ARAYATA v.

JOYA

Cecilio Joya, during his lifetime, inherited from his deceased parents the right of lease to six lots
of the friar lands. Cecilio Joya married the herein plaintiff, Basilia Arayata.

When the Insular Government acquired the said land, Cecilio Joya continued his lease in
accordance with the provisions of the Act of Congress of July 1, 1902 and Act No. 1120 of the
Philippine Commission. While married to the herein plaintiff-appellant, Cecilio Joya purchased
the lots he had been leasing, on installments, from the Government designated as lots Nos. 1031,
1058, 1086, 1153, 2352, and 547. As the number of lots which a purchaser could acquire under
the law was limited, lots Nos. 1153 and 2352 were excluded and put up for sale. In order not to
lose them, Cecilio Joya had Pedro Tiongco buy them, supplying him with the necessary funds.

Subsequently, Pedro Tiongco transferred his right to said lots to Cecilio Joya by donation. Cecilio
Joya conveyed his right to lot No. 1058 to Florentino Joya consideration of the sum of P2,000.
Also, Cecilio Joya conveyed his right to lot No. 547 to Marcelina Joya and Francisco Joya in
consideration of the sum of P450. All conveyances were approved by the director of Lands and
registered in the proper registry book.

Cecilio Joya executed a will devising lot No. 1058 to Florentino Joya, lot No. 1086 to Pablo Joya,
lot No. 1031 to Delfin and Felicisima Blancaflor, lot No. 1153 to the brothers Agustin and Pedro
Joya, lot No. 2352 to Feliciano and Asuncion Bobadilla, and lot No. 547 (Exhibit Y) to Marcelina
and Francisca Joya. At the time of his death, Cecilio Joya had not yet completed the payment
of the price of the lots mentioned above to the Insular Government. All the lots in question
except lot No. 547, are in the possession of the defendants, who enjoy their products.

On May 26, 1919, Cecilio Joya died, and on June 9, 1919, his executor, the herein defendant
Florentino Joya, presented said will for probate. in the course of the testamentary proceedings,
the executor Florentino Joya presented an alleged agreement of partition by the legatees,
which agreement was disapproved by the court in view of the herein plaintiff's opposition, who
alleged that her signature had been obtained by fraud.

(1) Were Cecilio Joya's conveyances of his interest in lot No. 1958 to Florentino Joya and in No.
547 to the sisters Marcelina and Francisca Joya fraudulent?

Under Act No. 1120, the holder of a certificate of sale of friar lands, who has not fully paid the
purchase price may transfer and convey his rights, but that the transferee or grantee is not
subrogated to all the transferor's right until the transfer has been approved by the Director of
Lands and registered in the registry book in the Bureau of Public Lands.

Said conveyance having been made in accordance with the provisions of the law, Florentino
Joya on the one hand, and Marcelina and Francisca Joya on the other, were subrogated to all
of Cecilio Joya's rights to said lots, and there is nothing in the record to show conclusively that
said conveyances were fraudulently obtained. The fact that the testator included said lots in his
will and disposed of them in the form of legacies in favor of said persons, does not in itself show
the existence of any fraud. At most, it may be held as an act of ratification.
(2) Were Cecilio Joya's legacies of lots Nos. 1031, 1086, 1153 and 2352 to the other defendants
null and void? (3) Has the plaintiff-appellant, as the surviving spouse, exclusive right to all the lots
in question?

The legacies to the other defendants were null and void. The law further provides that in case of
the death of said holder, the surviving spouse shall be entitled to receive the title to the land,
upon compliance with the requirements of the law. Thus, the holder of a certificate of sale of
friar lands cannot dispose of his rights to said lands by will to the prejudice of his widow and
children.

The provisions of the Civil Code referring to conjugal property cannot be applied in this case, as
was done by the trial court, because the law regulating the acquisition, disposition, and
transmission of rights to the friar lands acquired by the Insular Government, lays down rules in
conflict with the aforesaid provisions of the Civil Code; and as the said Code is of a general
character, while Act No. 1120 is a special law, the latter should prevail.

(4) In case she has, is she entitled to the possession and products thereof?

Yes, provided that the legal requirements have been complied with. Until a judicial partition of
the property left by Cecilio Joya is made, said property belongs to the latter's estate and it
together with its products, is subject to the payment of the testator's debts, if any. Only after
judicial partition has been made do they acquire the title to their respective legacies, if the
latter are valid. Since the legacies given by Cecilio Joya to the defendants were void, said
defendants cannot invoke the provisions of the Civil Code with respect to possession in good
faith insofar as the fruits are concerned. They are bound to return them to the herein plaintiff-
appellant, after deducting the necessary expenses for cultivation and preservation.
Alvarez v. IAC

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 with an area of 156,549 square meters,
was registered in the name of the heirs of Aniceto Yanes under OCT no. 8804.

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. 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.

It is on record that on May 19, 1938, Fortunato D. Santiago was issued TCT covering Lot 773-A
with an area of 37,818 square meters. The bigger portion of Lot 773 with an area of 118,831
square meters was also registered in the name of Fortunato D. Santiago under TCT. Both cert of
title contain a certification to the effect that Lot 773-B was originally registered under OCT No.
8804.

Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of
P7,000.00. TCTs were then issued in Fuentebellas name.

After Fuentebella's death and during the settlement of his estate, the administratrix thereof
requested authority from the court to sell Lots 773-A and 773-B. Court granted. Lots were sold for
P6,000.00 to Rosendo Alvarez. TCTs were issued in the name of Alvarez.

Two years later, Teodora Yanes and the children of her brother Rufino, namely, Estelita,
Iluminado and Jesus, filed 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, and that the share or money equivalent due the heirs
be delivered to them, and damages. be made by the defendants.

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

RTC and CA ordered the legitimate children of the late Rosendo Alvarez, to pay the Yaneses the
sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B since the lots may
no longer be reconveyed as the same have passed to a buyer in good faith and for value.
Heir of Rosendo Alvarez as plaintiffs herein 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.

ISSUE: won such contention is tenable.

HELD: NO

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. 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.

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. It must, however, be made clear that petitioners are liable
only to the extent of the value of their inheritance.

**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.
Lim v. CA

Petitioner Rufina Luy Lim is the surviving spouse of the late Pastor Y. Lim whose estate is the
subject of probate proceedings.

Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing,
Inc., Active Distributing, Inc. and Action Company are corporations formed, organized and
existing under Philippine laws and which owned real properties covered under the Torrens
system.

Pastor Y. Lim died intestate with herein petitioner as his surviving spouse. Private respondent
corporations, whose properties were included in the inventory of the estate of Pastor Y. Lim, then
filed a motion[6] for the lifting of lis pendens and motion[7] for exclusion of certain properties from
the estate of the decedent.

Rufina averred that all their capital, assets and equity were however, personally owned by the
late Pastor Y Lim. Hence the alleged stockholders and officers appearing in the respective
articles of incorporation of the above business entities were mere dummies of Pastor Y. Lim, and
they were listed therein only for purposes of registration with the Securities and Exchange
Commission.

ISSUE: May a corporation, in its universality, be the proper subject of and be included in the
inventory of the estate of a deceased person?

HELD: No.

Inasmuch as the real properties included in the inventory of the estate of the late Pastor Y. Lim
are in the possession of and are registered in the name of private respondent corporations,
which under the law possess a personality separate and distinct from their stockholders, and in
the absence of any cogency to shred the veil of corporate fiction, the presumption of
conclusiveness of said titles in favor of private respondents should stand undisturbed.

Rufina was not able to present sufficient evidence that indeed the corporations are
mere conduits of Pastor. Mere ownership by a single stockholder or by another corporation of all
or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding
the fiction of separate corporate personalities. The veil cant be pierced without any showing
that indeed the corporation is being used merely as a dummy. To disregard the separate
juridical personality of a corporation, the wrong-doing must be clearly and convincingly
established. It cannot be presumed.
Estate of Llenado v. Llenado

The case is about a parcel of land (Lot 249-D-1) with an area of 1,554 square meters
which formed part of Lot 249-D owned by Nario. On December 2, 1975 Nario leased Lot 249-D-1
in favor of his nephew Romy for a period of five years renewable for another 5 years at Narios
option. On March 31, 1978, Romy assigned all his rights and interest under the lease contract in
favor of his cousin Orly and the latters heirs, successors and assigns. Nario agreed to the transfer
of rights but granted Orly a period up to December 3, 1983 only renewable for another four
years or up to December 2, 1987. It was also stipulated in the lease contract with Orly that during
the period of the lease, the property cannot be sold, transferred or conveyed in whatever
manner to a third party.

Since Orly would use the property as a gasoline station and to comply with the
requirements of the oil company, Orly convinced Nario to amend their lease so as to give him
an additional option to renew the lease contract for an aggregate period of ten years at five
year intervals that is, from December 3, 1987 to December 2, 1992 and from December 3, 1992
to December 2, 1997. So on June 24, 1978, Orly and Nario executed a Supplementary
Agreement amending the March 31, 1978 lease contract.

On November 27, 1983, or 26 days prior to the expiration of original period of the lease
contract, Orly died. Upon his death his wife Fenny took over the operation of the gasoline station
and continued possession of the leased property without notifying Nario that as surviving spouse
and guardian of her minor children, she was exercising the option to renew the contract of lease
that would expire on December 3, 1983. Nario allowed the set up out of his close blood
relationship with Orly who was his nephew.

Meanwhile on January 29, 1987, Nario sold Lot 249-D-1 to his sons Ed and Jorge. Several
months thereafter or on September 7, 1987, Nario died.

Sometime in 1993, Ed tried to get back the property from Fenny and her children. He
claimed that Fennys possession of said property was merely out of tolerance as the lease
between their late father Nario and Fennys deceased husband Orly had long expired and was
not renewed.

In response Fenny as surviving spouse and administrator of Orlys estate and guardian of
her minor children sued Ed and George and the latters mother Fely. She claimed that when
Nario sold Lot 249-D-1 to Ed and Jorgeon January 29, 1987, the lease contract was still in full
force, thus said sale was fraudulent, in bad faith and invalid because it is in violation of the
provision therein prohibiting the sale, transfer or conveyance of the subject lot to any third party
while it is force.

ISSUE: Won the allegations of fenny was correct

No. The heirs are bound by the contracts entered into by their predecessors-in-interest
except when the rights and obligations therein are not transmissible by their nature, by
stipulation or by provision of law (Article 1311, Civil Code).
A contract of lease involves a property right and is therefore generally transmissible to the heirs
of the lessor and the lessee. As such, the death of a party does not excuse the non-performance
of the contract. The heirs of the deceased lessor are bound to respect the period of lease as
much as the heirs of the lessee are bound by the covenants to renew the lease which are not
personal but run with the land. Accordingly, the rights and obligations in the March 31, 1978
Agreement with option to renew where Romy as lessee transferred his rights to Orly, his heirs,
successors and assigns, were transmitted from Orly to his heirs upon his death on November 7,
1983.

In resolving this case therefore, it is necessary to determine whether the said Agreement
was renewed upon its expiration on December 3, 1983 and so was still in force at the time of the
sale of the subject lot in favor of Ed and Jorge on January 29, 1987.

When Orly died on November 7, 1983, the lease contract was set to expire 26 days later or on
December 3, 1983 unless renewed by Orlys heirs (Fenny and her children) for another four years.
While the option to renew is an enforceable right, it must necessarily be exercised first to be
given effect. The lessor must be notified thereof by the lessee or his heirs prior to or at least at the
time of the expiration of the original term. In this case, Fenny did not notify Nario that they were
exercising the option. She just continued possession of the subject lot. The exercise of the option
to renew cannot be inferred from such continued possession and operation of the gasoline
station even after the death of Orly on November 7, 1983 and the expiration of the lease
contract on December 3, 1983. There must be some positive acts that Orlys heirs exercised the
option to renew the lease.

Hence at the time of the sale of subject lot to Ed and Jorge on January 29, 1987, the lease
agreement had long been terminated for failure of Orly or his heirs to validly renew the same. As
a result there was no longer any obstacle to said sale as the prohibitory clause under the lease
contract was no longer in force