing so, they invoked the
very same jurisdiction by filing an answer seeking an
affirmative relief from it. Worse, petitioners actively
participated in the trial of the case by presenting their
own witness and by cross-examining the witnesses
presented by the respondents Spouses Lumbao. It is
elementary that the active participation of a party in a
case pending against him before a court is tantamount
to recognition of that courts jurisdiction and a
willingness to abide by the resolution of the case which
will bar said party from later on impugning the courts
jurisdiction.
17
It is also well-settled that the non-referral
of a case for barangay conciliation when so required
under the law is not jurisdictional in nature and may
therefore be deemed waived if not raised seasonably in
a motion to dismiss.
18
Hence, herein petitioners can no
longer raise the defense of non-compliance with the
barangay conciliation proceedings to seek the dismissal
of the complaint filed by the respondents Spouses
Lumbao, because they already waived the said defense
when they failed to file a Motion to Dismiss.
As regards the second issue, petitioners maintain that
the "Bilihan ng Lupa," dated 17 August 1979 and 9
January 1981 are null and void for being falsified
documents as it is made to appear that petitioners
Virgilio and Tadeo were present in the execution of the
said documents and that the identities of the properties
in those documents in relation to the subject property
has not been established by the evidence of the
respondents Spouses Lumbao. Petitioners also claim
that the enforceability of those documents is barred by
prescription of action and laches.
It is the petitioners incessant barking that the "Bilihan
ng Lupa" documents dated 17 August 1979 and 9
January 1981 were falsified because it was made to
appear that petitioners Virgilio and Tadeo were present
in the executions thereof, and their allegation that even
respondents Spouses Lumbaos witness Carolina
Morales proved that said petitioners were not present
during the execution of the aforementioned documents.
This is specious.
Upon examination of the aforesaid documents, this
Court finds that in the "Bilihan ng Lupa," dated 17
August 1979, the signatures of petitioners Virgilio and
Tadeo appeared thereon. Moreover, in petitioners
Answer and Amended Answer to the Complaint for
Reconveyance with Damages, both petitioners Virgilio
and Tadeo made an admission that indeed they acted
as witnesses in the execution of the "Bilihan ng Lupa,"
dated 17 August 1979.
19
However, in order to avoid their
obligations in the said "Bilihan ng Lupa," petitioner
Virgilio, in his cross-examination, denied having
knowledge of the sale transaction and claimed that he
could not remember the same as well as his
appearance before the notary public due to the length of
time that had passed. Noticeably, petitioner Virgilio did
not categorically deny having signed the "Bilihan ng
Lupa," dated 17 August 1979 and in support thereof, his
testimony in the cross-examination propounded by the
counsel of the respondents Spouses Lumbao is quoted
hereunder:
ATTY. CHIU:
Q. Now, you said, Mr. WitnessVirgilio Santos, that you
dont know about this document which was marked as
Exhibit "A" for the [respondents spouses Lumbao]?
ATTY. BUGARING:
The question is misleading, your Honor. Counsel
premised the question that he does not have any
knowledge but not that he does not know.
ATTY. CHIU:
Q. Being you are one of the witnesses of this
document? [I]s it not?
WITNESS:
A. No, sir.
Q. I am showing to you this document, there is a
signature at the left hand margin of this document
Virgilio Santos, will you please go over the same and tell
the court whose signature is this?
A. I dont remember, sir, because of the length of time
that had passed.
Q. But that is your signature?
A. I dont have eyeglasses My signature is different.
Q. You never appeared before this notary public
Apolinario Mangahas?
A. I dont remember.
20

As a general rule, facts alleged in a partys pleading are
deemed admissions of that party and are binding upon
him, but this is not an absolute and inflexible rule. An
answer is a mere statement of fact which the party filing
it expects to prove, but it is not evidence.
21
And in spite
of the presence of judicial admissions in a partys
pleading, the trial court is still given leeway to consider
other evidence presented.
22
However, in the case at
bar, as the Court of Appeals mentioned in its Decision,
"[herein petitioners] had not adduced any other
evidence to override the admission made in their
[A]nswer that [petitioners Virgilio and Tadeo] actually
signed the [Bilihan ng Lupa dated 17 August 1979]
except that they were just misled as to the purpose of
the document, x x x."
23
Virgilios answers were unsure
and quibbled. Hence, the general rule that the
admissions made by a party in a pleading are binding
and conclusive upon him applies in this case.
On the testimony of respondents Spouses Lumbaos
witness Carolina Morales, this Court adopts the findings
made by the appellate court. Thus -
[T]he trial court gave singular focus on her reply to a
question during cross-examination if the [petitioners
Virgilio and Tadeo] were not with her and the vendor
[Rita] during the transaction. It must be pointed out that
earlier in the direct examination of said witness, she
confirmed that [respondents spouses Lumbao] actually
bought the lot from [Rita] ("nagkabilihan"). Said witness
positively identified and confirmed the two (2)
documents evidencing the sale in favor of [respondents
spouse Lumbao]. Thus, her subsequent statement that
the [petitioners Virgilio and Tadeo] were not with them
during the transaction does not automatically imply that
[petitioners Virgilio and Tadeo] did not at any time sign
as witnesses as to the deed of sale attesting to their
mothers voluntary act of selling a portion of her share in
her deceased mothers property. The rule is that
testimony of a witness must be considered and
calibrated in its entirety and not by truncated portions
thereof or isolated passages therein.
24

Furthermore, both "Bilihan ng Lupa" documents dated
17 August 1979 and 9 January 1981 were duly
notarized before a notary public. It is well-settled that a
document acknowledged before a notary public is a
public document
25
that enjoys the presumption of
regularity. It is a prima facie evidence of the truth of the
facts stated therein and a conclusive presumption of its
existence and due execution.
26
To overcome this
presumption, there must be presented evidence that is
clear and convincing. Absent such evidence, the
presumption must be upheld.
27
In addition, one who
denies the due execution of a deed where ones
signature appears has the burden of proving that
contrary to the recital in the jurat, one never appeared
before the notary public and acknowledged the deed to
be a voluntary act. Nonetheless, in the present case
petitioners denials without clear and convincing
evidence to support their claim of fraud and falsity were
not sufficient to overthrow the above-mentioned
presumption; hence, the authenticity, due execution and
the truth of the facts stated in the aforesaid "Bilihan ng
Lupa" are upheld.
The defense of petitioners that the identities of the
properties described in the "Bilihan ng Lupa," dated 17
August 1979 and 9 January 1981 in relation to the
subject property were not established by respondents
Spouses Lumbaos evidence is likewise not acceptable.
It is noteworthy that at the time of the execution of the
documents denominated as "Bilihan ng Lupa," the entire
property owned by Maria, the mother of Rita, was not
yet divided among her and her co-heirs and so the
description of the entire estate is the only description
that can be placed in the "Bilihan ng Lupa, dated 17
August 1979 and 9 January 1981" because the exact
metes and bounds of the subject property sold to
respondents Spouses Lumbao could not be possibly
determined at that time. Nevertheless, that does not
make the contract of sale between Rita and
respondents Spouses Lumbao invalid because both the
law and jurisprudence have categorically held that even
while an estate remains undivided, co-owners have
each full ownership of their respective aliquots or
undivided shares and may therefore alienate, assign or
mortgage them.
28
The co-owner, however, has no right
to sell or alienate a specific or determinate part of the
thing owned in common, because such right over the
thing is represented by an aliquot or ideal portion
without any physical division. In any case, the mere fact
that the deed purports to transfer a concrete portion
does not per se render the sale void. The sale is valid,
but only with respect to the aliquot share of the selling
co-owner. Furthermore, the sale is subject to the results
of the partition upon the termination of the co-
ownership.
29

In the case at bar, when the estate left by Maria had
been partitioned on 2 May 1986 by virtue of a Deed of
Extrajudicial Settlement, the 107- square meter lot sold
by the mother of the petitioners to respondents Spouses
Lumbao should be deducted from the total lot, inherited
by them in representation of their deceased mother,
which in this case measures 467 square meters. The
107-square meter lot already sold to respondents
Spouses Lumbao can no longer be inherited by the
petitioners because the same was no longer part of their
inheritance as it was already sold during the lifetime of
their mother.
Likewise, the fact that the property mentioned in the two
"Bilihan ng Lupa" documents was described as "a
portion of a parcel of land covered in Tax Declarations
No. A-018-01674," while the subject matter of the Deed
of Extrajudicial Settlement was the property described in
Transfer Certificate of Title (TCT) No. 3216 of the
Registry of Deeds of the Province of Rizal in the name
of Maria is of no moment because in the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981, it is
clear that there was only one estate left by Maria upon
her death. And this fact was not refuted by the
petitioners. Besides, the property described in Tax
Declaration No. A-018-01674 and the property
mentioned in TCT No. 3216 are both located in Barrio
Rosario, Municipality of Pasig, Province of Rizal, and
almost have the same boundaries. It is, thus, safe to
state that the property mentioned in Tax Declaration No.
A-018-01674 and in TCT No. 3216 are one and the
same.
The defense of prescription of action and laches is
likewise unjustifiable. In an action for reconveyance, the
decree of registration is respected as incontrovertible.
What is sought instead is the transfer of the property or
its title which has been wrongfully or erroneously
registered in another persons name to its rightful or
legal owner, or to the one with a better right. It is,
indeed, true that the right to seek reconveyance of
registered property is not absolute because it is subject
to extinctive prescription. However, when the plaintiff is
in possession of the land to be reconveyed, prescription
cannot set in. Such an exception is based on the theory
that registration proceedings could not be used as a
shield for fraud or for enriching a person at the expense
of another.
30

In the case at bar, the right of the respondents Spouses
Lumbao to seek reconveyance does not prescribe
because the latter have been and are still in actual
possession and occupation as owners of the property
sought to be reconveyed, which fact has not been
refuted nor denied by the petitioners. Furthermore,
respondents Spouses Lumbao cannot be held guilty of
laches because from the very start that they bought the
107-square meter lot from the mother of the petitioners,
they have constantly asked for the transfer of the
certificate of title into their names but Rita, during her
lifetime, and the petitioners, after the death of Rita,
failed to do so on the flimsy excuse that the lot had not
been partitioned yet. Inexplicably, after the partition of
the entire estate of Maria, petitioners still included the
107-square meter lot in their inheritance which they
divided among themselves despite their knowledge of
the contracts of sale between their mother and the
respondents Spouses Lumbao.
Under the above premises, this Court holds that the
"Bilihan ng Lupa" documents dated 17 August 1979 and
9 January 1981 are valid and enforceable and can be
made the basis of the respondents Spouses Lumbaos
action for reconveyance. The failure of respondents
Spouses Lumbao to have the said documents
registered does not affect its validity and enforceability.
It must be remembered that registration is not a
requirement for validity of the contract as between the
parties, for the effect of registration serves chiefly to
bind third persons. The principal purpose of registration
is merely to notify other persons not parties to a contract
that a transaction involving the property had been
entered into. Where the party has knowledge of a prior
existing interest which is unregistered at the time he
acquired a right to the same land, his knowledge of that
prior unregistered interest has the effect of registration
as to him.
31
Hence, the "Bilihan ng Lupa" documents
dated 17 August 1979 and 9 January 1981, being valid
and enforceable, herein petitioners are bound to comply
with their provisions. In short, such documents are
absolutely valid between and among the parties thereto.
Finally, the general rule that heirs are bound by
contracts entered into by their predecessors-in-interest
applies in the present case. Article 1311
32
of the NCC is
the basis of this rule. It is clear from the said provision
that whatever rights and obligations the decedent have
over the property were transmitted to the heirs by way of
succession, a mode of acquiring the property, rights and
obligations of the decedent to the extent of the value of
the inheritance of the heirs.
33
Thus, the heirs cannot
escape the legal consequence of a transaction entered
into by their predecessor-in-interest because they have
inherited the property subject to the liability affecting
their common ancestor. Being heirs, there is privity of
interest between them and their deceased mother. They
only succeed to what rights their mother had and what is
valid and binding against her is also valid and binding as
against them. The death of a party does not excuse
nonperformance of a contract which involves a property
right and the rights and obligations thereunder pass to
the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the
party when the other party has a property interest in the
subject matter of the contract.
34

In the end, despite the death of the petitioners mother,
they are still bound to comply with the provisions of the
"Bilihan ng Lupa," dated 17 August 1979 and 9 January
1981. Consequently, they must reconvey to herein
respondents Spouses Lumbao the 107-square meter lot
which they bought from Rita, petitioners mother. And as
correctly ruled by the appellate court, petitioners must
pay respondents Spouses Lumbao attorneys fees and
litigation expenses for having been compelled to litigate
and incur expenses to protect their interest.
35
On this
matter, we do not find reasons to reverse the said
findings.
WHEREFORE, premises considered, the instant
Petition is hereby DENIED. The Decision and
Resolution of the Court of Appeals dated 8 June 2005
and 29 July 2005, respectively, are hereby AFFIRMED.
Herein petitioners are ordered to reconvey to
respondents Spouses Lumbao the subject property and
to pay the latter attorneys fees and litigation expenses.
Costs against petitioners.
SO ORDERED.