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EN BANC

[G.R. No. L-8437. November 28, 1956.]


ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,
claimant-Appellant.
DECISION
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:
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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;
and 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.
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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.
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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.
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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:
(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;
and (2) that whatever losses may occur after
Hemadys death, are not chargeable to his estate, because upon his death he
ceased to be guarantor.
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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:
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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:
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.
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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:

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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).
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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;
they take such property subject to all the obligations resting thereon
in the hands of him from whom they derive their rights.
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(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;
and 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.
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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;
le 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.
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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;
cuando 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.)
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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;
hence, 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.
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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;
and 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.
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The foregoing concept is confirmed by the next Article 2057, that runs as follows:

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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:
it is his right, not his duty;
he 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.
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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;
Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).
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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;
Gibson
vs. Mithell, 16 Pla., 519;
Maxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs.
Pulliam, 7 Baxt. [Tenn.], 119;
Ernst vs. Nou, 63 Wis., 134.)
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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;
and 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.
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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.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador,
Concepcion, Endencia and Felix, JJ., concur.

SECOND DIVISION

[G.R. No. 149926. February 23, 2005]

UNION BANK OF THE PHILIPPINES, petitioner,


SANTIBAEZ
and
FLORENCE
ARIOLA, respondents.

vs. EDMUND
SANTIBAEZ

DECISION
CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court which seeks the reversal of the Decision [1] of the Court of Appeals dated May 30,
2001 in CA-G.R. CV No. 48831 affirming the dismissal [2] of the petitioners complaint in
Civil Case No. 18909 by the Regional Trial Court (RTC) of Makati City, Branch 63.
The antecedent facts are as follows:
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M.
Santibaez entered into a loan agreement [3] in the amount of P128,000.00. The amount
was intended for the payment of the purchase price of one (1) unit Ford 6600
Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim and his son, Edmund,
executed a promissory note in favor of the FCCC, the principal sum payable in five
equal annual amortizations of P43,745.96 due on May 31, 1981 and every May
31st thereafter up to May 31, 1985.
On December 13, 1980, the FCCC and Efraim entered into another loan
agreement,[4] this time in the amount of P123,156.00. It was intended to pay the balance
of the purchase price of another unit of Ford 6600 Agricultural All-Purpose Diesel
Tractor, with accessories, and one (1) unit Howard Rotamotor Model AR 60K. Again,
Efraim and his son, Edmund, executed a promissory note for the said amount in favor of
the FCCC. Aside from such promissory note, they also signed a Continuing Guaranty
Agreement[5] for the loan dated December 13, 1980.
Sometime in February 1981, Efraim died, leaving a holographic will. [6] Subsequently
in March 1981, testate proceedings commenced before the RTC of Iloilo City, Branch 7,
docketed as Special Proceedings No. 2706. On April 9, 1981, Edmund, as one of the
heirs, was appointed as the special administrator of the estate of the decedent. [7] During
the pendency of the testate proceedings, the surviving heirs, Edmund and his sister
Florence Santibaez Ariola, executed a Joint Agreement [8] dated July 22, 1981, wherein
they agreed to divide between themselves and take possession of the three (3) tractors;
that is, two (2) tractors for Edmund and one (1) tractor for Florence. Each of them was

to assume the indebtedness of their late father to FCCC, corresponding to the tractor
respectively taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of Liabilities [9] was
executed by and between FCCC and Union Savings and Mortgage Bank, wherein the
FCCC as the assignor, among others, assigned all its assets and liabilities to Union
Savings and Mortgage Bank.
Demand letters[10] for the settlement of his account were sent by petitioner Union
Bank of the Philippines (UBP) to Edmund, but the latter failed to heed the same and
refused to pay. Thus, on February 5, 1988, the petitioner filed a Complaint [11] for sum of
money against the heirs of Efraim Santibaez, Edmund and Florence, before the RTC
of Makati City, Branch 150, docketed as Civil Case No. 18909. Summonses were
issued against both, but the one intended for Edmund was not served since he was in
the United States and there was no information on his address or the date of his return
to the Philippines.[12] Accordingly, the complaint was narrowed down to respondent
Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her Answer [13] and
alleged that the loan documents did not bind her since she was not a party thereto.
Considering that the joint agreement signed by her and her brother Edmund was not
approved by the probate court, it was null and void; hence, she was not liable to the
petitioner under the joint agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati
City, Branch 63.[14] Consequently, trial on the merits ensued and a decision was
subsequently rendered by the court dismissing the complaint for lack of merit. The
decretal portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of


merit.[15]
The trial court found that the claim of the petitioner should have been filed with the
probate court before which the testate estate of the late Efraim Santibaez was
pending, as the sum of money being claimed was an obligation incurred by the said
decedent. The trial court also found that the Joint Agreement apparently executed by his
heirs, Edmund and Florence, on July 22, 1981, was, in effect, a partition of the estate of
the decedent. However, the said agreement was void, considering that it had not been
approved by the probate court, and that there can be no valid partition until after the will
has been probated. The trial court further declared that petitioner failed to prove that it
was the now defunct Union Savings and Mortgage Bank to which the FCCC had
assigned its assets and liabilities. The court also agreed to the contention of
respondent Florence S. Ariola that the list of assets and liabilities of the FCCC assigned
to Union Savings and Mortgage Bank did not clearly refer to the decedents account.
Ruling that the joint agreement executed by the heirs was null and void, the trial court
held that the petitioners cause of action against respondent Florence S. Ariola must
necessarily fail.

The petitioner appealed from the RTC decision and elevated its case to the Court of
Appeals (CA), assigning the following as errors of the trial court:
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT
(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD
WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.[16]

The petitioner asserted before the CA that the obligation of the deceased had
passed to his legitimate children and heirs, in this case, Edmund and Florence; the
unconditional signing of the joint agreement marked as Exhibit A estopped respondent
Florence S. Ariola, and that she cannot deny her liability under the said document; as
the agreement had been signed by both heirs in their personal capacity, it was no longer
necessary to present the same before the probate court for approval; the property
partitioned in the agreement was not one of those enumerated in the holographic will
made by the deceased; and the active participation of the heirs, particularly respondent
Florence S. Ariola, in the present ordinary civil action was tantamount to a waiver to relitigate the claim in the estate proceedings.
On the other hand, respondent Florence S. Ariola maintained that the money claim
of the petitioner should have been presented before the probate court. [17]
The appellate court found that the appeal was not meritorious and held that the
petitioner should have filed its claim with the probate court as provided under Sections 1
and 5, Rule 86 of the Rules of Court. It further held that the partition made in the
agreement was null and void, since no valid partition may be had until after the will has
been probated. According to the CA, page 2, paragraph (e) of the holographic will
covered the subject properties (tractors) in generic terms when the deceased referred to
them as all other properties. Moreover, the active participation of respondent Florence
S. Ariola in the case did not amount to a waiver. Thus, the CA affirmed the RTC
decision, viz.:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial


Court of Makati City, Branch 63, is hereby AFFIRMED in toto.
SO ORDERED.[18]
In the present recourse, the petitioner ascribes the following errors to the CA:
I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE


JOINT AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT.

II.

THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO


VALID PARTITION AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAEZ
UNTIL AFTER THE WILL HAS BEEN PROBATED.
III.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE


RESPONDENT HAD WAIVED HER RIGHT TO HAVE THE CLAIM RELITIGATED IN THE ESTATE PROCEEDING.
IV.

RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY


LIABLE WITH THE PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAEZ
ON THE STRENGTH OF THE CONTINUING GUARANTY AGREEMENT
EXECUTED IN FAVOR OF PETITIONER-APPELLANT UNION BANK.
V.

THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00
AND DECEMBER 13, 1980 IN THE AMOUNT OF P123,000.00
CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS
BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE
DEBTOR EFRAIM SANTIBAEZ IN FAVOR OF PETITIONER UNION BANK.[19]
The petitioner claims that the obligations of the deceased were transmitted to the
heirs as provided in Article 774 of the Civil Code; there was thus no need for the probate
court to approve the joint agreement where the heirs partitioned the tractors owned by
the deceased and assumed the obligations related thereto. Since respondent Florence
S. Ariola signed the joint agreement without any condition, she is now estopped from
asserting any position contrary thereto. The petitioner also points out that the
holographic will of the deceased did not include nor mention any of the tractors subject
of the complaint, and, as such was beyond the ambit of the said will. The active
participation and resistance of respondent Florence S. Ariola in the ordinary civil action
against the petitioners claim amounts to a waiver of the right to have the claim
presented in the probate proceedings, and to allow any one of the heirs who executed
the joint agreement to escape liability to pay the value of the tractors under
consideration would be equivalent to allowing the said heirs to enrich themselves to the
damage and prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both the trial and appellate
courts failed to consider the fact that respondent Florence S. Ariola and her brother
Edmund executed loan documents, all establishing the vinculum juris or the legal bond

between the late Efraim Santibaez and his heirs to be in the nature of a solidary
obligation. Furthermore, the Promissory Notes dated May 31, 1980 and December 13,
1980 executed by the late Efraim Santibaez, together with his heirs, Edmund and
respondent Florence, made the obligation solidary as far as the said heirs are
concerned. The petitioner also proffers that, considering the express provisions of the
continuing guaranty agreement and the promissory notes executed by the named
respondents, the latter must be held liable jointly and severally liable thereon. Thus,
there was no need for the petitioner to file its money claim before the probate court.
Finally, the petitioner stresses that both surviving heirs are being sued in their
respective personal capacities, not as heirs of the deceased.
In her comment to the petition, respondent Florence S. Ariola maintains that the
petitioner is trying to recover a sum of money from the deceased Efraim Santibaez;
thus the claim should have been filed with the probate court. She points out that at the
time of the execution of the joint agreement there was already an existing probate
proceedings of which the petitioner knew about. However, to avoid a claim in the
probate court which might delay payment of the obligation, the petitioner opted to
require them to execute the said agreement.
According to the respondent, the trial court and the CA did not err in declaring that
the agreement was null and void. She asserts that even if the agreement was voluntarily
executed by her and her brother Edmund, it should still have been subjected to the
approval of the court as it may prejudice the estate, the heirs or third parties.
Furthermore, she had not waived any rights, as she even stated in her answer in the
court a quo that the claim should be filed with the probate court. Thus, the petitioner
could not invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as evidence to
show that she had caused herself to be bound by the obligation of her late father.
The petition is bereft of merit.
The Court is posed to resolve the following issues: a) whether or not the partition in
the Agreement executed by the heirs is valid; b) whether or not the heirs assumption of
the indebtedness of the deceased is valid; and c) whether the petitioner can hold the
heirs liable on the obligation of the deceased.
At the outset, well-settled is the rule that a probate court has the jurisdiction to
determine all the properties of the deceased, to determine whether they should or
should not be included in the inventory or list of properties to be administered. [20] The
said court is primarily concerned with the administration, liquidation and distribution of
the estate.[21]
In our jurisdiction, the rule is that there can be no valid partition among the heirs
until after the will has been probated:

In testate succession, there can be no valid partition among the heirs until after the
will has been probated. The law enjoins the probate of a will and the public requires

it, because unless a will is probated and notice thereof given to the whole world, the
right of a person to dispose of his property by will may be rendered nugatory. The
authentication of a will decides no other question than such as touch upon the capacity
of the testator and the compliance with those requirements or solemnities which the
law prescribes for the validity of a will.[22]
This, of course, presupposes that the properties to be partitioned are the same
properties embraced in the will.[23] In the present case, the deceased, Efraim
Santibaez, left a holographic will [24] which contained, inter alia, the provision which
reads as follows:

(e) All other properties, real or personal, which I own and may be discovered later
after my demise, shall be distributed in the proportion indicated in the immediately
preceding paragraph in favor of Edmund and Florence, my children.
We agree with the appellate court that the above-quoted is an all-encompassing
provision embracing all the properties left by the decedent which might have escaped
his mind at that time he was making his will, and other properties he may acquire
thereafter. Included therein are the three (3) subject tractors. This being so, any partition
involving the said tractors among the heirs is not valid. The joint agreement [25] executed
by Edmund and Florence, partitioning the tractors among themselves, is invalid,
specially so since at the time of its execution, there was already a pending proceeding
for the probate of their late fathers holographic will covering the said tractors.
It must be stressed that the probate proceeding had already acquired jurisdiction
over all the properties of the deceased, including the three (3) tractors. To dispose of
them in any way without the probate courts approval is tantamount to divesting it with
jurisdiction which the Court cannot allow.[26] Every act intended to put an end to
indivision among co-heirs and legatees or devisees is deemed to be a partition,
although it should purport to be a sale, an exchange, a compromise, or any other
transaction.[27] Thus, in executing any joint agreement which appears to be in the nature
of an extra-judicial partition, as in the case at bar, court approval is imperative, and the
heirs cannot just divest the court of its jurisdiction over that part of the estate. Moreover,
it is within the jurisdiction of the probate court to determine the identity of the heirs of the
decedent.[28] In the instant case, there is no showing that the signatories in the joint
agreement were the only heirs of the decedent. When it was executed, the probate of
the will was still pending before the court and the latter had yet to determine who the
heirs of the decedent were. Thus, for Edmund and respondent Florence S. Ariola to
adjudicate unto themselves the three (3) tractors was a premature act, and prejudicial to
the other possible heirs and creditors who may have a valid claim against the estate of
the deceased.
The question that now comes to fore is whether the heirs assumption of the
indebtedness of the decedent is binding. We rule in the negative. Perusing the joint
agreement, it provides that the heirs as parties thereto have agreed to divide between
themselves and take possession and use the above-described chattel and each of them

to assume the indebtedness corresponding to the chattel taken as herein after stated
which is in favor of First Countryside Credit Corp.[29] The assumption of liability was
conditioned upon the happening of an event, that is, that each heir shall take
possession and use of their respective share under the agreement. It was made
dependent on the validity of the partition, and that they were to assume the
indebtedness corresponding to the chattel that they were each to receive. The partition
being invalid as earlier discussed, the heirs in effect did not receive any such tractor. It
follows then that the assumption of liability cannot be given any force and effect.
The Court notes that the loan was contracted by the decedent. The petitioner,
purportedly a creditor of the late Efraim Santibaez, should have thus filed its money
claim with the probate court in accordance with Section 5, Rule 86 of the Revised Rules
of Court, which provides:

Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. All claims for money against the decedent, arising from contract,
express or implied, whether the same be due, not due, or contingent, all claims for
funeral expenses for the last sickness of the decedent, and judgment for money against
the decedent, must be filed within the time limited in the notice; otherwise they are
barred forever, except that they may be set forth as counterclaims in any action that
the executor or administrator may bring against the claimants. Where an executor or
administrator commences an action, or prosecutes an action already commenced by
the deceased in his lifetime, the debtor may set forth by answer the claims he has
against the decedent, instead of presenting them independently to the court as herein
provided, and mutual claims may be set off against each other in such action; and if
final judgment is rendered in favor of the defendant, the amount so determined shall
be considered the true balance against the estate, as though the claim had been
presented directly before the court in the administration proceedings. Claims not yet
due, or contingent, may be approved at their present value.
The filing of a money claim against the decedents estate in the probate court is
mandatory.[30] As we held in the vintage case of Py Eng Chong v. Herrera:[31]

This requirement is for the purpose of protecting the estate of the deceased by
informing the executor or administrator of the claims against it, thus enabling him to
examine each claim and to determine whether it is a proper one which should be
allowed. The plain and obvious design of the rule is the speedy settlement of the
affairs of the deceased and the early delivery of the property to the distributees,
legatees, or heirs. `The law strictly requires the prompt presentation and disposition of
the claims against the decedent's estate in order to settle the affairs of the estate as
soon as possible, pay off its debts and distribute the residue. [32]
Perusing the records of the case, nothing therein could hold private respondent
Florence S. Ariola accountable for any liability incurred by her late father. The

documentary evidence presented, particularly the promissory notes and the continuing
guaranty agreement, were executed and signed only by the late Efraim Santibaez and
his son Edmund. As the petitioner failed to file its money claim with the probate court, at
most, it may only go after Edmund as co-maker of the decedent under the said
promissory notes and continuing guaranty, of course, subject to any defenses Edmund
may have as against the petitioner. As the court had not acquired jurisdiction over the
person of Edmund, we find it unnecessary to delve into the matter further.
We agree with the finding of the trial court that the petitioner had not sufficiently
shown that it is the successor-in-interest of the Union Savings and Mortgage Bank to
which the FCCC assigned its assets and liabilities. [33] The petitioner in its complaint
alleged that by virtue of the Deed of Assignment dated August 20, 1981 executed by
and between First Countryside Credit Corporation and Union Bank of the
Philippines[34] However, the documentary evidence[35] clearly reflects that the parties
in the deed of assignment with assumption of liabilities were the FCCC, and the Union
Savings and Mortgage Bank, with the conformity of Bancom Philippine Holdings, Inc.
Nowhere can the petitioners participation therein as a party be found. Furthermore, no
documentary or testimonial evidence was presented during trial to show that Union
Savings and Mortgage Bank is now, in fact, petitioner Union Bank of the Philippines. As
the trial court declared in its decision:

[T]he court also finds merit to the contention of defendant that plaintiff failed to
prove or did not present evidence to prove that Union Savings and Mortgage Bank is
now the Union Bank of the Philippines. Judicial notice does not apply here. The
power to take judicial notice is to [be] exercised by the courts with caution; care must
be taken that the requisite notoriety exists; and every reasonable doubt upon the
subject should be promptly resolved in the negative. (Republic vs. Court of Appeals,
107 SCRA 504).[36]
This being the case, the petitioners personality to file the complaint is wanting.
Consequently, it failed to establish its cause of action. Thus, the trial court did not err in
dismissing the complaint, and the CA in affirming the same.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed
Court of Appeals Decision is AFFIRMED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

[1]

Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Eubulo G. Verzola
(deceased), and Marina L. Buzon, concurring.

[2]

Penned by Presiding Judge Julio R. Logarta.

[3]

Records, pp. 8-12.

[4]

Id. at 13-18.

[5]

Id. at 19-20.

[6]

Exhibit 7.

[7]

Annex A of the Answer, Records, p. 48.

[8]

Exhibit A.

[9]

Exhibit G.

[10]

Exhibits E and F.

[11]

Records, p. 1.

[12]

See Sheriffs Return of Service, Id. at 39.

[13]

Records, p. 42.

[14]

Id. at 83.

[15]

Id. at 522.

[16]

CA Rollo, p. 43.

[17]

Id. at 76.

[18]

Rollo, p. 30.

[19]

Id. at 7-8.

[20]

See Ortega v. Court of Appeals, 153 SCRA 96 (1987); See also Morales v. CFI of Cavite, Br. V, 146
SCRA 373 (1986).

[21]

See De la Cruz v. Camon, 16 SCRA 886 (1966).

[22]

Vda. de Kilayko v. Tengco, 207 SCRA 600 (1992).

[23]

Ralla v. Untalan, 172 SCRA 858 (1989).

[24]

Exhibit 7.

[25]

Exhibit A.

[26]

See Sandoval v. Santiago, 83 Phil 784 (1949).

[27]

Article 1082, New Civil Code.

[28]

See Reyes v. Ysip, 97 Phil 11 (1955).

[29]

See Exhibit 7.

[30]

See De Bautista v. De Guzman, 125 SCRA 676 (1983).

[31]

70 SCRA 130 (1976).

[32]

Ibid.

[33]

See Exhibit G.

[34]

Records, p. 4.

[35]

Exhibit G.

[36]

Records, p. 521.

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-infact, 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 plaintiffappellant, 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 coowners 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 coowners 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-infact 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
FIRST DIVISION
G.R. No. 131953

June 5, 2002

MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S. CABATINGAN, petitioners,


vs.
THE HEIRS OF CORAZON CABATINGAN, namely, LUZ M. BOQUIA, PERLA M. ABELLA,
ESTRELLA M. CAETE, LOURDES M. YUSON, and JULIA L. MAYOL, HEIRS OF GENOVIVA C.
NATIVIDAD namely, OSCAR C. NATIVIDAD, OLGA NATIVIDAD, ODETTE NATIVIDAD, OPHELIA
NATIVIDAD, RICHARD NATIVIDAD, RAYMUND NATIVIDAD, RICHIE NATIVIDAD, SONIA
NATIVIDAD and ENCARNACION CABATINGAN VDA. DE TRINIDAD, ALFREDO CABATINGAN
and JESUSA C. NAVADA, respondents.
AUSTRIA-MARTINEZ, J.:
Posed for resolution before the Court in this petition for review on certiorari filed under Rule 45 of the
Rules of Court is the sole issue of whether the donations made by the late Conchita Cabatingan are
donations inter vivos ormortis causa.
The facts of the case are as follows:
On February 17, 1992, Conchita Cabatingan executed in favor of her brother, petitioner Nicolas
Cabatingan, a "Deed of Conditional of Donation (sic) Inter Vivos for House and Lot" covering onehalf () portion of the former's house and lot located at Cot-cot, Liloan, Cebu. 1 Four (4) other deeds
of donation were subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing
upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land - one located in Cogon, Cebu (307
sq. m.) and the other, a portion of a parcel of land in Masbate (50,232 sq. m.); (b) petitioner Nicolas
Cabatingan, a portion of a parcel of land located in Masbate (80,000 sq. m.); and (c) petitioner Merly
S. Cabatingan, a portion of the Masbate property (80,000 sq. m.).2 These deeds of donation contain
similar provisions, to wit:
"That for and in consideration of the love and affection of the DONOR for the DONEE, x x x
the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the
DONEE the above-described property, together with the buildings and all improvements
existing thereon, to become effective upon the death of the DONOR; PROVIDED,
HOWEVER, that in the event that the DONEE should die before the DONOR, the
present donation shall be deemed automatically rescinded and of no further force and
effect; x x x"3 (Emphasis Ours)
On May 9, 1995, Conchita Cabatingan died.
Upon learning of the existence of the foregoing donations, respondents filed with the Regional Trial
Court of Mandaue, Branch 55, an action for Annulment And/Or Declaration of Nullity of Deeds of
Donations and Accounting, docketed as Civil Case No. MAN-2599, seeking the annulment of said
four (4) deeds of donation executed on January 14, 1995. Respondents allege, inter alia, that
petitioners, through their sinister machinations and strategies and taking advantage of Conchita

Cabatingan's fragile condition, caused the execution of the deeds of donation, and, that the
documents are void for failing to comply with the provisions of the Civil Code regarding formalities of
wills and testaments, considering that these are donations mortis causa.4 Respondents prayed that a
receiver be appointed in order to preserve the disputed properties, and, that they be declared as coowners of the properties in equal shares, together with petitioner Nicolas Cabatingan. 5
Petitioners in their Amended Answer, deny respondents' allegations contending that Conchita
Cabatingan freely, knowingly and voluntarily caused the preparation of the instruments. 6
On respondents' motion, the court a quo rendered a partial judgment on the pleadings on December
2, 1997 in favor of respondents, with the following dispositive portion:
"WHEREREFORE, and in consideration of all the foregoing, judgment is hereby rendered in
favor of the plaintiffs and against the defendant and unwilling co-plaintiff with regards (sic) to
the four Deeds of Donation Annexes "A", "A-1", "B" and Annex "C" which is the subject of this
partial decision by:
Declaring the four Deeds of Donation as null and void ab initio for being a donation
Mortis Causa and for failure to comply with formal and solemn requisite under Art.
806 of the New Civil Code;
b) To declare the plaintiffs and defendants as well as unwilling co-plaintiff as the
heirs of the deceased Conchita Cabatingan and therefore hereditary co-owners of
the properties subject of this partial decision, as mandated under Art. 777 of the New
Civil Code;
SO ORDERED."7
The court a quo ruled that the donations are donations mortis causa and therefore the four (4) deeds
in question executed on January 14, 1995 are null and void for failure to comply with the requisites
of Article 806 of the Civil Code on solemnities of wills and testaments.8
Raising questions of law, petitioners elevated the court a quo's decision to this Court,9 alleging that:
"THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-WELL-ESTABLISHED
RULINGS OF THIS HONORABLE SUPREME COURT ON THE CHARACTERIZATION OF
DONATIONS AS INTER VIVOSOR MORTIS CAUSA AND, INSTEAD, PROCEEDED TO
INTERPRET THE DONATIONS IN QUESTION IN A MANNER CONTRARY THERETO."10
Petitioners insist that the donations are inter vivos donations as these were made by the late
Conchita Cabatingan "in consideration of the love and affection of the donor" for the donee, and
there is nothing in the deeds which indicate that the donations were made in consideration of
Cabatingan's death.11 In addition, petitioners contend that the stipulation on rescission in case
petitioners die ahead of Cabatingan is a resolutory condition that confirms the nature of the donation
as inter vivos.
Petitioners' arguments are bereft of merit.
In a donation mortis causa, "the right of disposition is not transferred to the donee while the donor is
still alive."12In determining whether a donation is one of mortis causa, the following characteristics
must be taken into account:

(1) It conveys no title or ownership to the transferee before the death of the transferor; or
what amounts to the same thing, that the transferor should retain the ownership (full or
naked) and control of the property while alive;
(2) That before his death, the transfer should be revocable by the transferor at will, ad nutum;
but revocability may be provided for indirectly by means of a reserved power in the donor to
dispose of the properties conveyed;
and
(3) That the transfer should be void if the transferor should survive the transferee. 13
In the present case, the nature of the donations as mortis causa is confirmed by the fact that the
donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior
to Cabatingan's death.14 The phrase "to become effective upon the death of the DONOR" admits of
no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties
to petitioners during her lifetime. Petitioners themselves expressly confirmed the donations as mortis
causa in the following Acceptance and Attestation clauses, uniformly found in the subject deeds of
donation, to wit:
"That the DONEE does hereby accept the foregoing donation mortis causa under the terms
and conditions set forth therein, and avail herself of this occasion to express her profound
gratitude for the kindness and generosity of the DONOR."
xxx
"SIGNED by the above-named DONOR and DONEE at the foot of this Deed of
Donation mortis causa, which consists of two (2) pages x x x."15
That the donations were made "in consideration of the love and affection of the donor" does not
qualify the donations as inter vivos because transfers mortis causa may also be made for the same
reason.16
Well in point is National Treasurer of the Phils. v. Vda. de Meimban.17 In said case, the questioned
donation contained the provision:
"That for and in consideration of the love and affection which the DONOR has for the
DONEE, the said Donor by these presents does hereby give, transfer, and convey unto the
DONEE, her heirs and assigns a portion of ONE HUNDRED THOUSAND (100,000)
SQUARE METERS, on the southeastern part Pro-indiviso of the above described property.
(The portion herein donated is within Lot 2-B of the proposed amendment Plan Subdivision
of Lots Nos. 1 and 2, Psu-109393), with all the buildings and improvements thereon, to
become effective upon the death of the DONOR. (italics supplied.)"18
Notably, the foregoing provision is similar to that contained in the donation executed by Cabatingan.
We held in Meimban case that the donation is a mortis causa donation, and that the above quoted
provision establishes the donor's intention to transfer the ownership and possession of the donated
property to the donee only after the former's death. Further:
"As the donation is in the nature of a mortis causa disposition, the formalities of a will should
have been complied with under Article 728 of the Civil Code, otherwise, the donation is void

and would produce no effect. As we have held in Alejandro v. Geraldez (78 SCRA 245,253),
"If the donation is made in contemplation of the donor's death, meaning that the full or naked
ownership of the donated properties will pass to the donee because of the donor's death,
then it is at that time that the donation takes effect, and it is a donation mortis causa which
should be embodied in a last will and testament. (Citing Bonsato v. Court of Appeals, 95 Phil.
481)."19
We apply the above rulings to the present case. The herein subject deeds expressly provide that the
donation shall be rescinded in case petitioners predecease Conchita Cabatingan. As stated
in Reyes v. Mosqueda,20 one of the decisive characteristics of a donation mortis causa is that the
transfer should be considered void if the donor should survive the donee. This is exactly what
Cabatingan provided for in her donations. If she really intended that the donation should take effect
during her lifetime and that the ownership of the properties donated be transferred to the donee or
independently of, and not by reason of her death, she would have not expressed such proviso in the
subject deeds.
1wphi1.nt

Considering that the disputed donations are donations mortis causa, the same partake of the nature
of testamentary provisions21 and as such, said deeds must be executed in accordance with the
requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code, to wit:
"ART. 805. Every will, other than a holographic will, must be subscribed at the end thereof by
the testator himself or by the testator's name written by some other person in his presence,
and by his express direction, and attested and subscribed by three or more credible
witnesses in the presence of the testator and of one another.
The testator or the person requested by him to write his name and the instrumental
witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the
last, on the left margin, and all the pages shall be numbered correlatively in letters placed on
the upper part of each page.
The attestation shall state the number of pages used upon which the will is written , and the
fact that the testator signed the will and every page thereof, or caused some other person to
write his name, under his express direction, in the presence of the instrumental witnesses,
and that the latter witnessed and signed the will and all the pages thereof in the presence of
the testator and of one another.
If the attestation clause is in a language not known to the witnesses, it shall be interpreted to
them. (n)
ART. 806. Every will must be acknowledged before a notary public by the testator and the
witnesses. The notary public shall not be required to retain a copy of the will, or file another
with the office of the Clerk of Court. (n)"
The deeds in question although acknowledged before a notary public of the donor and the donee,
the documents were not executed in the manner provided for under the above-quoted provisions of
law.
Thus, the trial court did not commit any reversible error in declaring the subject deeds of donation
null and void.
WHEREFORE, the petition is hereby DENIED for lack of merit.

SO ORDERED.
Vitug, and Kapunan, JJ., concur.
Davide, Jr.,C.J., Ynares-Santiago, J., on official leave.

Footnote
1

Original Records, See Annex "D", pp. 107-108.

Original Records, See Annexes "A" to "C", pp. 99-106.

Ibid.

Original Records, Amended Complaint, pp. 93-97.

Original Records, p. 97.

Amended Answer, pp. 2-3; Original Records, pp. 125-126.

Decision, p. 8; Original Records, p. 207.

Original Records, See Partial Decision dated December 2, 1997, p. 200.

The petition was given due course per S.C. Resolution dated April 24, 1998.

10

Petition, p. 5; Rollo, p. 17.

11

Petition, pp. 13-14; Rollo, pp. 25-26.

12

Sicad v. Court of Appeals, 294 SCRA 183 [1998], p. 193.

Reyes v. Mosqueda, 187 SCRA 661 [1990], at pp. 670-671, citing Bonsato, et al. v. Court
of Appeals, et al., 95 Phil. 481 [1954].
13

14

Rollo, See Annexes "B" to "E", pp. 45-51.

15

Rollo, Annexes "B" to "E", pp. 45-52.

16

Sicad v. Court of Appeals, supra, p. 194, citing Alejandro v. Geraldez, 78 SCRA 245 [1977].

17

131 SCRA 264 [1984].

18

Ibid., p. 269.

19

Ibid., p. 270.

20

See Note 13.

21

Article 728, Civil Code.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 146006

February 23, 2004

JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and Corporate Secretary,
respectively, of Philippines International Life Insurance Company, and FILIPINO LOAN
ASSISTANCE GROUP, petitioners
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, respondents.
DECISION
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to reverse and set aside the
decision1 of the Court of Appeals, First Division, dated July 26, 2000, in CA G.R. 59736, which
dismissed the petition for certiorari filed by petitioners Jose C. Lee and Alma Aggabao (in their
capacities as president and secretary, respectively, of Philippine International Life Insurance
Company) and Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance Company, Inc. on
July 6, 1956. At the time of the companys incorporation, Dr. Ortaez owned ninety percent (90%) of
the subscribed capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado Ortaez), three legitimate
children (Rafael, Jose and Antonio Ortaez) and five illegitimate children by Ligaya Novicio (herein
private respondent Ma. Divina Ortaez-Enderes and her siblings Jose, Romeo, Enrico Manuel and
Cesar, all surnamed Ortaez).2
On September 24, 1980, Rafael Ortaez filed before the Court of First Instance of Rizal, Quezon
City Branch (now Regional Trial Court of Quezon City) a petition for letters of administration of the
intestate estate of Dr. Ortaez, docketed as SP Proc. Q-30884 (which petition to date remains
pending at Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an opposition to the petition
for letters of administration and, in a subsequent urgent motion, prayed that the intestate court
appoint a special administrator.

On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch 85, appointed Rafael
and Jose Ortaez joint special administrators of their fathers estate. Hearings continued for the
appointment of a regular administrator (up to now no regular administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose Ortaez submitted an
inventory of the estate of their father which included, among other properties, 2,029 3 shares of stock
in Philippine International Life Insurance Company (hereafter Philinterlife), representing 50.725% of
the companys outstanding capital stock.
On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that she owned
1,0144 Philinterlife shares of stock as her conjugal share in the estate, sold said shares with right to
repurchase in favor of herein petitioner Filipino Loan Assistance Group (FLAG), represented by its
president, herein petitioner Jose C. Lee. Juliana Ortaez failed to repurchase the shares of stock
within the stipulated period, thus ownership thereof was consolidated by petitioner FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal capacity and
claiming that he owned the remaining 1,0115 Philinterlife shares of stocks as his inheritance share in
the estate, sold said shares with right to repurchase also in favor of herein petitioner FLAG,
represented by its president, herein petitioner Jose C. Lee. After one year, petitioner FLAG
consolidated in its name the ownership of the Philinterlife shares of stock when Jose Ortaez failed
to repurchase the same.
It appears that several years before (but already during the pendency of the intestate proceedings at
the Regional Trial Court of Quezon City, Branch 85), Juliana Ortaez and her two children, Special
Administrators Rafael and Jose Ortaez, entered into a memorandum of agreement dated March 4,
1982 for the extrajudicial settlement of the estate of Dr. Juvencio Ortaez, partitioning the estate
(including the Philinterlife shares of stock) among themselves. This was the basis of the number of
shares separately sold by Juliana Ortaez on April 15, 1989 (1,014 shares) and by Jose Ortaez on
October 30, 1991 (1,011 shares) in favor of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes and her siblings (hereafter
referred to as private respondents Enderes et al.) filed a motion for appointment of special
administrator of Philinterlife shares of stock. This move was opposed by Special Administrator Jose
Ortaez.
On November 8, 1995, the intestate court granted the motion of private respondents Enderes et
al. and appointed private respondent Enderes special administratrix of the Philinterlife shares of
stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to declare void ab
initio the memorandum of agreement dated March 4, 1982. On January 9, 1996, she filed a motion
to declare the partial nullity of the extrajudicial settlement of the decedents estate. These motions
were opposed by Special Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to declare void ab
initio the deeds of sale of Philinterlife shares of stock, which move was again opposed by Special
Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the approval of the deeds of sale
of the Philinterlife shares of stock and (2) the release of Ma. Divina Ortaez-Enderes as special
administratrix of the Philinterlife shares of stock on the ground that there were no longer any shares
of stock for her to administer.

On August 11, 1997, the intestate court denied the omnibus motion of Special Administrator Jose
Ortaez for the approval of the deeds of sale for the reason that:
Under the Godoy case, supra, it was held in substance that a sale of a property of the estate without
an Order of the probate court is void and passes no title to the purchaser. Since the sales in question
were entered into by Juliana S. Ortaez and Jose S. Ortaez in their personal capacity without prior
approval of the Court, the same is not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of Philinterlife shares of stock
and release of Ma. Divina Ortaez-Enderes as Special Administratrix is hereby denied. 6
On August 29, 1997, the intestate court issued another order granting the motion of Special
Administratrix Enderes for the annulment of the March 4, 1982 memorandum of agreement or
extrajudicial partition of estate. The court reasoned that:
In consonance with the Order of this Court dated August 11, 1997 DENYING the approval of the sale
of Philinterlife shares of stocks and release of Ma. Divina Ortaez-Enderes as Special Administratrix,
the "Urgent Motion to Declare Void Ab Initio Memorandum of Agreement" dated December 19, 1995.
. . is hereby impliedly partially resolved insofar as the transfer/waiver/renunciation of the Philinterlife
shares of stock are concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the Memorandum of
Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement dated March 4, 1982
executed by Juliana S. Ortaez, Rafael S. Ortaez and Jose S. Ortaez as partially void ab
initio insofar as the transfer/waiver/renunciation of the Philinterlife shares of stocks are concerned. 7
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez filed, on December 22,
1997, a petition for certiorari in the Court of Appeals. The appellate court denied his petition,
however, ruling that there was no legal justification whatsoever for the extrajudicial partition of the
estate by Jose Ortaez, his brother Rafael Ortaez and mother Juliana Ortaez during the pendency
of the settlement of the estate of Dr. Ortaez, without the requisite approval of the intestate court,
when it was clear that there were other heirs to the estate who stood to be prejudiced thereby.
Consequently, the sale made by Jose Ortaez and his mother Juliana Ortaez to FLAG of the
shares of stock they invalidly appropriated for themselves, without approval of the intestate court,
was void.8
Special Administrator Jose Ortaez filed a motion for reconsideration of the Court of Appeals
decision but it was denied. He elevated the case to the Supreme Court via petition for review under
Rule 45 which the Supreme Court dismissed on October 5, 1998, on a technicality. His motion for
reconsideration was denied with finality on January 13, 1999. On February 23, 1999, the resolution
of the Supreme Court dismissing the petition of Special Administrator Jose Ortaez became final
and was subsequently recorded in the book of entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the FLAG-controlled
board of directors, increased the authorized capital stock of Philinterlife, diluting in the process the
50.725% controlling interest of the decedent, Dr. Juvencio Ortaez, in the insurance company.9 This
became the subject of a separate action at the Securities and Exchange Commission filed by private
respondent-Special Administratrix Enderes against petitioner Jose Lee and other members of the
FLAG-controlled board of Philinterlife on November 7, 1994. Thereafter, various cases were filed by
Jose Lee as president of Philinterlife and Juliana Ortaez and her sons against private respondentSpecial Administratrix Enderes in the SEC and civil courts.10 Somehow, all these cases were
connected to the core dispute on the legality of the sale of decedent Dr. Ortaezs Philinterlife shares

of stock to petitioner FLAG, represented by its president, herein petitioner Jose Lee who later
became the president of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and her siblings filed a motion
for execution of the Orders of the intestate court dated August 11 and August 29, 1997 because the
orders of the intestate court nullifying the sale (upheld by the Court of Appeals and the Supreme
Court) had long became final. Respondent-Special Administratrix Enderes served a copy of the
motion to petitioners Jose Lee and Alma Aggabao as president and secretary, respectively, of
Philinterlife,11 but petitioners ignored the same.
On July 6, 2000, the intestate court granted the motion for execution, the dispositive portion of which
read:
WHEREFORE, premises considered, let a writ of execution issue as follows:
1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in the name of the Estate
of Dr. Juvencio Ortaez to Filipino Loan Assistance Group (FLAG);
2. Commanding the President and the Corporate Secretary of Philinterlife to reinstate in the
stock and transfer book of Philinterlife the 2,029 Philinterlife shares of stock in the name of
the Estate of Dr. Juvencio P. Ortaez as the owner thereof without prejudice to other claims
for violation of pre-emptive rights pertaining to the said 2,029 Philinterlife shares;
3. Directing the President and the Corporate Secretary of Philinterlife to issue stock
certificates of Philinterlife for 2,029 shares in the name of the Estate of Dr. Juvencio P.
Ortaez as the owner thereof without prejudice to other claims for violations of pre-emptive
rights pertaining to the said 2,029 Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina Ortaez-Enderes, has the
power to exercise all the rights appurtenant to the said shares, including the right to vote and
to receive dividends.
5. Directing Philinterlife and/or any other person or persons claiming to represent it or
otherwise, to acknowledge and allow the said Special Administratrix to exercise all the
aforesaid rights on the said shares and to refrain from resorting to any action which may tend
directly or indirectly to impede, obstruct or bar the free exercise thereof under pain of
contempt.
6. The President, Corporate Secretary, any responsible officer/s of Philinterlife, or any other
person or persons claiming to represent it or otherwise, are hereby directed to comply with
this order within three (3) days from receipt hereof under pain of contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby directed to implement
the writ of execution with dispatch to forestall any and/or further damage to the Estate.
SO ORDERED.12
In the several occasions that the sheriff went to the office of petitioners to execute the writ of
execution, he was barred by the security guard upon petitioners instructions. Thus, private
respondent-Special Administratrix Enderes filed a motion to cite herein petitioners Jose Lee and
Alma Aggabao (president and secretary, respectively, of Philinterlife) in contempt. 13

Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a petition for certiorari,
docketed as CA G.R. SP No. 59736. Petitioners alleged that the intestate court gravely abused its
discretion in (1) declaring that the ownership of FLAG over the Philinterlife shares of stock was null
and void; (2) ordering the execution of its order declaring such nullity and (3) depriving the
petitioners of their right to due process.
On July 26, 2000, the Court of Appeals dismissed the petition outright:
We are constrained to DISMISS OUTRIGHT the present petition for certiorari and prohibition with
prayer for a temporary restraining order and/or writ of preliminary injunction in the light of the
following considerations:
1. The assailed Order dated August 11, 1997 of the respondent judge had long become final
and executory;
2. The certification on non-forum shopping is signed by only one (1) of the three (3)
petitioners in violation of the Rules; and
3. Except for the assailed orders and writ of execution, deed of sale with right to repurchase,
deed of sale of shares of stocks and omnibus motion, the petition is not accompanied by
such pleadings, documents and other material portions of the record as would support the
allegations therein in violation of the second paragraph, Rule 65 of the 1997 Rules of Civil
Procedure, as amended.
Petition is DISMISSED.
SO ORDERED.14
The motion for reconsideration filed by petitioners Lee and Aggabao of the above decision was
denied by the Court of Appeals on October 30, 2000:
This resolves the "urgent motion for reconsideration" filed by the petitioners of our resolution of July
26, 2000 dismissing outrightly the above-entitled petition for the reason, among others, that the
assailed Order dated August 11, 1997 of the respondent Judge had long become final and
executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack of merit.
SO ORDERED.15
On December 4, 2000, petitioners elevated the case to the Supreme Court through a petition for
review under Rule 45 but on December 13, 2000, we denied the petition because there was no
showing that the Court of Appeals in CA G.R. SP No. 59736 committed any reversible error to
warrant the exercise by the Supreme Court of its discretionary appellate jurisdiction. 16
However, upon motion for reconsideration filed by petitioners Lee and Aggabao, the Supreme Court
granted the motion and reinstated their petition on September 5, 2001. The parties were then
required to submit their respective memoranda.

Meanwhile, private respondent-Special Administratrix Enderes, on July 19, 2000, filed a motion to
direct the branch clerk of court in lieu of herein petitioners Lee and Aggabao to reinstate the name of
Dr. Ortaez in the stock and transfer book of Philinterlife and issue the corresponding stock
certificate pursuant to Section 10, Rule 39 of the Rules of Court which provides that "the court may
direct the act to be done at the cost of the disobedient party by some other person appointed by the
court and the act when so done shall have the effect as if done by the party." Petitioners Lee and
Aggabao opposed the motion on the ground that the intestate court should refrain from acting on the
motion because the issues raised therein were directly related to the issues raised by them in their
petition for certiorari at the Court of Appeals docketed as CA-G.R. SP No. 59736. On October 30,
2000, the intestate court granted the motion, ruling that there was no prohibition for the intestate
court to execute its orders inasmuch as the appellate court did not issue any TRO or writ of
preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari in the Court of
Appeals, docketed as CA-G.R. SP No. 62461, questioning this time the October 30, 2000 order of
the intestate court directing the branch clerk of court to issue the stock certificates. They also
questioned in the Court of Appeals the order of the intestate court nullifying the sale made in their
favor by Juliana Ortaez and Jose Ortaez. On November 20, 2002, the Court of Appeals denied
their petition and upheld the power of the intestate court to execute its order. Petitioners Lee and
Aggabao then filed motion for reconsideration which at present is still pending resolution by the
Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of Philinterlife) and
FLAG now raise the following errors for our consideration:
The Court of Appeals committed grave reversible ERROR:
A. In failing to reconsider its previous resolution denying the petition despite the fact that the
appellate courts mistake in apprehending the facts had become patent and evident from the
motion for reconsideration and the comment of respondent Enderes which had admitted the
factual allegations of petitioners in the petition as well as in the motion for reconsideration.
Moreover, the resolution of the appellate court denying the motion for reconsideration was
contained in only one page without even touching on the substantive merits of the
exhaustive discussion of facts and supporting law in the motion for reconsideration in
violation of the Rule on administrative due process;
B. in failing to set aside the void orders of the intestate court on the erroneous ground that
the orders were final and executory with regard to petitioners even as the latter were never
notified of the proceedings or order canceling its ownership;
C. in not finding that the intestate court committed grave abuse of discretion amounting to
excess of jurisdiction (1) when it issued the Omnibus Order nullifying the ownership of
petitioner FLAG over shares of stock which were alleged to be part of the estate and (2)
when it issued a void writ of execution against petitioner FLAG as present owner to
implement merely provisional orders, thereby violating FLAGs constitutional right against
deprivation of property without due process;
D. In failing to declare null and void the orders of the intestate court which nullified the sale of
shares of stock between the legitimate heir Jose S. Ortaez and petitioner FLAG because of
settled law and jurisprudence, i.e., that an heir has the right to dispose of the decedents
property even if the same is under administration pursuant to Civil Code provision that

possession of hereditary property is transmitted to the heir the moment of death of the
decedent (Acedebo vs. Abesamis, 217 SCRA 194);
E. In disregarding the final decision of the Supreme Court in G.R. No. 128525 dated
December 17, 1999 involving substantially the same parties, to wit, petitioners Jose C. Lee
and Alma Aggabao were respondents in that case while respondent Ma. Divina Enderes was
the petitioner therein. That decision, which can be considered law of the case, ruled that
petitioners cannot be enjoined by respondent Enderes from exercising their power as
directors and officers of Philinterlife and that the intestate court in charge of the intestate
proceedings cannot adjudicate title to properties claimed to be part of the estate and which
are equally CLAIMED BY petitioner FLAG.17
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG, assail before us not
only the validity of the writ of execution issued by the intestate court dated July 7, 2000 but also the
validity of the August 11, 1997 order of the intestate court nullifying the sale of the 2,029 Philinterlife
shares of stock made by Juliana Ortaez and Jose Ortaez, in their personal capacities and without
court approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of the Philinterlife shares of
stock in their favor because this was already settled a long time ago by the Court of Appeals in its
decision dated June 23, 1998 in CA-G.R. SP No. 46342. This decision was effectively upheld by us
in our resolution dated October 9, 1998 in G.R. No. 135177 dismissing the petition for review on a
technicality and thereafter denying the motion for reconsideration on January 13, 1999 on the
ground that there was no compelling reason to reconsider said denial. 18 Our decision became final
on February 23, 1999 and was accordingly entered in the book of entry of judgments. For all intents
and purposes therefore, the nullity of the sale of the Philinterlife shares of stock made by Juliana
Ortaez and Jose Ortaez in favor of petitioner FLAG is already a closed case. To reopen said issue
would set a bad precedent, opening the door wide open for dissatisfied parties to relitigate
unfavorable decisions no end. This is completely inimical to the orderly and efficient administration of
justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the nullity of the sale
made by Jose Ortaez and his mother Juliana Ortaez of the Philinterlife shares of stock read:
Petitioners asseverations relative to said [memorandum] agreement were scuttled during the
hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement was executed, did the children
of Juliana Salgado know already that there was a claim for share in the inheritance of the
children of Novicio?
ATTY. CALIMAG:
Your Honor please, at that time, Your Honor, it is already known to them.
JUSTICE AQUINO:

What can be your legal justification for extrajudicial settlement of a property subject of
intestate proceedings when there is an adverse claim of another set of heirs, alleged heirs?
What would be the legal justification for extra-judicially settling a property under
administration without the approval of the intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement there is an approval of the
honorable court as to the propertys partition x x x. There were as mentioned by the
respondents counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under intestate proceedings without
the approval of the court. That is basic unless you can present justification on that. In fact,
there are two steps: first, you ask leave and then execute the document and then ask for
approval of the document executed. Now, is there any legal justification to exclude this
particular transaction from those steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY. BUYCO:
With that admission that there is no legal justification, Your Honor, we rest the case for the
private respondent. How can the lower court be accused of abusing its discretion? (pages
33-35, TSN of January 29, 1998).
Thus, We find merit in the following postulation by private respondent:
What we have here is a situation where some of the heirs of the decedent without securing court
approval have appropriated as their own personal property the properties of [the] Estate, to the
exclusion and the extreme prejudice of the other claimant/heirs. In other words, these heirs, without
court approval, have distributed the asset of the estate among themselves and proceeded to dispose
the same to third parties even in the absence of an order of distribution by the Estate Court. As
admitted by petitioners counsel, there was absolutely no legal justification for this action by the
heirs. There being no legal justification, petitioner has no basis for demanding that public respondent
[the intestate court] approve the sale of the Philinterlife shares of the Estate by Juliana and Jose
Ortaez in favor of the Filipino Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of Agreement dated March 4, 1982 (see
Annex 7 of the Comment). . . are not the only heirs claiming an interest in the estate left by Dr.
Juvencio P. Ortaez. The records of this case. . . clearly show that as early as March 3, 1981 an
Opposition to the Application for Issuance of Letters of Administration was filed by the acknowledged
natural children of Dr. Juvencio P. Ortaez with Ligaya Novicio. . . This claim by the acknowledged
natural children of Dr. Juvencio P. Ortaez is admittedly known to the parties to the Memorandum of

Agreement before they executed the same. This much was admitted by petitioners counsel during
the oral argument. xxx
Given the foregoing facts, and the applicable jurisprudence, public respondent can never be faulted
for not approving. . . the subsequent sale by the petitioner [Jose Ortaez] and his mother [Juliana
Ortaez] of the Philinterlife shares belonging to the Estate of Dr. Juvencio P. Ortaez." (pages 3-4 of
Private Respondents Memorandum; pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion amounting to excess or want of
jurisdiction committed by respondent judge.19
From the above decision, it is clear that Juliana Ortaez, and her three sons, Jose, Rafael and
Antonio, all surnamed Ortaez, invalidly entered into a memorandum of agreement extrajudicially
partitioning the intestate estate among themselves, despite their knowledge that there were other
heirs or claimants to the estate and before final settlement of the estate by the intestate court. Since
the appropriation of the estate properties by Juliana Ortaez and her children (Jose, Rafael and
Antonio Ortaez) was invalid, the subsequent sale thereof by Juliana and Jose to a third party
(FLAG), without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under administration under Art. 533
of the Civil Code which provides that possession of hereditary property is deemed transmitted to the
heir without interruption from the moment of death of the decedent.20 However, an heir can only
alienate such portion of the estate that may be allotted to him in the division of the estate by the
probate or intestate court after final adjudication, that is, after all debtors shall have been paid or the
devisees or legatees shall have been given their shares.21 This means that an heir may only sell
his ideal or undivided share in the estate, not any specific property therein. In the present case,
Juliana Ortaez and Jose Ortaez sold specific properties of the estate (1,014 and 1,011 shares of
stock in Philinterlife) in favor of petitioner FLAG. This they could not lawfully do pending the final
adjudication of the estate by the intestate court because of the undue prejudice it would cause the
other claimants to the estate, as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without court approval. It is
well-settled that court approval is necessary for the validity of any disposition of the decedents
estate. In the early case ofGodoy vs. Orellano,22 we laid down the rule that the sale of the property of
the estate by an administrator without the order of the probate court is void and passes no title to the
purchaser. And in the case of Dillena vs. Court of Appeals,23 we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were included in the inventory of
properties of the estate submitted by then Administratrix Fausta Carreon Herrera on November 14,
1974. Private respondent was appointed as administratrix of the estate on March 3, 1976 in lieu of
Fausta Carreon Herrera. On November 1, 1978, the questioned deed of sale of the fishponds was
executed between petitioner and private respondent without notice and approval of the probate
court. Even after the sale, administratrix Aurora Carreon still included the three fishponds as among
the real properties of the estate in her inventory submitted on August 13, 1981. In fact, as stated by
the Court of Appeals, petitioner, at the time of the sale of the fishponds in question, knew that the
same were part of the estate under administration.
xxx

xxx

xxx

The subject properties therefore are under the jurisdiction of the probate court which according to
our settled jurisprudence has the authority to approve any disposition regarding properties under
administration. . . More emphatic is the declaration We made in Estate of Olave vs. Reyes (123

SCRA 767) where We stated that when the estate of the deceased person is already the subject of a
testate or intestate proceeding, the administrator cannot enter into any transaction involving it
without prior approval of the probate court.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We held that the sale of
an immovable property belonging to the estate of a decedent, in a special proceedings, needs court
approval. . . This pronouncement finds support in the previous case of Dolores Vda. De Gil vs.
Agustin Cancio (14 SCRA 797) wherein We emphasized that it is within the jurisdiction of a probate
court to approve the sale of properties of a deceased person by his prospective heirs before final
adjudication. x x x
It being settled that property under administration needs the approval of the probate court before it
can be disposed of, any unauthorized disposition does not bind the estate and is null and void. As
early as 1921 in the case of Godoy vs. Orellano (42 Phil 347), We laid down the rule that a sale by
an administrator of property of the deceased, which is not authorized by the probate court is null and
void and title does not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and void the disposition of the
property under administration, made by private respondent, the same having been effected without
authority from said court. It is the probate court that has the power to authorize and/or approve the
sale (Section 4 and 7, Rule 89), hence, a fortiori, it is said court that can declare it null and void for
as long as the proceedings had not been closed or terminated. To uphold petitioners contention that
the probate court cannot annul the unauthorized sale, would render meaningless the power
pertaining to the said court. (Bonga vs. Soler, 2 SCRA 755). (emphasis ours)
Our jurisprudence is therefore clear that (1) any disposition of estate property by an administrator or
prospective heir pending final adjudication requires court approval and (2) any unauthorized
disposition of estate property can be annulled by the probate court, there being no need for a
separate action to annul the unauthorized disposition.
The question now is: can the intestate or probate court execute its order nullifying the invalid sale?
We see no reason why it cannot. The intestate court has the power to execute its order with regard
to the nullity of an unauthorized sale of estate property, otherwise its power to annul the
unauthorized or fraudulent disposition of estate property would be meaningless. In other words,
enforcement is a necessary adjunct of the intestate or probate courts power to annul unauthorized
or fraudulent transactions to prevent the dissipation of estate property before final adjudication.
Moreover, in this case, the order of the intestate court nullifying the sale was affirmed by the
appellate courts (the Court of Appeals in CA-G.R. SP No. 46342 dated June 23, 1998 and
subsequently by the Supreme Court in G.R. No. 135177 dated October 9, 1998). The finality of the
decision of the Supreme Court was entered in the book of entry of judgments on February 23, 1999.
Considering the finality of the order of the intestate court nullifying the sale, as affirmed by the
appellate courts, it was correct for private respondent-Special Administratrix Enderes to thereafter
move for a writ of execution and for the intestate court to grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the probate court could not
issue a writ of execution with regard to its order nullifying the sale because said order was merely
provisional:
The only authority given by law is for respondent judge to determine provisionally whether said
shares are included or excluded in the inventory In ordering the execution of the orders,

respondent judge acted in excess of his jurisdiction and grossly violated settled law and
jurisprudence, i.e., that the determination by a probate or intestate court of whether a property is
included or excluded in the inventory of the estate being provisional in nature, cannot be the subject
of execution.24 (emphasis ours)
Petitioners argument is misplaced. There is no question, based on the facts of this case, that the
Philinterlife shares of stock were part of the estate of Dr. Juvencio Ortaez from the very start as in
fact these shares were included in the inventory of the properties of the estate submitted by Rafael
Ortaez after he and his brother, Jose Ortaez, were appointed special administrators by the
intestate court.25
The controversy here actually started when, during the pendency of the settlement of the estate of
Dr. Ortaez, his wife Juliana Ortaez sold the 1,014 Philinterlife shares of stock in favor petitioner
FLAG without the approval of the intestate court. Her son Jose Ortaez later sold the remaining
1,011 Philinterlife shares also in favor of FLAG without the approval of the intestate court.
We are not dealing here with the issue of inclusion or exclusion of properties in the inventory of the
estate because there is no question that, from the very start, the Philinterlife shares of stock were
owned by the decedent, Dr. Juvencio Ortaez. Rather, we are concerned here with the effect of
the sale made by the decedents heirs, Juliana Ortaez and Jose Ortaez, without the
required approval of the intestate court. This being so, the contention of petitioners that the
determination of the intestate court was merely provisional and should have been threshed out in a
separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of execution should not be
executed against them because they were not notified, nor they were aware, of the proceedings
nullifying the sale of the shares of stock.
We are not persuaded. The title of the purchaser like herein petitioner FLAG can be struck down by
the intestate court after a clear showing of the nullity of the alienation. This is the logical
consequence of our ruling in Godoyand in several subsequent cases.26 The sale of any property of
the estate by an administrator or prospective heir without order of the probate or intestate
court is void and passes no title to the purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio
Geneto, G.R. No. 56451, June 19, 1985, we ordered the probate court to cancel the transfer
certificate of title issued to the vendees at the instance of the administrator after finding that the sale
of real property under probate proceedings was made without the prior approval of the court. The
dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated February 18, 1981 of
the respondent Judge approving the questioned Amicable Settlement is declared NULL and VOID
and hereby SET ASIDE. Consequently, the sale in favor of Sotero Dioniosio III and by the latter to
William Go is likewise declared NULL and VOID. The Transfer Certificate of Title issued to the latter
is hereby ordered cancelled.
It goes without saying that the increase in Philinterlifes authorized capital stock, approved on the
vote of petitioners non-existent shareholdings and obviously calculated to make it difficult for Dr.
Ortaezs estate to reassume its controlling interest in Philinterlife, was likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.

The facts show that petitioners, for reasons known only to them, did not appeal the decision of the
intestate court nullifying the sale of shares of stock in their favor. Only the vendor, Jose Ortaez,
appealed the case. A careful review of the records shows that petitioners had actual knowledge of
the estate settlement proceedings and that they knew private respondent Enderes was questioning
therein the sale to them of the Philinterlife shares of stock.
It must be noted that private respondent-Special Administratrix Enderes filed before the intestate
court (RTC of Quezon City, Branch 85) a "Motion to Declare Void Ab Initio Deeds of Sale of
Philinterlife Shares of Stock" on March 22, 1996. But as early as 1994, petitioners already knew of
the pending settlement proceedings and that the shares they bought were under the administration
by the intestate court because private respondent Ma. Divina Ortaez-Enderes and her mother
Ligaya Novicio had filed a case against them at the Securities and Exchange Commission on
November 7, 1994, docketed as SEC No. 11-94-4909, for annulment of transfer of shares of stock,
annulment of sale of corporate properties, annulment of subscriptions on increased capital stocks,
accounting, inspection of corporate books and records and damages with prayer for a writ of
preliminary injunction and/or temporary restraining order.27 In said case, Enderes and her mother
questioned the sale of the aforesaid shares of stock to petitioners. The SEC hearing officer in fact, in
his resolution dated March 24, 1995, deferred to the jurisdiction of the intestate court to rule on the
validity of the sale of shares of stock sold to petitioners by Jose Ortaez and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortaez who died, in 1980,
are part of his estate which is presently the subject matter of an intestate proceeding of the RTC of
Quezon City, Branch 85. Although, private respondents [Jose Lee et al.] presented the documents of
partition whereby the foregoing share of stocks were allegedly partitioned and conveyed to Jose S.
Ortaez who allegedly assigned the same to the other private respondents, approval of the Court
was not presented. Thus, the assignments to the private respondents [Jose Lee et al.] of the subject
shares of stocks are void.
xxx

xxx

xxx

With respect to the alleged extrajudicial partition of the shares of stock owned by the late Dr.
Juvencio Ortaez, we rule that the matter properly belongs to the jurisdiction of the regular court
where the intestate proceedings are currently pending.28
With this resolution of the SEC hearing officer dated as early as March 24, 1995 recognizing the
jurisdiction of the intestate court to determine the validity of the extrajudicial partition of the estate of
Dr. Ortaez and the subsequent sale by the heirs of the decedent of the Philinterlife shares of stock
to petitioners, how can petitioners claim that they were not aware of the intestate proceedings?
Furthermore, when the resolution of the SEC hearing officer reached the Supreme Court in 1996
(docketed as G.R. 128525), herein petitioners who were respondents therein filed their answer
which contained statements showing that they knew of the pending intestate proceedings:
[T]he subject matter of the complaint is not within the jurisdiction of the SEC but with the Regional
Trial Court; Ligaya Novicio and children represented themselves to be the common law wife and
illegitimate children of the late Ortaez; that on March 4, 1982, the surviving spouse Juliana Ortaez,
on her behalf and for her minor son Antonio, executed a Memorandum of Agreement with her other
sons Rafael and Jose, both surnamed Ortaez, dividing the estate of the deceased composed of his
one-half (1/2) share in the conjugal properties; that in the said Memorandum of Agreement, Jose S.
Ortaez acquired as his share of the estate the 1,329 shares of stock in Philinterlife; that on March
4, 1982, Juliana and Rafael assigned their respective shares of stock in Philinterlife to Jose; that
contrary to the contentions of petitioners, private respondents Jose Lee, Carlos Lee, Benjamin Lee

and Alma Aggabao became stockholders of Philinterlife on March 23, 1983 when Jose S. Ortaez,
the principal stockholder at that time, executed a deed of sale of his shares of stock to private
respondents; and that the right of petitioners to question the Memorandum of Agreement and the
acquisition of shares of stock of private respondent is barred by prescription. 29
Also, private respondent-Special Administratrix Enderes offered additional proof of actual knowledge
of the settlement proceedings by petitioners which petitioners never denied: (1) that petitioners were
represented by Atty. Ricardo Calimag previously hired by the mother of private respondent Enderes
to initiate cases against petitioners Jose Lee and Alma Aggabao for the nullification of the sale of the
shares of stock but said counsel made a conflicting turn-around and appeared instead as counsel of
petitioners, and (2) that the deeds of sale executed between petitioners and the heirs of the
decedent (vendors Juliana Ortaez and Jose Ortaez) were acknowledged before Atty. Ramon
Carpio who, during the pendency of the settlement proceedings, filed a motion for the approval of
the sale of Philinterlife shares of stock to the Knights of Columbus Fraternal Association, Inc. (which
motion was, however, later abandoned).30 All this sufficiently proves that petitioners, through their
counsels, knew of the pending settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal Case No. 97-7179-81), grave
coercion (Criminal Case No. 84624) and robbery (Criminal Case No. Q-96-67919) against private
respondents mother Ligaya Novicio who was a director of Philinterlife, 31 all of which criminal cases
were related to the questionable sale to petitioners of the Philinterlife shares of stock.
Considering these circumstances, we cannot accept petitioners claim of denial of due process. The
essence of due process is the reasonable opportunity to be heard. Where the opportunity to be
heard has been accorded, there is no denial of due process.32 In this case, petitioners knew of the
pending instestate proceedings for the settlement of Dr. Juvencio Ortaezs estate but for reasons
they alone knew, they never intervened. When the court declared the nullity of the sale, they did not
bother to appeal. And when they were notified of the motion for execution of the Orders of the
intestate court, they ignored the same. Clearly, petitioners alone should bear the blame.
Petitioners next contend that we are bound by our ruling in G.R. No. 128525 entitled Ma. Divina
Ortaez-Enderes vs. Court of Appeals, dated December 17, 1999, where we allegedly ruled that the
intestate court "may not pass upon the title to a certain property for the purpose of determining
whether the same should or should not be included in the inventory but such determination is not
conclusive and is subject to final decision in a separate action regarding ownership which may be
constituted by the parties."
We are not unaware of our decision in G.R. No. 128525. The issue therein was whether the Court of
Appeals erred in affirming the resolution of the SEC that Enderes et al. were not entitled to the
issuance of the writ of preliminary injunction. We ruled that the Court of Appeals was correct in
affirming the resolution of the SEC denying the issuance of the writ of preliminary injunction because
injunction is not designed to protect contingent rights. Said case did not rule on the issue of the
validity of the sale of shares of stock belonging to the decedents estate without court approval nor of
the validity of the writ of execution issued by the intestate court. G.R. No. 128525 clearly involved a
different issue and it does not therefore apply to the present case.
Petitioners and all parties claiming rights under them are hereby warned not to further delay the
execution of the Orders of the intestate court dated August 11 and August 29, 1997.
WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R. S.P.
No. 59736 dated July 26, 2000, dismissing petitioners petition for certiorari and affirming the July 6,

2000 order of the trial court which ordered the execution of its (trial courts) August 11 and 29, 1997
orders, is hereby AFFIRMED.
SO ORDERED.
Vitug, (Chairman), and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., no part.

Footnotes
Penned by Associate Justice Martin S. Villarama, concurred in by Associate Justices
Salome A. Montoya (Chairman of the First Division) and Romeo Callejo, Sr. (now Associate
Justice of the Supreme Court).
1

Recognized by the decedent, Dr. Juvencio P. Ortaez and declared by the intestate court
as lawful heirs of Dr. Ortaez in its resolution dated September 22, 2000; Rollo, pp. 203-214.
2

Inventory and Accounting of Properties of the Estate; Rollo, p. 572.

Deed of Sale with Right to Repurchase; Rollo, pp. 55-56.

Deed of Sale of Shares of Stock; Rollo, pp. 57-58.

Rollo, pp. 39-41.

Cited in the decision of the Court of Appeals dated June 23, 1998 in CA-G.R. SP No.
46842, p. 3; Rollo, p. 240.
7

Rollo, pp. 238-258.

Rollo, p. 709.

10

Rollo, pp. 524-526.

11

Rollo, p. 70.

12

Rollo, p. 47-48.

13

Rollo, pp. 266-268.

14

Rollo, pp. 34-35.

15

Rollo, p. 38.

16

Rollo, p. 115.

17

Rollo, pp. 15-17.

18

Rollo, pp. 260-262.

19

Rollo, pp. 254-256.

Acebedo vs. Abesamis, 217 SCRA 186 [1993], citing Vda. De Gil vs. Cancio, 14 SCRA 796
[1965].
20

Based on the Civil Code provisions on co-ownership (Article 493). Acebedo vs. Abesamis,
217 SCRA 186 [1993], citing Reyes vs. Concepcion, 190 SCRA 171 [1990], PNB vs. Court of
Appeals, 98 SCRA 207 [1980],Mercado vs. Liwanag, 5 SCRA 472 [1962].
21

22

42 Phil. 347 [1921].

23

163 SCRA 631 [1988].

24

Rollo, pp. 603-604.

Inventory and Accounting of Properties of the Estate dated March 13, 1984, Rollo, pp. 571754.
25

Dillena vs. Court of Appeals, 163 SCRA 630 [1988]; Manotok Realty vs. Court of Appeals,
149 SCRA 174 [1987]; Leabres vs. Court of Appeals, 146 SCRA 158 [1986]; Estate of Olave
vs. Reyes, 123 SCRA 767 [1983] and Vda. De Gil vs. Cancio, 14 SCRA 797 [1965].
26

27

Cited in Ma. Divina Ortaez-Enderes et al. vs. Court of Appeals et al., 321 SCRA 178 [1999].

28

Rollo, pp. 147-149.

29

Rollo, p. 136.

30

Rollo, pp. 728-729.

31

Rollo, pp. 524-526.

32

Salonga vs. Court of Appeals, 269 SCRA 534 [1997].

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, 13who 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 T23166 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. T23165 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.

Footnotes
1 TSN, October 17, 1973, pp. 4-5.
2 TSN, December 11, 1973, pp. 11 & 55.
3 Exhibits 26 and 28.
4 Exhibit 27.
5 Exhibit B Alvarez.
6 Exhibits 23 and 24-Siason.
7 Exh. I-Alvarez Exh. 17-Siason.
8 Exh. 2-Alvarez.
9 Exh. 3-Alvarez.
10 Exh. 2-Siason.
11 Civil Case No. 5022; Exhibit B.
12 Exhibit F.
13 Exhibits 12 and 13.
14 Exhibits 10, 11, 14 and 15.

15 Exhibit 4-Alvarez.
16 Record on Appeal, p. 25.
17 Exhibit E.
18 Cad. Case No. 6; Exhibit 3.
19 Cad. Case No. 6.
20 Exhibit 5.
21 Exhibit 6.
22 Exhibit 78.
23 Exhibit 9.
24 Civil Case No. 8474.
25 Record on Appeal, pp. 8-9.
26 Record on Appeal, p. 36.
27 Ibid., p. 63.
28 Ibid, pp. 95-99.
29 Record on Appeal, pp. 100-101.
30 Porfirio V. Siason, Jr. J., ponente. Abdulwahid A. Bidin, Marcelino R. Velocio and
Desiderio P. Jurado, JJ., concurring.
31 Rollo, p. 32.
32 Rollo, p. 32.
33 Rollo, p. 119.
34 Rollo, p. 27.
35 Miranda v. C.A., 141 SCRA 302 [1986].
36 Ngo Bun Tiong v. Judge Sayo, G.R. No. 45825, June 30, 1988.
37 Record on Appeal, pp. 24-25.

38 Rollo, p. 27.
39 Quiniano et al. v. C.A., 39 SCRA 221 [1971].
40 Ibid.
41 100 Phil. 388.
42 Lopez vs. Enriquez, 16 Phil. 336 (1910).

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-44837

November 23, 1938

SOCORRO LEDESMA and ANA QUITCO LEDESMA, plaintiffs-appellees,


vs.
CONCHITA MCLACHLIN, ET AL., defendants-appellants.
Adriano T. de la Cruz for appellants.
Simeon Bitanga for appellees.

VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by the defendants Conchita McLachlin,
Lorenzo Quitco, Jr., Sabina Quitco, Rafael Quitco and Marcela Quitco, from the decision of the Court
of First Instance of Occidental Negros, the dispositive part of which reads:
For the foregoing considerations, the court renders judgment in this case declaring
Ana Quitco Ledesma an acknowledged natural daughter of the deceased Lorenzo M. Quitco,
for legal purposes, but absolving the defendants as to the prayer in the first cause of action
that the said Ana Quitco Ledesma be declared entitled to share in the properties left by the
deceased Eusebio Quitco.
As to the second cause of action, the said defendants are ordered to pay to the plaintiff
Socorro Ledesma, jointly and severally, only the sum of one thousand five hundred
pesos(P1,500), with legal interest thereon from the filing of this complaint until fully paid. No
pronouncement is made as to the costs. So ordered.
In support of their appeal, the appellants assign the following errors allegedly committed by
the trial court in its aforesaid decision:
1. That the trial court erred in holding, that the action for the recovery of the sum of P1,500,
representing the last installment of the note Exhibit C has not yet prescribed.
2. That the trial court erred in holding that the property inherited by the defendants from their
deceased grandfather by the right of representation is subject to the debts and obligations of
their deceased father who died without any property whatsoever.
lawphi1.net

3. That the trial court erred in condemning the defendants to pay jointly and severally the
plaintiff Socorro Ledesma the sum of P1,500.

The only facts to be considered in the determination of the legal questions raised in this
appeal are those set out in the appealed decision, which have been established at the trial, namely:
In the year 1916, the plaintiff Socorro Ledesma lived maritally with Lorenzo M. Quitco,
while the latter was still single, of which relation, lasting until the year 1921, was born a
daughter who is the other plaintiff Ana Quitco Ledesma. In 1921, it seems hat the relation
between Socorro Ledesma and Lorenzo M. Quitco came to an end, but the latter executed a
deed (Exhibit A), acknowledging the plaintiff Ana Quitco Ledesma as his natural daughter
and on January 21, 1922, he issued in favor of the plaintiff Socorro Ledesma a promissory
note (Exhibit C), of the following tenor:
P2,000. For value received I promise to pay Miss Socorro Ledesma the sum of two
thousand pesos (P2,000). Philippine currency under the following terms: Two hundred and
fifty pesos (P250) to be paid on the first day of March 1922; another two hundred and fifty
pesos (P250)to be paid on the first day of
November 1922; the remaining one
thousand and five hundred (P1,500) to be paid two years from the date of the execution of
this note. San Enrique, Occ. Negros, P. I., Jan. 21, 1922.
Subsequently, Lorenzo M. Quitco married the defendant Conchita McLachlin, with
whom he had four children, who are the other defendants. On March 9, 1930, Lorenzo M.
Quitco died (Exhibit 5), and, still later, that is, on December 15, 1932, his father Eusebio
Quitco also died, and as the latter left real and personal properties upon his death,
administration proceedings of said properties were instituted in this court, the said case
being known as the "Intestate of the deceased Eusebio Quitco," civil case No. 6153 of this
court.
Upon the institution of the intestate of the deceased Eusebio Quitco and the
appointment of the committee on claims and appraisal, the plaintiff Socorro Ledesma, on
August 26, 1935, filed before said committee the aforequoted promissory note for payment,
and the commissioners, upon receipt of said promissory note, instead of passing upon it,
elevated the same to this court en consulta (Exhibit F), and as the Honorable Jose Lopez
Vito, presiding over the First Branch, returned said consulta and refrained from giving his
opinion thereon (Exhibit C), the aforesaid commissioners on claims and appraisal, alleging
lack of jurisdiction to pass upon the claim, denied he same (Exhibit H).
On
November 14, 1933 (Exhibit I), the court issued an order of declaration of
heirs in the intestate of the deceased Eusebio Quitco, and as Ana Quitco Ledesma was not
included among the declared heirs, Socorro Ledesma, as mother of Ana Quitco Ledesma,
asked for the reconsideration of said order, a petition which the court denied. From the order
denying the said petition no appeal was taken, and in lieu thereof there was filed the
complaint which gives rise to this case.
The first question to be decided in this appeal, raised in the first assignment of alleged error, is
whether or not the action to recover the sum of P1,500, representing the last installment for the
payment of the promissory note Exhibit C, has prescribed.

According to the promissory note Exhibit C, executed by the deceased Lorenzo M. Quitco, on
January 21, 1922, the last installment of P1,500 should be paid two years from the date of the
execution of said promissory note, that is, on January 21, 1924. The complaint in the present case
was filed on June 26, 1934, that is, more than ten years after he expiration of the said period. The
fact that the plaintiff Socorro Ledesma filed her claim, on August 26, 1933, with the committee on
claims and appraisal appointed in the intestate of Eusebio Quitco, does not suspend the running of
the prescriptive period of the judicial action for the recovery of said debt, because the claim for the
unpaid balance of the amount of the promissory note should no have been presented in the intestate
of Eusebio Quitco, the said deceased not being the one who executed the same, but in the intestate
of Lorenzo M. Quitco, which should have been instituted by the said Socorro Ledesma as provided
in section 642 of the Code of Civil Procedure, authorizing a creditor to institute said case through the
appointment of an administrator for the purpose of collecting his credit. More than ten years having
thus elapsed from the expiration of the period for the payment of said debt of P1,500, the action for
its recovery has prescribed under section 43, No. 1, of the Code of Civil Procedure.
The first assignment of alleged error is, therefore, well-founded.
As to the second assignment of alleged error, consisting in that the trial court erred in holding
that the properties inherited by the defendants from their deceased grandfather by representation
are subject to the payment of debts and obligations of their deceased father, who died without
leaving any property, while it is true that under the provisions of articles 924 to 927 of the Civil Code,
a children presents his father or mother who died before him in the properties of his grandfather or
grandmother, this right of representation does not make the said child answerable for the obligations
contracted by his deceased father or mother, because, as may be seen from the provisions of the
Code of Civil Procedure referring to partition of inheritances, the inheritance is received with the
benefit of inventory, that is to say, the heirs only answer with the properties received from their
predecessor. The herein defendants, as heirs of Eusebio Quitco, in representation of their father
Lorenzo M. Quitco, are not bound to pay the indebtedness of their said father from whom they did
not inherit anything.
The second assignment of alleged error is also well-founded.
Being a mere sequel of the first two assignments of alleged errors, the third assignment of
error is also well-founded.
For the foregoing considerations, we are of the opinion and so hold: (1) That the filing of a
claim before the committee on claims and appraisal, appointed in the intestate of the father, for a
monetary obligation contracted by a son who died before him, does not suspend the prescriptive
period of the judicial action for the recovery of said indebtedness; (2) that the claim for the payment
of an indebtedness contracted by a deceased person cannot be filed for its collection before the
committee on claims and appraisal, appointed in the intestate of his father, and the
propertiesinherited from the latter by the children of said deceased do not answer for the payment of
the indebtedness contracted during the lifetime of said person.
Wherefore, the appealed judgment is reversed, and the defendants are absolved from the
complaint, with the costs to the appellees. So ordered.

Avancea, C.J., Imperial, Diaz, Laurel and Concepcion, JJ., concur.

FIRST DIVISION
WILLIAM ONG GENATO,
Petitioner,

G.R. No. 171035

- versus Present:
PUNO, C.J., Chairperson,
BENJAMIN BAYHON, MELANIE
CARPIO,
BAYHON, BENJAMIN BAYHON,
CORONA,
JR., BRENDA BAYHON, ALINA
LEONARDO-DE CASTRO, and
BAYHON-CAMPOS, IRENE
BERSAMIN, JJ.
BAYHON-TOLOSA, and the minor
GINO BAYHON, as represented
herein by his natural mother
as guardian-ad-litem, JESUSITA
Promulgated:
M. BAYHON,
Respondents.
__________________
x------------------------------------------------x

DECISION
PUNO, C.J.:
At bar is a Petition for Review on Certiorari assailing the Decision of the
Court of Appeals dated September 16, 2005[1] and Resolution denying the
petitioners motion for reconsideration issued on January 6, 2006.
This is a consolidated case stemming from two civil cases filed before the
Regional Trial Court (RTC) Civil Case No. Q-90-7012 and Civil Case No. Q-907551.

Civil Case No. Q-90-7012


On October 18, 1990, respondents Benjamin M. Bayhon, Melanie Bayhon,
Benjamin Bayhon Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene BayhonTolosa and the minor Gino Bayhon, as represented by his mother Jesusita M.
Bayhon, filed an action before the RTC, Quezon City, Branch 76, docketed as Civil
Case No. Q-90-7012. In their Complaint, respondents sought the declaration of
nullity of a dacion en pago allegedly executed by respondent Benjamin Bayhon in
favor of petitioner William Ong Genato.[2]
Respondent Benjamin Bayhon alleged that on July 3, 1989, he obtained
from the petitioner a loan amounting to PhP 1,000,000.00; [3] that to cover the loan,
he executed a Deed of Real Estate Mortgage over the property covered by Transfer
Certificate of Title (TCT) No. 38052; that, however, the execution of the Deed of
Real Estate Mortgage was conditioned upon the personal assurance of the
petitioner that the said instrument is only a private memorandum of indebtedness
and that it would neither be notarized nor enforced according to its tenor.[4]
Respondent further alleged that he filed a separate proceeding for the
reconstitution of TCT No. 38052 before the RTC, Quezon City, Branch 87.
[5]
Petitioner William Ong Genato filed an Answer in Intervention in the said
proceeding and attached a copy of an alleged dacion en pago covering said lot.
[6]
Respondent assailed the dacion en pago as a forgery alleging that neither he nor
his wife, who had died 3 years earlier, had executed it.[7]
In his Answer, petitioner Genato denied the claim of the respondent
regarding the death of the latters wife. [8] He alleged that on the date that the real
estate mortgage was to be signed, respondent introduced to him a woman as his
wife.[9] He alleged that the respondent signed the dacion en pago and that the
execution of the instrument was above-board.[10]
Civil Case No. Q-90-7551
On December 20, 1990, petitioner William Ong Genato filed Civil Case No.
Q-90-7551, an action for specific performance, before the RTC, Quezon City,
Branch 79. In his Complaint, petitioner alleged that respondent obtained a loan
from him in the amount of PhP 1,000,000.00. Petitioner alleged further that

respondent failed to pay the loan and executed on October 21, 1989 a dacion en
pago in favor of the petitioner. The dacion en pago was inscribed and recorded
with the Registry of Deeds of Quezon City.[11]
Petitioner further averred that despite demands, respondent refused to
execute the requisite documents to transfer to him the ownership of the lot subject
of the dacion en pago. Petitioner prayed, inter alia, for the court to order the
respondent to execute the final deed of sale and transfer of possession of the said
lot.[12]
Decision of the Consolidated Cases
The two cases were consolidated and transferred to the RTC, Quezon City,
Branch 215. On October 9, 1997, the trial court rendered its Decision. It found that
respondent obtained a loan in the amount of PhP 1,000,000.00 from the petitioner
on July 3, 1989. The terms of the loan were interest payment at 5% per month with
an additional 3% penalty in case of nonpayment.[13]
With respect to the dacion en pago, the trial court held that the parties have
novated the agreement.[14] It deduced the novation from the subsequent payments
made by the respondent to the petitioner. Of the principal amount, the sum of PhP
102,870.00 had been paid: PhP 27,870.00 on March 23, 1990, PhP 55,000.00 on 26
March 1990 and PhP 20,000.00 on 16 November 1990. [15] All payments were made
after the purported execution of the dacion en pago.
The trial court likewise found that at the time of the execution of the real
estate mortgage, the wife of respondent, Amparo Mercado, was already dead. It
held that the property covered by TCT No. 38052 was owned in common by the
respondents and not by respondent Benjamin Bayhon alone. It concluded that the
said lot could not have been validly mortgaged by the respondent alone; the deed
of mortgage was not enforceable and only served as evidence of the obligation of
the respondent.[16]
In sum, the trial court upheld the respondents liability to the petitioner and
ordered the latter to pay the sum of Php 5,647,130.00. [17] This amount included the

principal, the stipulated interest of 5% per month, and the penalty; and, was
calculated from the date of demand until the date the RTC rendered its judgment.
Appeal to the Court of Appeals
Respondents appealed before the Court of Appeals. On March 28, 2002,
respondent Benjamin Bayhon died while the case was still pending decision. [18] On
September 16, 2005, the Court of Appeals rendered a decision reversing the trial
court.
The Court of Appeals held that the real estate mortgage and the dacion en
pago were both void. The appellate court ruled that at the time the real estate
mortgage and thedacion en pago were executed, or on July 3, 1989 and October
21, 1989, respectively, the wife of respondent Benjamin Bayhon was already dead.
[19]
Thus, she could not have participated in the execution of the two documents.
The appellate court struck down both the dacion en pago and the real estate
mortgage as being simulated or fictitious contracts pursuant to Article 1409 of the
Civil Code.[20]
The Court of Appeals held further that while the principal obligation is valid,
the death of respondent Benjamin Bayhon extinguished it. [21] The heirs could not
be ordered to pay the debts left by the deceased. [22] Based on the foregoing, the
Court of Appeals dismissed petitioners appeal. Petitioners motion for
reconsideration was denied in a resolution dated January 6, 2006.[23]
Petition for Review
Petitioner now comes before this Court assailing the decision of the Court of
Appeals and raising the following issues:
Whether or not Benjamin Bayhon is liable to Mr. Genato in the amount of Php
5,647,130.00 in principal and interest as of October 3, 1997 and 5% monthly
interest thereafter until the account shall have been fully paid.[24]
The Court of Appeals erred in declaring the Real Estate Mortgage dated July 3,
1989 and the Dacion en Pago dated October 21, 1989, null and void.[25]

We shall first tackle the nullity of the dacion en pago.

We affirm the ruling of the appellate court that the subject dacion en pago is
a simulated or fictitious contract, and hence void. The evidence shows that at the
time it was allegedly signed by the wife of the respondent, his wife was already
dead. This finding of fact cannot be reversed.
We now go to the ruling of the appellate court extinguishing the obligation
of respondent. As a general rule, obligations derived from a contract are
transmissible. Article 1311, par.1 of the Civil Code provides:
Contracts take 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 he received from the decedent.

In Estate of Hemady v. Luzon Surety Co., Inc.,[26] the Court, through


Justice JBL Reyes, held:
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."[27] (Emphasis supplied)

The Court proceeded further to state the general rule:


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. The

transition is marked by the disappearance of the imprisonment for debt.


[28]
(Emphasis supplied)

The loan in this case was contracted by respondent. He died while the case
was pending before the Court of Appeals. While he may no longer be compelled to
pay the loan, the debt subsists against his estate. No property or portion of the
inheritance may be transmitted to his heirs unless the debt has first been satisfied.
Notably, throughout the appellate stage of this case, the estate has been amply
represented by the heirs of the deceased, who are also his co-parties in Civil Case
No. Q-90-7012.
The procedure in vindicating monetary claims involving a defendant who
dies before final judgment is governed by Rule 3, Section 20 of the Rules of Civil
Procedure, to wit:
When the action is for recovery of money arising from contract, express or
implied, and the defendant dies before entry of final judgment in the court in
which the action was pending at the time of such death, it shall not be dismissed
but shall instead be allowed to continue until entry of final judgment. A favorable
judgment obtained by the plaintiff therein shall be enforced in the manner
especially provided in these Rules for prosecuting claims against the estate of a
deceased person.

Pursuant to this provision, petitioners remedy lies in filing a claim against


the estate of the deceased respondent.
We now go to the interest awarded by the trial court. We note that the
interest has been pegged at 5% per month, or 60% per annum. This is
unconscionable, hence cannot be enforced.[29] In light of this, the rate of interest for
this kind of loan transaction has been fixed in the case of Eastern Shipping Lines
v. Court of Appeals,[30] at 12% per annum, calculated from October 3, 1989, the
date of extrajudicial demand.[31]
Following this formula, the total amount of the obligation of the estate
of Benjamin Bayhon is as follows:
Principal
Less: Partial Payments

Php 1,000,000.00
27,870.00

55,000.00
20,000.00
897,130.00
Plus: Interest
(12% per annum x
20 years)

2,153,552.00
TOTAL:

Php 3,050,682.00

IN VIEW WHEREOF, the decision of the Court of Appeals dated


September 16, 2005 is AFFIRMED with the MODIFICATION that the obligation
to pay the principal loan and interest contracted by the deceased Benjamin Bayhon
subsists against his estate and is computed at
PhP 3,050,682.00.
No costs.
SO ORDERED.

REYNATO S. PUNO
Chief Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

RENATO C. CORONA
Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

LUCAS P. BERSAMIN
Associate Justice
C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]

CA G.R.-CV No. 63626, Benjamin M. Bayhon, Melanie Bayhon, Benjamin Bayhon, Jr., Brenda Bayhon, Alina
Bayhon-Campos, Irene Bayhon-Tolosa, and the minor Gino Bayhon, represented herein by his natural mother as
guardian-ad-litem, Jesusita M. Bayhon v. William Ong Genato; penned by Associate Justice Vicente Q. Roxas and
concurred in by Associate Justices Portia Alio-Hormachuelos and Juan Q. Enriquez, Jr.
[2]
Original Records, pp. 1-9.
[3]
Id., pp. 3-4.
[4]
Id., p. 4.
[5]
Designated as LRC Case No. Q-1957.
[6]
Original Records, p. 4.
[7]
Id., p. 5.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
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 guardianad 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. 4275. March 23, 1909.]
PAULA CONDE, Plaintif-Appellee, vs. ROMAN ABAYA, Defendant-Appellant.
DECISION
ARELLANO, C.J.:
From the hearing of the appeal interposed by Roman Abaya in the special
proceedings brought in the Court of First Instance of La Laguna for the settlement of
the intestate estate and the distribution of the property of Casiano Abaya it
appears:
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I.
As antecedents:
that Casiano Abaya, unmarried, the son of Romualdo
Abaya and Sabina Labadia, died on the 6th of April 1899; that Paula Conde, as the
mother of the natural children Jose and Teopista Conde, whom she states she had
by Casiano Abaya, on the 6th of November, 1905, moved the settlement of the said
intestate succession; that an administrator having been appointed for the said
estate on the 25th of November, 1905, Roman Abaya, a son of the said Romualdo
Abaya and Sabina Labadia, the parents of the late Casiano Abaya, came forward
and opposed said appointment and claimed it for himself as being the nearest
relative of the deceased; that this was granted by the court below on the 9th of
January, 1906; that on the 17th of November, 1906, Roman Abaya moved that, after
due process of law, the court declare him to be the sole heir of Casiano Abaya, to
the exclusion of all other persons, especially of Paula Conde, and to be therefore
entitled to take possession of all the property of said estate, and that it be
adjudicated to him; and that on November 22, 1906, the court ordered the
publication of notices for the declaration of heirs and distribution of the property of
the estate.
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II.
That on the 28th of November, 1906, Paula Conde, in reply to the
foregoing motion of Roman Abaya, filed a petition wherein she stated that she
acknowledged the relationship alleged by Roman Abaya, but that she considered
that her right was superior to his and moved for a hearing of the matter, and, in
consequence of the evidence that she intended to present she prayed that she be
declared to have preferential rights to the property left by Casiano Abaya, and that
the same be adjudicated to her together with the corresponding products thereof.
III.
That the trial was held, both parties presenting documentary and oral
evidence, and the court below entered the following judgment:
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That the administrator of the estate of Casiana Abaya should recognize Teopista
and Jose Conde as being natural children of Casiano Abaya; that the Petitioner Paula
Conde should succeed to the hereditary rights of her children with respect to the
inheritance of their deceased natural father Casiano Abaya; and therefore, it is
hereby declared that she is the only heir to the property of the said intestate estate,
to the exclusion of the administrator, Roman Abaya.
IV.
That Roman Abaya excepted to the foregoing judgment, appealed to this
court, and presented the following statement of errors:
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1.
The fact that the court below found that an ordinary action for the
acknowledgment of natural children under articles 135 and 137 of the Civil Code,
might be brought in special probate proceedings.
2.
The finding that after the death of a person claimed to be an
unacknowledged natural child, the mother of such presumed natural child, as heir to
the latter, may bring an action to enforce the acknowledgment of her deceased
child in accordance with articles 135 and 137 of the Civil Code.
3.
The finding in the judgment that the alleged continuous possession of the
deceased children of Paula Conde of the status of natural children of the late
Casiano Abaya, has been fully proven in these proceedings; and
4.
On the hypothesis that it was proper to adjudicate the property of this
intestate estate to Paula Conde, as improperly found by the court below, the court
erred in not having declared that said property should be reserved in favor of
relatives of Casiano Abaya to the third degree, and in not having previously
demanded securities from Paula Conde to guarantee the transmission of the
property to those who might fall within the reservation.
As to the first error assigned, the question is set up as to whether in special
proceedings for the administration and distribution of an intestate estate, an action
might be brought to enforce the acknowledgment of the natural child of the person
from whom the inheritance is derived, that is to say, whether one might appear as
heir on the ground that he is a recognized natural child of the deceased, not having
been so recognized by the deceased either voluntarily or compulsory by reason of a
preexisting judicial decision, but asking at the same time that, in the special
proceeding itself, he be recognized by the presumed legitimate heirs of the
deceased who claim to be entitled to the succession opened in the special
proceeding.
According to section 782 of the Code of Civil Procedure
If there shall be a controversy before the Court of First Instance as to who the
lawful heirs of the deceased person are, or as to the distributive share to which each
person is entitled under the law, the testimony as to such controversy shall be taken
in writing by the judge, under oath and signed by witness. Any party in interest
whose distributive share is affected by the determination of such controversy, may
appeal from the judgment of the Court of First Instance determining such
controversy to the Supreme Court, within the time and in the manner provided in
the last preceding section.
This court has decided the present question in the manner shown in the case of
Juana Pimental vs. Engracio Palanca (5 Phil. Rep. 436.)
cralaw

The main question with regard to the second error assigned, is whether or not the
mother of a natural child now deceased, but who survived the person who, it is
claimed, was his natural father, also deceased, may bring an action for the
acknowledgment of the natural filiation in favor of such child in order to appear in
his behalf to receive the inheritance from the person who is supposed to be his
natural father.
In order to decide in the affirmative the court below has assigned the following as
the only foundation:
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In resolving a similar question Manresa says:


An acknowledgment can only be
demanded by the natural child and his descendants whom it shall benefit, and
should they be minors or otherwise incapacitated, such person as legally represents
them; the mother may ask it in behalf of her child so long as he is under her
authority. On this point no positive declaration has been made, undoubtedly
because it was not considered necessary. A private action is in question and the
general rule must be followed. Elsewhere the same author adds:
It may so
happen that the child dies before four years have expired after attaining majority, or
that the document supporting his petition for acknowledgment is discovered after
his death, such death perhaps occurring after his parents had died, as is supposed
by article 137, or during their lifetime. In any case such right of action shall pertain
to the descendants of the child whom the acknowledgment may interest. (See
Commentaries to arts. 135 and 137, Civil Code. Vol. I.)
chanrobles

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cralaw

The above doctrine, advanced by one of the most eminent commentators of the
Civil Code, lacks legal and doctrinal foundation. The power to transmit the right of
such action by the natural child to his descendants cannot be sustained under the
law, and still less to his mother.
It is without any support in law because the rule laid down in the code is most
positive, limiting in form, when establishing the exception for the exercise of such
right of action after the death of the presumed parents, as is shown hereafter. It is
not supported by any doctrine, because up to the present time no argument has
been presented, upon which even an approximate conclusion could be based.
Although the Civil Code considerably improved the condition of recognized natural
children, granting them rights and actions that they did not possess under the
former laws, they were not, however, placed upon the same plane as legitimate
ones. The difference that separates these two classes of children is still great, as
proven by so many articles dealing with the rights of the family and with succession
in relation to the members thereof. It may be laid down as a legal maxim, that
whatever the code does not grant to the legitimate children, or in connection with
their rights, must still less be understood as granted to recognized natural children
or in connection with their rights. There is not a single exception in its provisions.
If legitimacy is the attribute that constitutes the basis of the absolute family rights
of the child, the acknowledgment of the natural child is, among illegitimate ones,
that which unites him to the family of the father or the mother who recognizes him,
and affords him a participation in the rights of the family, relatively advantageous
according to whether they are alone or whether they concur with other individuals
of the family of his purely natural father or mother.
Thus, in order to consider the spirit of the Civil Code nothing is more logical than to
establish a comparison between an action to claim the legitimacy, and one to
enforce acknowledgment.
Art. 118.
The action to claim its legitimacy may be brought by the child at
any time of its lifetime and shall be transmitted to its heirs, should it die during
minority or in a state of insanity. In such cases the heirs shall be allowed a period of
five years in which to institute the action.
The action already instituted by the child is transmitted by its death to the heirs, if
it has not lapsed before then.

Art. 137.
The actions for the acknowledgment of natural children can be
instituted only during the life of the presumed parents, except in the following
cases:
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1.
If the father or mother died during the minority of the child, in which case
the latter may institute the action before the expiration of the first four years of its
majority.
2.
If, after the death of the father or mother, some instrument, before
unknown, should be discovered in which the child is expressly acknowledged.
In this case the action must be instituted within the six months following the
discovery of such instrument.
On this supposition the first difference that results between one action and the
other consists in that the right of action for legitimacy lasts during the whole
lifetime of the child, that is, it can always be brought against the presumed parents
or their heirs by the child itself, while the right of action for the acknowledgment of
a natural child does not last his whole lifetime, and, as a general rule, it cannot be
instituted against the heirs of the presumed parents, inasmuch as it can be
exercised only during the life of the presumed parents.
With regard to the question at issue, that is, the transmission to the heirs of the
presumed parents of the obligation to admit the legitimate filiation, or to recognize
the natural filiation, there exists the most radical difference in that the former
continues during the life of the child who claims to be legitimate, and he may
demand it either directly and primarily from the said presumed parents, or indirectly
and secondarily from the heirs of the latter; while the second does not endure for
life; as a general rule, it only lasts during the life of the presumed parents. Hence
the other difference, derived as a consequence, that an action for legitimacy is
always brought against the heirs of the presumed parents in case of the death of
the latter, while the action for acknowledgment is not brought against the heirs of
such parents, with the exception of the two cases prescribed by article 137
transcribed above.
So much for the passive transmission of the obligation to admit the legitimate
filiation, or to acknowledge the natural filiation.
As to the transmission to the heirs of the child of the latters action to claim his
legitimacy, or to obtain the acknowledgment of his natural filiation, it is seen that
the code grants it in the first case, but not the second. It contains provisions for the
transmission of the right of action which, for the purpose of claiming his legitimacy
inheres in the child, but it does not say a word with regard to the transmission of the
right to obtain the acknowledgment of the natural filiation.
Therefore, the respective corollary of each of the two above-cited articles is:
(1)
That the right of action which devolves upon the child to claim his legitimacy under
article 118, may be transmitted to his heirs in certain cases designated in the said
article; (2) That the right of action for the acknowledgment of natural children to
which article 137 refers, can never be transmitted, for the reason that the code
makes no mention of it in any case, not even as an exception.
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It is most illogical and contrary to every rule of correct interpretation, that the right
of action to secure acknowledgment by the natural child should be presumed to be
transmitted, independently, as a rule, to his heirs, while the right of action to claim

legitimacy from his predecessor is not expressly, independently, or, as a general


rule, conceded to the heirs of the legitimate child, but only relatively and as an
exception. Consequently, the pretension that the right of action on the part of the
child to obtain the acknowledgment of his natural filiation is transmitted to his
descendants is altogether unfounded. No legal provision exists to sustain such
pretension, nor can an argument of presumption be based on the lesser claim when
there is no basis for the greater one, and when it is only given as an exception in
well-defined cases. It is placing the heirs of the natural child on a better footing than
the heirs of the legitimate one, when, as a matter of fact, the position of a natural
child is no better than, nor even equal to, that of a legitimate child.
From the express and precise precepts of the code the following conclusions are
derived:
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The right of action that devolves upon the child to claim his legitimacy lasts during
his whole life, while the right to claim the acknowledgment of a natural child lasts
only during the life of his presumed parents.
Inasmuch as the right of action accruing to the child to claim his legitimacy lasts
during his whole life, he may exercise it either against the presumed parents, or
their heirs; while the right of action to secure the acknowledgment of a natural
child, since it does not last during his whole life, but depends on that of the
presumed parents, as a general rule can only be exercised against the latter.
Usually the right of action for legitimacy devolving upon the child is of a personal
character and pertains exclusively to him, only the child may exercise it at any time
during his lifetime. As an exception, and in three cases only, it may be transmitted
to the heirs of the child, to wit, if he died during his minority, or while insane, or
after action had been already instituted.
An action for the acknowledgment of a natural child may, as an exception, be
exercised against the heirs of the presumed parents in two cases:
first, in the
event of the death of the latter during the minority of the child, and second, upon
the discovery of some instrument of express acknowledgment of the child, executed
by the father or mother, the existence of which was unknown during the life of the
latter.
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But as such action for the acknowledgment of a natural child can only be exercised
by him. It cannot be transmitted to his descendants, or to his ascendants.
In support of the foregoing the following authorities may be cited:

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Sanchez Roman, in his Treatise on Civil Law, propounds the question as to whether
said action should be considered transmissive to the heirs or descendants of the
natural child, whether he had or had not exercised it up to the time of his death,
and decides it as follows;
There is an entire absence of legal provisions, and at most, it might be deemed
admissible as a solution, that the right of action to claim the acknowledgment of a
natural child is transmitted by analogy to his heirs on the same conditions and
terms that it is transmitted to the descendants of a legitimate child, to claim his
legitimacy, under article 118, but nothing more; because on this point nothing
warrants placing the heirs of a natural child on a better footing than those of the
legitimate child, and even to compare them would not fail to be a strained and
questionable matter, and one of great difficulty for decision by the courts, for the

simple reason that for the heirs of the legitimate child, the said article 118 exists,
while for those of the natural child, as we have said, there is no provision in the
code authorizing the same, although on the other hand there is none that prohibits
it. (Vol. V.)
cralaw

Diaz Guijarro and Martinez Ruiz in their work on The Civil Code as construed by the
supreme court of Spain, commenting upon article 137, say:
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Article 118, taking into account the privileges due to the legitimacy of children,
grants them the right to claim said legitimacy during their lifetime, and even
authorizes the transmission of said right for the space of five years to the heirs
thereof, if the child die during his minority or in a state of insanity. But as article 137
is based on the consideration that in the case of a natural child, ties are less strong
and sacred in the eyes of the law, it does not fix such a long and indefinite period
for the exercise of the action; it limits it to the life of the parents, excepting in the
two cases mentioned in said article; and it does not allow, as does article 118, the
action to pass on to the heirs, inasmuch as, although it does not prohibit it, and for
that reason it might be deemed on general principles of law to consent to it, such a
supposition is inadmissible for the reason that a comparison of both articles shows
that the silence of the law in the latter case is not, nor can it be, an omission, but a
deliberate intent to establish a wide difference between the advantages granted to
a legitimate child and to a natural one.
(Ibid., Vol. II, 171.)

cralaw

Navarro Amandi (Cuestionario del Codigo Civil) raises the question:


Can the heirs
of a natural child claim the acknowledgment in those cases wherein the father or
mother are under obligation to acknowledge? And says:
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Opinions are widely divergent. The court of Rennes held (on April 13, 1844) that
the right of investigation forms a part of the estate of the child, and along with his
patrimony is transmitted to his heirs. The affirmation is altogether too categorical to
be admissible. If it were correct the same thing would happen as when the
legitimacy of a child is claimed, and as already seen, the right of action to demand
the legitimacy is not transmitted to the heirs in every case and as an absolute right,
but under certain limitations and circumstances. Now, were we to admit the
doctrine of the court of Rennes, the result would be that the claim for natural
filiation would be more favored than one for legitimate filiation. This would be
absurd, because it cannot be conceived that the legislator should have granted a
right of action to the heirs of the natural child, which is only granted under great
limitations and in very few cases to those of a legitimate one. Some persons insist
that the same rules that govern legitimate filiation apply by analogy to natural
filiation, and that in this conception the heirs of the natural child are entitled to
claim it in the cases prescribed by article 118. The majority, however, are inclined to
consider the right to claim acknowledgment as a personal right, and consequently,
not transmissive to the heirs. Really there are not legal grounds to warrant the
transmission. (Vol. 2, 229.)
cralaw

In a decision like the present one it is impossible to bring forward the argument of
analogy for the purpose of considering that the heirs of the natural child are entitled
to the right of action which article 118 concedes to the heirs of the legitimate child.
The existence of a provision for the one case and the absence thereof for the other
is a conclusive argument that inclusio unius est exclusio alterius, and it cannot be

understood that the provision of law should be the same when the same reason
does not hold in the one case as in the other.
The theory of the law of transmission is also entirely inapplicable in this case. This
theory, which in the Roman Law expressed the general rule that an heir who did not
accept an inheritance during his lifetime was incapacitated from transmitting it to
his own heirs, included at the same time the idea that if the inheritance was not
transmitted because the heir did not possess it, there were, however, certain things
which the heir held and could transmit. Such was the law and the right to accept the
inheritance, for the existing reason that all rights, both real and personal, shall pass
to the heir; quia haeres representat defunctum in omnibus et per omnia. According
to article 659 of the Civil Code, the inheritance includes all the property, rights,
and obligations of a person, which are not extinguished by his death. If the mother
is the heir of her natural child, and the latter, among other rights during his lifetime
was entitled to exercise an action for his acknowledgment against his father, during
the life of the latter, or after his death in some of the excepting cases of article 137,
such right, which is a portion of his inheritance, is transmitted to his mother as
being his heir, and it was so understood by the court of Rennes when it considered
the right in question, not as a personal and exclusive right of the child which is
extinguished by his death, but as any other right which might be transmitted after
his death. This right of supposed transmission is even less tenable than that sought
to be sustained by the argument of analogy.
The right of action pertaining to the child to claim his legitimacy is in all respects
superior to that of the child who claims acknowledgment as a natural child. And it is
evident that the right of action to claim his legitimacy is not one of those rights
which the legitimate child may transmit by inheritance to his heirs; it forms no part
of the component rights of his inheritance. If it were so, there would have been no
necessity to establish its transmissibility to heirs as an exception in the terms and
conditions of article 118 of the code. So that, in order that it may constitute a
portion of the childs inheritance, it is necessary that the conditions and the terms
contained in article 118 shall be present, since without them, the right that the child
held during his lifetime, being personal and exclusive in principle, and therefore, as
a general rule not susceptible of transmission, would and should have been
extinguished by his death. Therefore, where no express provision like that of article
118 exists, the right of action for the acknowledgment of a natural child is, in
principle and without exception, extinguished by his death, and cannot be
transmitted as a portion of the inheritance of the deceased child.
On the other hand, it said right of action formed a part of the childs inheritance, it
would be necessary to establish the doctrine that the right to claim such an
acknowledgment from the presumed natural father and from his heirs is an absolute
right of the heirs of the child, not limited by certain circumstances as in the case of
the heirs of a legitimate child; and if it is unreasonable to compare a natural child
with a legitimate one to place the heirs of a natural child and his inheritance on a
better footing than those of a legitimate child would not only be unreasonable, but,
as stated in one of the above citations, most absurd and illegal in the present state
of the law and in accordance with the general principles thereof.
For all of the foregoing reasons we hereby reverse the judgment appealed from in
all its parts, without any special ruling as to the costs of this instance.
Mapa, Johnson, Carson and Willard, JJ., concur.

Separate Opinions
TORRES, J., dissenting:

chanrobles virtualawlibrary

The questions arising from the facts and points of law discussed in this litigation
between the parties thereto, decided in the judgment appealed from, and set up
and discussed in this instance by the said parties in their respective briefs, are
subordinate in the first place to the main point, submitted among others to the
decision of this court, that is, whether the right of action brought to demand from
the natural father, or from his heirs, the acknowledgment of the natural child which
the former left at his death was, by operation of the law, transmitted to the natural
mother by reason of the death of the said child acknowledged by her.
The second error assigned by the Appellant in his brief refers exclusively to this
important point of law.
Article 846 of the Civil Code prescribes:

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The right of succession which the law grants natural children extends reciprocally
in similar cases to the natural father or mother.
Article 944 reads:

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If the acknowledged natural or legitimized child should die without issue, either
legitimate or acknowledged by it, the father or mother who acknowledged it shall
succeed to its entire estate, and if both acknowledged it and are alive, they shall
inherit from it share and share alike.
It cannot be inferred from the above legal provisions that from the right of
succession which the law grants the natural father or mother upon the death of
their natural child, the right of the heirs of any of the said parents to claim the
acknowledgment of the natural child is excluded. No article is to be found in the
Civil Code that expressly provides for such exclusion or elimination of the right of
the heirs of the deceased child to claim his acknowledgment.
If under article 659 of said code, the inheritance includes all the property, rights,
and obligations of a person, which are not extinguished by his death, it is
unquestionable that among such rights stands that which the natural child had,
while alive, to claim his acknowledgment as such from his natural father, or from
the heirs of the latter. There is no reason or legal provision whatever to prevent the
consideration that the right to claim acknowledgment of the filiation of a deceased
child from his natural father, or from the heirs of the latter, is included in the
hereditary succession of the deceased child in favor of his natural mother.
It is to be regretted that such an eminent writer as Manresa is silent on this special
point; or that he is not very explicit in his comments on article 137 of the Civil Code.
Among the various noted writers on law, Professor Sanchez Roman is the only one
who has given his opinion in a categorical manner as to whether or not the right of
action for the acknowledgment of a deceased natural child shall be considered
transmissive to his heirs, as may be seen from the following:
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In order to complete the explanation of this article 137 of the Civil Code, three
points must be decided:
(1) Against whom shall an action for acknowledgment be
brought under the cases and terms to which the two exceptions indicated in
paragraphs 1 and 2 of article 137 refer? (2) Who is to represent the miner in
chanrobles virtualawlibrary

bringing this action when neither the father nor the mother has acknowledged him?
(3) Should this right of action be considered as transmitted to the heirs or
descendants of the natural child whether or not it was exercised at the time of his
death?
With respect to the third, there is an entire absence of legal provisions, and at
most, it might be deemed admissible as a solution, that the right of action to claim
the acknowledgment of a natural child is transmitted by analogy to his heirs on the
same conditions and terms that it is transmitted to the descendants of the
legitimate child, to claim his legitimacy, under article 118, but no more; because on
this point nothing warrants placing the heirs of a natural child on a better footing
than those of the legitimate child, and even to compare them would not fail to be a
strained and questionable matter, and one of great difficulty for decision by the
courts, for the simple reason that for the heirs of the legitimate child the said article
118 exists, while for those of the natural child, as we have said, there is no provision
in the code authorizing the same, although on the other hand there is none that
prohibits it.
Certainly there is no article in the Civil Code, or any special law that bars the
transmission to the heirs of a natural child, particularly to his natural mother, of the
right of action to claim the acknowledgment of said natural child from the heirs of
his deceased natural father.
According to the above-cited article 944 of the Civil Code, the only persons
designated to succeed to the intestate estate of a natural child who died during
minority or without issue are its natural father or mother who acknowledged it;
consequently if by operation of the law his parents are his legal successors or heirs,
it is unquestionable that by reason of the childs death the property, rights, and
obligations of the deceased minor were, as a matter of fact, transmitted to them,
among which was the right to demand the acknowledgment of the said deceased
natural child from the heirs of the deceased natural father or mother, respectively,
on account of having enjoyed uninterruptedly the status of natural child of the said
deceased parents. (Arts. 135 and 136, Civil Code.)
cralaw

At the death of the children, Teopista in 1902, and Jose in 1903, during their
minority, and after the death of their natural father which took place in 1899, the
natural mother of the said minors, Paula Conde, succeeded them in all of their
property and rights, among which must necessarily appear and be included the
right of action to claim the acknowledgment of said two children from the heirs of
Icasiano Abaya, their deceased natural father. There is no legal provision or precept
whatever excluding such right from those which, by operation of the law, were
transmitted to the mother, Paula Conde, or expressly declaring that the said right to
claim such acknowledgment is extinguished by the death of the natural children.
It is true that, as a general rule, an action for acknowledgment cannot be brought
by a surviving natural child after the death of his parents, except in the event that
he was a minor at the time of the death of either of his parents, as was the case
with the minors Teopista and Jose Conde, who, if living, would unquestionably be
entitled to institute an action for acknowledgment against the presumed heirs of
their natural father; and as there is no law that provides that said right is
extinguished by the death of the same, and that the mother did not inherit it from
the said minors, it is also unquestionable that Paula Conde, the natural mother and

successor to the rights of said minors, is entitled to exercise the corresponding


action for acknowledgment.
If the natural mother had no right of action against the heirs of the natural father,
for the acknowledgment of her natural child, the unlimited and unconditional
reciprocity established by article 846 of the code would neither be true nor correct.
It should be noticed that the relation of paternity and that of filiation between the
above-mentioned father and children are both natural in character; therefore, the
intestate succession of the said children of Paula Conde is governed exclusively by
articles 944 and 945 of the said code.
It is true that nothing is provided by article 137 with reference to the transmission
to the natural mother of the right to claim the acknowledgment of her natural
children, but, as Sanchez Roman says, it does not expressly prohibit it; and as
opposed to the silence of the said article, we find the provisions of articles 846 and
944 of the Civil code, which expressly recognized the right of the natural mother to
succeed her natural child, a right which is transmitted to her by operation of law
from the moment that the child ceases to exist.
The question herein does not bear upon the right of a child to claim his legitimacy,
as provided in article 118 of the code, nor is it claimed that the rights of natural
children and of their mother are equal to those of legitimate ones, even by analogy.
The foundations of this opinion are based solely on the provisions of the abovementioned articles of the code, and I consider that they are sustainable so long as it
is not positively proven that the so often-mentioned right of action for
acknowledgment is extinguished by the death of the minor natural child, and is not
transmitted to the natural mother by express declaration or prohibition of the law,
together with the property and other rights in the intestate succession.
In view of the considerations above set forth it is my opinion that it should be held:
That Paula Conde, as the natural mother and sole heir of her children Teopista and
Jose, was and is entitled to the right to institute proceedings to obtain the
acknowledgment of the latter as natural children of the late Icasiano Abaya, from
Roman Abaya, as heir and administrator of the estate of the said Icasiano Abaya;
and that the said Teopista and Jose who died during their minority, three years after
the death of their father, should be considered and acknowledged as such natural
children of the latter, for the reason that while living they uninterruptedly enjoyed
the status of his natural children. The judgment appealed from should be affirmed
without any special ruling as to costs.

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With regard to the declaration that the property of the late Icasiano, which Paula
Conde might take, are of a reservable character, together with the other matter
contained in the third error assigned by the Appellant to the said judgment, the
writer withholds his opinion until such time as the question may be raised between
the parties in proper form.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 173292

September 1, 2010

MEMORACION Z. CRUZ, represented by EDGARDO Z. CRUZ, Petitioner,


vs.
OSWALDO Z. CRUZ, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Court of Appeals (CA) Decision2 dated 20 December 2005 and
Resolution dated 21 June 2006 in CA-G.R. CV No. 80355. The CA affirmed with modification the
Order3 dated 2 June 1997 of the Regional Trial Court of the National Capital Judicial Region, Branch
30, Manila (RTC).
The Antecedent Facts
The undisputed facts, as summarized by the Court of Appeals, are as follows:
On October 18, 1993, Memoracion Z. Cruz filed with the Regional Trial Court in Manila a Complaint
against her son, defendant-appellee Oswaldo Z. Cruz, for "Annulment of Sale, Reconveyance and
Damages."
Memoracion claimed that during her union with her common-law husband (deceased) Architect
Guido M. Cruz, she acquired a parcel of land located at Tabora corner Limay Streets, Bo. Obrero,
Tondo Manila; that the said lot was registered in her name under TCT No. 63467 at the Register of
Deeds of Manila; that sometime in July 1992, she discovered that the title to the said property was
transferred by appellee and the latters wife in their names in August 1991 under TCT No. 0-199377
by virtue of a Deed of Sale dated February 12, 1973; that the said deed was executed through fraud,
forgery, misrepresentation and simulation, hence, null and void; that she, with the help of her
husbands relatives, asked appellee to settle the problem; that despite repeated pleas and demands,
appellee refused to reconvey to her the said property; that she filed a complaint against appellee
before the office of the Barangay having jurisdiction over the subject property; and that since the
matter was unsettled, the barangay x x x issued x x x a certification to file [an] action in court, now
the subject of controversy.
After Memoracion x x x finished presenting her evidence in chief, she died on October 30, 1996.
Through a Manifestation, Memoracions counsel, Atty. Roberto T. Neri, notified the trial court on
January 13, 1997 of the fact of such death, evidenced by a certificate thereof.
For his part, appellee filed a Motion to Dismiss on the grounds that (1) the plaintiffs reconveyance
action is a personal action which does not survive a partys death, pursuant to Section 21, Rule 3 of

the Revised Rules of Court, and (2) to allow the case to continue would result in legal absurdity
whereby one heir is representing the defendant [and is a] co-plaintiff in this case.
On June 2, 1997, the trial court issued the appealed Order in a disposition that reads:
"Wherefore, in view of the foregoing, this case is ordered dismissed without prejudice to the
prosecution thereof in the proper estate proceedings."
On October 17, 1997, Memoracions son-heir, Edgardo Z. Cruz, manifested to the trial court that he
is retaining the services of Atty. Neri for the plaintiff. Simultaneously, Atty. Neri filed a Motion for
Reconsideration of the June 2, 1997 Order. However, the said motion was subsequently denied by
Acting Presiding Judge Cielito N. Mindaro-Grulla [on October 31, 2000].
Thereafter, Edgardo Cruz, as an heir of Memoracion Cruz, filed a notice of appeal in behalf of the
deceased plaintiff, signed by Atty. Neri, but the appeal was dismissed by Judge Mindaro-Grulla,
[stating that] the proper remedy being certiorari under Rule 65 of the Rules of Court. On appellants
motion for reconsideration, Judge Lucia Pena Purugganan granted the same, stating that the
remedy under the circumstances is ordinary appeal. 4
The Court of Appeals Ruling
Petitioner Memoracion Z. Cruz, represented by Edgardo Z. Cruz, filed with the Court of Appeals a
Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure. On 20 December
2005, the CA rendered judgment affirming with modification the RTC decision. We quote the
dispositive portion of the CAs decision below.
WHEREFORE, the appealed Order is AFFIRMED, with MODIFICATION. The trial courts directive
as to the prosecution of the action in the proper estate proceedings is DELETED.
SO ORDERED.5
Petitioners Motion for Reconsideration was denied by the CA in its Resolution of 21 June 2006. 6
Hence, this appeal.
The Issues
The issues for resolution in this case are:
1. Whether the Court of Appeals erred in ruling that Memoracion Z. Cruzs Petition for
Annulment of Deed of Sale, Reconveyance and Damages is a purely personal action which
did not survive her death; and
2. Whether the Court of Appeals erred in affirming with modification the RTC Order
dismissing the Petition for Annulment of Deed of Sale, Reconveyance and Damages.
The Courts Ruling
We find the appeal meritorious.

The Petition for Annulment of Sale, Reconveyance


and Damages survived the death of petitioner
The criterion for determining whether an action survives the death of a petitioner was elucidated in
Bonilla v. Barcena,7 to wit:
The question as to whether an action survives or not depends on the nature of the action and the
damage sued for. In the causes of action which survive, the wrong complained [of] 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.8
If the case affects primarily and principally property and property rights, then it survives the death of
the plaintiff or petitioner. In Sumaljag v. Literato,9 we held that a Petition for Declaration of Nullity of
Deed of Sale of Real Property is one relating to property and property rights, and therefore, survives
the death of the petitioner. Accordingly, the instant case for annulment of sale of real property merits
survival despite the death of petitioner Memoracion Z. Cruz.
The CA erred in affirming RTCs dismissal of the
Petition for Annulment of Deed of Sale,
Reconveyance and Damages
When a party dies during the pendency of a case, Section 16, Rule 3 of the 1997 Revised Rules of
Civil Procedure necessarily applies, viz:
Sec. 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the claim
is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30)
days after such death of the fact thereof, and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action.
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 a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within a
specified time, to procure the appointment of an executor or administrator for the estate of the
deceased and the latter shall immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing party, may be recovered as
costs.
The foregoing section is a revision of Section 17, Rule 3 of the old Rules of Court:
SEC. 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 the 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 deceased 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.
If the action survives despite death of a party, it is the duty of the deceaseds counsel to inform the
court of such death, and to give the names and addresses of the deceaseds legal representatives.
The deceased may be substituted by his heirs in the pending action. As explained in Bonilla:
x x x 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. 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. 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.
When [plaintiff], therefore, died[,] her claim or right to the parcels of land x x x 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.10
If no legal representative is named by the counsel of the deceased, or the legal representative fails
to appear within a specified period, it is the duty of the court where the case is pending to order the
opposing party to procure the appointment of an executor or administrator for the estate of the
deceased. The reason for this rule is to protect all concerned who may be affected by the intervening
death, particularly the deceased and his estate.11
1avvphi1

In the instant case, petitioner (plaintiff) Memoracion Z. Cruz died on 30 October 1996. Her counsel,
Atty. Roberto T. Neri, notified the trial court of such death on 13 January 1997, through a
Manifestation stating thus:
COMES NOW the undersigned counsel and to this Honorable Court respectfully gives notice that
the plaintiff, Memoracion Z. Cruz, died on October 30, 1996, in Manila as shown by a Certificate of
Death, a certified true copy of which is hereto attached as Annex "A" hereof.
The legal representative of the deceased plaintiff is her son EDGARDO CRUZ whose address is at
No. 3231-E Tabora St., Bo. Obrero, Tondo, Manila.
x x x x12
On 24 January 1997, respondent (defendant) Oswaldo Z. Cruz moved to dismiss the case alleging
that it did not survive Memoracions death. The RTC granted the motion to dismiss in the assailed
Order dated 2 June 1997.
We rule that it was error for the RTC to dismiss the case. As mentioned earlier, the petition for
annulment of deed of sale involves property and property rights, and hence, survives the death of
petitioner Memoracion. The RTC was informed, albeit belatedly,13 of the death of Memoracion, and
was supplied with the name and address of her legal representative, Edgardo Cruz. What the RTC
could have done was to require Edgardo Cruz to appear in court and substitute Memoracion as party

to the pending case, pursuant to Section 16, Rule 3 of the 1997 Revised Rules of Civil Procedure,
and established jurisprudence.
We note that on 17 October 1997, Edgardo Cruz filed with the RTC a Manifestation, stating that he is
retaining the services of Atty. Roberto T. Neri. We quote:14
UNDERSIGNED HEIR of the late Memoracion Z. Cruz respectfully manifests that he is retaining the
services ofATTY. ROBERTO T. NERI as counsel for the plaintiff.
(Sgd.) EDGARDO Z. CRUZ
Plaintiff
Consistent with our ruling in Heirs of Haberer v. Court of Appeals,15 we consider such Manifestation,
signed by Memoracions heir, Edgardo Cruz, and retaining Atty. Neris services as counsel, a formal
substitution of deceased Memoracion by her heir, Edgardo Cruz. It also needs mention that Oswaldo
Cruz, although also an heir of Memoracion, should be excluded as a legal representative in the case
for being an adverse party therein.16
WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals Decision dated 20
December 2005 and Resolution dated 21 June 2006 in CA-G.R. CV No. 80355. We REMAND this
case to the Regional Trial Court of the National Capital Judicial Region, Branch 30, Manila, for
further proceedings.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ANTONIO EDUARDO B. NACHURA
Associate Justice
LUCAS P. BERSAMIN*
Associate Justice

ROBERTO A. ABAD
Associate Justice
JOSE C. MENDOZA
Associate Justice
ATT E S TATI O N

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R TI F I C ATI O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
*

Designated additional member per Special Order No. 882 dated 31 August 2010.

Under Rule 45 of the 1997 Revised Rules of Civil Procedure.

Penned by Associate Justice Magdangal M. De Leon, with Associate Justices Portia AlioHormachuelos and Mariano Del Castillo (now a member of the Supreme Court), concurring.
2

Issued by RTC Judge Senecio O. Ortile.

Rollo, pp. 32-33. Citations omitted.

Id. at 39.

Id. at 43-44.

163 Phil. 516 (1976). See also Torres v. Rodellas, G.R. No. 177836, 4 September 2009,
598 SCRA 390.
7

Id. at 521, citing Iron Gate Bank v. Brady, 184 U.S. 665, 22 SCT 529, 46 L.ed. 739
and Wenber v. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79.
8

G.R. No. 149787, 18 June 2008, 555 SCRA 53, 60.

10

Bonilla v. Barcena, supra note 7 at 520-521. Citations omitted.

11

Sumaljag v. Literato, supra note 9 at 62.

12

Records, pp. 172-173.

The counsels late filing of the Notice of Death of Memoracion Z. Cruz was not questioned
by defendant Oswaldo Cruz.
13

14

Records, p. 196.

15

192 Phil. 62, 73 (1981).

In Sumaljag v. Literato, supra note 9, the deceaseds sister, although a legal heir, was
excluded as a legal representative for being one of the adverse parties in the pending cases.
16

FIRST DIVISION

NATIONAL HOUSING

G.R. No. 162784

AUTHORITY,
Petitioner,

Present:

PUNO, C.J., Chairperson,


SANDOVAL-GUTIERREZ,
- versus -

CORONA,
AZCUNA,

and
GARCIA, JJ.

SEGUNDA ALMEIDA, COURT

Promulgated:

OF APPEALS, and RTC of SAN


PEDRO, LAGUNA, BR. 31,
Respondents.

June 22, 2007

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

DECISION

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 PITUMPUT 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 akoy 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 akoy


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 Lots
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 Herreras 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 plaintiffs 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 Herreras heirs null and void. The Register of Deeds of
Laguna, Calamba Branch was ordered to cancel the Transfer
Certificate of Title issued. Attorneys 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 formers 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 Herreras 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 powerthat 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 courts 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 courts 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 akoy 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 applicants 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
Herreras demise, this Contract to Sell was neither nullified nor
revoked. This Contract to Sell was an obligation on both parties
Margarita Herrera and NHA. Obligations are transmissible.
[37]
Margarita Herreras 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 CAG.R. No. 68370 dated August 28, 2003, affirming the decision of
the Regional Trial Court of San Pedro, Laguna in Civil Case No. B2780 dated March 9, 1998, is hereby AFFIRMED.
No cost.
SO ORDERED.

REYNATO S. PUNO
Chief Justice

WE CONCUR:

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

RENATO C. CORONA
Associate
Justice

Justice

ADOLFO S. AZCUNA
Associate

CANCIO C. GARCIA
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO

S.

PUNO
Chief Justice

[1]
[2]

[3]

Rollo, at 8.
A Decree Creating the National Housing Authority and Dissolving the Existing Housing Agencies, Defining
Its Powers and Functions, Providing Funds Therefor, and for Other Purposes, Presidential Decree No. 757,
promulgated July 31, 1975.
Rollo, at 70.

[4]
[5]

Id.
It should be noted that a thumbmark is considered a valid signature. As held in Payad v. Tolentino, 62 Phil. 848
(1936): The testators thumbprint is always valid and sufficient signature for the purpose of complying with the
requirement of the article. While in most of these cases, the testator was suffering from some infirmity which
made the writing of the testators name difficult or impossible, there seems to be no basis for limiting the validity
of thumbprints only to cases of illness or infirmity.

[6]

Rollo, at 49.

[7]

Vol. 1, Original Record, at 11-14.

[8]

Rollo, at 39-43.

[9]

Id., at 41-42 (emphasis supplied).

[10] Id., at 9.
[11] Id., at 9, 44-47.
[12] Id., at 9.
[13] Id., at 25-26. Francisca Herrera left behind her husband, Macario Berroya, and children: Ramon, Antonio,
Alberto, Rosita, Pacita, Bernabe, Gregorio, Josefina and Rustica. In the extra judicial settlement made by the said
heirs, Rosita, Pacita, Bernabe, Gregorio, Josefina and Rustica waived all their rights, interest and participation
therein in favor of their siblings Macario, Alberto, Ramon and Antonio. Deeds of sale involving the subject lots
were executed by the NHA in favor of Alberto, Antonio and Macario. Hence, TCT Nos. T-173557, T-173579, T173578 and T-183166 were issued to Macario, Alberto and Antonio, respectively.
[14] Id., at 27.
[15] Id., at 27-28.
[16] Id., at 28.
[17] Id., at 5.
[18] Id., at 6; see Annex F.
[19] Id., at 71-72.
[20] Brillantes v. Castro, 99 Phil. 497, 503 (1956).
[21] G.R. No. L-14791, September 30, 1963, 9 SCRA 75.
[22] Administrative Code of 1987, Executive Order No. 292, Bk. VIII, ch. 1, 2(9).
[23] Midland Insurance Corp. v. IAC, G.R. No. L-71905, August 13, 1986, 143 SCRA 458, 462.

[24] 1987 PHIL. CONST., art. VIII, 1 as explained in United Residents of Dominical Hills, Inc. v. Commission
on Settlement of Land Problems, G.R. No. 135945, March 7, 2001, 353 SCRA 783, 797-798.
[25] 1987 PHIL. CONST., art. VIII, 1 2.
[26] An Act Reorganizing the Judiciary, Appropriating Funds Therefor and for Other Purposes, Batas Pambansa
Blg. 129, promulgated August 14, 1981.
[27] Id. 9 (3).
[28] Records, vol.1, at 80.
[29] Buaya v. Stronghold Insurance, Corp., 396 Phil. 739 (2000).
[30] Ayala Corp. v. Rosa-Diana Realty and Devt. Corp., 400 Phil. 511 (2000).
[31] Rollo, at 17.
[32] Id.
[33] Civil Code, art. 774 (emphasis supplied).
[34] Rollo, at 70.
[35] Id., at 39-43.
[36] Id., at 24; C.A. G.R. No. 68370 citing Agreement No. 3787, dated July 28, 1959.
[37] Araneta v. Montelibano, 14 Phil. 117 (1909).
[38] Civil Code, arts. 1544 (which prohibit double sales) and 1165 (which established the obligation of the seller to
the buyer respecting a thing which is determinate in nature).
[39] Because the estate acquires juridical personality to continue the transmissible obligations and rights of the
decedent.
[40] Vol. 1, Original Record, at 11-14.
[41] Rollo, at 34.