principal, and shall be exigible immediately upon the occurrence of such
EN BANC default. (Rec. App. pp. 98- 102.)
[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:chanroblesvirtuallawlibrary
Premiums. As consideration for this suretyship, the undersigned jointly
and severally, agree to pay the COMPANY the sum of ________________
(P______) pesos, Philippines Currency, in advance as premium there of for
every __________ months or fractions thereof, this ________ or any
renewal or substitution thereof is in effect.
Indemnity. The undersigned, jointly and severally, agree at all times to
indemnify the COMPANY and keep it indemnified and hold and save it
harmless from and against any and all damages, losses, costs, stamps,
taxes, penalties, charges, and expenses of whatsoever kind and nature
which the COMPANY shall or may, at any time sustain or incur in
consequence of having become surety upon this bond or any extension,
renewal, substitution or alteration thereof made at the instance of the
undersigned or any of them or any order executed on behalf of the
undersigned or any of them; chan roblesvirtualawlibraryand to pay,
reimburse and make good to the COMPANY, its successors and assigns, all
sums and amount of money which it or its representatives shall pay or
cause to be paid, or become liable to pay, on account of the undersigned
or any of them, of whatsoever kind and nature, including 15% of the
amount involved in the litigation or other matters growing out of or
connected therewith for counsel or attorneys fees, but in no case less than
P25. It is hereby further agreed that in case of extension or renewal of this
________ we equally bind ourselves for the payment thereof under the
same terms and conditions as above mentioned without the necessity of
executing another indemnity agreement for the purpose and that we
hereby equally waive our right to be notified of any renewal or extension
of this ________ which may be granted under this indemnity agreement.
Interest on amount paid by the Company. Any and all sums of money
so paid by the company shall bear interest at the rate of 12% per annum
which interest, if not paid, will be accummulated and added to the capital
quarterly order to earn the same interests as the capital and the total sum
thereof, the capital and interest, shall be paid to the COMPANY as soon as
the COMPANY shall have become liable therefore, whether it shall have
paid out such sums of money or any part thereof or not.
xxx xxx xxx
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.
xxx xxx xxx
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
The Luzon Surety Co., prayed for allowance, as a contingent claim, of the
value of the twenty bonds it had executed in consideration of the
counterbonds, and further asked for judgment for the unpaid premiums
and documentary stamps affixed to the bonds, with 12 per cent interest
thereon.
Before answer was filed, and upon motion of the administratrix of
Hemadys estate, the lower court, by order of September 23, 1953,
dismissed the claims of Luzon Surety Co., on two
grounds:chanroblesvirtuallawlibrary (1) that the premiums due and cost of
documentary stamps were not contemplated under the indemnity
agreements to be a part of the undertaking of the guarantor (Hemady),
since they were not liabilities incurred after the execution of the
counterbonds; chan roblesvirtualawlibraryand (2) that whatever losses
may occur after Hemadys death, are not chargeable to his estate, because
upon his death he ceased to be guarantor.
Taking up the latter point first, since it is the one more far reaching in
effects, the reasoning of the court below ran as
follows:chanroblesvirtuallawlibrary
The administratrix further contends that upon the death of Hemady, his
liability as a guarantor terminated, and therefore, in the absence of a
showing that a loss or damage was suffered, the claim cannot be
considered contingent. This Court believes that there is merit in this
contention and finds support in Article 2046 of the new Civil Code. It should
be noted that a new requirement has been added for a person to qualify
as a guarantor, that is:chanroblesvirtuallawlibrary integrity. As correctly
pointed out by the Administratrix, integrity is something purely personal
and is not transmissible. Upon the death of Hemady, his integrity was not
transmitted to his estate or successors. Whatever loss therefore, may occur
after Hemadys death, are not chargeable to his estate because upon his
death he ceased to be a guarantor.
Another clear and strong indication that the surety company has exclusively
relied on the personality, character, honesty and integrity of the now
deceased K. H. Hemady, was the fact that in the printed form of the
indemnity agreement there is a paragraph entitled Security by way of first
mortgage, which was expressly waived and renounced by the security
company. The security company has not demanded from K. H. Hemady to
comply with this requirement of giving security by way of first mortgage.
In the supporting papers of the claim presented by Luzon Surety Company,
no real property was mentioned in the list of properties mortgaged which
appears at the back of the indemnity agreement. (Rec. App., pp. 407-
408).
We find this reasoning untenable. Under the present Civil Code (Article
1311), as well as under the Civil Code of 1889 (Article 1257), the rule is
that
Contracts take effect only as between the parties, their assigns and heirs,
except in the case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law.
While in our successional system the responsibility of the heirs for the debts
of their decedent cannot exceed the value of the inheritance they receive
from him, the principle remains intact that these heirs succeed not only to
the rights of the deceased but also to his obligations. Articles 774 and 776
of the New Civil Code (and Articles 659 and 661 of the preceding one)
expressly so provide, thereby confirming Article 1311 already quoted.
ART. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another or
others either by his will or by operation of law.
ART. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
ruled:chanroblesvirtuallawlibrary
Under the Civil Code the heirs, by virtue of the rights of succession are
subrogated to all the rights and obligations of the deceased (Article 661)
and cannot be regarded as third parties with respect to a contract to which
the deceased was a party, touching the estate of the deceased (Barrios vs.
Dolor, 2 Phil. 44).
xxx xxx xxx
The principle on which these decisions rest is not affected by the
provisions of the new Code of Civil Procedure, and, in accordance with that
principle, the heirs of a deceased person cannot be held to be third
persons in relation to any contracts touching the real estate of their
decedent which comes in to their hands by right of inheritance; chan
roblesvirtualawlibrarythey take such property subject to all the obligations
resting thereon in the hands of him from whom they derive their rights.
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman
vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party is not
altered by the provision in our Rules of Court that money debts of a
deceased must be liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is that whatever
payment is thus made from the estate is ultimately a payment by the heirs
and distributees, since the amount of the paid claim in fact diminishes or
reduces the shares that the heirs would have been entitled to receive.
Under our law, therefore, the general rule is that a partys contractual rights
and obligations are transmissible to the successors. The rule is a
consequence of the progressive depersonalization of patrimonial rights
and duties that, as observed by Victorio Polacco, has characterized the
history of these institutions. From the Roman concept of a relation from
person to person, the obligation has evolved into a relation from patrimony
to patrimony, with the persons occupying only a representative position,
barring those rare cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its performance by a
specific person and by no other. The transition is marked by the
disappearance of the imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the obligation
of the surety or guarantor does not warrant the conclusion that his peculiar
individual qualities are contemplated as a principal inducement for the
contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady
when it accepted the latter as surety in the counterbonds? Nothing but the
reimbursement of the moneys that the Luzon Surety Co. might have to
disburse on account of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting from an
obligation to give; chan roblesvirtualawlibraryand to the Luzon Surety Co.,
it was indifferent that the reimbursement should be made by Hemady
himself or by some one else in his behalf, so long as the money was paid
to it.
The second exception of Article 1311, p. 1, is intransmissibility by
stipulation of the parties. Being exceptional and contrary to the general
rule, this intransmissibility should not be easily implied, but must be
expressly established, or at the very least, clearly inferable from the
provisions of the contract itself, and the text of the agreements sued upon
nowhere indicate that they are non-transferable.
(b) Intransmisibilidad por pacto. Lo general es la transmisibilidad de
darechos y obligaciones; chan roblesvirtualawlibraryle excepcion, la
intransmisibilidad. Mientras nada se diga en contrario impera el principio
de la transmision, como elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester el pacto expreso,
porque si no, lo convenido entre partes trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del causante, sobre ellos
recaen los efectos de los vinculos juridicos creados por sus antecesores, y
para evitarlo, si asi se quiere, es indespensable convension terminante en
tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir ms all de las
personas que les dieron vida, y a ejercer presion sobre los sucesores de
esa persona; chan roblesvirtualawlibrarycuando no se quiera esto, se
impone una estipulacion limitativa expresamente de la transmisibilidad o
de cuyos tirminos claramente se deduzca la concresion del concreto a las
mismas personas que lo otorgon. (Scaevola, Codigo Civil, Tomo XX, p.
541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a contract
is deemed to have contracted for himself and his heirs and assigns, it is
unnecessary for him to expressly stipulate to that effect; chan
roblesvirtualawlibraryhence, his failure to do so is no sign that he intended
his bargain to terminate upon his death. Similarly, that the Luzon Surety
Co., did not require bondsman Hemady to execute a mortgage indicates
nothing more than the companys faith and confidence in the financial
stability of the surety, but not that his obligation was strictly personal.
The third exception to the transmissibility of obligations under Article 1311
exists when they are not transmissible by operation of law. The provision
makes reference to those cases where the law expresses that the rights or
obligations are extinguished by death, as is the case in legal support
(Article 300), parental authority (Article 327), usufruct (Article 603),
contracts for a piece of work (Article 1726), partnership (Article 1830 and
agency (Article 1919). By contract, the articles of the Civil Code that
regulate guaranty or suretyship (Articles 2047 to 2084) contain no
provision that the guaranty is extinguished upon the death of the guarantor
or the surety.
The lower court sought to infer such a limitation from Art. 2056, to the
effect that one who is obliged to furnish a guarantor must present a
person who possesses integrity, capacity to bind himself, and sufficient
property to answer for the obligation which he guarantees. It will be
noted, however, that the law requires these qualities to be present only at
the time of the perfection of the contract of guaranty. It is self-evident that
once the contract has become perfected and binding, the supervening
incapacity of the guarantor would not operate to exonerate him of the
eventual liability he has contracted; chan roblesvirtualawlibraryand if that
be true of his capacity to bind himself, it should also be true of his integrity,
which is a quality mentioned in the article alongside the capacity.
The foregoing concept is confirmed by the next Article 2057, that runs as
follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be convicted in first instance of a
crime involving dishonesty or should become insolvent, the creditor may
demand another who has all the qualifications required in the preceding
article. The case is excepted where the creditor has required and stipulated
that a specified person should be guarantor.
From this article it should be immediately apparent that the supervening
dishonesty of the guarantor (that is to say, the disappearance of his
integrity after he has become bound) does not terminate the contract but
merely entitles the creditor to demand a replacement of the guarantor. But
the step remains optional in the creditor:chanroblesvirtuallawlibrary it is his
right, not his duty; chan roblesvirtualawlibraryhe may waive it if he
chooses, and hold the guarantor to his bargain. Hence Article 2057 of the
present Civil Code is incompatible with the trial courts stand that the
requirement of integrity in the guarantor or surety makes the latters
undertaking strictly personal, so linked to his individuality that the guaranty
automatically terminates upon his death.
The contracts of suretyship entered into by K. H. Hemady in favor of Luzon
Surety Co. not being rendered intransmissible due to the nature of the
undertaking, nor by the stipulations of the contracts themselves, nor by
provision of law, his eventual liability thereunder necessarily passed upon
his death to his heirs. The contracts, therefore, give rise to contingent
claims provable against his estate under section 5, Rule 87 (2 Moran, 1952
ed., p. 437; chan roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil.
810, 814).
The most common example of the contigent claim is that which arises
when a person is bound as surety or guarantor for a principal who is
insolvent or dead. Under the ordinary contract of suretyship the surety has
no claim whatever against his principal until he himself pays something by
way of satisfaction upon the obligation which is secured. When he does
this, there instantly arises in favor of the surety the right to compel the
principal to exonerate the surety. But until the surety has contributed
something to the payment of the debt, or has performed the secured
obligation in whole or in part, he has no right of action against anybody
no claim that could be reduced to judgment. (May vs. Vann, 15 Pla.,
553; chan roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan
roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs.
Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs. Nou, 63
Wis., 134.)
For Defendant administratrix it is averred that the above doctrine refers to
a case where the surety files claims against the estate of the principal
debtor; chan roblesvirtualawlibraryand it is urged that the rule does not
apply to the case before us, where the late Hemady was a surety, not a
principal debtor. The argument evinces a superficial view of the relations
between parties. If under the Gaskell ruling, the Luzon Surety Co., as
guarantor, could file a contingent claim against the estate of the principal
debtors if the latter should die, there is absolutely no reason why it could
not file such a claim against the estate of Hemady, since Hemady is a
solidary co-debtor of his principals. What the Luzon Surety Co. may claim
from the estate of a principal debtor it may equally claim from the estate
of Hemady, since, in view of the existing solidarity, the latter does not even
enjoy the benefit of exhaustion of the assets of the principal debtor.
The foregoing ruling is of course without prejudice to the remedies of the
administratrix against the principal debtors under Articles 2071 and 2067
of the New Civil Code.
Our conclusion is that the solidary guarantors liability is not extinguished
by his death, and that in such event, the Luzon Surety Co., had the right
to file against the estate a contingent claim for reimbursement. It becomes
unnecessary now to discuss the estates liability for premiums and stamp
taxes, because irrespective of the solution to this question, the Luzon
Suretys claim did state a cause of action, and its dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the records are
ordered remanded to the court of origin, with instructions to proceed in
accordance with law. Costs against the Administratrix- Appellee. SO
ORDERED.
G.R. No. 82027 March 29, 1990
ROMARICO G. VITUG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-
CORONA, respondents.
Rufino B. Javier Law Office for petitioner.
Quisumbing, Torres & Evangelista for private respondent.
SARMIENTO, J.:
This case is a chapter in an earlier suit decided by this Court 1 involving
the probate of the two wills of the late Dolores Luchangco Vitug, who
died in New York, U. S.A., on November 10, 1980, naming private
respondent Rowena Faustino-Corona executrix. In our said decision, we
upheld the appointment of Nenita Alonte as co-special administrator of
Mrs. Vitug's estate with her (Mrs. Vitug's) widower, petitioner Romarico
G. Vitug, pending probate.
On January 13, 1985, Romarico G. Vitug filed a motion asking for
authority from the probate court to sell certain shares of stock and real
properties belonging to the estate to cover allegedly his advances to the
estate in the sum of P667,731.66, plus interests, which he claimed were
personal funds. As found by the Court of Appeals, 2 the alleged advances
consisted of P58,147.40 spent for the payment of estate tax, P518,834.27
as deficiency estate tax, and P90,749.99 as "increment
thereto." 3 According to Mr. Vitug, he withdrew the sums of P518,834.27
and P90,749.99 from savings account No. 35342-038 of the Bank of
America, Makati, Metro Manila.
On April 12, 1985, Rowena Corona opposed the motion to sell on the
ground that the same funds withdrawn from savings account No. 35342-
038 were conjugal partnership properties and part of the estate, and
hence, there was allegedly no ground for reimbursement. She also
sought his ouster for failure to include the sums in question for inventory
and for "concealment of funds belonging to the estate." 4
Vitug insists that the said funds are his exclusive property having
acquired the same through a survivorship agreement executed with his
late wife and the bank on June 19, 1970. The agreement provides:
We hereby agree with each other and with the BANK
OF AMERICAN NATIONAL TRUST AND SAVINGS
ASSOCIATION (hereinafter referred to as the BANK),
that all money now or hereafter deposited by us or
any or either of us with the BANK in our joint savings
current account shall be the property of all or both of
us and shall be payable to and collectible or
withdrawable by either or any of us during our
lifetime, and after the death of either or any of us
shall belong to and be the sole property of the
survivor or survivors, and shall be payable to and
collectible or withdrawable by such survivor or
survivors.
We further agree with each other and the BANK that
the receipt or check of either, any or all of us during
our lifetime, or the receipt or check of the survivor or
survivors, for any payment or withdrawal made for
our above-mentioned account shall be valid and
sufficient release and discharge of the BANK for such
payment or withdrawal. 5
The trial courts 6 upheld the validity of this agreement and granted "the
motion to sell some of the estate of Dolores L. Vitug, the proceeds of
which shall be used to pay the personal funds of Romarico Vitug in the
total sum of P667,731.66 ... ." 7
On the other hand, the Court of Appeals, in the petition for certiorari filed
by the herein private respondent, held that the above-quoted survivorship
agreement constitutes a conveyance mortis causa which "did not comply
with the formalities of a valid will as prescribed by Article 805 of the Civil
Code," 8 and secondly, assuming that it is a mere donation inter vivos, it
is a prohibited donation under the provisions of Article 133 of the Civil
Code. 9
The dispositive portion of the decision of the Court of Appeals states:
WHEREFORE, the order of respondent Judge dated
November 26, 1985 (Annex II, petition) is hereby set
aside insofar as it granted private respondent's
motion to sell certain properties of the estate of
Dolores L. Vitug for reimbursement of his alleged
advances to the estate, but the same order is
sustained in all other respects. In addition,
respondent Judge is directed to include provisionally
the deposits in Savings Account No. 35342-038 with
the Bank of America, Makati, in the inventory of
actual properties possessed by the spouses at the
time of the decedent's death. With costs against
private respondent. 10
In his petition, Vitug, the surviving spouse, assails the appellate court's
ruling on the strength of our decisions in Rivera v. People's Bank and
Trust Co. 11 and Macam v. Gatmaitan 12 in which we sustained the
validity of "survivorship agreements" and considering them as aleatory
contracts. 13
The petition is meritorious.
The conveyance in question is not, first of all, one of mortis causa, which
should be embodied in a will. A will has been defined as "a personal,
solemn, revocable and free act by which a capacitated person disposes of
his property and rights and declares or complies with duties to take effect
after his death." 14 In other words, the bequest or device must pertain to
the testator. 15 In this case, the monies subject of savings account No.
35342-038 were in the nature of conjugal funds In the case relied
on, Rivera v. People's Bank and Trust Co., 16 we rejected claims that a
survivorship agreement purports to deliver one party's separate
properties in favor of the other, but simply, their joint holdings:
xxx xxx xxx
... Such conclusion is evidently predicated on the
assumption that Stephenson was the exclusive owner
of the funds-deposited in the bank, which
assumption was in turn based on the facts (1) that
the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served
only as housemaid of the deceased." But it not
infrequently happens that a person deposits money
in the bank in the name of another; and in the
instant case it also appears that Ana Rivera served
her master for about nineteen years without actually
receiving her salary from him. The fact that
subsequently Stephenson transferred the account to
the name of himself and/or Ana Rivera and executed
with the latter the survivorship agreement in
question although there was no relation of kinship
between them but only that of master and servant,
nullifies the assumption that Stephenson was the
exclusive owner of the bank account. In the absence,
then, of clear proof to the contrary, we must give full
faith and credit to the certificate of deposit which
recites in effect that the funds in question belonged
 to Edgar Stephenson and Ana Rivera; that they were
joint (and several) owners thereof; and that either of
them could withdraw any part or the whole of said
account during the lifetime of both, and the balance,
if any, upon the death of either, belonged to the
survivor. 17
ART. 2010. By an aleatory contract, one of the
parties or both reciprocally bind themselves to give
or to do something in consideration of what the other
shall give or do upon the happening of an event
which is uncertain, or which is to occur at an
indeterminate time.

xxx xxx xxx
In Macam v. Gatmaitan, 18
it was held:
xxx xxx xxx
This Court is of the opinion that Exhibit C is an
aleatory contract whereby, according to article 1790
of the Civil Code, one of the parties or both
reciprocally bind themselves to give or do something
as an equivalent for that which the other party is to
give or do in case of the occurrence of an event
which is uncertain or will happen at an indeterminate
time. As already stated, Leonarda was the owner of
the house and Juana of the Buick automobile and
most of the furniture. By virtue of Exhibit C, Juana
would become the owner of the house in case
Leonarda died first, and Leonarda would become the
owner of the automobile and the furniture if Juana
were to die first. In this manner Leonarda and Juana
reciprocally assigned their respective property to one
another conditioned upon who might die first, the
time of death determining the event upon which the
acquisition of such right by the one or the other
depended. This contract, as any other contract, is
binding upon the parties thereto. Inasmuch as
Leonarda had died before Juana, the latter
thereupon acquired the ownership of the house, in
the same manner as Leonarda would have acquired
the ownership of the automobile and of the furniture
if Juana had died first. 19
xxx xxx xxx
There is no showing that the funds exclusively belonged to one party,
and hence it must be presumed to be conjugal, having been acquired
during the existence of the marita. relations. 20
Neither is the survivorship agreement a donation inter vivos, for obvious
reasons, because it was to take effect after the death of one party.
Secondly, it is not a donation between the spouses because it involved no
conveyance of a spouse's own properties to the other.
Under the aforequoted provision, the fulfillment of an aleatory contract
depends on either the happening of an event which is (1) "uncertain," (2)
"which is to occur at an indeterminate time." A survivorship agreement,
the sale of a sweepstake ticket, a transaction stipulating on the value of
currency, and insurance have been held to fall under the first category,
while a contract for life annuity or pension under Article 2021, et
sequentia, has been categorized under the second. 25 In either case, the
element of risk is present. In the case at bar, the risk was the death of
one party and survivorship of the other.
However, as we have warned:
xxx xxx xxx
But although the survivorship agreement is per se
not contrary to law its operation or effect may be
violative of the law. For instance, if it be shown in a
given case that such agreement is a mere cloak to
hide an inofficious donation, to transfer property in
fraud of creditors, or to defeat the legitime of a
forced heir, it may be assailed and annulled upon
such grounds. No such vice has been imputed and
established against the agreement involved in this
case. 26
xxx xxx xxx
There is no demonstration here that the survivorship agreement had
been executed for such unlawful purposes, or, as held by the respondent
court, in order to frustrate our laws on wills, donations, and conjugal
partnership.
The conclusion is accordingly unavoidable that Mrs. Vitug having
predeceased her husband, the latter has acquired upon her death a
vested right over the amounts under savings account No. 35342-038 of
the Bank of America. Insofar as the respondent court ordered their
inclusion in the inventory of assets left by Mrs. Vitug, we hold that the
court was in error. Being the separate property of petitioner, it forms no
more part of the estate of the deceased.
WHEREFORE, the decision of the respondent appellate court, dated June
29, 1987, and its resolution, dated February 9, 1988, are SET ASIDE.

It is also our opinion that the agreement involves no modification petition

No costs.
of the conjugal partnership, as held by the Court of Appeals, 21 by "mere
stipulation" 22 and that it is no "cloak" 23 to circumvent the law on
conjugal property relations. Certainly, the spouses are not prohibited by SO ORDERED.
law to invest conjugal property, say, by way of a joint and several bank
account, more commonly denominated in banking parlance as an
"and/or" account. In the case at bar, when the spouses Vitug opened
savings account No. 35342-038, they merely put what rightfully belonged
to them in a money-making venture. They did not dispose of it in favor of
the other, which would have arguably been sanctionable as a prohibited
donation. And since the funds were conjugal, it can not be said that one
spouse could have pressured the other in placing his or her deposits in
the money pool.

The validity of the contract seems debatable by reason of its "survivor-

take-all" feature, but in reality, that contract imposed a mere obligation
with a term, the term being death. Such agreements are permitted by the
Civil Code. 24

Under Article 2010 of the Code:

G.R. Nos. 140371-72 November 27, 2006
DY YIENG SEANGIO, BARBARA D. SEANGIO and VIRGINIA D.
SEANGIO, Petitioners,
vs.
HON. AMOR A. REYES, in her capacity as Presiding Judge,
Regional Trial Court, National Capital Judicial Region, Branch 21,
Manila, ALFREDO D. SEANGIO, ALBERTO D. SEANGIO, ELISA D.
SEANGIO-SANTOS, VICTOR D. SEANGIO, ALFONSO D. SEANGIO,
SHIRLEY D. SEANGIO-LIM, BETTY D. SEANGIO-OBAS and JAMES
D. SEANGIO, Respondents.
DECISION
AZCUNA, J.:
This is a petition for certiorari1 with application for the issuance of a writ
of preliminary injunction and/or temporary restraining order seeking the
nullification of the orders, dated August 10, 1999 and October 14, 1999,
of the Regional Trial Court of Manila, Branch 21 (the RTC), dismissing the
petition for probate on the ground of preterition, in the consolidated
cases, docketed as SP. Proc. No. 98-90870 and SP. Proc. No. 99-93396,
and entitled, "In the Matter of the Intestate Estate of Segundo C. Seangio
v. Alfredo D. Seangio, et al." and "In the Matter of the Probate of the Will
of Segundo C. Seangio v. Dy Yieng Seangio, Barbara D. Seangio and
Virginia Seangio."
The facts of the cases are as follows:
On September 21, 1988, private respondents filed a petition for the
settlement of the intestate estate of the late Segundo Seangio, docketed
as Sp. Proc. No. 9890870 of the RTC, and praying for the appointment
of private respondent Elisa D. SeangioSantos as special administrator
and guardian ad litem of petitioner Dy Yieng Seangio.
Petitioners Dy Yieng, Barbara and Virginia, all surnamed Seangio,
opposed the petition. They contended that: 1) Dy Yieng is still very
healthy and in full command of her faculties; 2) the deceased Segundo
executed a general power of attorney in favor of Virginia giving her the
power to manage and exercise control and supervision over his business
in the Philippines; 3) Virginia is the most competent and qualified to serve
as the administrator of the estate of Segundo because she is a certified
public accountant; and, 4) Segundo left a holographic will, dated
September 20, 1995, disinheriting one of the private respondents, Alfredo
Seangio, for cause. In view of the purported holographic will, petitioners
averred that in the event the decedent is found to have left a will, the
intestate proceedings are to be automatically suspended and replaced by
the proceedings for the probate of the will.
On April 7, 1999, a petition for the probate of the holographic will of
Segundo, docketed as SP. Proc. No. 9993396, was filed by petitioners
before the RTC. They likewise reiterated that the probate proceedings
should take precedence over SP. Proc. No. 9890870 because testate
proceedings take precedence and enjoy priority over intestate
proceedings.2
The document that petitioners refer to as Segundos holographic will is
quoted, as follows:
Kasulatan sa pag-aalis ng mana
Tantunin ng sinuman
Ako si Segundo Seangio Filipino may asawa naninirahan sa 465-A Flores
St., Ermita, Manila at nagtatalay ng maiwanag na pag-iisip at disposisyon
ay tahasan at hayagang inaalisan ko ng lahat at anumang mana ang
paganay kong anak na si Alfredo Seangio dahil siya ay naging
lapastangan sa akin at isan beses siya ng sasalita ng masama harapan ko
at mga kapatid niya na si Virginia Seangio labis kong kinasama ng loob ko
at sasabe rin ni Alfredo sa akin na ako nasa ibabaw gayon gunit daratin
ang araw na ako nasa ilalim siya at siya nasa ibabaw.
Labis kong ikinasama ng loob ko ang gamit ni Alfredo ng akin pagalan
para makapagutang na kuarta siya at kanya asawa na si Merna de los
Reyes sa China Bangking Corporation na millon pesos at hindi ng
babayad at hindi ng babayad ito ay nagdulot sa aking ng malaking
kahihiya sa mga may-ari at stockholders ng China Banking.
At ikinagalit ko pa rin ang pagkuha ni Alfredo at ng kanyang asawa na
mga custome[r] ng Travel Center of the Philippines na pinagasiwaan ko
at ng anak ko si Virginia.
Dito ako nagalit din kaya gayon ayoko na bilanin si Alfredo ng anak ko at
hayanan kong inaalisan ng lahat at anoman mana na si Alfredo at si
Alfredo Seangio ay hindi ko siya anak at hindi siya makoha mana.
Nila[g]daan ko ngayon ika 20 ng Setyembre 1995 sa longsod ng Manila
sa harap ng tatlong saksi. 3
(signed)
Segundo Seangio
Nilagdaan sa harap namin
(signed)
Dy Yieng Seangio (signed)
Unang Saksi ikalawang saksi
(signed)
ikatlong saksi
On May 29, 1999, upon petitioners motion, SP. Proc. No. 9890870 and
SP. Proc. No. 9993396 were consolidated.4
On July 1, 1999, private respondents moved for the dismissal of the
probate proceedings5 primarily on the ground that the document
purporting to be the holographic will of Segundo does not contain any
disposition of the estate of the deceased and thus does not meet the
definition of a will under Article 783 of the Civil Code. According to private
respondents, the will only shows an alleged act of disinheritance by the
decedent of his eldest son, Alfredo, and nothing else; that all other
compulsory heirs were not named nor instituted as heir, devisee or
legatee, hence, there is preterition which would result to intestacy. Such
being the case, private respondents maintained that while procedurally
the court is called upon to rule only on the extrinsic validity of the will, it
is not barred from delving into the intrinsic validity of the same, and
ordering the dismissal of the petition for probate when on the face of the
will it is clear that it contains no testamentary disposition of the property
of the decedent.
Petitioners filed their opposition to the motion to dismiss contending that:
1) generally, the authority of the probate court is limited only to a
determination of the extrinsic validity of the will; 2) private respondents
question the intrinsic and not the extrinsic validity of the will; 3)
disinheritance constitutes a disposition of the estate of a decedent; and,
4) the rule on preterition does not apply because Segundos will does not
constitute a universal heir or heirs to the exclusion of one or more
compulsory heirs.6
On August 10, 1999, the RTC issued its assailed order, dismissing the
petition for probate proceedings:
A perusal of the document termed as "will" by oppositors/petitioners Dy
Yieng Seangio, et al., clearly shows that there is preterition, as the only
heirs mentioned thereat are Alfredo and Virginia. [T]he other heirs being
omitted, Article 854 of the New Civil Code thus applies. However, insofar
as the widow Dy Yieng Seangio is concerned, Article 854 does not apply,
she not being a compulsory heir in the direct line.
As such, this Court is bound to dismiss this petition, for to do otherwise
would amount to an abuse of discretion. The Supreme Court in the case
of Acain v. Intermediate Appellate Court [155 SCRA 100 (1987)] has
made its position clear: "for respondents to have tolerated the probate
of the will and allowed the case to progress when, on its face, the will
appears to be intrinsically void would have been an exercise in futility.
It would have meant a waste of time, effort, expense, plus added futility.
The trial court could have denied its probate outright or could have
passed upon the intrinsic validity of the testamentary provisions before
the extrinsic validity of the will was resolved(underscoring supplied).
WHEREFORE, premises considered, the Motion to Suspend Proceedings is
hereby DENIED for lack of merit. Special Proceedings No. 9993396 is
hereby DISMISSED without pronouncement as to costs.
SO ORDERED.7
Petitioners motion for reconsideration was denied by the RTC in its order
dated October 14, 1999.
Petitioners contend that:
THE RESPONDENT JUDGE ACTED IN EXCESS OF HER JURISDICTION OR
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION AND DECIDED A QUESTION OF LAW NOT IN ACCORD
WITH LAW AND JURISPRUDENCE IN ISSUING THE QUESTIONED
ORDERS, DATED 10 AUGUST 1999 AND 14 OCTOBER 1999
(ATTACHMENTS "A" AND "B" HEREOF) CONSIDERING THAT:
I
THE RESPONDENT JUDGE, WITHOUT EVEN COMPLYING WITH
SECTIONS 3 AND 4 OF RULE 76 OF THE RULES OF COURT ON THE
PROPER PROCEDURE FOR SETTING THE CASE FOR INITIAL HEARING
FOR THE ESTABLISHMENT OF THE JURISDICTIONAL FACTS, DISMISSED
THE TESTATE CASE ON THE ALLEGED GROUND THAT THE TESTATORS
WILL IS VOID ALLEGEDLY BECAUSE OF THE EXISTENCE OF
PRETERITION, WHICH GOES INTO THE INTRINSIC VALIDITY OF THE
WILL, DESPITE THE FACT THAT IT IS A SETTLED RULE THAT THE
AUTHORITY OF PROBATE COURTS IS LIMITED ONLY TO A
DETERMINATION OF THE EXTRINSIC VALIDITY OF THE WILL, I.E., THE
DUE EXECUTION THEREOF, THE TESTATORS TESTAMENTARY
CAPACITY AND THE COMPLIANCE WITH THE REQUISITES OR
SOLEMNITIES PRESCRIBED BY LAW;
II
EVEN ASSUMING ARGUENDO THAT THE RESPONDENT JUDGE HAS THE
AUTHORITY TO RULE UPON THE INTRINSIC VALIDITY OF THE WILL OF
THE TESTATOR, IT IS INDUBITABLE FROM THE FACE OF THE
TESTATORS WILL THAT NO PRETERITON EXISTS AND THAT THE WILL
IS BOTH INTRINSICALLY AND EXTRINSICALLY VALID; AND,
III
RESPONDENT JUDGE WAS DUTY BOUND TO SUSPEND THE
PROCEEDINGS IN THE INTESTATE CASE CONSIDERING THAT IT IS A
SETTLED RULE THAT TESTATE PROCEEDINGS TAKE PRECEDENCE OVER
INTESTATE PROCEEDINGS.
Petitioners argue, as follows:
First, respondent judge did not comply with Sections 3 and 4 of Rule 76
of the Rules of Court which respectively mandate the court to: a) fix the
time and place for proving the will when all concerned may appear to
contest the allowance thereof, and cause notice of such time and place to
be published three weeks successively previous to the appointed time in a
newspaper of general circulation; and, b) cause the mailing of said notice
to the heirs, legatees and devisees of the testator Segundo;
Second, the holographic will does not contain any institution of an heir,
but rather, as its title clearly states, Kasulatan ng Pag-Aalis ng
Mana, simply contains a disinheritance of a compulsory heir. Thus, there
is no preterition in the decedents will and the holographic will on its face
is not intrinsically void;
Third, the testator intended all his compulsory heirs, petitioners and
private respondents alike, with the sole exception of Alfredo, to inherit his
estate. None of the compulsory heirs in the direct line of Segundo were
preterited in the holographic will since there was no institution of an heir;
Fourth, inasmuch as it clearly appears from the face of the holographic
will that it is both intrinsically and extrinsically valid, respondent judge
was mandated to proceed with the hearing of the testate case; and,
Lastly, the continuation of the proceedings in the intestate case will work
injustice to petitioners, and will render nugatory the disinheritance of
Alfredo.
The purported holographic will of Segundo that was presented by
petitioners was dated, signed and written by him in his own handwriting.
Except on the ground of preterition, private respondents did not raise any
issue as regards the authenticity of the document.
The document, entitled Kasulatan ng Pag-Aalis ng Mana, unmistakably
showed Segundos intention of excluding his eldest son, Alfredo, as an
heir to his estate for the reasons that he cited therein. In effect, Alfredo
was disinherited by Segundo.
For disinheritance to be valid, Article 916 of the Civil Code requires that
the same must be effected through a will wherein the legal cause
therefor shall be specified. With regard to the reasons for the
disinheritance that were stated by Segundo in his document, the Court
believes that the incidents, taken as a whole, can be considered a form of
maltreatment of Segundo by his son, Alfredo, and that the matter
presents a sufficient cause for the disinheritance of a child or descendant
under Article 919 of the Civil Code:
Article 919. The following shall be sufficient causes for the disinheritance
of children and descendants, legitimate as well as illegitimate:
(1) When a child or descendant has been found guilty of an
attempt against the life of the testator, his or her spouse,
descendants, or ascendants;
(2) When a child or descendant has accused the testator of a
crime for which the law prescribes imprisonment for six years
or more, if the accusation has been found groundless;
(3) When a child or descendant has been convicted of adultery
or concubinage with the spouse of the testator;
(4) When a child or descendant by fraud, violence, intimidation,
or undue influence causes the testator to make a will or to
change one already made;
(5) A refusal without justifiable cause to support the parents or
ascendant who disinherit such child or descendant;
 (6) Maltreatment of the testator by word or deed, by the child
or descendant;8
(7) When a child or descendant leads a dishonorable or
disgraceful life;
(8) Conviction of a crime which carries with it the penalty of
civil interdiction.
1999, are set aside. Respondent judge is directed to reinstate and hear
SP Proc. No. 99-93396 for the allowance of the holographic will of
Segundo Seangio. The intestate case or SP. Proc. No. 98-90870 is hereby
suspended until the termination of the aforesaid testate proceedings.
No costs.
SO ORDERED.

Now, the critical issue to be determined is whether the document

executed by Segundo can be considered as a holographic will.

A holographic will, as provided under Article 810 of the Civil Code, must
be entirely written, dated, and signed by the hand of the testator himself.
It is subject to no other form, and may be made in or out of the
Philippines, and need not be witnessed.

Segundos document, although it may initially come across as a mere

disinheritance instrument, conforms to the formalities of a holographic
will prescribed by law. It is written, dated and signed by the hand of
Segundo himself. An intent to dispose mortis causa[9] can be clearly
deduced from the terms of the instrument, and while it does not make an
affirmative disposition of the latters property, the disinheritance of
Alfredo, nonetheless, is an act of disposition in itself. In other words, the
disinheritance results in the disposition of the property of the testator
Segundo in favor of those who would succeed in the absence of Alfredo.10

Moreover, it is a fundamental principle that the intent or the will of the

testator, expressed in the form and within the limits prescribed by law,
must be recognized as the supreme law in succession. All rules of
construction are designed to ascertain and give effect to that intention. It
is only when the intention of the testator is contrary to law, morals, or
public policy that it cannot be given effect.11

Holographic wills, therefore, being usually prepared by one who is not

learned in the law, as illustrated in the present case, should be construed
more liberally than the ones drawn by an expert, taking into account the
circumstances surrounding the execution of the instrument and the
intention of the testator.12 In this regard, the Court is convinced that the
document, even if captioned as Kasulatan ng Pag-Aalis ng Mana, was
intended by Segundo to be his last testamentary act and was executed
by him in accordance with law in the form of a holographic will. Unless
the will is probated,13 the disinheritance cannot be given effect.14

With regard to the issue on preterition,15 the Court believes that the
compulsory heirs in the direct line were not preterited in the will. It was,
in the Courts opinion, Segundos last expression to bequeath his estate
to all his compulsory heirs, with the sole exception of Alfredo. Also,
Segundo did not institute an heir16 to the exclusion of his other
compulsory heirs. The mere mention of the name of one of the
petitioners, Virginia, in the document did not operate to institute her as
the universal heir. Her name was included plainly as a witness to the
altercation between Segundo and his son, Alfredo.1wphi1

Considering that the questioned document is Segundos holographic will,

and that the law favors testacy over intestacy, the probate of the will
cannot be dispensed with. Article 838 of the Civil Code provides that no
will shall pass either real or personal property unless it is proved and
allowed in accordance with the Rules of Court. Thus, unless the will is
probated, the right of a person to dispose of his property may be
rendered nugatory.17

In view of the foregoing, the trial court, therefore, should have allowed
the holographic will to be probated. It is settled that testate proceedings
for the settlement of the estate of the decedent take precedence over
intestate proceedings for the same purpose.18

WHEREFORE, the petition is GRANTED. The Orders of the Regional

Trial Court of Manila, Branch 21, dated August 10, 1999 and October 14,
G.R. No. L-7188 August 9, 1954
In re: Will and Testament of the deceased REVEREND SANCHO
ABADIA.
SEVERINA A. VDA. DE ENRIQUEZ, ET AL., petitioners-appellees,
vs.
MIGUEL ABADIA, ET AL., oppositors-appellants.
Manuel A. Zosa, Luis B. Ladonga, Mariano A. Zosa and B. G. Advincula for
appellants.
C. de la Victoria for appellees.
MONTEMAYOR, J.:
On September 6, 1923, Father Sancho Abadia, parish priest of Talisay,
Cebu, executed a document purporting to be his Last Will and Testament
now marked Exhibit "A". Resident of the City of Cebu, he died on January
14, 1943, in the municipality of Aloguinsan, Cebu, where he was an
evacuee. He left properties estimated at P8,000 in value. On October 2,
1946, one Andres Enriquez, one of the legatees in Exhibit "A", filed a
petition for its probate in the Court of First Instance of Cebu. Some
cousins and nephews who would inherit the estate of the deceased if he
left no will, filed opposition.
During the hearing one of the attesting witnesses, the other two being
dead, testified without contradiction that in his presence and in the
presence of his co-witnesses, Father Sancho wrote out in longhand
Exhibit "A" in Spanish which the testator spoke and understood; that he
(testator) signed on he left hand margin of the front page of each of the
three folios or sheets of which the document is composed, and numbered
the same with Arabic numerals, and finally signed his name at the end of
his writing at the last page, all this, in the presence of the three attesting
witnesses after telling that it was his last will and that the said three
witnesses signed their names on the last page after the attestation clause
in his presence and in the presence of each other. The oppositors did not
submit any evidence.
The learned trial court found and declared Exhibit "A" to be a holographic
will; that it was in the handwriting of the testator and that although at
the time it was executed and at the time of the testator's death,
holographic wills were not permitted by law still, because at the time of
the hearing and when the case was to be decided the new Civil Code was
already in force, which Code permitted the execution of holographic wills,
under a liberal view, and to carry out the intention of the testator which
according to the trial court is the controlling factor and may override any
defect in form, said trial court by order dated January 24, 1952, admitted
to probate Exhibit "A", as the Last Will and Testament of Father Sancho
Abadia. The oppositors are appealing from that decision; and because
only questions of law are involved in the appeal, the case was certified to
us by the Court of Appeals.
The new Civil Code (Republic Act No. 386) under article 810 thereof
provides that a person may execute a holographic will which must be
entirely written, dated and signed by the testator himself and need not
be witnessed. It is a fact, however, that at the time that Exhibit "A" was
executed in 1923 and at the time that Father Abadia died in 1943,
holographic wills were not permitted, and the law at the time imposed
certain requirements for the execution of wills, such as numbering
correlatively each page (not folio or sheet) in letters and signing on the
left hand margin by the testator and by the three attesting witnesses,
requirements which were not complied with in Exhibit "A" because the
back pages of the first two folios of the will were not signed by any one,
not even by the testator and were not numbered, and as to the three
front pages, they were signed only by the testator.
Interpreting and applying this requirement this Court in the case of In re
Estate of Saguinsin, 41 Phil., 875, 879, referring to the failure of the
testator and his witnesses to sign on the left hand margin of every page,
said:
. . . . This defect is radical and totally vitiates the testament. It
is not enough that the signatures guaranteeing authenticity
should appear upon two folios or leaves; three pages having
been written on, the authenticity of all three of them should be
guaranteed by the signature of the alleged testatrix and her
witnesses.
And in the case of Aspe vs. Prieto, 46 Phil., 700, referring to the same
requirement, this Court declared:
From an examination of the document in question, it appears
that the left margins of the six pages of the document are
signed only by Ventura Prieto. The noncompliance with section
2 of Act No. 2645 by the attesting witnesses who omitted to
sign with the testator at the left margin of each of the five
pages of the document alleged to be the will of Ventura Prieto,
is a fatal defect that constitutes an obstacle to its probate.
What is the law to apply to the probate of Exh. "A"? May we apply the
provisions of the new Civil Code which not allows holographic wills, like
Exhibit "A" which provisions were invoked by the appellee-petitioner and
applied by the lower court? But article 795 of this same new Civil Code
expressly provides: "The validity of a will as to its form depends upon the
observance of the law in force at the time it is made." The above
provision is but an expression or statement of the weight of authority to
the affect that the validity of a will is to be judged not by the law enforce
at the time of the testator's death or at the time the supposed will is
presented in court for probate or when the petition is decided by the
court but at the time the instrument was executed. One reason in support
of the rule is that although the will operates upon and after the death of
the testator, the wishes of the testator about the disposition of his estate
among his heirs and among the legatees is given solemn expression at
the time the will is executed, and in reality, the legacy or bequest then
becomes a completed act. This ruling has been laid down by this court in
the case of In re Will of Riosa, 39 Phil., 23. It is a wholesome doctrine
and should be followed.
Of course, there is the view that the intention of the testator should be
the ruling and controlling factor and that all adequate remedies and
interpretations should be resorted to in order to carry out said intention,
and that when statutes passed after the execution of the will and after
the death of the testator lessen the formalities required by law for the
execution of wills, said subsequent statutes should be applied so as to
validate wills defectively executed according to the law in force at the
time of execution. However, we should not forget that from the day of
the death of the testator, if he leaves a will, the title of the legatees and
devisees under it becomes a vested right, protected under the due
process clause of the constitution against a subsequent change in the
statute adding new legal requirements of execution of wills which would
invalidate such a will. By parity of reasoning, when one executes a will
which is invalid for failure to observe and follow the legal requirements at
the time of its execution then upon his death he should be regarded and
declared as having died intestate, and his heirs will then inherit by
intestate succession, and no subsequent law with more liberal
requirements or which dispenses with such requirements as to execution
should be allowed to validate a defective will and thereby divest the heirs
of their vested rights in the estate by intestate succession. The general
rule is that the Legislature can not validate void wills (57 Am. Jur., Wills,
Sec. 231, pp. 192-193).
In view of the foregoing, the order appealed from is reversed, and Exhibit
"A" is denied probate. With costs.