G.R. No.

L-770

April 27, 1948

ANGEL
T.
LIMJOCO, petitioner,
vs.
INTESTATE ESTATE OF PEDRO O. FRAGRANTE, deceased, respondent.
HILADO, J.:
Under date of May 21, 1946, the Public Service Commission, through Deputy
Commissioner Fidel Ibaez, rendered its decision in case No. 4572 of Pedro O.
Fragante, as applicant for a certificate of public convenience to install, maintain and
operate an ice plant in San Juan, Rizal, whereby said commission held that the
evidence therein showed that the public interest and convenience will be promoted in
a proper and suitable manner "by authorizing the operation and maintenance of
another ice plant of two and one-half (2-) tons in the municipality of San Juan; that
the original applicant Pedro O. Fragante was a Filipino Citizen at the time of his
death; and that his intestate estate is financially capable of maintaining the proposed
service". The commission, therefore, overruled the opposition filed in the case and
ordered "that under the provisions of section 15 of Commonwealth Act No. 146, as
amended a certificate of public convenience be issued to the Intestate Estate of the
deceased Pedro Fragante, authorizing said Intestate Estate through its Special or
Judicial Administrator, appointed by the proper court of competent jurisdiction, to
maintain and operate an ice plant with a daily productive capacity of two and one-half
(2-1/2) tons in the Municipality of San Juan and to sell the ice produced from said
plant in the said Municipality of San Juan and in the Municipality of Mandaluyong,
Rizal, and in Quezon City", subject to the conditions therein set forth in detail
(petitioner's brief, pp. 33-34).
Petitioner makes four assignments of error in his brief as follows:
1. The decision of the Public Service Commission is not in accordance with
law.
2. The decision of the Public Service Commission is not reasonably
supported by evidence.
3. The Public Service Commission erred in not giving petitioner and the Ice
and Cold Storage Industries of the Philippines, Inc., as existing operators, a
reasonable opportunity to meet the increased demand.

Page 1 of 59

4. The decision of the Public Service Commission is an unwarranted

departure from its announced policy with respect to the establishment and
operation of ice plant. (Pp. 1-2, petitioner's brief.)
In his argument petitioner contends that it was error on the part of the commission to
allow the substitution of the legal representative of the estate of Pedro O. Fragante for
the latter as party applicant in the case then pending before the commission, and in
subsequently granting to said estate the certificate applied for, which is said to be in
contravention of law.
If Pedro O. Fragante had not died, there can be no question that he would have had
the right to prosecute his application before the commission to its final conclusion. No
one would have denied him that right. As declared by the commission in its decision,
he had invested in the ice plant in question P 35,000, and from what the commission
said regarding his other properties and business, he would certainly have been
financially able to maintain and operate said plant had he not died. His transportation
business alone was netting him about P1,440 a month. He was a Filipino citizen and
continued to be such till his demise. The commission declared in its decision, in view
of the evidence before it, that his estate was financially able to maintain and operate
the ice plant. The aforesaid right of Pedro O. Fragante to prosecute said application
to its conclusion was one which by its nature did not lapse through his death. Hence,
it constitutes a part of the assets of his estate, for which a right was property despite
the possibility that in the end the commission might have denied application, although
under the facts of the case, the commission granted the application in view of the
financial ability of the estate to maintain and operate the ice plant. Petitioner, in his
memorandum of March 19, 1947, admits (page 3) that the certificate of public
convenience once granted "as a rule, should descend to his estate as an asset".
Such certificate would certainly be property, and the right to acquire such a certificate,
by complying with the requisites of the law, belonged to the decedent in his lifetime,
and survived to his estate and judicial administrator after his death.
If Pedro O. Fragrante had in his lifetime secured an option to buy a piece of land and
during the life of the option he died, if the option had been given him in the ordinary
course of business and not out of special consideration for his person, there would be
no doubt that said option and the right to exercise it would have survived to his estate
and legal representatives. In such a case there would also be the possibility of failure
to acquire the property should he or his estate or legal representative fail to comply
with the conditions of the option. In the case at bar Pedro O. Fragrante's undoubted
right to apply for and acquire the desired certificate of public convenience the
evidence established that the public needed the ice plant was under the law
conditioned only upon the requisite citizenship and economic ability to maintain and
operate the service. Of course, such right to acquire or obtain such certificate of

public convenience was subject to failure to secure its objective through nonfulfillment
of the legal conditions, but the situation here is no different from the legal standpoint
from that of the option in the illustration just given.
Rule 88, section 2, provides that the executor or administrator may bring or defend
actions, among other cases, for the protection of the property or rights of the
deceased which survive, and it says that such actions may be brought or defended
"in the right of the deceased".
Rule 82, section 1, paragraph (a), mentions among the duties of the executor or
administrator, the making of an inventory of all goods, chattels, rights, credits, and
estate of the deceased which shall come to his possession or knowledge, or to the
possession of any other person for him.
In his commentaries on the Rules of Court (Volume II, 2nd ed., pages 366, 367) the
present chief Justice of this Court draws the following conclusion from the decisions
cited by him:
Therefore, unless otherwise expressly provided by law, any action affecting
the property or rights (emphasis supplied) of a deceased person which may
be brought by or against him if he were alive, may likewise be instituted and
prosecuted by or against the administrator, unless the action is for recovery
of money, debt or interest thereon, or unless, by its very nature, it cannot
survive, because death extinguishes the right . . . .
It is true that a proceeding upon the application for a certificate of public convenience
before the Public Service Commission is not an "action". But the foregoing provisions
and citations go to prove that the decedent's rights which by their nature are not
extinguished by death go to make up a part and parcel of the assets of his estate
which, being placed under the control and management of the executor or
administrator, can not be exercised but by him in representation of the estate for the
benefit of the creditors, devisees or legatees, if any, and the heirs of the decedent.
And if the right involved happens to consist in the prosecution of an unfinished
proceeding upon an application for a certificate of public convenience of the
deceased before the Public Service Commission, it is but logical that the legal
representative be empowered and entitled in behalf of the estate to make the right
effective in that proceeding.
Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and article 336 of the
Civil Code, respectively, consider as immovable and movable things rights which are
not material. The same eminent commentator says in the cited volume (p. 45) that

Page 2 of 59

article 336 of the Civil Code has been deficiently drafted in that it is not sufficiently
expressive of all incorporeal rights which are also property for juridical purposes.
Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the term, property
includes, among other things, "an option", and "the certificate of the railroad
commission permitting the operation of a bus line", and on page 748 of the same
volume we read:
However, these terms (real property, as estate or interest) have also been
declared to include every species of title, inchoate or complete, and
embrace rights which lie in contract, whether executory or executed.
(Emphasis supplied.)
Another important question raised by petitioner is whether the estate of Pedro O.
Fragrante is a "person" within the meaning of the Public Service Act.
Words and Phrases, First Series, (Vol. 6, p, 5325), states the following doctrine in the
jurisdiction of the State of Indiana:
As the estate of the decedent is in law regarded as a person, a forgery
committed after the death of the man whose name purports to be signed to
the instrument may be prosecuted as with the intent to defraud the estate.
Billings vs. State, 107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am. Rep. 77.
The Supreme Court of Indiana in the decision cited above had before it a case of
forgery committed after the death of one Morgan for the purpose of defrauding his
estate. The objection was urged that the information did not aver that the forgery was
committed with the intent to defraud any person. The Court, per Elliott, J., disposed of
this objection as follows:
. . . The reason advanced in support of this proposition is that the law does
not regard the estate of a decedent as a person. This intention (contention)
cannot prevail. The estate of the decedent is a person in legal
contemplation. "The word "person" says Mr. Abbot, "in its legal signification,
is a generic term, and includes artificial as well as natural persons," 2 Abb.
Dict. 271; Douglas vs. Pacific, etc. Co., 4 Cal. 304; Planters', etc., Bank vs.
Andrews, 8 Port. (Ala.) 404. It said in another work that 'persons are of two
kinds: natural and artificial. A natural person is a human being. Artificial
persons include (1) a collection or succession of natural persons forming a
corporation; (2) a collection of property to which the law attributes the
capacity of having rights and duties. The latter class of artificial persons is
recognized only to a limited extent in our law. "Examples are the estate of a

bankrupt or deceased person." 2 Rapalje & L. Law Dict. 954. Our own cases
inferentially recognize the correctness of the definition given by the authors
from whom we have quoted, for they declare that it is sufficient, in pleading a
claim against a decedent's estate, to designate the defendant as the estate
of the deceased person, naming him. Ginn vs. Collins, 43 Ind. 271. Unless
we accept this definition as correct, there would be a failure of justice in
cases where, as here, the forgery is committed after the death of a person
whose name is forged; and this is a result to be avoided if it can be done
consistent with principle. We perceive no difficulty in avoiding such a result;
for, to our minds, it seems reasonable that the estate of a decedent should
be regarded as an artificial person. It is the creation of law for the purpose of
enabling a disposition of the assets to be properly made, and, although
natural persons as heirs, devises, or creditors, have an interest in the
property, the artificial creature is a distinct legal entity. The interest which
natural persons have in it is not complete until there has been a due
administration; and one who forges the name of the decedent to an
instrument purporting to be a promissory note must be regarded as having
intended to defraud the estate of the decedent, and not the natural persons
having diverse interests in it, since ha cannot be presumed to have known
who those persons were, or what was the nature of their respective interest.
The fraudulent intent is against the artificial person, the estate and not
the natural persons who have direct or contingent interest in it. (107 Ind. 54,
55, 6 N.E. 914-915.)
In the instant case there would also be a failure of justice unless the estate of Pedro
O. Fragrante is considered a "person", for quashing of the proceedings for no other
reason than his death would entail prejudicial results to his investment amounting to
P35,000.00 as found by the commission, not counting the expenses and
disbursements which the proceeding can be presumed to have occasioned him
during his lifetime, let alone those defrayed by the estate thereafter. In this jurisdiction
there are ample precedents to show that the estate of a deceased person is also
considered as having legal personality independent of their heirs. Among the most
recent cases may be mentioned that of "Estate of Mota vs. Concepcion, 56 Phil., 712,
717, wherein the principal plaintiff was the estate of the deceased Lazaro Mota, and
this Court gave judgment in favor of said estate along with the other plaintiffs in these
words:
. . . the judgment appealed from must be affirmed so far as it holds that
defendants Concepcion and Whitaker are indebted to he plaintiffs in the
amount of P245,804.69 . . . .

Page 3 of 59

Under the regime of the Civil Code and before the enactment of the Code of Civil
Procedure, the heirs of a deceased person were considered in contemplation of law
as the continuation of his personality by virtue of the provision of article 661 of the first
Code that the heirs succeed to all the rights and obligations of the decedent by the
mere fact of his death. It was so held by this Court in Barrios vs. Dolor, 2 Phil., 44, 46.
However, after the enactment of the Code of Civil Procedure, article 661 of the Civil
Code was abrogated, as held in Suiliong & Co. vs. Chio-Taysan, 12 Phil., 13, 22. In
that case, as well as in many others decided by this Court after the innovations
introduced by the Code of Civil Procedure in the matter of estates of deceased
persons, it has been the constant doctrine that it is the estate or the mass of property,
rights and assets left by the decedent, instead of the heirs directly, that becomes
vested and charged with his rights and obligations which survive after his demise.
The heirs were formerly considered as the continuation of the decedent's personality
simply by legal fiction, for they might not have been flesh and blood the reason
was one in the nature of a legal exigency derived from the principle that the heirs
succeeded to the rights and obligations of the decedent. Under the present legal
system, such rights and obligations as survive after death have to be exercised and
fulfilled only by the estate of the deceased. And if the same legal fiction were not
indulged, there would be no juridical basis for the estate, represented by the executor
or administrator, to exercise those rights and to fulfill those obligations of the
deceased. The reason and purpose for indulging the fiction is identical and the same
in both cases. This is why according to the Supreme Court of Indiana in Billings vs.
State, supra, citing 2 Rapalje & L. Dictionary, 954, among the artificial persons
recognized by law figures "a collection of property to which the law attributes the
capacity of having rights and duties", as for instance, the estate of a bankrupt or
deceased person.
Petitioner raises the decisive question of whether or not the estate of Pedro O.
Fragrante can be considered a "citizen of the Philippines" within the meaning of
section 16 of the Public Service Act, as amended, particularly the proviso thereof
expressly and categorically limiting the power of the commission to issue certificates
of public convenience or certificates of public convenience and necessity "only to
citizens of the Philippines or of the United States or to corporations, copartnerships,
associations, or joint-stock companies constituted and organized under the laws of
the Philippines", and the further proviso that sixty per centum of the stock or paid-up
capital of such entities must belong entirely to citizens of the Philippines or of the
United States.
Within the Philosophy of the present legal system, the underlying reason for the legal
fiction by which, for certain purposes, the estate of the deceased person is
considered a "person" is the avoidance of injustice or prejudice resulting from the

impossibility of exercising such legal rights and fulfilling such legal obligations of the
decedent as survived after his death unless the fiction is indulged. Substantially the
same reason is assigned to support the same rule in the jurisdiction of the State of
Indiana, as announced in Billings vs. State, supra, when the Supreme Court of said
State said:
. . . It seems reasonable that the estate of a decedent should be regarded as
an artificial person. it is the creation of law for the purpose of enabling a
disposition of the assets to be properly made . . . .
Within the framework and principles of the constitution itself, to cite just one example,
under the bill of rights it seems clear that while the civil rights guaranteed therein in
the majority of cases relate to natural persons, the term "person" used in section 1 (1)
and (2) must be deemed to include artificial or juridical persons, for otherwise these
latter would be without the constitutional guarantee against being deprived of property
without due process of law, or the immunity from unreasonable searches and
seizures. We take it that it was the intendment of the framers to include artificial or
juridical, no less than natural, persons in these constitutional immunities and in others
of similar nature. Among these artificial or juridical persons figure estates of deceased
persons. Hence, we hold that within the framework of the Constitution, the estate of
Pedro O. Fragrante should be considered an artificial or juridical person for the
purposes of the settlement and distribution of his estate which, of course, include the
exercise during the judicial administration thereof of those rights and the fulfillment of
those obligations of his which survived after his death. One of those rights was the
one involved in his pending application before the Public Service Commission in the
instant case, consisting in the prosecution of said application to its final conclusion. As
stated above, an injustice would ensue from the opposite course.
How about the point of citizenship? If by legal fiction his personality is considered
extended so that any debts or obligations left by, and surviving, him may be paid, and
any surviving rights may be exercised for the benefit of his creditors and heirs,
respectively, we find no sound and cogent reason for denying the application of the
same fiction to his citizenship, and for not considering it as likewise extended for the
purposes of the aforesaid unfinished proceeding before the Public Service
Commission. The outcome of said proceeding, if successful, would in the end inure to
the benefit of the same creditors and the heirs. Even in that event petitioner could not
allege any prejudice in the legal sense, any more than he could have done if
Fragrante had lived longer and obtained the desired certificate. The fiction of such
extension of his citizenship is grounded upon the same principle, and motivated by
the same reason, as the fiction of the extension of personality. The fiction is made
necessary to avoid the injustice of subjecting his estate, creditors and heirs, solely by
reason of his death to the loss of the investment amounting to P35,000, which he has

Page 4 of 59

already made in the ice plant, not counting the other expenses occasioned by the
instant proceeding, from the Public Service Commission of this Court.
We can perceive no valid reason for holding that within the intent of the constitution
(Article IV), its provisions on Philippine citizenship exclude the legal principle of
extension above adverted to. If for reasons already stated our law indulges the fiction
of extension of personality, if for such reasons the estate of Pedro O. Fragrante
should be considered an artificial or juridical person herein, we can find no
justification for refusing to declare a like fiction as to the extension of his citizenship
for the purposes of this proceeding.
Pedro O. Fragrante was a Filipino citizen, and as such, if he had lived, in view of the
evidence of record, he would have obtained from the commission the certificate for
which he was applying. The situation has suffered but one change, and that is, his
death. His estate was that of a Filipino citizen. And its economic ability to
appropriately and adequately operate and maintain the service of an ice plant was the
same that it received from the decedent himself. In the absence of a contrary
showing, which does not exist here, his heirs may be assumed to be also Filipino
citizens; and if they are not, there is the simple expedient of revoking the certificate or
enjoining them from inheriting it.
Upon the whole, we are of the opinion that for the purposes of the prosecution of said
case No. 4572 of the Public Service Commission to its final conclusion, both the
personality and citizenship of Pedro O. Fragrante must be deemed extended, within
the meaning and intent of the Public Service Act, as amended, in harmony with the
constitution: it is so adjudged and decreed.
Decision affirmed, without costs. So ordered.
G.R. No. L-28067

March 10, 1928

BASILIA
vs.
FLORENTINO JOYA, ET AL., defendants-appellants.

ARAYATA, plaintiff-appellant,

VILLA-REAL, J.:
In this instance both parties have appealed from the judgment of the Court of First
Instance of Cavite, the dispositive part of which, as amended, is as follows;

Wherefore, the testamentary clauses and dispositions made by the late

Cecilio Joya concerning one-half of the property left by the deceased and
pertaining to the plaintiff, are hereby declared void in so far as they infringe
upon said plaintiff's right, as being contrary to law; the certificate of sale of lot
No. 1058, Exhibit 9, executed by the deceased in favor of defendant
Florentino Joya is null and void, and the plaintiff is hereby declared the sole
and exclusive owner of said lots, or such portions thereof or their value, as
the plaintiff may be entitled to as a result of the liquidation of the
testamentary estate; and each and every one of the defendants, Florentino
and Pablo Joya, Asuncion Bobadilla, and Delfin and Felicisima Blancaflor,
are hereby ordered to deliver lots Nos. 1031, 1058, 1086, 1153, and 2352 to
the administrator of the estate of the deceased in order that he may proceed
to the liquidation, partition and distribution of the latter's estate in accordance
with the law and this judgment, as soon as it becomes final and executory,
the Director of Lands being hereby ordered to cancel the certificates of
transfer of said lots Nos. 1031, 1058, 1086, 1153 and 2352 registered in the
name of said defendants, Florentino Joya on his own behalf and that of
Pablo Joya, Felicisimo Joya, Asuncion Bobadilla, Delfin and Felicisima
Blancaflor, with the costs of the action against the defendants. So ordered.
In support of her appeal, plaintiff-appellant assigns the following alleged errors as
committed by the trial court in its decision, to wit: (1) The lower court erred in
declaring the plaintiff owner of only one-half of lots Nos. 1031, 1058, 1086, 1153, and
2352, as conjugal property possessed with the deceased Cecilio Joya, instead of
holding her to be the absolute and exclusive owner of said lots, in accordance with
section 16 of Act No. 1120; (2) the lower court erred in not holding the document of
sale of lot No. 547, Exhibit 10, fraudulent, (3) the lower court erred in amending its
judgment of December 17, 1926, thereby exempting the defendants from the
obligation to pay plaintiff the products of the lots in question, from the year 1920 until
their restitution; (4) the lower court erred in amending its judgment rendered on
December 17, 1926, ordering the delivery of all the lots in question to the
administrator of the estate of the deceased Cecilio Joya, in order that he might
proceed to the liquidation and distribution of the latter's estate in accordance with the
law and its judgment; (5) the lower court erred in not passing upon petition contained
in the complaint to the effect that defendant, Florentino Joya, who was appointed
administrator of the estate of the deceased Cecilio Joya in case No. 1241, be relieved
from such duty; (6) the lower court erred in denying plaintiff's motion for a new trial.
The defendants-appellants, in turn, assign the following alleged errors as committed
by the trial court in its decision, to wit: (1) The trial court erred in annulling the clauses
and provisions of the decedent Cecilio Joya's will, Exhibit Y, with respect to one-half
of the property left by said decedent; (2) the trial court erred in holding the certificate

Page 5 of 59

of sale of lot No. 1058, exhibit 9, executed by the deceased Cecilio Joya in favor of
defendant Florentino Joya, to be null and void; (3) the trial court erred in finding that
when plaintiff signed the agreement of partition, Exhibit 7, she was unaware of the
contents of the same, and that said agreement of partition has not become legally
effective as against the plaintiff; (4) the trial court erred in holding it to be a fact
admitted by both parties that lots 1153 and 2352 were not donated by Pedro Tiongco
to Cecilio Joya, the corresponding certificates of transfer by donation, Exhibits F and
G, notwithstanding; (5) the trial court erred in giving more credit to the testimony of
the plaintiff Basilia Arayata than to that of the defendant Florentino Joya; (6) the trial
court erred in admitting plaintiff's Exhibits J, M, N and N-1; (7) the trial court erred in
ordering each and every one of the defendants, Florentino, Feliciano and Pablo Joya,
Asuncion Bobadilla Delfin and Feliciana Blancaflor to deliver lots Nos. 1031, 1038,
1086, 1153 and 2352 to the administrator of the estate of the deceased Cecilio Joya
in order that he might proceed with the liquidation, partition, and distribution of the
said deceased's estate in accordance with the decision rendered in this case by said
trial court; (8) the trial court erred in holding plaintiff to be sole and exclusive owner of
the lots question, or such portions thereof, or their value as may be due her as a
result of said liquidation.
The following are the pertinent and controverted facts necessary for the decision of
this case:
Cecilio Joya, during his lifetime, inherited from his deceased parents the right of lease
to six lots of the friar lands at Santa Crus de Malabon, municipality of Tanza, Province
of Cavite. On June 4, 1906, 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 purchase the lots he had been leasing, on installments, from the
Government, under said Act No. 1120, which were designated as lots Nos. 1031
(Exhibit C), 1058 (Exhibit D), 1086 (Exhibit E), 1153 (Exhibit F), 2352 (Exhibit G) and
547 (Exhibit H). 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, as appears from Exhibits F and G. These transfers were
approved by the Director of Lands and noted in the proper registry book. On April 24
1919, Cecilio Joya conveyed his right to lot No. 1058 to Florentino Joya consideration
of the sum of P2,000 said conveyance having been approved by the Director of
Lands and registered in the proper registry book (Exhibit 9). On May 11, 1919, Cecilio
Joya conveyed his right to lot No. 547 to Marcelina Joya and Francisco Joya in
consideration of the sum of P450, conveyance having been approved by the Director

of Lands and registered in the proper registry book (Exhibit 10). On April 27, 1919,
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 10, 1920 lots Nos.
2352, 1086, 1153 and 1031, were transferred to Florentino Joya as administrator of
the estate of the deceased Cecilio Joya. (Exhibits 3, 4, 5 and 6.)
On May 26, 1919, Cecilio Joya died, and on June 9, 1919, his executor, the herein
defendant Florentino Joya, presented said will for probate to the Court of First
Instance of Cavite, which was probated after the proper proceedings. In March, 1920,
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.
The questions to be determined in this appeal are purely legal, and, briefly,, are as
follows: (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? (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? (4) In case she has, is she entitled
to the possession and products thereof?
As to the first question, the pertinent part of section 16 of Act No. 1120 says the
following:
SEC. 16. . . . In case the holder of the certificate shall have his interest in the
land before having complied with all the conditions thereof, the purchaser
from the holder of the certificate shall be entitled to all the rights of the holder
of the certificate upon presenting his assignment to the Chief of the Bureau
of Public Lands for registration.
It will be seen that the holder of a certificate off sale of friar has a right to sell his
interest therein, even before having fully paid the purchase price and upon
presentation of the certificate of transfer to the Chief of the Bureau of Public Lands for
registration, he is subrogated to all the rights of the holder of the certificate.

Page 6 of 59

The evidence shows that during his lifetime Cecilio Joya conveyed his interest in lot
No. 1058 to Florentino Joya for the sum of P2,000, said conveyance having been
approved by the Director of Lands, and registered in the proper register book of said
office. (Exhibit 9.) His right to lot No. 547 was also conveyed by Cecilio Joya to
Marcelina and Francisca Joya during his lifetime, said transfer having been approved
by the Director of Lands, and registered in the proper book in the Bureau of Public
Lands. (Exhibit 10.) 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.
In regard to the second and third questions, that is, whether or not the legacies are
null and void, and the plaintiff-appellant, as the surviving spouse, is entitled
exclusively to the lots in question, the pertinent part of said section 16 of Act No. 1120
provides as follows:
SEC. 16. In the event of the death of a holder of a certificate the issuance of
which is provided for in section twelve hereof, prior to the execution of a
deed by the Government to any purchaser, his widow shall be entitled to
receive a deed of the land stated in the certificate upon showing that she has
complied with the requirements of law for the purchase of the same.
In the case of Jocson vs. Soriano, as administrator of the intestate estate of Silvestre
Estacion (45 Phil., 375), this court, interpreting the above-quoted legal provision, laid
down the following doctrine:
FRIAR ESTATE LANDS; RIGHTS OF THE WIDOW OF THE PURCHASER
AFTER THE DEATH OF THE LATTER. Under the provisions of section
16 of Act No. 1120, the widow of a purchaser of a parcel of land belonging to
the Friar Estate, purchased by the Government, after the death of her
husband (the purchaser), is entitled to have a patent issued to her of the
lands purchased, upon a proper showing that she has completed the
payment of the purchase price. The right granted to the original settlers of
the friar estate lands to purchase the parcel occupied by them at the time of
the purchase by the Government, is a right conceded by the Government,
analogous to the homestead laws. A homestead privilege does not terminate
on the husband's death, but is transferred to his widow and his family. A
homestead selected by the husband in his lifetime vests absolute in his
surviving wife, and her rights are governed by the law in force at the time of

the death of her husband. Neither does she lose said right by a second
marriage upon the death of her husband, the purchaser. She may continue
to occupy the whole of the homestead.
We have seen, in discussing and solving the first question, that 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. In other words, in order
that a transfer of the rights of a holder of a certificate of sale of friar lands may be
legally effective, it is necessary that a formal certificate of transfer be drawn up and
submitted to the Chief of the Bureau of Public Lands for his approval and registration.
The law authorizes no other way of transferring the rights of a holder of a certificate of
sale of friar lands. It provides, however, 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. If, as it was held in the aforecited case of
Jocson vs.Soriano, the right conferred by Act No. 1120 on the holder of a certificate of
sale of friar lands in similar to that conferred on the holder of a "homestead," and if
the latter has no right to dispose of said certificate by will to the prejudice of his
surviving spouse and for his children (29 C. J., 930, par. 342), then by analogy, 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.
With respect to the fourth question raised, namely, whether or not the herein plaintiffappellant is entitled to the possession and the products of the friar lands acquired by
the Insular Government, which, by virtue of the law, pass exclusively to the surviving
spouse upon compliance of the legal requirements, the answer must be in the
affirmative. The defendants, who are in possession of the said lands, cannot invoke
the provisions of the Civil Code relative to possession in good faith, inasmuch as the
principle on which the right of a holder in good faith is based is the belief that his
possession is with just title under claim of ownership.
While a deceased heirs or legatees acquire the ownership of the property given them
in the will and may taken possession of their respective portions upon the death of
their predecessor, yet upon the appointment of an administrator, the latter, by virtue of

Page 7 of 59

his appointment, acquires a right to the possession of the property of estate, subject
to the orders of the court, unless he consents to the heirs continuing in possession
thereof. But such consent does not, however, relieve the administrator of all
responsibility for the management of the same and its fruits; because until the judicial
partition is made, said property continues to belong to the testamentary estate.
(Pimentel vs. Palanca, 5 Phil., 436; Fernandez vs. Tria, 22 Phil., 603.)
Being a matter of law, the defendants-appellants cannot plead ignorance of the fact
that until a judicial partition of the property left by Cecilio Joya is made, said property
belongs to the lather'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.
(Santos vs. Roman Catholic Bishop of Nueva Caceres, 45 Phil., 895.)
We have seen that the legacies given by Cecilio Joya to the defendants were void. If
the lands, which are the subject matter of said legacies and which are in the
possession of the defendants, still belong to Cecilio Joya's estate, because no judicial
partition has as yet been made of the property he left, which is subject, together with
its fruits, to the payment of his debts, said defendants cannot invoke the provisions of
the Civil Code with respect to possession in good faith insofar as the fruits are
concerned; because even when the legacies are valid they acquired only when the
latter judicially assigned to them in the final partition, and because, while said lands
are under administration, the administrator is obliged to render an account of his
management of the same and the products thereof.
In conclusion, them we hold that the defendants are not entitled to the possession of
the lands in question or their products, and they are bound to return them to the
herein plaintiff-appellant, after deducting the necessary expenses for cultivation and
preservation. (Art 453, Civil Code.)
Summarizing all that has been said above, we find:
1. That Cecilio Joya's transfers during his lifetime of lot No. 1058 to
Florentino Joya and lot No. 547 to the sisters Marcelina and Francisca Joya,
with the approval of the Director of Lands, are bona fide, and therefore legal
and valid.
2. That Cecilio Joya's legacies in his will of lot No. 1031 to Delfin and
Felicisima Blancaflor, lot No. 1086 to Pablo Joya, lot No. 1152 to the
brothers Agustin and Pedro Joya, and lot No. 2352 to Feliciano and
Asuncion Bobadilla are null and void, being contrary to the provisions of
section 16 of Act No. 1120 which grants his widow, the herein plaintiff-

appellant the ownership of the lands purchased and not transferred by him
during his lifetime, provided that she complies with the legal requirements for
the purchase of the same.
3. The plaintiff-appellant is entitled to the exclusive ownership and
possession of the aforementioned lots Nos. 1031, 1086, 1153, and 2352 and
to their fruits, after deducting the necessary expenses of preservation,
cultivation and production.
For the foregoing, the judgment appealed from is modified, and it is ordered that
Feliciano and Pablo Joya, Asuncion Bobadilla, Delfin and Felicisima Blancaflor return
lots Nos. 1031, 1086, 1153, and 2352 to the plaintiff-appellant, Basilia Arayata,
together with their products, or the latter's equivalent in cash from the year 1920 until
their restitution, deducting the necessary expenses of cultivation, preservation, and
production. Without any special pronouncement as to costs, it is so ordered.

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.

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.

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,

Page 8 of 59

The bigger portion of Lot 773 with an area of 118,831 square meters was also
registered in the name of Fortunato D. Santiago on September 6, 1938 Under TCT
No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to
the effect that Lot 773-B was originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr.
in consideration of the sum of P7,000.00. 5 Consequently, on February 20, 1956, TCT
Nos. T-19291 and T-19292 were issued in Fuentebella's name. 6
After Fuentebella's death and during the settlement of his estate, the administratrix
thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in Special Proceedings No.
4373 in the Court of First Instance of Negros Occidental, a motion requesting
authority to sell Lots 773-A and 773-B. 7 By virtue of a court order granting said
motion, 8 on March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00

to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos. T-23165 and T-23166
covering Lots 773-A and 773-B were respectively issued to Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora Yanes and the children of her brother
Rufino, namely, Estelita, Iluminado and Jesus, filed in the Court of First Instance of
Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de
Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return"
of the ownership and possession of Lots 773 and 823. They also prayed that an
accounting of the produce of the land from 1944 up to the filing of the complaint be
made by the defendants, that after court approval of said accounting, the share or
money equivalent due the plaintiffs be delivered to them, and that defendants be
ordered to pay plaintiffs P500.00 as damages in the form of attorney's fees. 11
During the pendency in court of said case or on November 13, 1961, Alvarez sold
Lots 773-A, 773-B and another lot for P25,000.00 to Dr. Rodolfo
Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13 who
thereafter, declared the two lots in his name for assessment purposes. 14
Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the
other plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No.
5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim,
monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in
connection with the above-entitled case." 15
On October 11, 1963, a decision was rendered by the Court of First Instance of
Negros Occidental in Civil Case No. 5022, the dispositive portion of which reads:
WHEREFORE, judgment is rendered, ordering the defendant
Rosendo Alvarez to reconvey to the plaintiffs lots Nos. 773 and 823
of the Cadastral Survey of Murcia, Negros Occidental, now covered
by Transfer Certificates of Title Nos. T-23165 and T-23166 in the
name of said defendant, and thereafter to deliver the possession of
said lots to the plaintiffs. No special pronouncement as to costs.
SO ORDERED. 16
It will be noted that the above-mentioned manifestation of Jesus Yanes was not
mentioned in the aforesaid decision.
However, execution of said decision proved unsuccessful with respect to Lot 773. In
his return of service dated October 20, 1965, the sheriff stated that he discovered that

Page 9 of 59

Lot 773 had been subdivided into Lots 773-A and 773-B; that they were "in the name"
of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not
be delivered to the plaintiffs as Siason was "not a party per writ of execution." 17
The execution of the decision in Civil Case No. 5022 having met a hindrance, herein
private respondents (the Yaneses) filed on July 31, 1965, in the Court of First
Instance of Negros Occidental a petition for the issuance of a new certificate of title
and for a declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo
Alvarez.18 Thereafter, the court required Rodolfo Siason to produce the certificates of
title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B
and 658, not Lots 773 and 823, "in good faith and for a valuable consideration without
any knowledge of any lien or encumbrances against said properties"; that the
decision in the cadastral proceeding 19 could not be enforced against him as he was
not a party thereto; and that the decision in Civil Case No. 5022 could neither be
enforced against him not only because he was not a party-litigant therein but also
because it had long become final and executory. 20 Finding said manifestation to be
well-founded, the cadastral court, in its order of September 4, 1965, nullified its
previous order requiring Siason to surrender the certificates of title mentioned
therein. 21
In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of
execution in Civil Case No. 5022. Siason opposed it. 22 In its order of September 28,
1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted
another action for the recovery of the land in question, ruled that at the judgment
therein could not be enforced against Siason as he was not a party in the case. 23
The action filed by the Yaneses on February 21, 1968 was for recovery of real
property with damages. 24 Named defendants therein were Dr. Rodolfo Siason, Laura
Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros
Occidental. The Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292
issued to Siason (sic) for being null and void; the issuance of a new certificate of title
in the name of the Yaneses "in accordance with the sheriffs return of service dated
October 20, 1965;" Siason's delivery of possession of Lot 773 to the Yaneses; and if,
delivery thereof could not be effected, or, if the issuance of a new title could not be
made, that the Alvarez and Siason jointly and severally pay the Yaneses the sum of
P45,000.00. They also prayed that Siason render an accounting of the fruits of Lot
773 from November 13, 1961 until the filing of the complaint; and that the defendants
jointly and severally pay the Yaneses moral damages of P20,000.00 and exemplary
damages of P10,000.00 plus attorney's fees of P4, 000.00. 25

In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773A 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:

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

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

Page 10 of 59

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.

Page 11 of 59

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.

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.

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

WHEREFORE, subject to the clarification herein above stated, the assailed decision
of the Court of Appeals is hereby AFFIRMED. Costs against petitioners.

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

Page 12 of 59

G.R. No. 124715

January 24, 2000

RUFINA
LUY
LIM, petitioner,
vs.
COURT OF APPEALS, AUTO TRUCK TBA CORPORATION, SPEED
DISTRIBUTING, INC., ACTIVE DISTRIBUTORS, ALLIANCE MARKETING
CORPORATION, ACTION COMPANY, INC. respondents.
BUENA, J.:
May a corporation, in its universality, be the proper subject of and be included in the
inventory of the estate of a deceased person?
Petitioner disputes before us through the instant petition for review on certiorari, the
decision1 of the Court of Appeals promulgated on 18 April 1996, in CA-GR SP No.
38617, which nullified and set aside the orders dated 04 July 1995 2, 12 September
19953 and 15 September 19954 of the Regional Trial Court of Quezon City, Branch 93,
sitting as a probate court.
Petitioner Rufina Luy Lim is the surviving spouse of late Pastor Y. Lim whose estate is
the subject of probate proceedings in Special Proceedings Q-95-23334, entitled, "In
Re: Intestate Estate of Pastor Y. Lim Rufina Luy Lim, represented by George Luy,
Petitioner".1wphi1.nt
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.
On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as surviving spouse
and duly represented by her nephew George Luy, fried on 17 March 1995, a joint
petition5 for the administration of the estate of Pastor Y. Lim before the Regional Trial
Court of Quezon City.

Private respondent corporations, whose properties were included in the inventory of

the estate of Pastor Y. Lim, then filed a motion6 for the lifting of lis pendens and
motion7 for exclusion of certain properties from the estate of the decedent.

Company

In an order8 dated 08 June 1995, the Regional Trial Court of Quezon City, Branch 93,
sitting as a probate court, granted the private respondents' twin motions, in this wise:

3.1 Although the above business entities dealt and engaged in

business with the public as corporations, 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.

Wherefore, the Register of Deeds of Quezon City is hereby ordered to lift,

expunge or delete the annotation of lis pendens on Transfer Certificates of
Title Nos. 116716, 116717, 116718, 116719 and 5182 and it is hereby further
ordered that the properties covered by the same titles as well as those
properties by (sic) Transfer Certificate of Title Nos. 613494, 363123, 236236
and 263236 are excluded from these proceedings.
SO ORDERED.
Subsequently, Rufina Luy Lim filed a verified amended petition 9 which contained the
following averments:
3. The late Pastor Y. Lim personally owned during his lifetime the following
business entities, to wit:
Business
Entity
xxx

xxx

Speed
Distributing Inc.
xxx

xxx

Auto Truck TBA

Corp.
xxx

xxx

Active
Distributors,
Inc.
xxx
Action

Page 13 of 59

5. That the following real properties, although registered in the name of the
above entities, were actually acquired by Pastor Y. Lim during his marriage
with petitioner, to wit:
Corporation

Title

Location

k. Auto Truck

TCT No. 617726

Sto.
Domingo
Corporation Cainta, Rizal

q. Alliance Marketing

TCT No. 27896

Prance, Metro Manila

xxx

Alliance
Marketing, Inc.
xxx

4. Pastor Lim, likewise, had Time, Savings and Current Deposits with the
following banks: (a) Metrobank, Grace Park, Caloocan City and Quezon
Avenue, Quezon City Branches and (b) First Intestate Bank (formerly
Producers Bank), Rizal Commercial Banking Corporation and in other banks
whose identities are yet to be determined.

Address:
xxx

xxx

City or 92-D Mc-Arthur Highway

Valenzuela Bulacan.

xxx
Block 3, Lot 6, Dacca BF Homes,
Paraaque, Metro Manila.

xxx

xxx

xxx
910 Barrio Niog, Aguinaldo
Highway, Bacoor, Cavite.
xxx
2251 Roosevelt Avenue, Quezon
City.
xxx
Block 3, Lot 6, Dacca BF Homes,
Paraaque, Metro Manila.
xxx
100 20th Avenue Murphy, Quezon

Copies of the above-mentioned Transfer Certificate of Title and/or Tax

Declarations are hereto attached as Annexes "C" to "W".
xxx

xxx

xxx

7. The aforementioned properties and/or real interests left by the late Pastor
Y. Lim, are all conjugal in nature, having been acquired by him during the
existence of his marriage with petitioner.
8. There are other real and personal properties owned by Pastor Y. Lim
which petitioner could not as yet identify. Petitioner, however will submit to
this Honorable Court the identities thereof and the necessary documents
covering the same as soon as possible.

On 04 July 1995, the Regional Trial Court acting on petitioner's motion issued an
order10, thus:
Wherefore, the order dated 08 June 1995 is hereby set aside and the
Registry of Deeds of Quezon City is hereby directed to reinstate the
annotation of lis pendens in case said annotation had already been deleted
and/or cancelled said TCT Nos. 116716, 116717, 116718, 116719 and
51282.
Further more (sic), said properties covered by TCT Nos. 613494, 365123,
236256 and 236237 by virtue of the petitioner are included in the instant
petition.
SO ORDERED.
On 04 September 1995, the probate court appointed Rufina Lim as special
administrator11 and Miguel Lim and Lawyer Donald Lee, as co-special administrators
of the estate of Pastor Y. Lim, after which letters of administration were accordingly
issued.
In an order12 dated 12 September 1995, the probate court denied anew private
respondents' motion for exclusion, in this wise:
The issue precisely raised by the petitioner in her petition is whether the
corporations are the mere alter egos or instrumentalities of Pastor Lim,
Otherwise (sic) stated, the issue involves the piercing of the corporate veil, a
matter that is clearly within the jurisdiction of this Honorable Court and not
the Securities and Exchange Commission. Thus, in the case of Cease vs.
Court of Appeals, 93 SCRA 483, the crucial issue decided by the regular
court was whether the corporation involved therein was the mere extension
of the decedent. After finding in the affirmative, the Court ruled that the
assets of the corporation are also assets of the estate.
A reading of P.D. 902, the law relied upon by oppositors, shows that the
SEC's exclusive (sic) applies only to intra-corporate controversy. It is simply
a suit to settle the intestate estate of a deceased person who, during his
lifetime, acquired several properties and put up corporations as his
instrumentalities.

produce and submit to the special administrators, through this Honorable

Court within (5) five days from receipt of this order their respective records of
the savings/current accounts/time deposits and other deposits in the names
of Pastor Lim and/or corporations above-mentioned, showing all the
transactions made or done concerning savings/current accounts from
January 1994 up to their receipt of this court order.
xxx

xxx

xxx

SO ORDERED.
Private respondent filed a special civil action for certiorari14, with an urgent prayer for
a restraining order or writ of preliminary injunction, before the Court of Appeals
questioning the orders of the Regional Trial Court, sitting as a probate court.
On 18 April 1996, the Court of Appeals, finding in favor of herein private respondents,
rendered the assailed decision15, the decretal portion of which declares:
Wherefore, premises considered, the instant special civil action
for certiorari is hereby granted, The impugned orders issued by respondent
court on July 4, 1995 and September 12, 1995 are hereby nullified and set
aside. The impugned order issued by respondent on September 15, 1995 is
nullified insofar as petitioner corporations" bank accounts and records are
concerned.
SO ORDERED.
Through the expediency of Rule 45 of the Rules of Court, herein petitioner Rufina Luy
Lim
now
comes
before
us
with
a
lone
assignment
of
error16:
The respondent Court of Appeals erred in reversing the orders of the lower
court which merely allowed the preliminary or provisional inclusion of the
private respondents as part of the estate of the late deceased (sic) Pastor Y.
Lim with the respondent Court of Appeals arrogating unto itself the power to
repeal, to disobey or to ignore the clear and explicit provisions of Rules
81,83,84 and 87 of the Rules of Court and thereby preventing the petitioner,
from performing her duty as special administrator of the estate as expressly
provided in the said Rules.

SO ORDERED.
Petitioner's contentions tread on perilous grounds.
On 15 September 1995, the probate court acting on an ex parte motion filed by
petitioner, issued an order13 the dispositive portion of which reads:
Wherefore, the parties and the following banks concerned herein under
enumerated are hereby ordered to comply strictly with this order and to

Page 14 of 59

In the instant petition for review, petitioner prays that we affirm the orders issued by
the probate court which were subsequently set aside by the Court of Appeals.

Yet, before we delve into the merits of the case, a review of the rules on jurisdiction
over probate proceedings is indeed in order.
The provisions of Republic Act 7691 17, which introduced amendments to Batas
Pambansa Blg. 129, are pertinent:

xxx

xxx

xxx

Simply put, the determination of which court exercises jurisdiction over matters of
probate depends upon the gross value of the estate of the decedent.

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the

"Judiciary Reorganization Act of 1980", is hereby amended to read as
follows:

As to the power and authority of the probate court, petitioner relies heavily on the
principle that a probate court may pass upon title to certain properties, albeit
provisionally, for the purpose of determining whether a certain property should or
should not be included in the inventory.

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive jurisdiction:

In a litany of cases, We defined the parameters by which the court may extend its
probing arms in the determination of the question of title in probate proceedings.

xxx

This Court, in PASTOR, JR. vs. COURT OF APPEALS,18 held:

xxx

xxx

(4) In all matters of probate, both testate and intestate, where the gross
value of the estate exceeds One Hundred Thousand Pesos (P100,000) or, in
probate matters in Metro Manila, where such gross value exceeds Two
Hundred Thousand Pesos (P200,000);
xxx

xxx

xxx

Sec. 3. Section 33 of the same law is hereby amended to read as follows:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases.
Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts shall exercise:
1. Exclusive original jurisdiction over civil actions and probate
proceedings, testate and intestate, including the grant of provisional
remedies in proper cases, where the value of the personal property,
estate or amount of the demand does not exceed One Hundred
Thousand Pesos (P100,000) or, in Metro Manila where such
personal property, estate or amount of the demand does not
exceed Two Hundred Thousand Pesos (P200,000), exclusive of
interest, damages of whatever kind, attorney's fees, litigation
expenses and costs, the amount of which must be specifically
alleged, Provided, that interest, damages of whatever kind,
attorney's, litigation expenses and costs shall be included in the
determination of the filing fees, Provided further, that where there
are several claims or causes of actions between the same or
different parties, embodied in the same complaint, the amount of
the demand shall be the totality of the claims in all the causes of
action, irrespective of whether the causes of action arose out of the
same or different transactions;

Page 15 of 59

. . . As a rule, the question of ownership is an extraneous matter which the

probate court cannot resolve with finality. Thus, for the purpose of
determining whether a certain property should or should not be included in
the inventory of estate properties, the Probate Court may pass upon the title
thereto, but such determination is provisional, not conclusive, and is subject
to the final decision in a separate action to resolve title.
We reiterated the rule in PEREIRA vs. COURT OF APPEALS19:
. . . The function of resolving whether or not a certain property should be
included in the inventory or list of properties to be administered by the
administrator is one clearly within the competence of the probate court.
However, the court's determination is only provisional in character, not
conclusive, and is subject to the final decision in a separate action which
may be instituted by the parties.
Further, in MORALES vs. CFI OF CAVITE20 citing CUIZON vs. RAMOLETE21, We
made an exposition on the probate court's limited jurisdiction:
It is a well-settled rule that a probate court or one in charge of proceedings
whether testate or intestate cannot adjudicate or determine title to properties
claimed to be a part of the estate and which are equally claimed to belong to
outside parties. All that the said court could do as regards said properties is
to determine whether they should or should not be included in the inventory
or list of properties to be administered by the administrator. If there is no
dispute, well and good; but if there is, then the parties, the administrator and
the opposing parties have to resort to an ordinary action for a final
determination of the conflicting claims of title because the probate court
cannot do so.

Again, in VALERA vs. INSERTO22, We had occasion to elucidate, through Mr. Justice
Andres Narvasa23:

at bar, possession of the property itself is in the persons named in the title. . .
.

Settled is the rule that a Court of First Instance (now Regional Trial Court),
acting as a probate court, exercises but limited jurisdiction, and thus has no
power to take cognizance of and determine the issue of title to property
claimed by a third person adversely to the decedent, unless the claimant and
all other parties having legal interest in the property consent, expressly or
impliedly, to the submission of the question to the probate court for
adjudgment, or the interests of third persons are not thereby prejudiced, the
reason for the exception being that the question of whether or not a
particular matter should be resolved by the court in the exercise of its
general jurisdiction or of its limited jurisdiction as a special court (e.g.
probate, land registration, etc.), is in reality not a jurisdictional but in essence
of procedural one, involving a mode of practice which may be waived. . . .

A perusal of the records would reveal that no strong compelling evidence was ever
presented by petitioner to bolster her bare assertions as to the title of the deceased
Pastor Y. Lim over the properties. Even so, P.D. 1529, otherwise known as, "The
Property Registration Decree", proscribes collateral attack on Torrens Title, hence:

. . . . These considerations assume greater cogency where, as here, the

Torrens title is not in the decedent's name but in others, a situation on which
this Court has already had occasion to rule . . . . (emphasis Ours)
Petitioner, in the present case, argues that the parcels of land covered under the
Torrens system and registered in the name of private respondent corporations should
be included in the inventory of the estate of the decedent Pastor Y. Lim, alleging that
after all the determination by the probate court of whether these properties should be
included or not is merely provisional in nature, thus, not conclusive and subject to a
final determination in a separate action brought for the purpose of adjudging once and
for all the issue of title.
Yet, under the peculiar circumstances, where the parcels of land are registered in the
name of private respondent corporations, the jurisprudence pronounced in BOLISAY
vs., ALCID 24 is of great essence and finds applicability, thus:
It does not matter that respondent-administratrix has evidence purporting to
support her claim of ownership, for, on the other hand, petitioners have a
Torrens title in their favor, which under the law is endowed with
incontestability until after it has been set aside in the manner indicated in the
law itself, which of course, does not include, bringing up the matter as a
mere incident in special proceedings for the settlement of the estate of
deceased persons. . . .
. . . . In regard to such incident of inclusion or exclusion, We hold that if a
property covered by Torrens title is involved, the presumptive conclusiveness
of such title should be given due weight, and in the absence of strong
compelling evidence to the contrary, the holder thereof should be considered
as the owner of the property in controversy until his title is nullified or
modified in an appropriate ordinary action, particularly, when as in the case

Page 16 of 59

xxx

xxx

xxx

Sec. 48. Certificate not subject to collateral attack. A certificate of title

shall not be subject to collateral attack. It cannot be altered, modified or
cancelled except in a direct proceeding in accordance with law.
In CUIZON vs. RAMOLETE, where similarly as in the case at bar, the property
subject of the controversy was duly registered under the Torrens system, We
categorically stated:
. . . Having been apprised of the fact that the property in question was in the
possession of third parties and more important, covered by a transfer
certificate of title issued in the name of such third parties, the respondent
court should have denied the motion of the respondent administrator and
excluded the property in question from the inventory of the property of the
estate. It had no authority to deprive such third persons of their possession
and ownership of the property. . . .
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.
Accordingly, the probate court was remiss in denying private respondents' motion for
exclusion. While it may be true that the Regional Trial Court, acting in a restricted
capacity and exercising limited jurisdiction as a probate court, is competent to issue
orders involving inclusion or exclusion of certain properties in the inventory of the
estate of the decedent, and to adjudge, albeit, provisionally the question of title over
properties, it is no less true that such authority conferred upon by law and reinforced
by jurisprudence, should be exercised judiciously, with due regard and caution to the
peculiar circumstances of each individual case.
Notwithstanding that the real properties were duly registered under the Torrens
system in the name of private respondents, and as such were to be afforded the
presumptive conclusiveness of title, the probate court obviously opted to shut its eyes
to this gleamy fact and still proceeded to issue the impugned orders.

By its denial of the motion for exclusion, the probate court in effect acted in utter
disregard of the presumption of conclusiveness of title in favor of private respondents.
Certainly, the probate court through such brazen act transgressed the clear provisions
of law and infringed settled jurisprudence on this matter.
Moreover, petitioner urges that not only the properties of private respondent
corporations are properly part of the decedent's estate but also the private
respondent corporations themselves. To rivet such flimsy contention, petitioner cited
that the late Pastor Y. Lim during his lifetime, organized and wholly-owned the five
corporations, which are the private respondents in the instant case. 25 Petitioner thus
attached as Annexes "F"26 and "G"27 of the petition for review affidavits executed by
Teresa Lim and Lani Wenceslao which among others, contained averments that the
incorporators of Uniwide Distributing, Inc. included on the list had no actual and
participation in the organization and incorporation of the said corporation. The affiants
added that the persons whose names appeared on the articles of incorporation of
Uniwide Distributing, Inc., as incorporators thereof, are mere dummies since they
have not actually contributed any amount to the capital stock of the corporation and
have been merely asked by the late Pastor Y. Lim to affix their respective signatures
thereon.
It is settled that a corporation is clothed with personality separate and distinct from
that of the persons composing it. It may not generally be held liable for that of the
persons composing it. It may not be held liable for the personal indebtedness of its
stockholders or those of the entities connected with it.28
Rudimentary is the rule that a corporation is invested by law with a personality distinct
and separate from its stockholders or members. In the same vein, a corporation by
legal fiction and convenience is an entity shielded by a protective mantle and imbued
by law with a character alien to the persons comprising it.
Nonetheless, the shield is not at all times invincible. Thus, in FIRST PHILIPPINE
INTERNATIONAL BANK vs.COURT OF APPEALS29, We enunciated:
. . . When the fiction is urged as a means of perpetrating a fraud or an illegal
act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, the achievement or perfection of a monopoly or
generally the perpetration of knavery or crime, the veil with which the law
covers and isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an
aggregation of individuals. . . .
Piercing the veil of corporate entity requires the court to see through the protective
shroud which exempts its stockholders from liabilities that ordinarily, they could be
subject to, or distinguishes one corporation from a seemingly separate one, were it
not for the existing corporate fiction.30

Page 17 of 59

The corporate mask may be lifted and the corporate veil may be pierced when a
corporation is just but the alter ego of a person or of another corporation. Where
badges of fraud exist, where public convenience is defeated; where a wrong is sought
to be justified thereby, the corporate fiction or the notion of legal entity should come to
naught.31
Further, the test in determining the applicability of the doctrine of piercing the veil of
corporate fiction is as follows: 1) Control, not mere majority or complete stock control,
but complete domination, not only of finances but of policy and business practice in
respect to the transaction attacked so that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its own; (2) Such control must
have been used by the defendant to commit fraud or wrong, to perpetuate the
violation of a statutory or other positive legal duty, or dishonest and unjust act in
contravention of plaintiffs legal right; and (3) The aforesaid control and breach of duty
must proximately cause the injury or unjust loss complained of. The absence of any of
these elements prevent "piercing the corporate veil".32
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.33
Moreover, to disregard the separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. It cannot be presumed.34
Granting arguendo that the Regional Trial Court in this case was not merely acting in
a limited capacity as a probate court, petitioner nonetheless failed to adduce
competent evidence that would have justified the court to impale the veil of corporate
fiction. Truly, the reliance reposed by petitioner on the affidavits executed by Teresa
Lim and Lani Wenceslao is unavailing considering that the aforementioned
documents possess no weighty probative value pursuant to the hearsay rule. Besides
it is imperative for us to stress that such affidavits are inadmissible in evidence
inasmuch as the affiants were not at all presented during the course of the
proceedings in the lower court. To put it differently, for this Court to uphold the
admissibility of said documents would be to relegate from Our duty to apply such
basic rule of evidence in a manner consistent with the law and jurisprudence.
Our
pronouncement
in PEOPLE
vs. LEONIDAS35 finds pertinence:

BANK

AND

TRUST

COMPANY

Affidavits are classified as hearsay evidence since they are not generally
prepared by the affiant but by another who uses his own language in writing
the affiant's statements, which may thus be either omitted or misunderstood
by the one writing them. Moreover, the adverse party is deprived of the
opportunity to cross-examine the affiants. For this reason, affidavits are
generally rejected for being hearsay, unless the affiant themselves are
placed on the witness stand to testify thereon.

As to the order36 of the lower court, dated 15 September 1995, the Court of Appeals
correctly observed that the Regional Trial Court, Branch 93 acted without jurisdiction
in issuing said order; The probate court had no authority to demand the production of
bank accounts in the name of the private respondent corporations.
WHEREFORE, in view of the foregoing disquisitions, the instant petition is hereby
DISMISSED for lack of merit and the decision of the Court of Appeals which nullified
and set aside the orders issued by the Regional Trial Court, Branch 93, acting as a
probate court, dated 04 July 1995 and 12 September 1995 is AFFIRMED
G.R. No. 145736

March 4, 2009

ESTATE OF ORLANDO LLENADO and WENIFREDA T. LLENADO, in her capacity

as (a) Administratrix of the Estate of Orlando A. Llenado and (b) Judicial
Guardian of the Minor children of Orlando A. Llenado, and (c) in her Own behalf
as the Surviving Spouse and Legal Heir of Orlando A. Llenado, Petitioners,
vs.
EDUARDO LLENADO, JORGE LLENADO, FELIZA GALLARDO VDA. DE
LLENADO and REGISTER OF DEEDS of Valenzuela City, Metro
Manila, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the May 30, 2000 Decision 1 of the Court of
Appeals in CA-G.R. CV No. 58911 which reversed the May 5, 1997 Decision 2 of the
Regional Trial Court of Valenzuela City, Branch 75 in Civil Case No. 4248-V-93, and
the October 6, 2000 Resolution3 which denied the motion for reconsideration. The
appellate court dismissed for lack of merit the complaint for annulment of deed of
conveyance, title and damages filed by petitioner against herein respondents.
The subject of this controversy is a parcel of land denominated as Lot 249-D-1
(subject lot) consisting of 1,554 square meters located in Barrio Malinta, Valenzuela,
Metro Manila and registered in the names of Eduardo Llenado (Eduardo) and Jorge
Llenado (Jorge) under Transfer of Certificate of Title (TCT) No. V-1689. 4 The subject
lot once formed part of Lot 249-D owned by and registered in the name of their father,
Cornelio Llenado (Cornelio), under TCT No. T-16810.
On December 2, 1975, Cornelio leased Lot 249-D-1 to his nephew, Romeo Llenado
(Romeo), for a period of five years, renewable for another five years at the option of
Cornelio. On March 31, 1978, Cornelio, Romeo and the latters cousin Orlando

Page 18 of 59

Llenado (Orlando) executed an Agreement5 whereby Romeo assigned all his rights to
Orlando over the unexpired portion of the aforesaid lease contract. The parties further
agreed that Orlando shall have the option to renew the lease contract for another
three years commencing from December 3, 1980, up to December 2, 1983,
renewable for another four years or up to December 2, 1987, and that "during the
period that [this agreement] is enforced, the x x x property cannot be sold,
transferred, alienated or conveyed in whatever manner to any third party."
Shortly thereafter or on June 24, 1978, Cornelio and Orlando entered into a
Supplementary Agreement6amending the March 31, 1978 Agreement. Under the
Supplementary Agreement, Orlando was given an additional option to renew the
lease contract for an aggregate period of 10 years at five-year intervals, that is, from
December 3, 1987 to December 2, 1992 and from December 3, 1992 to December 2,
1997. The said provision was inserted in order to comply with the requirements of
Mobil Philippines, Inc. for the operation of a gasoline station which was subsequently
built on the subject lot.
Upon the death of Orlando on November 7, 1983, his wife, Wenifreda Llenado
(Wenifreda), took over the operation of the gasoline station. Meanwhile, on January
29, 1987, Cornelio sold Lot 249-D to his children, namely, Eduardo, Jorge, Virginia
and Cornelio, Jr., through a deed of sale, denominated as "Kasulatan sa Ganap Na
Bilihan,"7 for the sum of P160,000.00. As stated earlier, the subject lot, which forms
part of Lot 249-D, was sold to Eduardo and Jorge, and titled in their names under
TCT No. V-1689. Several months thereafter or on September 7, 1987, Cornelio
passed away.
Sometime in 1993, Eduardo informed Wenifreda of his desire to take over the subject
lot. However, the latter refused to vacate the premises despite repeated demands.
Thus, on September 24, 1993, Eduardo filed a complaint for unlawful detainer before
the Metropolitan Trial Court of Valenzuela, Metro Manila against Wenifreda, which
was docketed as Civil Civil Case No. 6074.
On July 22, 1996, the Metropolitan Trial Court rendered its Decision in favor of
Eduardo and ordered Wenifreda to: (1) vacate the leased premises; (2) pay Eduardo
reasonable compensation for the use and occupation of the premises plus attorneys
fees, and (3) pay the costs of the suit.
Wenifreda appealed to the Regional Trial Court of Valenzuela, Metro Manila, which
reversed the decision of the court a quo. Thus, Eduardo appealed to the Court of
Appeals which rendered a Decision8 on March 31, 1998 reversing the decision of the
Regional Trial Court and reinstating the decision of the Metropolitan Trial Court. It also
increased the amount of reasonable compensation awarded to Eduardo for the use of

the leased premises. Wenifredas appeal to this Court, docketed as G.R. No. 135001,
was dismissed in a Resolution9 dated December 2, 1998. Accordingly, an Entry of
Judgment10 was made in due course on July 8, 1999.

Wenifreda Llenado, and against [respondents] e.g. Jorge, Eduardo, Felisa Gallardo,
all surnamed Llenado, and the Register of Deeds of Valenzuela, Metro Manila, as
follows:

Previously, after Eduardo instituted the aforesaid unlawful detainer case on

September 24, 1993, herein petitioner Wenifreda, in her capacity as administratrix of
the estate of Orlando Llenado, judicial guardian of their minor children, and surviving
spouse and legal heir of Orlando, commenced the subject Complaint, 11 later
amended, on November 10, 1993 for annulment of deed of conveyance, title and
damages against herein respondents Eduardo, Jorge, Feliza Llenado (mother of the
Llenado brothers), and the Register of Deeds of Valenzuela, Metro Manila. The case
was docketed as Civil Case No. 4248-V-93 and raffled to Branch 75 of the Regional
Trial Court of Valenzuela, Metro Manila.

1) It hereby judicially declare as non-existence (sic) and null and void, the
following:

Petitioner alleged that the transfer and conveyance of the subject lot by Cornelio in
favor of respondents Eduardo and Jorge, was fraudulent and in bad faith considering
that the March 31, 1978 Agreement provided that while the lease is in force, the
subject lot cannot be sold, transferred or conveyed to any third party; that the period
of the lease was until December 3, 1987 with the option to renew granted to Orlando;
that the subject lot was transferred and conveyed to respondents Eduardo and Jorge
on January 29, 1987 when the lease was in full force and effect making the sale null
and void; that Cornelio verbally promised Orlando that in case he (Cornelio) decides
to sell the subject lot, Orlando or his heirs shall have first priority or option to buy the
subject lot so as not to prejudice Orlandos business and because Orlando is the
owner of the property adjacent to the subject lot; and that this promise was wantonly
disregarded when Cornelio sold the said lot to respondents Jorge and Eduardo.
In their Answer,12 respondents Eduardo and Jorge claimed that they bought the
subject lot from their father, Cornelio, for value and in good faith; that the lease
agreement and its supplement were not annotated at the back of the mother title of
the subject lot and do not bind them; that said agreements are personal only to
Cornelio and Orlando; that the lease expired upon the death of Orlando on November
7, 1983; that they were not aware of any verbal promise to sell the subject lot granted
by Cornelio to Orlando and, even if there was, said option to buy is unenforceable
under the statute of frauds.
After the parties presented their respective evidence, the Regional Trial Court
rendered judgment on May 5, 1997 in favor of petitioner, viz:

a) The Kasulatan Sa Ganap na Kasunduan or Deed of Sale;

b) TCT- Transfer Certificate of Title No. V-9440, in the name of
[respondent] Eduardo Llenado, TCT- Transfer Certificate of Title
No. V-1689, in the name of Jorge Llenado, and Eduardo Llenado,
and all deeds, documents or proceedings leading to the issuance of
said title, and all subsequent title issued therefrom and likewise
whatever deeds, documents or proceedings leading to the issuance
of said subsequent titles;
2) It hereby orders the reconveyance of the said properties embraced in the
said TCTs-Transfer Certificate of Title Nos. V-9440 and V-1689 to the
[petitioner] for the same consideration, or purchase price, paid by
[respondents] Eduardo Llenado and Jorge Llenado for the same properties;
3) It hereby orders [respondent], Register of Deeds of Valenzuela, Metro
Manila, to cause the issuance of new transfer certificates of title over the
said property in the name of the [petitioner];
4) And, because this Court is not only a court of law, but of equity, it hereby
rendered the following damages to be paid by the [respondents], as the
[respondents] litigated under bonafide assertions that they have meritorious
defense, viz:
a) P400,000.00 as moral damages;
b) 10,000.00 as nominal damages;
c) 10,000.00 as temperate damages;
d) 10,000.00 as exemplary damages;

WHEREFORE, PREMISES CONSIDERED, this Court finds the [petitioners] civil

action duly established by preponderance of evidence, renders judgment
(adjudicates) in favor of the [petitioner], Estate of Orlando Llenado represented by

Page 19 of 59

e) 10,000.00 attorneys fees on the basis of quantum merit; and

f) costs of suit.
SO ORDERED.13
The Regional Trial Court found that upon the death of Orlando on November 7, 1983,
his rights under the lease contract were transmitted to his heirs; that since the lease
was in full force and effect at the time the subject lot was sold by Cornelio to his sons,
the sale violated the prohibitory clause in the said lease contract. Further, Cornelios
promise to sell the subject lot to Orlando may be established by parole evidence
since an option to buy is not covered by the statute of frauds. Hence, the same is
binding on Cornelio and his heirs.
Respondents appealed before the Court of Appeals which rendered the assailed May
30, 2000 Decision reversing the judgment of the Regional Trial Court and dismissing
the Complaint. The appellate court held that the death of Orlando did not extinguish
the lease agreement and had the effect of transmitting his lease rights to his heirs.
However, the breach of the non-alienation clause of the said agreement did not nullify
the sale between Cornelio and his sons because the heirs of Orlando are mere
lessees on the subject lot and can never claim a superior right of ownership over said
lot as against the registered owners thereof. It further ruled that petitioner failed to
establish by a preponderance of evidence that Cornelio made a verbal promise to
Orlando granting the latter the right of first refusal if and when the subject lot was
sold.
Upon the denial of its motion for reconsideration, petitioner is now before this Court
on the following assignment of errors:
[T]he Court of Appeals erred:
1.- In finding and concluding that there is no legal basis to annul the deed of
conveyance involved in the case and in not applying R.A. No. 3516, further
amending R.A. No. 1162; and
2.- In not finding and holding as null and void the subject deed of
conveyance, the same having been executed in direct violation of an
expressed covenant in said deed and in total disregard of the pre-emptive,
or preferential rights of the herein petitioners to buy the property subject of
their lease contract under said R.A. No. 3516, further amending R.A. No.
1162.14
The petition lacks merit.

Page 20 of 59

Petitioner contends that the heirs of Orlando are entitled to the rights of a tenant
under Republic Act (R.A.) No. 1162, 15 as amended by R.A. No. 3516. 16 The right of
first refusal or preferential right to buy the leased premises is invoked pursuant to
Section 517 of said law and this Courts ruling in Mataas Na Lupa Tenants Association,
Inc. v. Dimayuga.18
This issue is being raised for the first time on appeal. True, in Mataas Na Lupa
Tenants Association, Inc., the Court explained that Section 1 of R.A. No. 1162, as
amended by R.A. No. 3516, authorizes the expropriation of any piece of land in the
City of Manila, Quezon City and suburbs which have been and are actually being
leased to tenants for at least 10 years, provided said lands have at least 40 families of
tenants thereon.19 Prior to and pending the expropriation, the tenant shall have a right
of first refusal or preferential right to buy the leased premises should the landowner
sell the same. However, compliance with the conditions for the application of the
aforesaid law as well as the qualifications of the heirs of Orlando to be beneficiaries
thereunder were never raised before the trial court, or even the Court of Appeals,
because petitioner solely anchored its claim of ownership over the subject lot on the
alleged violation of the prohibitory clause in the lease contract between Cornelio and
Orlando, and the alleged non-performance of the right of first refusal given by
Cornelio to Orlando. The rule is settled, impelled by basic requirements of due
process, that points of law, theories, issues and arguments not adequately brought to
the attention of the lower court will not be ordinarily considered by a reviewing court
as they cannot be raised for the first time on appeal. 20 As the issue of the applicability
of R.A. No. 1162, as amended, was neither averred in the pleadings nor raised during
the trial below, the same cannot be raised for the first time on appeal.
At any rate, the allegations in the Complaint and the evidence presented during the
trial below do not establish that Orlando or his heirs are covered by R.A. No. 1162, as
amended. It was not alleged nor shown that the subject lot is part of the landed estate
or haciendas in the City of Manila which were authorized to be expropriated under
said law; that the Solicitor General has instituted the requisite expropriation
proceedings pursuant to Section 221thereof; that the subject lot has been actually
leased for a period of at least ten (10) years; and that the subject lot has at least forty
(40) families of tenants thereon. Instead, what was merely established during the trial
is that the subject lot was leased by Cornelio to Orlando for the operation of a
gasoline station, thus, negating petitioners claim that the subject lot is covered by the
aforesaid law. In Mataas Na Lupa Tenants Association, Inc., the Court further
explained that R.A. No. 1162, as amended, has been superseded by Presidential
Decree (P.D.) No. 151722entitled "Proclaiming Urban Land Reform in the Philippines
and Providing for the Implementing Machinery Thereof."23 However, as held in
Tagbilaran Integrated Settlers Association Incorporated v. Court of Appeals,24 P.D. No.
1517 is applicable only in specific areas declared, through presidential

proclamation,25 to be located within the so-called urban zones. 26 Further, only

legitimate tenants who have resided on the land for ten years or more who have built
their homes on the land and residents who have legally occupied the lands by
contract, continuously for the last ten years, are given the right of first refusal to
purchase the land within a reasonable time. 27 Consequently, those lease contracts
entered into for commercial use are not covered by said law.28 Thus, considering that
petitioner failed to prove that a proclamation has been issued by the President
declaring the subject lot as within the urban land reform zone and considering further
that the subject lot was leased for the commercial purpose of operating a gasoline
station, P.D. No. 1517 cannot be applied to this case.
In fine, the only issue for our determination is whether the sale of the subject lot by
Cornelio to his sons, respondents Eduardo and Jorge, is invalid for (1) violating the
prohibitory clause in the lease agreement between Cornelio, as lessor-owner, and
Orlando, as lessee; and (2) contravening the right of first refusal of Orlando over the
subject lot.
It is not disputed that the lease agreement contained an option to renew and a
prohibition on the sale of the subject lot in favor of third persons while the lease is in
force. Petitioner claims that when Cornelio sold the subject lot to respondents
Eduardo and Jorge the lease was in full force and effect, thus, the sale violated the
prohibitory clause rendering it invalid. In resolving this issue, it is necessary to
determine whether the lease agreement was in force at the time of the subject sale
and, if it was in force, whether the violation of the prohibitory clause invalidated the
sale.
Under Article 1311 of the Civil Code, 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. A contract of
lease is, therefore, generally transmissible to the heirs of the lessor or lessee. It
involves a property right and, as such, the death of a party does not excuse nonperformance of the contract.29The rights and obligations pass to the heirs of the
deceased and the heir of the deceased lessor is bound to respect the period of the
lease.30 The same principle applies to the option to renew the lease. As a general
rule, covenants to renew a lease are not personal but will run with the
land.31 Consequently, the successors-in-interest of the lessee are entitled to the
benefits, while that of the lessor are burdened with the duties and obligations, which
said covenants conferred and imposed on the original parties.
The foregoing principles apply with greater force in this case because the parties
expressly stipulated in the March 31, 1978 Agreement that Romeo, as lessee, shall
transfer all his rights and interests under the lease contract with option to renew "in

Page 21 of 59

favor of the party of the Third Part (Orlando), the latters heirs, successors and
assigns"32indicating the clear intent to allow the transmissibility of all the rights and
interests of Orlando under the lease contract unto his heirs, successors or assigns.
Accordingly, the rights and obligations under the lease contract with option to renew
were transmitted from Orlando to his heirs upon his death on November 7, 1983.
It does not follow, however, that the lease subsisted at the time of the sale of the
subject lot on January 29, 1987. When Orlando died on November 7, 1983, the lease
contract was set to expire 26 days later or on December 3, 1983, unless renewed by
Orlandos heirs for another four years. While the option to renew is an enforceable
right, it must necessarily be first exercised to be given effect. 33 As the Court explained
in Dioquino v. Intermediate Appellate Court:34
A clause found in an agreement relative to the renewal of the lease agreement at the
option of the lessee gives the latter an enforceable right to renew the contract in
which the clause is found for such time as provided for. The agreement is understood
as being in favor of the lessee, and the latter is authorized to renew the contract and
to continue to occupy the leased property after notifying the lessor to that effect. A
lessors covenant or agreement to renew gives a privilege to the tenant, but is
nevertheless an executory contract, and until the tenant has exercised the privilege
by way of some affirmative act, he cannot be held for the additional term. In the
absence of a stipulation in the lease requiring notice of the exercise of an option or an
election to renew to be given within a certain time before the expiration of the lease,
which of course, the lessee must comply with, the general rule is that a lessee must
exercise an option or election to renew his lease and notify the lessor thereof before,
or at least at the time of the expiration of his original term, unless there is a waiver or
special circumstances warranting equitable relief.1avvphi1.zw+
There is no dispute that in the instant case, the lessees (private respondents) were
granted the option to renew the lease for another five (5) years after the termination of
the original period of fifteen years. Yet, there was never any positive act on the part of
private respondents before or after the termination of the original period to show their
exercise of such option. The silence of the lessees after the termination of the original
period cannot be taken to mean that they opted to renew the contract by virtue of the
promise by the lessor, as stated in the original contract of lease, to allow them to
renew. Neither can the exercise of the option to renew be inferred from their
persistence to remain in the premises despite petitioners demand for them to vacate.
x x x.35
Similarly, the election of the option to renew the lease in this case cannot be inferred
from petitioner Wenifredas continued possession of the subject lot and operation of
the gasoline station even after the death of Orlando on November 7, 1983 and the

expiration of the lease contract on December 3, 1983. In the unlawful detainer case
against petitioner Wenifreda and in the subject complaint for annulment of
conveyance, respondents consistently maintained that after the death of Orlando, the
lease was terminated and that they permitted petitioner Wenifreda and her children to
remain in possession of the subject property out of tolerance and respect for the close
blood relationship between Cornelio and Orlando. It was incumbent, therefore, upon
petitioner as the plaintiff with the burden of proof during the trial below to establish by
some positive act that Orlando or his heirs exercised the option to renew the lease.
After going over the records of this case, we find no evidence, testimonial or
documentary, of such nature was presented before the trial court to prove that
Orlando or his heirs exercised the option to renew prior to or at the time of the
expiration of the lease on December 3, 1983. In particular, the testimony of petitioner
Wenifreda is wanting in detail as to the events surrounding the implementation of the
subject lease agreement after the death of Orlando and any overt acts to establish
the renewal of said lease.
Given the foregoing, it becomes unnecessary to resolve the issue on whether the
violation of the prohibitory clause invalidated the sale and conferred ownership over
the subject lot to Orlandos heirs, who are mere lessees, considering that at the time
of said sale on January 29, 1987 the lease agreement had long been terminated for
failure of Orlando or his heirs to validly renew the same. As a result, there was no
obstacle to the sale of the subject lot by Cornelio to respondents Eduardo and Jorge
as the prohibitory clause under the lease contract was no longer in force.
Petitioner also anchors its claim over the subject lot on the alleged verbal promise of
Cornelio to Orlando that should he (Cornelio) sell the same, Orlando would be given
the first opportunity to purchase said property. According to petitioner, this amounted
to a right of first refusal in favor of Orlando which may be proved by parole evidence
because it is not one of the contracts covered by the statute of frauds. Considering
that Cornelio sold the subject lot to respondents Eduardo and Jorge without first
offering the same to Orlandos heirs, petitioner argues that the sale is in violation of
the latters right of first refusal and is, thus, rescissible.
The question as to whether a right of first refusal may be proved by parole evidence
has been answered in the affirmative by this Court in Rosencor Development
Corporation v. Inquing:36
We have previously held that not all agreements "affecting land" must be put into
writing to attain enforceability. Thus, we have held that the setting up of boundaries,
the oral partition of real property, and an agreement creating a right of way are not
covered by the provisions of the statute of frauds. The reason simply is that these
agreements are not among those enumerated in Article 1403 of the New Civil Code.

Page 22 of 59

A right of first refusal is not among those listed as unenforceable under the statute of
frauds. Furthermore, the application of Article 1403, par. 2(e) of the New Civil Code
presupposes the existence of a perfected, albeit unwritten, contract of sale. A right of
first refusal, such as the one involved in the instant case, is not by any means a
perfected contract of sale of real property. At best, it is a contractual grant, not of the
sale of the real property involved, but of the right of first refusal over the property
sought to be sold.
It is thus evident that the statute of frauds does not contemplate cases involving a
right of first refusal. As such, a right of first refusal need not be written to be
enforceable and may be proven by oral evidence.37
In the instant case, the Regional Trial Court ruled that the right of first refusal was
proved by oral evidence while the Court of Appeals disagreed by ruling that petitioner
merely relied on the allegations in its Complaint to establish said right. We have
reviewed the records and find that no testimonial evidence was presented to prove
the existence of said right. The testimony of petitioner Wenifreda made no mention of
the alleged verbal promise given by Cornelio to Orlando. The two remaining
witnesses for the plaintiff, Michael Goco and Renato Malindog, were representatives
from the Register of Deeds of Caloocan City who naturally were not privy to this
alleged promise. Neither was it established that respondents Eduardo and Jorge were
aware of said promise prior to or at the time of the sale of the subject lot. On the
contrary, in their answer to the Complaint, respondents denied the existence of said
promise for lack of knowledge thereof.38 Within these parameters, petitioners
allegations in its Complaint cannot substitute for competent proof on such a crucial
factual issue. Necessarily, petitioners claims based on this alleged right of first refusal
cannot be sustained for its existence has not been duly established.
WHEREFORE, the petition is DENIED. The May 30, 2000 Decision of the Court of
Appeals in CA-G.R. CV No. 58911 dismissing the complaint for annulment of deed of
conveyance, title and damages, and the October 6, 2000 Resolution denying the
motion for reconsideration, are AFFIRMED.
G.R. No. 118248

April 5, 2000

DKC
HOLDINGS
CORPORATION,petitioner,
vs.
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR
METRO MANILA, DISTRICT III,respondents.
YNARES-SANTIAGO, J.:

This is a petition for review on certiorari seeking the reversal of the December 5, 1994
Decision of the Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC Holdings
Corporation vs. Victor U. Bartolome, et al.",1 affirming in toto the January 4, 1993
Decision of the Regional Trial Court of Valenzuela, Branch 172,2 which dismissed
Civil Case No. 3337-V-90 and ordered petitioner to pay P30,000.00 as attorney's
fees.
The subject of the controversy is a 14,021 square meter parcel of land located in
Malinta, Valenzuela, Metro Manila which was originally owned by private respondent
Victor U. Bartolome's deceased mother, Encarnacion Bartolome, under Transfer
Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila, District III.
This lot was in front of one of the textile plants of petitioner and, as such, was seen by
the latter as a potential warehouse site.
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy
with Encarnacion Bartolome, whereby petitioner was given the option to lease or
lease with purchase the subject land, which option must be exercised within a period
of two years counted from the signing of the Contract. In turn, petitioner undertook to
pay P3,000.00 a month as consideration for the reservation of its option. Within the
two-year period, petitioner shall serve formal written notice upon the lessor
Encarnacion Bartolome of its desire to exercise its option. The contract also provided
that in case petitioner chose to lease the property, it may take actual possession of
the premises. In such an event, the lease shall be for a period of six years, renewable
for another six years, and the monthly rental fee shall be P15,000.00 for the first six
years and P18,000.00 for the next six years, in case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to
Encarnacion until her death in January 1990. Thereafter, petitioner coursed its
payment to private respondent Victor Bartolome, being the sole heir of Encarnacion.
Victor, however, refused to accept these payments.
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication
over all the properties of Encarnacion, including the subject lot. Accordingly,
respondent Register of Deeds cancelled Transfer Certificate of Title No. B-37615 and
issued Transfer Certificate of Title No. V-14249 in the name of Victor Bartolome.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it
was exercising its option to lease the property, tendering the amount of P15,000.00
as rent for the month of March. Again, Victor refused to accept the tendered rental fee
and to surrender possession of the property to petitioner.
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking
Corporation, Cubao Branch, in the name of Victor Bartolome and deposited therein
the P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the
months of February and March.

Page 23 of 59

Petitioner also tried to register and annotate the Contract on the title of Victor to the
property. Although respondent Register of Deeds accepted the required fees, he
nevertheless refused to register or annotate the same or even enter it in the day book
or primary register.1wphi1.nt
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and
damages against Victor and the Register of Deeds, 3 docketed as Civil Case No.
3337-V-90 which was raffled off to Branch 171 of the Regional Trial Court of
Valenzuela. Petitioner prayed for the surrender and delivery of possession of the
subject land in accordance with the Contract terms; the surrender of title for
registration and annotation thereon of the Contract; and the payment of P500,000.00
as actual damages, P500,000.00 as moral damages, P500,000.00 as exemplary
damages and P300,000.00 as attorney's fees.
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss 4 was
filed by one Andres Lanozo, who claimed that he was and has been a tenant-tiller of
the subject property, which was agricultural riceland, for forty-five years. He
questioned the jurisdiction of the lower court over the property and invoked the
Comprehensive Agrarian Reform Law to protect his rights that would be affected by
the dispute between the original parties to the case.
On May 18, 1990, the lower court issued an Order 5 referring the case to the
Department of Agrarian Reform for preliminary determination and certification as to
whether it was proper for trial by said court.
On July 4, 1990, the lower court issued another Order 6 referring the case to Branch
172 of the RTC of Valenzuela which was designated to hear cases involving agrarian
land, after the Department of Agrarian Reform issued a letter-certification stating that
referral to it for preliminary determination is no longer required.
On July 16, 1990, the lower court issued an Order denying the Motion to
Intervene,7 holding that Lanozo's rights may well be ventilated in another proceeding
in due time.
After trial on the merits, the RTC of Valenzuela, Branch 172 rendered its Decision on
January 4, 1993, dismissing the Complaint and ordering petitioner to pay Victor
P30,000.00 as attorney's fees. On appeal to the CA, the Decision was affirmed in
toto.
Hence, the instant Petition assigning the following errors:
(A)
FIRST ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE

PROVISION ON THE NOTICE TO EXERCISE OPTION WAS NOT
TRANSMISSIBLE.
(B)
SECOND ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
NOTICE OF OPTION MUST BE SERVED BY DKC UPON ENCARNACION
BARTOLOME PERSONALLY.
(C)
THIRD ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
CONTRACT WAS ONE-SIDED AND ONEROUS IN FAVOR OF DKC.
(D)
FOURTH ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
EXISTENCE OF A REGISTERED TENANCY WAS FATAL TO THE
VALIDITY OF THE CONTRACT.
(E)
FIFTH ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
PLAINTIFF-APPELLANT WAS LIABLE TO DEFENDANT-APPELLEE FOR
ATTORNEY'S FEES.8
The issue to be resolved in this case is whether or not the Contract of Lease with
Option to Buy entered into by the late Encarnacion Bartolome with petitioner was
terminated upon her death or whether it binds her sole heir, Victor, even after her
demise.
Both the lower court and the Court of Appeals held that the said contract was
terminated upon the death of Encarnacion Bartolome and did not bind Victor because
he was not a party thereto.

Page 24 of 59

Art. 1311 of the Civil Code provides, as follows

Art. 1311. 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.
xxx

xxx

xxx

The general rule, therefore, is that heirs are bound by contracts entered into by their
predecessors-in-interest except when the rights and obligations arising therefrom are
not transmissible by (1) their nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making
the rights and obligations under the contract intransmissible. More importantly, the
nature of the rights and obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent
civilist, is as follows:
Among contracts which are intransmissible are those which are purely
personal, either by provision of law, such as in cases of partnerships and
agency, or by the very nature of the obligations arising therefrom, such as
those requiring special personal qualifications of the obligor. It may also be
stated that contracts for the payment of money debts are not transmitted to
the heirs of a party, but constitute a charge against his estate. Thus, where
the client in a contract for professional services of a lawyer died, leaving
minor heirs, and the lawyer, instead of presenting his claim for professional
services under the contract to the probate court, substituted the minors as
parties for his client, it was held that the contract could not be enforced
against the minors; the lawyer was limited to a recovery on the basis
of quantum meruit.9
In American jurisprudence, "(W)here acts stipulated in a contract require the exercise
of special knowledge, genius, skill, taste, ability, experience, judgment, discretion,
integrity, or other personal qualification of one or both parties, the agreement is of a
personal nature, and terminates on the death of the party who is required to render
such service." 10
It has also been held that a good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of such a character
that it may be performed by the promissor's personal representative. Contracts to
perform personal acts which cannot be as well performed by others are discharged by
the death of the promissor. Conversely, where the service or act is of such a
character that it may as well be performed by another, or where the contract, by its

terms, shows that performance by others was contemplated, death does not
terminate the contract or excuse nonperformance. 11

Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound
by the subject Contract of Lease with Option to Buy.

In the case at bar, there is no personal act required from the late Encarnacion
Bartolome. Rather, the obligation of Encarnacion in the contract to deliver possession
of the subject property to petitioner upon the exercise by the latter of its option to
lease the same may very well be performed by her heir Victor.

That being resolved, we now rule on the issue of whether petitioner had complied with
its obligations under the contract and with the requisites to exercise its option. The
payment by petitioner of the reservation fees during the two-year period within which
it had the option to lease or purchase the property is not disputed. In fact, the
payment of such reservation fees, except those for February and March, 1990 were
admitted by Victor. 17 This is clear from the transcripts, to wit

As early as 1903, it was held that "(H)e who contracts does so for himself and his
heirs." 12 In 1952, it was ruled that if the predecessor was duty-bound to reconvey
land to another, and at his death the reconveyance had not been made, the heirs can
be compelled to execute the proper deed for reconveyance. This was grounded upon
the principle that heirs cannot escape the legal consequence of a transaction entered
into by their predecessor-in-interest because they have inherited the property subject
to the liability affecting their common ancestor. 13
It is futile for Victor to insist that he is not a party to the contract because of the clear
provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there
is privity of interest between him and his deceased mother. He only succeeds to what
rights his mother had and what is valid and binding against her is also valid and
binding as against him. 14 This is clear from Paraaque Kings Enterprises vs. Court of
Appeals, 15 where this Court rejected a similar defense
With respect to the contention of respondent Raymundo that he is not privy
to the lease contract, not being the lessor nor the lessee referred to therein,
he could thus not have violated its provisions, but he is nevertheless a
proper party. Clearly, he stepped into the shoes of the owner-lessor of the
land as, by virtue of his purchase, he assumed all the obligations of the
lessor under the lease contract. Moreover, he received benefits in the form
of rental payments. Furthermore, the complaint, as well as the petition,
prayed for the annulment of the sale of the properties to him. Both pleadings
also alleged collusion between him and respondent Santos which defeated
the exercise by petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo
was a necessary, if not indispensable, party to the case. A favorable
judgment for the petitioner will necessarily affect the rights of respondent
Raymundo as the buyer of the property over which petitioner would like to
assert its right of first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease, which is a
property right. The death of a party does not excuse nonperformance of a contract
which involves a property right, and the rights and obligations thereunder pass to the
personal representatives of the deceased. Similarly, nonperformance is not excused
by the death of the party when the other party has a property interest in the subject
matter of the contract. 16

Page 25 of 59

ATTY. MOJADO:
One request, Your Honor. The last payment which was allegedly made in
January 1990 just indicate in that stipulation that it was issued November of
1989 and postdated January 1990 and then we will admit all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There was no payment with respect to
payment of rentals. 18
Petitioner also paid the P15,000.00 monthly rental fee on the subject property by
depositing the same in China Bank Savings Account No. 1-04-02558-I-1, in the name
of Victor as the sole heir of Encarnacion Bartolome, 19 for the months of March to July
30, 1990, or a total of five (5) months, despite the refusal of Victor to turn over the
subject property. 20
Likewise, petitioner complied with its duty to inform the other party of its intention to
exercise its option to lease through its letter dated Match 12, 1990, 21 well within the
two-year period for it to exercise its option. Considering that at that time Encarnacion
Bartolome had already passed away, it was legitimate for petitioner to have
addressed its letter to her heir.1wphi1

It appears, therefore, that the exercise by petitioner of its option to lease the subject
property was made in accordance with the contractual provisions. Concomitantly,
private respondent Victor Bartolome has the obligation to surrender possession of
and lease the premises to petitioner for a period of six (6) years, pursuant to the
Contract of Lease with Option to Buy.
Coming now to the issue of tenancy, we find that this is not for this Court to pass upon
in the present petition. We note that the Motion to Intervene and to Dismiss of the
alleged tenant, Andres Lanozo, was denied by the lower court and that such denial
was never made the subject of an appeal. As the lower court stated in its Order, the
alleged right of the tenant may well be ventilated in another proceeding in due time.
WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED.
The Decision of the Court of Appeals in CA-G.R. CV No. 40849 and that of the
Regional Trial Court of Valenzuela in Civil Case No. 3337-V-90 are both SET ASIDE
and a new one rendered ordering private respondent Victor Bartolome to:
(a) surrender and deliver possession of that parcel of land covered by
Transfer Certificate of Title No. V-14249 by way of lease to petitioner and to
perform all obligations of his predecessor-in-interest, Encarnacion
Bartolome, under the subject Contract of Lease with Option to Buy;
(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249
to respondent Register of Deeds for registration and annotation thereon of
the subject Contract of Lease with Option to Buy;
(c) pay costs of suit.
Respondent Register of Deeds is, accordingly, ordered to register and annotate the
subject Contract of Lease with Option to Buy at the back of Transfer Certificate of Title
No. V-14249 upon submission by petitioner of a copy thereof to his office.
G.R. No. 121940

December 4, 2001

JESUS
SAN
AGUSTIN, petitioner,
vs.
HON. COURT OF APPEALS and MAXIMO MENEZ, JR., respondents.
QUISUMBING, J.:
This petition for review on certiorari seeks the reversal of the decision 1 of the Court
of Appeals dated May 19, 1995, affirming that of the Regional Trial Court in LRC Case
No. R-4659.

Page 26 of 59

The relevant facts, as summarized by the CA, are as follows:

On February 11, 1974, the Government Service Insurance System (GSIS) sold to a
certain Macaria Vda. de Caiquep, a parcel of residential land with an area of 168
square meters located in Rosario, Pasig City and denominated as Lot 13, Block 7,
Pcs-5816 of the Government Service and Insurance System Low Cost Housing
Project (GSIS-LCHP). The sale is evidenced by a Deed of Absolute Sale. 2 On
February 19, 1974, the Register of Deeds of Rizal issued in the name of Macaria Vda.
de Caiquep. Transfer Certificate of Title (TCT) No. 436465 with the following
encumbrance annotated at the back of the title:
This Deed of Absolute Sale is subject to the conditions enumerated below
which shall be permanent encumbrances on the property, the violation of
any of which shall entitle the vendor to cancel x x x. this Deed of Absolute
Sale and reenter the property;
The purpose of the sale be to aid the vendee in acquiring a lot for
himself/themselves and not to provide him/them with a means for
speculation or profit by a future assignment of his/their right herein acquired
or the resale of the lot through rent, lease or subletting to others of the lot
and subject of this deed, and therefore, the vendee shall not sell, convey,
lease or sublease, or otherwise encumber the property in favor of any other
party within five (5) years from the dates final and absolute ownership
thereof becomes vested in the vendee, except in cases of hereditary
succession or resale in favor of the vendor:
x x x (emphasis supplied).3
A day after We issuance of TCT No. 436465, or on February 20, 1974, Macaria Vda.
de Caiquep sold the subject lot to private respondent, Maximo Menez, Jr., as
evidenced by a Deed of Absolute Sale (Exhibit "D"). 4 This deed was notarized but
was not registered immediately upon its execution in 1974 because GSIS prohibited
him from registering the same in view of the five-year prohibition to sell during the
period ending in 1979.
Sometime in 1979, for being suspected as a subversive, an Arrest, Search and
Seizure Order (ASSO) was issued against private respondent. Military men
ransacked his house in Cainta, Rizal. Upon learning that he was wanted by the
military, he voluntarily surrendered and was detained for two (2) years. When
released, another order for his re-arrest was issued so he hid in Mindanao for another
four (4) years or until March 1984. In December of 1990, he discovered that the
subject TCT was missing. He consulted a lawyer but the latter did not act immediately

on the matter. Upon consulting a new counsel, an Affidavit of Loss 5 was filed with the
Register of Deeds of Pasig and a certified copy 6 of TCT No. 436465 was issued.
Private respondent also declared the property for tax purposes and obtained a
certification thereof from the Assessor's Office.7

Let copies of this Order be furnished the petitioner, the registered owner of
his given address in the title, in the deed of sale, and in the tax declaration;
the Registry of Deeds of Pasig, the Office of the Solicitor General; and the
Provincial Fiscal of Pasig, Metro Manila.

Private respondent sent notices to the registered owner at her address appearing in
the title and in the Deed of Sale. And, with his counsel, he searched for the
,registered owner in Metro Manila and Rizal and as far as Samar, Leyte, Calbayog
City, Tacloban City, and in Eastern and Northern Samar. However, their search proved
futile.

SO ORDERED.10

On July 8, 1992 private respondent filed a petition docketed as LRC Case No. R-4659
with the RTC, Branch 154, Pasig, Metro Manila for the issuance of owner's duplicate
copy of TCT No. 436465 to replace the lost one. To show he was the owner of the
contested lot, he showed the Deed of Absolute Sale, Exhibit "D". The petition was set
for hearing and the court's order dated July 10, 1992 was published once in Malaya, a
nationally circulated newspaper in the Philippines.8

On October 13, 1992, herein petitioner, Jesus San Agustin, received a copy of the
abovecited decision. He-claimed this was the first time he became aware of the case
of her aunt, Macaria Vda. de Caiquep who, according to him, died sometime in 1974.
Claiming that he was the present occupant of the property and the heir of Macaria, he
filed his "Motion to Reopen Reconstitution Proceedings'' 11 on October 27, 1992. On
December 3, 1992, RTC issued an order denying said motion.12
Petitioner filed an appeal with the Court of Appeals, which, as earlier stated, was
denied in its decision of May 19, 1995. Petitioner moved for a reconsideration, but it
was denied in a resolution dated September 11, 1995.13

During the hearing on September 3, 1992, only Menez and his counsel appeared.
The Register of Deeds who was not served notice, and the Office of the Solicitor
General and the Provincial Prosecutor who were notified did not attend.

Thus, the present petition, attributing the following errors to the court a quo:

On September 18, 1992, there being no opposition, Menez presented his

evidence ex-parte. The trial court granted his petition in its decision 9 dated September
30, 1992, the dispositive portion of which reads:

THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT LRC CASE NO.
R-4659 BEING ONLY A PETITION FOR THE ISSUANCE OF A NEW OWNER'S
DUPLICATE OF TITLE, THERE IS NO NEED OF PERSONAL NOTICE TO THE
PETITIONER, THE ACTUAL POSSESSOR [WHO HAS] AND ACTUALLY BEEN
PAYING THE REAL ESTATE TAX, DESPITE PRIVATE RESPONDENT'S
KNOWLEDGE OF ACTUAL POSSESSION OF AND INTEREST OVER THE
PROPERTY COVERED BY TCT NO. 436465.14

WHEREFORE, the petition is hereby GRANTED and the Registry of Deeds

of Pasig, Metro Manila, is hereby directed to issue a new Owner's Duplicate
Copy of Transfer Certificate of Title No. 436465 based on the original
thereon filed in his office which shall contain the memorandum of
encumbrance and an additional memorandum of the fact that it was issued
in place of the lost duplicate and which shall, in all respect, be entitled to like
faith and credit as the original duplicate, for all legal intents and purposes.

A.

B.

Issuance of new owner's duplicate copy shall be made only after this
decision shall have become final and executory. The said lost owner's
duplicate is hereby declared null and void.

RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE SALE

BETWEEN THE PRIVATE RESPONDENT AND MACARIA VDA. DE CAIQUEP IS
NOT NULL AND VOID AND UNDER ARTICLE 1409 OF THE CIVIL CODE
SPECIFICALLY PARAGRAPH (7) THEREOF WHICH REFERS TO CONTRACTS
EXPRESSLY PROHIBITED OR DECLARED VOID BY LAW.15

Petitioner shall pay all legal fees in connection with the issuance of the new
owner's copy.

Considering the above assignment of errors, let us resolve the corresponding issues
raised by petitioner.

Page 27 of 59

The first issue involves private respondent's alleged failure to send notice to petitioner
who is the actual possessor of the disputed lot. Stated briefly, is petitioner entitled to
notice? Our finding is in the negative.
Presidential Decree No. 1529, otherwise known as the "Property Registration Decree"
is decisive. It provides:
Sec. 109. Notice and replacement of lost duplicate certificate. In case of
loss or theft of an owner's duplicate certificate of title, due notice under oath
shall be sent by the owner or by someone in his behalf to the Register of
Deeds of the province or city where the land lies as soon as the loss or theft
is discovered. If a duplicate certificate is lost or destroyed, or cannot be
produced by a person applying for the entry of a new certificate to him or
for :the registration of any instrument, a sworn statement of the fact of such
loss or destruction may be filed by the registered owner or other person it
interest and registered.
Upon the petition of the registered owner or other person in interest, the
court may, after notice and due hearing, direct the issuance of a new
duplicate certificate, which shall contain a memorandum of the fact that it is
issued in place of the lost duplicate certificate, but shall in all respects be
entitled to like faith and credit as the original duplicate, and shall thereafter
be regarded as such for all purposes of this decree.
In Office of Court Administrator vs. Matas, A.M. No. RTJ-92-836, 247 SCRA 9, 16-17
(1995), we held:
In the case at bar, the respective certificate of title of the properties in
question on file with the Register of Deeds are existing, and it is the owner's
copy of the certificate of title that was alleged to have been lost or destroyed.
Thus, it is Section 109 of P.D. 1529 which was approved on June 11, 1978
that becomes effective and is applicable, a reading of which shows that it is
practically the same as Section 109 of Act No. 496, governing reconstitution
of a duplicate certificate of title lost or destroyed. Consequently, it is sufficient
that the notice under Section 109 is sent to the Register of Deeds and to
those persons who are known to have, or appear to have, an interest in the
property as shown in the Memorandum of encumbrances at the back of the
original or transfer certificate of title on file in the office of the Register of
Deeds. From a legal standpoint, there are no other interested parties who
should be notified, except those abovementioned since they are the only
ones who may be deemed to have a claim to the property involved. A

Page 28 of 59

person dealing with registered is not charged with notice of encumbrances

not annotated on the back of the title. (Emphasis supplied.)
Here, petitioner does not appear to have an interest in the property based on the
memorandum of encumbrances annotated at the back of the title. His claim, that he is
an heir (nephew) of the original owner of the lot covered by the disputed lot and the
present occupant thereof is not annotated in the said memorandum of encumbrances.
Neither was his claim entered on the Certificate of Titles in the name of their
original/former owners on file with the Register of Deeds at the time of the filing or
pendency of LRC Case No. R-4659. Clearly, petitioner is not entitled to notice.
Noteworthy is the fact that there was compliance by private respondent of the RTC's
order of publication of the petition in a newspaper of general circulation. This is
sufficient notice of the petition to the public at large.
Petitioner contends that as possessor or actual occupant of the lot in controversy, he
is entitled under the law to be notified. He relies on Alabang Development
Corporation vs. Valenzuela, G.R. No. L-54094, 116 SCRA 261, 277 (1982)) which
held that in reconstitution proceedings, courts must make sure that indispensable
parties, i.e.. the actual owners and possessors of the lands involved, are duly served
with actual and personal notice of the petition. As pointed out by the appellate court,
his reliance on Alabang is misplaced because the cause of action in that case is
based on Republic Act i No. 26, entitled "An Act Providing A Special Procedure for the
Reconstitution of Torrens Certificate of Title Lost or Destroyed," while the present
case is based on Section 109 of P.D. 1529 as above explained.
Under Republic Act No. 26, reconstitution is validly made only in case
the original copy of the certificate of title with the Register of Deeds is lost or
destroyed. And if no notice of the date of hearing of a reconstitution case is served on
a possessor or one having interest in the property involved, he is deprived of his day
in court and the order of reconstitution is null and void. 16 The case at bar is not for
reconstitution, but merely for replacement of lost duplicate certificate.
On the second assigned error, petitioner contends that Exhibit "D" is null and void
under Article 1409 of the Civil Code, specifically paragraph (7), 17 because the deed of
sale was executed within the five-year prohibitory period under Commonwealth Act
No. 141, as amended, otherwise known as "The Public Land Act."18
We find petitioner's contention less than meritorious. We agree with respondent court
that the proscription under Com. Act No. 141 on sale within the 5-year restrictive
period refers to homestead lands only. Here the lot in dispute is not a homestead

land, as found by the trial and appellate courts. Said lot is owned by GSIS, under TCT
No. 10028 in its proprietary capacity.
Moreover, as far as the violation of the 5-year restrictive condition imposed by GSIS
in its contract with petitioner's predecessor-in-interest is concerned, it is the GSIS and
not petitioner who had a cause of action against private respondent. Vide the
instructive case of Sarmiento vs. Salud:
The condition that the appellees Sarmiento spouses could not resell the
property except to the People's Homesite and Housing Corporation (PHHC
for short) within the next 25 years after appellees' purchasing the lot is
manifestly a condition in favor of the PHHC, and not one in favor of the
Sarmiento spouses. The condition conferred no actionable right on
appellees herein, since it operated as a restriction upon their jus disponendi
of the property they bought, and thus limited their right of ownership. It
follows that on the assumption that the mortgage to appellee Salud and the
foreclosure sale violated the condition in the Sarmiento contract, only the
PHHC was entitled to invoke the condition aforementioned, and not the
Sarmientos. The validity or invalidity of the sheriff's foreclosure sale to
appellant Salud thus violative of its right of exclusive reacquisition; but it
(PHHC) also could waive the condition and treat the sale as good, in which
event, the sale can not be assailed for breach of the condition aforestated.19

favor of the vendor."22 However, absent the proper action taken by the GSIS as the
original vendor referred to, the contract between petitioner's predecessor-in-interest
and private respondent deserves to be upheld. For as pointed out by said private
respondent, it is protected by the Constitution under Section 10, Article III, of the Bill
of Rights stating that, "No law impairing the obligation of contracts shall be passed."
Much as we would like to see a salutary policy triumph, that provision of the
Constitution duly calls for compliance.
More in point, however, is the fact that, following Sarmiento v. Salud,23 "Even if the
transaction between the original awardee and herein petitioner were wrongful, still, as
between themselves, the purchaser and the seller were bothin pari delicto,
being participes criminis as it were." As in Sarmiento, in this case both were aware of
the existence of the stipulated condition in favor of the original seller, GSIS, yet both
entered into an agreement violating said condition and nullifying its effects. Similarly,
as Acting Chief Justice JBL Reyes concluded in Sarmiento, "Both parties being
equally guilty, neither is entitled to complain against the other. Having entered into the
transaction with open eyes, and having benefited from it, said parties should be held
in estoppel to assail and annul their own deliberate acts."
WHEREFORE, the appeal is DENIED, and the decision of the respondent court is
AFFIRMED.
G. R. No. 136773

In this case, the GSIS has not filed any action for the annulment of Exhibit "D", nor for
the forfeiture of the lot in question. In our view, the contract of sale remains valid
between the parties, unless and until annulled in the proper suit filed by the rightful
party, the GSIS. For now, the said contract of sale is binding upon the heirs of
Macaria Vda. de Caiquep, including petitioner who alleges to be one of her heirs, in
line with the rule that heirs are bound by contracts entered into by their predecessorsin-interest.20
We are not unmindful of the social justice policy of R.A. 8291 otherwise known as
"Government Service Insurance Act of 1997" in granting housing assistance to the
less-privileged GSIS members and their dependents payable at an affordable
payment scheme.21 This is the same policy which the 5-year restrictive clause in the
contract seeks to implement by stating in the encumbrance itself annotated at the
back of TCT No. 436465 that, "The purpose of the sale is to aid the vendee in
acquiring a lot for himself/themselves and not to provide him/them with a means for
speculation or profit by a future assignment of his/their right herein acquired or the
resale of the lot through rent, lease or subletting to others of the lot and subject of this
deed, . . . within five (5) years from the date final and absolute ownership thereof
becomes vested in the vendee, except in cases of hereditary succession or resale in

Page 29 of 59

June 25, 2003

MILAGROS
MANONGSONG,
joined
by
her
husband,
CARLITO
MANONGSONG, Petitioners,
vs.
FELOMENA JUMAQUIO ESTIMO, EMILIANA JUMAQUIO, NARCISO ORTIZ,
CELESTINO ORTIZ, RODOLFO ORTIZ, ERLINDA O. OCAMPO, PASTOR ORTIZ,
JR., ROMEO ORTIZ BENJAMIN DELA CRUZ, SR., BENJAMIN DELA CRUZ, JR.,
AURORA NICOLAS, GLORIA RACADIO, ROBERTO DELA CRUZ, JOSELITO
DELA CRUZ and LEONCIA S. LOPEZ, Respondents.
CARPIO, J.:
The Case
Before this Court is a petition for review1 assailing the Decision2 of 26 June 1998 and
the Resolution of 21 December 1998 of the Court of Appeals in CA-G.R. CV No.
51643. The Court of Appeals reversed the Decision dated 10 April 1995 of the
Regional Trial Court of Makati City, Branch 135, in Civil Case No. 92-1685,

partitioning the property in controversy and awarding to petitioners a portion of the

property.
Antecedent Facts
Spouses Agatona Guevarra ("Guevarra") and Ciriaco Lopez had six (6) children,
namely: (1) Dominador Lopez; (2) Enriqueta Lopez-Jumaquio, the mother of
respondents Emiliana Jumaquio Rodriguez and Felomena Jumaquio Estimo
("Jumaquio sisters"); (3) Victor Lopez, married to respondent Leoncia Lopez; (4)
Benigna Lopez-Ortiz, the mother of respondents Narciso, Celestino, Rodolfo, Pastor
Jr. and Romeo Ortiz, and Erlinda Ortiz Ocampo; (5) Rosario Lopez-dela Cruz,
married to respondent Benjamin dela Cruz, Sr. and the mother of respondents
Benjamin Jr., Roberto, and Joselito, all surnamed dela Cruz, and of Gloria dela Cruz
Racadio and Aurora dela Cruz Nicolas; and (6) Vicente Lopez, the father of petitioner
Milagros Lopez Manongsong ("Manongsong").
The contested property is a parcel of land on San Jose Street, Manuyo Uno, Las
Pias, Metro Manila with an area of approximately 152 square meters ("Property").
The records do not show that the Property is registered under the Torrens system.
The Property is particularly described in Tax Declaration No. B-001-00390 3 as
bounded in the north by Juan Gallardo, south by Calle Velay, east by Domingo
Lavana and west by San Jose Street. Tax Declaration No. B-001-00390 was
registered with the Office of the Municipal Assessor of Las Pias on 30 September
1984 in the name of "Benigna Lopez, et al". 4 However, the improvements on the
portion of the Property denominated as No. 831 San Jose St., Manuyo Uno, Las
Pias were separately declared in the name of "Filomena J. Estimo" under Tax
Declaration No. 90-001-02145 dated 14 October 1991.5
Milagros and Carlito Manongsong ("petitioners") filed a Complaint 6 on 19 June 1992,
alleging that Manongsong and respondents are the owners pro indiviso of the
Property. Invoking Article 494 of the Civil Code,7 petitioners prayed for the partition
and award to them of an area equivalent to one-fifth (1/5) of the Property or its
prevailing market value, and for damages.
Petitioners alleged that Guevarra was the original owner of the Property. Upon
Guevarras death, her children inherited the Property. Since Dominador Lopez died
without offspring, there were only five children left as heirs of Guevarra. Each of the
five children, including Vicente Lopez, the father of Manongsong, was entitled to a
fifth of the Property. As Vicente Lopez sole surviving heir, Manongsong claims her
fathers 1/5 share in the Property by right of representation.

There is no dispute that respondents, who are the surviving spouses of Guevarras
children and their offspring, have been in possession of the Property for as long as
they can remember. The area actually occupied by each respondent family differs,
ranging in size from approximately 25 to 50 square meters. Petitioners are the only
descendants not occupying any portion of the Property.
Most respondents, specifically Narciso, Rodolfo, Pastor Jr., and Celestino Ortiz, and
Erlinda Ortiz Ocampo ("Ortiz family"), as well as Benjamin Sr., Benjamin Jr., and
Roberto dela Cruz, Aurora dela Cruz Nicolas and Gloria Dela Cruz Racadio ("Dela
Cruz family"), entered into a compromise agreement with petitioners. Under the
Stipulation of Facts and Compromise Agreement8 dated 12 September 1992
("Agreement"), petitioners and the Ortiz and Dela Cruz families agreed that each
group of heirs would receive an equal share in the Property. The signatories to the
Agreement asked the trial court to issue an order of partition to this effect and prayed
further that "those who have exceeded said one-fifth (1/5) must be reduced so that
those who have less and those who have none shall get the correct and proper
portion."9
Among the respondents, the Jumaquio sisters and Leoncia Lopez who each occupy
50 square meter portions of the Property and Joselito dela Cruz, did not sign the
Agreement.10 However, only the Jumaquio sisters actively opposed petitioners claim.
The Jumaquio sisters contended that Justina Navarro ("Navarro"), supposedly the
mother of Guevarra, sold the Property to Guevarras daughter Enriqueta Lopez
Jumaquio.
The Jumaquio sisters presented provincial Tax Declaration No. 91111 for the year
1949 in the sole name of Navarro. Tax Declaration No. 911 described a residential
parcel of land with an area of 172.51 square meters, located on San Jose St.,
Manuyo, Las Pias, Rizal with the following boundaries: Juan Gallardo to the north, I.
Guevarra Street to the south, Rizal Street to the east and San Jose Street to the
west. In addition, Tax Declaration No. 911 stated that the houses of "Agatona Lopez"
and "Enriquita Lopez" stood on the Property as improvements.
The Jumaquio sisters also presented a notarized KASULATAN SA BILIHAN NG
LUPA12 ("Kasulatan") dated 11 October 1957, the relevant portion of which states:
AKO SI JUSTINA NAVARRO, sapat ang gulang, may asawa, Pilipino at naninirahan
sa LAS PIAS, ay siyang nagma-may-ari at nagtatangkilik ng isang lagay na lupa na
matatagpuan sa Manuyo, Las Pias, Rizal, lihis sa anomang pagkakautang lalong
napagkikilala sa pamamagitan ng mga sumusunod na palatandaan:
BOUNDARIES:

Page 30 of 59

NORTH: JUAN GALLARDO SOUTH: I. GUEVARRA ST. EAST: RIZAL ST., WEST:
SAN JOSE ST.,
na may sukat na 172.51 metros cuadrados na may TAX DECLARATION BILANG
911.
NA DAHIL AT ALANG ALANG sa halagang DALAWANG DAAN LIMANGPUNG PISO
(P250.00), SALAPING PILIPINO, na sa akin ay kaliwang iniabot at ibinayad ni
ENRIQUETA LOPEZ, may sapat na gulang, Pilipino, may asawa at naninirahan sa
Las Pias, Rizal, at sa karapatang ito ay aking pinatutunayan ng pagkakatanggap ng
nasabing halaga na buong kasiyahan ng aking kalooban ay aking IPINAGBILI,
ISINALIN AT INILIPAT sa nasabing, ENRIQUETA LOPEZ, sa kanyang mga
tagapagmana at kahalili, ang kabuuang sukat ng lupang nabanggit sa itaas nito sa
pamamagitan ng bilihang walang anomang pasubali. Ang lupang ito ay walang
kasama at hindi taniman ng palay o mais.
Simula sa araw na ito ay aking ililipat ang pagmamay-ari at pagtatangkilik ng
nasabing lupa kay ENRIQUETA LOPEZ sa kanilang/kanyang tagapagmana at kahalili
x x x.
The Clerk of Court of the Regional Trial Court of Manila certified on 1 June 1994 that
the "KASULATAN SA BILIHAN NG LUPA, between Justina Navarro (Nagbili) and
Enriqueta Lopez (Bumili), was notarized by Atty. Ruperto Q. Andrada on 11 October
1957 and entered in his Notarial Register xxx."13 The certification further stated that
Atty. Andrada was a duly appointed notary public for the City of Manila in 1957.
Because the Jumaquio sisters were in peaceful possession of their portion of the
Property for more than thirty years, they also invoked the defense of acquisitive
prescription against petitioners, and charged that petitioners were guilty of laches.
The Jumaquio sisters argued that the present action should have been filed years
earlier, either by Vicente Lopez when he was alive or by Manongsong when the latter
reached legal age. Instead, petitioners filed this action for partition only in 1992 when
Manongsong was already 33 years old.
The Ruling of the Trial Court
After trial on the merits, the trial court in its Decision14 of 10 April 1995 ruled in favor of
petitioners. The trial court held that the Kasulatan was void, even absent evidence
attacking its validity. The trial court declared:

Page 31 of 59

It appears that the ownership of the estate in question is controverted. According to

defendants Jumaquios, it pertains to them through conveyance by means of a Deed
of Sale executed by their common ancestor Justina Navarro to their mother
Enriqueta, which deed was presented in evidence as Exhs. "4" to "4-A". Plaintiff
Milagros Manongsong debunks the evidence as fake. The document of sale, in the
observance of the Court, is however duly authenticated by means of a certificate
issued by the RTC of the Manila Clerk of Court as duly notarized public document
(Exh. "5"). No countervailing proof was adduced by plaintiffs to overcome or impugn
the documents legality or its validity.
xxx The conveyance made by Justina Navarro is subject to nullity because the
property conveyed had a conjugal character. No positive evidence had been
introduced that it was solely a paraphernal property. The name of Justina Navarros
spouse/husband was not mentioned and/or whether the husband was still alive at the
time the conveyance was made to Justina Navarro. Agatona Guevarra as her
compulsory heir should have the legal right to participate with the distribution of the
estate under question to the exclusion of others. She is entitled to herlegitime. The
Deed of Sale [Exhs "4" & "4-1"(sic)] did not at all provide for the reserved legitime or
the heirs, and, therefore it has no force and effect against Agatona Guevarra and her
six (6) legitimate children including the grandchildren, by right of representation, as
described in the order of intestate succession. The same Deed of Sale should be
declared a nullity ab initio. The law on the matter is clear. The compulsory heirs
cannot be deprived of their legitime, except on (sic) cases expressly specified by law
like for instance disinheritance for cause. xxx (Emphasis supplied)
Since the other respondents had entered into a compromise agreement with
petitioners, the dispositive portion of the trial courts decision was directed against the
Jumaquio sisters only, as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
plaintiffs and against the remaining active defendants, Emiliana Jumaquio and
Felomena J. Estimo, jointly and severally, ordering:
1. That the property consisting of 152 square meters referred to above be
immediately partitioned giving plaintiff Milagros Lopez-Manongsong her
lawful share of 1/5 of the area in square meters, or the prevailing market
value on the date of the decision;
2. Defendants to pay plaintiffs the sum of P10,000.00 as compensatory
damages for having deprived the latter the use and enjoyment of the fruits of
her 1/5 share;

3. Defendants to pay plaintiffs litigation expenses and attorneys fee in the

sum of P10,000.00; and
4. Defendants to pay the costs of suit.

which point-out that co-ownership exists on the property between the parties. Since
this is the admitted history, facts of the case, it follows that there should have been
proper document to extinguish this status of co-ownership between the common
owners either by (1) Court action or proper deed of tradition, xxx xxx xxx."

SO ORDERED.15 (Emphasis supplied)

The trial court confirms these admissions of plaintiffs-appellees. The trial court held:

When the trial court denied their motion for reconsideration, the Jumaquio sisters
appealed to the Court of Appeals.

"x x x

The Ruling of the Court of Appeals

Petitioners, in their appellees brief before the Court of Appeals, presented for the first
time a supposed photocopy of the death certificate 16 of Guevarra, which stated that
Guevarras mother was a certain Juliana Gallardo. Petitioner also attached an
affidavit17 from Benjamin dela Cruz, Sr. attesting that he knew Justina Navarro only by
name and had never met her personally, although he had lived for some years with
Agatona Guevarra after his marriage with Rosario Lopez. On the basis of these
documents, petitioners assailed the genuineness and authenticity of the Kasulatan.
The Court of Appeals refused to take cognizance of the death certificate and affidavit
presented by petitioners on the ground that petitioners never formally offered these
documents in evidence.
The appellate court further held that the petitioners were bound by their admission
that Navarro was the original owner of the Property, as follows:
Moreover, plaintiffs-appellees themselves admitted before the trial court that Justina
Navarro and not Juliana Gallardo was the original owner of the subject property and
was the mother of Agatona Navarro (sic). Plaintiffs-appellees in their ReplyMemorandum averred:

xxx

xxx

With the parties admissions and their conformity to a factual common line of
relationship of the heirs with one another, it has been elicited ascendant Justina
Navarro is the common ancestor of the heirs herein mentioned, however, it must be
noted that the parties failed to amplify who was the husband and the number of
compulsory heirs of Justina Navarro. xxx xxx xxx"
Therefore, plaintiffs-appellees cannot now be heard contesting the fact that Justina
Navarro was their common ancestor and was the original owner of the subject
property.
The Court of Appeals further held that the trial court erred in assuming that the
Property was conjugal in nature when Navarro sold it. The appellate court reasoned
as follows:
However, it is a settled rule that the party who invokes the presumption that all
property of marriage belongs to the conjugal partnership, must first prove that the
property was acquired during the marriage. Proof of acquisition during the coveture is
a condition sine qua non for the operation of the presumption in favor of conjugal
ownership.
In this case, not a single iota of evidence was submitted to prove that the subject
property was acquired by Justina Navarro during her marriage. xxx

"As regards the existence of common ownership, the defendants clearly admit as
follows:

The findings of the trial court that the subject property is conjugal in nature is not
supported by any evidence.

xxx

To the contrary, records show that in 1949 the subject property was declared, for
taxation purposes under the name of Justina Navarro alone. This indicates that the
land is the paraphernal property of Justina Navarro.

xxx

xxx

History of this case tells us that originally the property was owned by JUSTINA
NAVARRO who has a daughter by the name of AGATONA GUEVARRA who on the
other hand has six children namely: xxx xxx xxx.

Page 32 of 59

For these reasons, the Court of Appeals reversed the decision of the trial court, thus:

WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED

and SET ASIDE. A new one is hereby rendered DISMISSING plaintiffs-appellees
complaint in so far as defendants-appellants are concerned.

The Ruling of the Court

Costs against plaintiffs-appellees.

The issues raised by petitioners are mainly factual in nature. In general, only
questions of law are appealable to this Court under Rule 45. However, where the
factual findings of the trial court and Court of Appeals conflict, this Court has the
authority to review and, if necessary, reverse the findings of fact of the lower
courts.22 This is precisely the situation in this case.

SO ORDERED.18
Petitioners filed a motion for reconsideration, but the Court of Appeals denied the
same in its Resolution of 21 December 1998.19
On 28 January 1999, petitioners appealed the appellate courts decision and
resolution to this Court. The Court initially denied the petition for review due to certain
procedural defects. The Court, however, gave due course to the petition in its
Resolution of 31 January 2000.20
The Issues
Petitioners raise the following issues before this Court:
1. WHETHER PETITIONER HAS NO COUNTERVAILING EVIDENCE ON
THE ALLEGED SALE BY ONE JUSTINA NAVARRO;
2. WHETHER THERE IS PRETERITION AND THE ISSUES RAISED ARE
REVIEWABLE;
3. WHETHER THERE IS CO-OWNERSHIP PRO INDIVISO;
4. WHETHER THE RULE OF THE MAJORITY CO-OWNERS ON THE
LAND SHOULD PREVAIL;
5. WHETHER THE ALLEGED SALE IS VALID AND BINDS THE OTHER
CO-HEIRS;
6. WHETHER PRESCRIPTION APPLIES AGAINST THE SHARE OF
PETITIONERS.21
The fundamental question for resolution is whether petitioners were able to prove, by
the requisite quantum of evidence, that Manongsong is a co-owner of the Property
and therefore entitled to demand for its partition.

Page 33 of 59

The petition lacks merit.

We review the factual and legal issues of this case in light of the general rules of
evidence and the burden of proof in civil cases, as explained by this Court in Jison v.
Court of Appeals :23
xxx Simply put, he who alleges the affirmative of the issue has the burden of proof,
and upon the plaintiff in a civil case, the burden of proof never parts. However, in the
course of trial in a civil case, once plaintiff makes out a prima facie case in his favor,
the duty or the burden of evidence shifts to defendant to controvert plaintiff's prima
facie case, otherwise, a verdict must be returned in favor of plaintiff. Moreover, in civil
cases, the party having the burden of proof must produce a preponderance of
evidence thereon, with plaintiff having to rely on the strength of his own evidence and
not upon the weakness of the defendants. The concept of "preponderance of
evidence" refers to evidence which is of greater weight, or more convincing, that
which is offered in opposition to it; at bottom, it means probability of truth.
Whether the Court of Appeals erred in affirming the validity of the Kasulatan sa
Bilihan ng Lupa
Petitioners anchor their action for partition on the claim that Manongsong is a coowner or co-heir of the Property by inheritance, more specifically, as the heir of her
father, Vicente Lopez. Petitioners likewise allege that the Property originally belonged
to Guevarra, and that Vicente Lopez inherited from Guevarra a 1/5 interest in the
Property. As the parties claiming the affirmative of these issues, petitioners had the
burden of proof to establish their case by preponderance of evidence.
To trace the ownership of the Property, both contending parties presented tax
declarations and the testimonies of witnesses. However, the Jumaquio sisters also
presented a notarized KASULATAN SA BILIHAN NG LUPA which controverted
petitioners claim of co-ownership.

The Kasulatan, being a document acknowledged before a notary public, is a public

document and prima facie evidence of its authenticity and due execution. To assail
the authenticity and due execution of a notarized document, the evidence must be
clear, convincing and more than merely preponderant.24 Otherwise the authenticity
and due execution of the document should be upheld. 25 The trial court itself held that
"(n)o countervailing proof was adduced by plaintiffs to overcome or impugn the
documents legality or its validity."26

Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1)
consent or meeting of the minds; (2) determinate subject matter and (3) price certain
in money or its equivalent. 31 The presence of these elements is apparent on the face
of the Kasulatan itself. The Property was sold in 1957 for P250.00.32

Even if the Kasulatan was not notarized, it would be deemed an ancient document
and thus still presumed to be authentic. The Kasulatan is: (1) more than 30 years old,
(2) found in the proper custody, and (3) unblemished by any alteration or by any
circumstance of suspicion. It appears, on its face, to be genuine.27

We find no error in the Court of Appeals refusal to give any probative value to the
alleged birth certificate of Guevarra and the affidavit of Benjamin dela Cruz, Sr.
Petitioners belatedly attached these documents to their appellees brief. Petitioners
could easily have offered these documents during the proceedings before the trial
court. Instead, petitioners presented these documents for the first time on appeal
without any explanation. For reasons of their own, petitioners did not formally offer in
evidence these documents before the trial court as required by Section 34, Rule 132
of the Rules of Court.33 To admit these documents now is contrary to due process, as
it deprives respondents of the opportunity to examine and controvert them.

Nevertheless, the trial court held that the Kasulatan was void because the Property
was conjugal at the time Navarro sold it to Enriqueta Lopez Jumaquio. We do not
agree. The trial courts conclusion that the Property was conjugal was not based on
evidence, but rather on a misapprehension of Article 160 of the Civil Code, which
provides:
All property of the marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the wife.
As the Court of Appeals correctly pointed out, the presumption under Article 160 of
the Civil Code applies only when there is proof that the property was acquired during
the marriage. Proof of acquisition during the marriage is an essential condition for the
operation of the presumption in favor of the conjugal partnership.28
There was no evidence presented to establish that Navarro acquired the Property
during her marriage. There is no basis for applying the presumption under Article 160
of the Civil Code to the present case. On the contrary, Tax Declaration No. 911
showed that, as far back as in 1949, the Property was declared solely in Navarros
name.29This tends to support the argument that the Property was not conjugal.
We likewise find no basis for the trial courts declaration that the sale embodied in the
Kasulatan deprived the compulsory heirs of Guevarra of their legitimes. As opposed
to a disposition inter vivos by lucrative or gratuitous title, a valid sale for valuable
consideration does not diminish the estate of the seller. When the disposition is for
valuable consideration, there is no diminution of the estate but merely a substitution
of values,30 that is, the property sold is replaced by the equivalent monetary
consideration.1wphi1

Whether the Court of Appeals erred in not admitting the documents presented by
petitioners for the first time on appeal

Moreover, even if these documents were admitted, they would not controvert
Navarros ownership of the Property. Benjamin dela Cruz, Sr.s affidavit stated merely
that, although he knew Navarro by name, he was not personally acquainted with
her.34 Guevarras alleged birth certificate casts doubt only as to whether Navarro was
indeed the mother of Guevarra. These documents do not prove that Guevarra owned
the Property or that Navarro did not own the Property.
Petitioners admitted before the trial court that Navarro was the mother of Guevarra.
However, petitioners denied before the Court of Appeals that Navarro was the mother
of Guevarra. We agree with the appellate court that this constitutes an impermissible
change of theory. When a party adopts a certain theory in the court below, he cannot
change his theory on appeal. To allow him to do so is not only unfair to the other
party, it is also offensive to the basic rules of fair play, justice and due process.35
If Navarro were not the mother of Guevarra, it would only further undermine
petitioners case. Absent any hereditary relationship between Guevarra and Navarro,
the Property would not have passed from Navarro to Guevarra, and then to the
latters children, including petitioners, by succession. There would then be no basis
for petitioners claim of co-ownership by virtue of inheritance from Guevarra. On the
other hand, this would not undermine respondents position since they anchor their
claim on the sale under the Kasulatan and not on inheritance from Guevarra.
Since the notarized Kasulatan is evidence of greater weight which petitioners failed to
refute by clear and convincing evidence, this Court holds that petitioners were not

Page 34 of 59

able to prove by preponderance of evidence that the Property belonged to Guevarras

estate. There is therefore no legal basis for petitioners complaint for partition of the
Property.
WHEREFORE, the Decision of 26 June 1998 of the Court of Appeals in CA-G.R. CV
No. 51643, dismissing the complaint of petitioners against Felomena Jumaquio
Estimo and Emiliana Jumaquio, is AFFIRMED.

G.R. No. 126376

November 20, 2003

SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN,

SPOUSES JUANITO EDRA and NORA JOAQUIN, SPOUSES RUFINO VALDOZ
and
EMMA
JOAQUIN,
and
NATIVIDAD
JOAQUIN, petitioners,
vs.
COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA
LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA BERNARDO, SPOUSES
TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN
and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA
JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN,
SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO
JOAQUIN and LEA ASIS, respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Decision2 dated 26 June 1996 of
the Court of Appeals in CA-G.R. CV No. 41996. The Court of Appeals affirmed the
Decision3 dated 18 February 1993 rendered by Branch 65 of the Regional Trial Court
of Makati ("trial court") in Civil Case No. 89-5174. The trial court dismissed the case
after it found that the parties executed the Deeds of Sale for valid consideration and
that the plaintiffs did not have a cause of action against the defendants.
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of
plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel,

Page 35 of 59

Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The
married Joaquin children are joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property
executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of
their co-defendant children and the corresponding certificates of title issued in their
names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC)
Psd-256395 executed on 11 July 1978, in favor of defendant Felicitas
Joaquin, for a consideration of P6,000.00 (Exh. "C"), pursuant to which TCT
No. [36113/T-172] was issued in her name (Exh. "C-1");
2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd256394 executed on 7 June 1979, in favor of defendant Clarita Joaquin, for
a consideration of P1[2],000.00 (Exh. "D"), pursuant to which TCT No. S109772 was issued in her name (Exh. "D-1");
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd256394 executed on 12 May 1988, in favor of defendant spouses Fidel
Joaquin and Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh.
"E"), pursuant to which TCT No. 155329 was issued to them (Exh. "E-1");
4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd256394 executed on 12 May 1988, in favor of defendant spouses Artemio
Joaquin and Socorro Angeles, for a consideration ofP[54,3]00.00 (Exh. "F"),
pursuant to which TCT No. 155330 was issued to them (Exh. "F-1"); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan
(LRC) Psd-256395 executed on 9 September 1988, in favor of Tomas
Joaquin, for a consideration of P20,000.00 (Exh. "G"), pursuant to which
TCT No. 157203 was issued in her name (Exh. "G-1").
6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC)
Psd-256395 executed on 7 October 1988, in favor of Gavino Joaquin, for a
consideration of P25,000.00 (Exh. "K"), pursuant to which TCT No. 157779
was issued in his name (Exh. "K-1").]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of
title, plaintiffs, in their complaint, aver:

- XX-

After trial, the trial court ruled in favor of the defendants and dismissed the complaint.
The trial court stated:

The deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as they
are, are NULL AND VOID AB INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale xxx
over the properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in
the questioned deeds, the properties are more than three-fold times more
valuable than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the
parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result of a
deliberate conspiracy designed to unjustly deprive the rest of the compulsory
heirs (plaintiffs herein) of their legitime.
- XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos.
36113/T-172, S-109772, 155329, 155330, 157203 [and 157779] issued by the
Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB INITIO.

In the first place, the testimony of the defendants, particularly that of the xxx father will
show that the Deeds of Sale were all executed for valuable consideration. This
assertion must prevail over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action
against defendants since there can be no legitime to speak of prior to the death of
their parents. The court finds this contention tenable. In determining the legitime, the
value of the property left at the death of the testator shall be considered (Art. 908 of
the New Civil Code). Hence, the legitime of a compulsory heir is computed as of the
time of the death of the decedent. Plaintiffs therefore cannot claim an impairment of
their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the
counterclaim is likewise DISMISSED.
No costs.
SO ORDERED.8
The Ruling of the Court of Appeals

Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action
against them as well as the requisite standing and interest to assail their titles over
the properties in litis; (2) that the sales were with sufficient considerations and made
by defendants parents voluntarily, in good faith, and with full knowledge of the
consequences of their deeds of sale; and (3) that the certificates of title were issued
with sufficient factual and legal basis.4 (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of the case against defendant
spouses Gavino Joaquin and Lea Asis.5 Instead of filing an Answer with their codefendants, Gavino Joaquin and Lea Asis filed a Motion to Dismiss. 6 In granting the
dismissal to Gavino Joaquin and Lea Asis, the trial court noted that "compulsory heirs
have the right to a legitime but such right is contingent since said right commences
only from the moment of death of the decedent pursuant to Article 777 of the Civil
Code of the Philippines."7

Page 36 of 59

The Court of Appeals affirmed the decision of the trial court.1wphi1 The appellate
court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this
case, which is, whether xxx they have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant
brothers and sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin
and Feliciana Landrito, who are their parents. However, their right to the properties of
their defendant parents, as compulsory heirs, is merely inchoate and vests only upon
the latters death. While still alive, defendant parents are free to dispose of their
properties, provided that such dispositions are not made in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither
do they claim to be creditors of their defendant parents. Consequently, they cannot be

considered as real parties in interest to assail the validity of said deeds either for
gross inadequacy or lack of consideration or for failure to express the true intent of
the parties. In point is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et
al., 101 SCRA 376, thus:

4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

CONVEYANCE WAS PART AND PARCEL OF A CONSPIRACY AIMED AT
UNJUSTLY DEPRIVING THE REST OF THE CHILDREN OF THE
SPOUSES LEONARDO JOAQUIN AND FELICIANA LANDRITO OF THEIR
INTEREST OVER THE SUBJECT PROPERTIES.

The plaintiffs are not parties to the alleged deed of sale and are not principally or
subsidiarily bound thereby; hence, they have no legal capacity to challenge their
validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime
by the dispositions made by their defendant parents in favor of their defendant
brothers and sisters. But, as correctly held by the court a quo, "the legitime of a
compulsory heir is computed as of the time of the death of the decedent. Plaintiffs
therefore cannot claim an impairment of their legitime while their parents live."

5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT

PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID CAUSE OF
ACTION AGAINST THE PRIVATE RESPONDENTS.10
The Ruling of the Court
We find the petition without merit.

With this posture taken by the Court, consideration of the errors assigned by plaintiffsappellants is inconsequential.

We will discuss petitioners legal interest over the properties subject of the Deeds of
Sale before discussing the issues on the purported lack of consideration and gross
inadequacy of the prices of the Deeds of Sale.

WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against
plaintiffs-appellants.

Whether Petitioners have a legal interest over the properties subject of the Deeds of
Sale

SO ORDERED.9

Petitioners Complaint betrays their motive for filing this case. In their Complaint,
petitioners asserted that the "purported sale of the properties in litis was the result of
a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs
(plaintiffs herein) of their legitime." Petitioners strategy was to have the Deeds of Sale
declared void so that ownership of the lots would eventually revert to their respondent
parents. If their parents die still owning the lots, petitioners and their respondent
siblings will then co-own their parents estate by hereditary succession.11

Hence, the instant petition.

Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
CONVEYANCE IN QUESTION HAD NO VALID CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN
ASSUMING THAT THERE WAS A CONSIDERATION, THE SAME IS
GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
DEEDS OF SALE DO NOT EXPRESS THE TRUE INTENT OF THE
PARTIES.

Page 37 of 59

It is evident from the records that petitioners are interested in the properties subject of
the Deeds of Sale, but they have failed to show any legal right to the properties. The
trial and appellate courts should have dismissed the action for this reason alone. An
action must be prosecuted in the name of the real party-in-interest.12
[T]he question as to "real party-in-interest" is whether he is "the party who would be
benefitted or injured by the judgment, or the party entitled to the avails of the suit."
xxx
In actions for the annulment of contracts, such as this action, the real parties are
those who are parties to the agreement or are bound either principally or subsidiarily

or are prejudiced in their rights with respect to one of the contracting parties and can
show the detriment which would positively result to them from the contract even
though they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil.
572 [1912]) xxx.
These are parties with "a present substantial interest, as distinguished from a mere
expectancy or future, contingent, subordinate, or consequential interest. The
phrase present substantial interest more concretely is meant such interest of a party
in the subject matter of the action as will entitle him, under the substantive law, to
recover if the evidence is sufficient, or that he has the legal title to demand and the
defendant will be protected in a payment to or recovery by him."13
Petitioners do not have any legal interest over the properties subject of the Deeds of
Sale. As the appellate court stated, petitioners right to their parents properties is
merely inchoate and vests only upon their parents death. While still living, the parents
of petitioners are free to dispose of their properties. In their overzealousness to
safeguard their future legitime, petitioners forget that theoretically, the sale of the lots
to their siblings does not affect the value of their parents estate. While the sale of the
lots reduced the estate, cash of equivalent value replaced the lots taken from the
estate.

fulfillment or cancellation of the obligation under an existing valid contract while the
latter prevents the existence of a valid contract.15
Petitioners failed to show that the prices in the Deeds of Sale were absolutely
simulated. To prove simulation, petitioners presented Emma Joaquin Valdozs
testimony stating that their father, respondent Leonardo Joaquin, told her that he
would transfer a lot to her through a deed of sale without need for her payment of the
purchase price.16 The trial court did not find the allegation of absolute simulation of
price credible. Petitioners failure to prove absolute simulation of price is magnified by
their lack of knowledge of their respondent siblings financial capacity to buy the
questioned lots.17 On the other hand, the Deeds of Sale which petitioners presented
as evidence plainly showed the cost of each lot sold. Not only did respondents minds
meet as to the purchase price, but the real price was also stated in the Deeds of Sale.
As of the filing of the complaint, respondent siblings have also fully paid the price to
their respondent father.18
Whether the Deeds of Sale are void for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is grossly
inadequate as to invalidate the Deeds of Sale.

Whether the Deeds of Sale are void for lack of consideration

Articles 1355 of the Civil Code states:

Petitioners assert that their respondent siblings did not actually pay the prices stated
in the Deeds of Sale to their respondent father. Thus, petitioners ask the court to
declare the Deeds of Sale void.

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been fraud, mistake or undue influence.
(Emphasis supplied)

A contract of sale is not a real contract, but a consensual contract. As a consensual

contract, a contract of sale becomes a binding and valid contract upon the meeting of
the minds as to price. If there is a meeting of the minds of the parties as to the price,
the contract of sale is valid, despite the manner of payment, or even the breach of
that manner of payment. If the real price is not stated in the contract, then the contract
of sale is valid but subject to reformation. If there is no meeting of the minds of the
parties as to the price, because the price stipulated in the contract is simulated, then
the contract is void.14 Article 1471 of the Civil Code states that if the price in a contract
of sale is simulated, the sale is void.

Article 1470 of the Civil Code further provides:

It is not the act of payment of price that determines the validity of a contract of sale.
Payment of the price has nothing to do with the perfection of the contract. Payment of
the price goes into the performance of the contract. Failure to pay the consideration is
different from lack of consideration. The former results in a right to demand the

Page 38 of 59

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may
indicate a defect in the consent, or that the parties really intended a donation or some
other act or contract. (Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470
of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed,
there is no requirement that the price be equal to the exact value of the subject matter
of sale. All the respondents believed that they received the commutative value of what
they gave. As we stated in Vales v. Villa:19
Courts cannot follow one every step of his life and extricate him from bad bargains,
protect him from unwise investments, relieve him from one-sided contracts, or annul

the effects of foolish acts. Courts cannot constitute themselves guardians of persons
who are not legally incompetent. Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or overcome
illegally. Men may do foolish things, make ridiculous contracts, use miserable
judgment, and lose money by them indeed, all they have in the world; but not for
that alone can the law intervene and restore. There must be, in addition, a violation of
the law, the commission of what the law knows as an actionable wrong, before the
courts are authorized to lay hold of the situation and remedy it. (Emphasis in the
original)
Moreover, the factual findings of the appellate court are conclusive on the parties and
carry greater weight when they coincide with the factual findings of the trial court. This
Court will not weigh the evidence all over again unless there has been a showing that
the findings of the lower court are totally devoid of support or are clearly erroneous so
as to constitute serious abuse of discretion.20 In the instant case, the trial court found
that the lots were sold for a valid consideration, and that the defendant children
actually paid the purchase price stipulated in their respective Deeds of Sale. Actual
payment of the purchase price by the buyer to the seller is a factual finding that is
now conclusive upon us.
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.
G.R. No. 141882

Julian had two children with Antonia, namely: Josefa Teves Escao (Josefa) and
Emilio Teves (Emilio). He had also four (4) children with Milagros Donio, namely:
Maria Evelyn Donio Teves (Maria Evelyn), Jose Catalino Donio Teves (Jose Catalino),
Milagros Reyes Teves (Milagros Reyes) and Pedro Reyes Teves (Pedro).3
The present controversy involves a parcel of land covering nine hundred and fifty-four
(954) square meters, known as Lot No. 63 of the Bais Cadastre, which was originally
registered in the name of the conjugal partnership of Don Julian and Antonia under
Original Certificate of Title (OCT) No. 5203 of the Registry of Deeds of Bais City.
When Antonia died, the land was among the properties involved in an action for
partition and damages docketed as Civil Case No. 3443 entitled "Josefa Teves
Escao v. Julian Teves, Emilio B. Teves, et al." 4 Milagros Donio, the second wife of
Don Julian, participated as an intervenor. Thereafter, the parties to the case entered
into aCompromise Agreement5 which embodied the partition of all the properties of
Don Julian.
On the basis of the compromise agreement and approving the same, the Court of
First Instance (CFI) of Negros Oriental, 12 th Judicial District, rendered
a Decision6 dated 31 January 1964. The CFI decision declared a tract of land known
as Hacienda Medalla Milagrosa as property owned in common by Don Julian and his
two (2) children of the first marriage. The property was to remain undivided during the
lifetime of Don Julian.7 Josefa and Emilio likewise were given other properties at Bais,
including the electric plant, the "movie property," the commercial areas, and the
house where Don Julian was living. The remainder of the properties was retained by
Don Julian, including Lot No. 63.

March 11, 2005

J.L.T. AGRO, INC., represented by its Manager, JULIAN L. TEVES, Petitioner,

vs.
ANTONIO BALANSAG and HILARIA CADAYDAY, respondents.
TINGA, J.:
Once again, the Court is faced with the perennial conflict of property claims between
two sets of heirs, a conflict ironically made grievous by the fact that the decedent in
this case had resorted to great lengths to allocate which properties should go to which
set of heirs.
This is a Rule 45 petition assailing the Decision1 dated 30 September 1999 of the
Court of Appeals which reversed the Decision2 dated 7 May 1993 of the Regional Trial
Court (RTC), Branch 45, of Bais City, Negros Oriental.

Paragraph 13 of the Compromise Agreement, at the heart of the present dispute, lays
down the effect of the eventual death of Don Julian vis--vis his heirs:
13. That in the event of death of Julian L. Teves, the properties hereinafter
adjudicated to Josefa Teves Escao and Emilio B. Teves, (excluding the
properties comprised as Hacienda Medalla Milagrosa together with all its
accessories and accessions) shall be understood as including not only their
one-half share which they inherited from their mother but also the legitimes
and other successional rights which would correspond to them of the other
half belonging to their father, Julian L. Teves. In other words, the properties
now selected and adjudicated to Julian L. Teves (not including his
share in the Hacienda Medalla Milagrosa) shall exclusively be
adjudicated to the wife in second marriage of Julian L. Teves and his four
minor children, namely, Milagros Donio Teves, his two acknowledged natural
children Milagros Reyes Teves and Pedro Reyes Teves and his two
legitimated children Maria Evelyn Donio Teves and Jose Catalino Donio
Teves. (Emphasis supplied)

The factual antecedents follow.

Don Julian L. Teves (Don Julian) contracted two marriages, first with Antonia Baena
(Antonia), and after her death, with Milagros Donio Teves (Milagros Donio). Don

Page 39 of 59

On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of

Assignment of Assets with Assumption of Liabilities 8 in favor of J.L.T. Agro, Inc.
(petitioner). Less than a year later, Don Julian, Josefa and Emilio also executed an

instrument entitled Supplemental to the Deed of Assignment of Assets with the

Assumption of Liabilities (Supplemental Deed)9 dated 31 July 1973. This instrument
which constitutes a supplement to the earlier deed of assignment transferred
ownership over Lot No. 63, among other properties, in favor of petitioner.10 On 14
April 1974, Don Julian died intestate.
On the strength of the Supplemental Deed in its favor, petitioner sought the
registration of the subject lot in its name. A court, so it appeared, issued an
order11 cancelling OCT No. 5203 in the name of spouses Don Julian and Antonia on
12 November 1979, and on the same date TCT No. T-375 was issued in the name of
petitioner.12Since then, petitioner has been paying taxes assessed on the subject lot.13
Meanwhile, Milagros Donio and her children had immediately taken possession over
the subject lot after the execution of the Compromise Agreement. In 1974, they
entered into a yearly lease agreement with spouses Antonio Balansag and Hilaria
Cadayday, respondents herein.14 On Lot No. 63, respondents temporarily established
their home and constructed a lumber yard. Subsequently, Milagros Donio and her
children executed aDeed of Extrajudicial Partition of Real Estate15 dated 18 March
1980. In the deed of partition, Lot No. 63 was allotted to Milagros Donio and her two
(2) children, Maria Evelyn and Jose Catalino. Unaware that the subject lot was
already registered in the name of petitioner in 1979, respondents bought Lot No. 63
from Milagros Donio as evidenced by the Deed of Absolute Sale of Real
Estate16 dated 9 November 1983.
At the Register of Deeds while trying to register the deed of absolute sale,
respondents discovered that the lot was already titled in the name of petitioner. Thus,
they failed to register the deed.17
Respondents, as vendees of Lot No. 63, filed a complaint before the RTC Branch 45
of Bais City, seeking the declaration of nullity and cancellation of TCT No. T-375 in the
name of petitioner and the transfer of the title to Lot No. 63 in their names, plus
damages.18
After hearing, the trial court dismissed the complaint filed by respondents. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, by preponderance of evidence, this
Court finds judgment in favor of the defendant and against the plaintiff, and
thus hereby orders:
(1) That complaint be dismissed;
(2) That plaintiffs vacate the subject land, particularly identified as
Lot No. 63 registered under Transfer Certificate of Title No. T-375;
(3) That plaintiffs pay costs.

Page 40 of 59

Finding no basis on the counterclaim by defendant, the same is hereby

ordered dismissed.19
The trial court ruled that the resolution of the case specifically hinged on the
interpretation of paragraph 13 of theCompromise Agreement.20 It added that the direct
adjudication of the properties listed in the Compromise Agreement was only in favor
of Don Julian and his two children by the first marriage, Josefa and
Emilio.21Paragraph 13 served only as an amplification of the terms of the adjudication
in favor of Don Julian and his two children by the first marriage.
According to the trial court, the properties adjudicated in favor of Josefa and Emilio
comprised their shares in the estate of their deceased mother Antonia, as well as their
potential share in the estate of Don Julian upon the latters death. Thus, upon Don
Julians death, Josefa and Emilio could not claim any share in his estate, except their
proper share in the Hacienda Medalla Milagrosa which was adjudicated in favor of
Don Julian in theCompromise Agreement. As such, the properties adjudicated in favor
of Don Julian, except Hacienda Medalla Milagrosa, were free from the forced
legitimary rights of Josefa and Emilio, and Don Julian was under no impediment to
allocate the subject lot, among his other properties, to Milagros Donio and her four (4)
children.22
The trial court further stressed that with the use of the words "shall be," the
adjudication in favor of Milagros Donio and her four (4) children was not final and
operative, as the lot was still subject to future disposition by Don Julian during his
lifetime.23 It cited paragraph 1424 of the Compromise Agreement in support of his
conclusion.25 With Lot No. 63 being the conjugal property of Don Julian and Antonia,
the trial court also declared that Milagros Donio and her children had no hereditary
rights thereto except as to the conjugal share of Don Julian, which they could claim
only upon the death of the latter.26
The trial court ruled that at the time of Don Julians death on 14 April 1974, Lot No. 63
was no longer a part of his estate since he had earlier assigned it to petitioner on 31
July 1973. Consequently, the lot could not be a proper subject of extrajudicial partition
by Milagros Donio and her children, and not being the owners they could not have
sold it. Had respondents exercised prudence before buying the subject lot by
investigating the registration of the same with the Registry of Deeds, they would have
discovered that five (5) years earlier, OCT No. 5203 had already been cancelled and
replaced by TCT No. T-375 in the name of petitioner, the trial court added.27
The Court of Appeals, however, reversed the trial courts decision. The decretal part
of the appellate decision reads:
WHEREFORE, premises considered, the decision appealed from is hereby
REVERSED and SET ASIDE and a new one is entered declaring the
Transfer Certificate of Title No. T-375 registered in the name of J.L.T. Agro,
Inc. as null and void.

With costs against defendant J.L.T. Agro, Inc. represented by its Manager,
Julian L. Teves.
SO ORDERED.28
Per the appellate court, the Compromise Agreement incorporated in CFI decision
dated 31 January 1964, particularly paragraph 13 thereof, determined, adjudicated
and reserved to Don Julians two sets of heirs their future legitimes in his estate
except as regards his (Don Julians) share in Hacienda Medalla Milagrosa.29 The two
sets of heirs acquired full ownership and possession of the properties respectively
adjudicated to them in the CFI decision and Don Julian himself could no longer
dispose of the same, including Lot No. 63. The disposition in the CFI decision
constitutes res judicata.30 Don Julian could have disposed of only his conjugal share
in the Hacienda Medalla Milagrosa.31
The appellate court likewise emphasized that nobody in his right judgment would
preterit his legal heirs by simply executing a document like the Supplemental
Deed which practically covers all properties which Don Julian had reserved in favor of
his heirs from the second marriage. It also found out that the blanks reserved for the
Book No. and Page No. at the upper right corner of TCT No. T-375, "to identify the
exact location where the said title was registered or transferred," were not filled up,
thereby indicating that the TCT is "spurious and of dubious origin."32
Aggrieved by the appellate courts decision, petitioner elevated it to this Court via a
petition for review on certiorari, raising pure questions of law.
Before this Court, petitioner assigns as errors the following rulings of the appellate
court, to wit: (a) that future legitime can be determined, adjudicated and reserved
prior to the death of Don Julian; (b) that Don Julian had no right to dispose of or
assign Lot No. 63 to petitioner because he reserved the same for his heirs from the
second marriage pursuant to the Compromise Agreement; (c) that the Supplemental
Deed was tantamount to a preterition of his heirs from the second marriage; and (d)
that TCT No. T-375 in the name of petitioner is spurious for not containing entries on
the Book No. and Page No.33
While most of petitioners legal arguments have merit, the application of the
appropriate provisions of law to the facts borne out by the evidence on record
nonetheless warrants the affirmance of the result reached by the Court of Appeals in
favor of respondents.
Being the key adjudicative provision,
Agreement has to be quoted again:

paragraph

13

of

the Compromise

13. That in the event of death of Julian L. Teves, the properties herein
adjudicated to Josefa Teves Escao and Emilio B. Teves, (excluding the
properties comprised as Hacienda Medalla Milagrosa together with all its

Page 41 of 59

accessories and accessions) shall be understood as including not only their

one-half share which they inherited from their mother but also the legitimes
and other successional rights which would correspond to them of the other
half belonging to their father, Julian L.Teves. In other words, the properties
now selected and adjudicated to Julian L. Teves (not including his
share in the Hacienda Medalla Milagrosa) shall exclusively be
adjudicated to the wife in second marriage of Julian L. Teves and his
four minor children, namely, Milagros Donio Teves, his two
acknowledged natural children Milagros Reyes Teves and Pedro Reyes
Teves and his two legitimated children Maria Evelyn Donio Teves and
Jose Catalino Donio Teves." (Emphasis supplied)
With the quoted paragraph as basis, the Court of Appeals ruled that the adjudication
in favor of the heirs of Don Julian from the second marriage became automatically
operative upon the approval of the Compromise Agreement, thereby vesting on them
the right to validly dispose of Lot No. 63 in favor of respondents.
Petitioner argues that the appellate court erred in holding that future legitime can be
determined, adjudicated and reserved prior to the death of Don Julian. The Court
agrees. Our declaration in Blas v. Santos34 is relevant, where we defined future
inheritance as any property or right not in existence or capable of determination at
the time of the contract, that a person may in the future acquire by succession.
Article 1347 of the New Civil Code explicitly provides:
ART. 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not
intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in
cases expressly authorized by law.
All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract.
Well-entrenched is the rule that all things, even future ones, which are not outside the
commerce of man may be the object of a contract. The exception is that no contract
may be entered into with respect to future inheritance, and the exception to the
exception is the partition inter vivos referred to in Article 1080.35
For the inheritance to be considered "future," the succession must not have been
opened at the time of the contract. 36 A contract may be classified as a contract upon
future inheritance, prohibited under the second paragraph of Article 1347, where the
following requisites concur:
(1) That the succession has not yet been opened;

(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a
right which is purely hereditary in nature.37
The first paragraph of Article 1080, which provides the exception to the exception and
therefore aligns with the general rule on future things, reads:
ART. 1080. Should a person make a partition of his estate by an act inter
vivos, or by will, such partition shall be respected, insofar as it does not
prejudice the legitime of the compulsory heirs.
....
In interpreting this provision, Justice Edgardo Paras advanced the opinion that if the
partition is made by an actinter vivos, no formalities are prescribed by the
Article.38 The partition will of course be effective only after death. It does not
necessarily require the formalities of a will for after all it is not the partition that is the
mode of acquiring ownership. Neither will the formalities of a donation be required
since donation will not be the mode of acquiring the ownership here after death; since
no will has been made it follows that the mode will be succession (intestate
succession). Besides, the partition here is merely the physical determination of the
part to be given to each heir.39
The historical antecedent of Article 1080 of the New Civil Code is Article 1056 40 of the
old Civil Code. The only change in the provision is that Article 1080 now permits
any person (not a testator, as under the old law) to partition his estate by act inter
vivos. This was intended to abrogate the then prevailing doctrine that for a testator to
partition his estate by an act inter vivos, he must first make a will with all the
formalities provided by law.41
Article 1056 of the old Civil Code (now Article 1080) authorizes a testator to
partition inter vivos his property, and distribute them among his heirs, and this
partition is neither a donation nor a testament, but an instrument of a special
character, sui generis, which is revocable at any time by the causante during his
lifetime, and does not operate as a conveyance of title until his death . It derives
its binding force on the heirs from the respect due to the will of the owner of the
property, limited only by his creditors and the intangibility of the legitime of the forced
heirs.42

Page 42 of 59

The partition inter vivos of the properties of Don Julian is undoubtedly valid pursuant
to Article 1347. However, considering that it would become legally operative only
upon the death of Don Julian, the right of his heirs from the second marriage to the
properties adjudicated to him under the compromise agreement was but a mere
expectancy. It was a bare hope of succession to the property of their father. Being the
prospect of a future acquisition, the interest by its nature was inchoate. It had no
attribute of property, and the interest to which it related was at the time nonexistent
and might never exist.43
Evidently, at the time of the execution of the deed of assignment covering Lot No. 63
in favor of petitioner, Don Julian remained the owner of the property since ownership
over the subject lot would only pass to his heirs from the second marriage at the time
of his death. Thus, as the owner of the subject lot, Don Julian retained the absolute
right to dispose of it during his lifetime. His right cannot be challenged by Milagros
Donio and her children on the ground that it had already been adjudicated to them by
virtue of the compromise agreement.
Emerging as the crucial question in this case is whether Don Julian had validly
transferred ownership of the subject lot during his lifetime. The lower court ruled that
he had done so through the Supplemental Deed. The appellate court disagreed,
holding that the Supplemental Deed is not valid, containing as it does a prohibited
preterition of Don Julians heirs from the second marriage. Petitioner contends that
the ruling of the Court of Appeals is erroneous. The contention is well-founded.
Article 854 provides that the preterition or omission of one, some, or all of the
compulsory heirs in the direct line, whether living at the time of the execution of the
will or born after the death of the testator, shall annul the institution of heir; but the
devises and legacies shall be valid insofar as they are not inofficious.
Manresa defines preterition as the omission of the heir in the will, either by not
naming him at all or, while mentioning him as father, son, etc., by not instituting him
as heir without disinheriting him expressly, nor assigning to him some part of the
properties.44It is the total omission of a compulsory heir in the direct line from
inheritance.45 It consists in the silence of the testator with regard to a compulsory heir,
omitting him in the testament, either by not mentioning him at all, or by not giving him
anything in the hereditary property but without expressly disinheriting him, even if he
is mentioned in the will in the latter case.46 But there is no preterition where the
testator allotted to a descendant a share less than the legitime, since there was no
total omission of a forced heir.47
In the case at bar, Don Julian did not execute a will since what he resorted to was a
partition inter
vivos of
his
properties,
as
evidenced
by
the
court
approved Compromise Agreement. Thus, it is premature if not irrelevant to speak of
preterition prior to the death of Don Julian in the absence of a will depriving a legal
heir of his legitime. Besides, there are other properties which the heirs from the
second marriage could inherit from Don Julian upon his death. A couple of provisions
in the Compromise Agreement are indicative of Don Julians desire along this
line.48 Hence, the total omission from inheritance of Don Julians heirs from the

second marriage, a requirement for preterition to exist, is hardly imaginable as it is

unfounded.
Despite the debunking of respondents argument on preterition, still the petition would
ultimately rise or fall on whether there was a valid transfer effected by Don Julian to
petitioner. Notably, Don Julian was also the president and director of petitioner, and
his daughter from the first marriage, Josefa, was the treasurer thereof. There is of
course no legal prohibition against such a transfer to a family corporation. Yet close
scrutiny is in order, especially considering that such transfer would remove Lot No. 63
from the estate from which Milagros and her children could inherit. Both the alleged
transfer deed and the title which necessarily must have emanated from it have to be
subjected to incisive and detailed examination.
Well-settled, of course, is the rule that a certificate of title serves as evidence of an
indefeasible title to the property in favor of the person whose name appears
therein.49 A certificate of title accumulates in one document a precise and correct
statement of the exact status of the fee held by its owner. The certificate, in the
absence of fraud, is the evidence of title and shows exactly the real interest of its
owner.50
To successfully assail the juristic value of what a Torrens title establishes, a sufficient
and convincing quantum of evidence on the defect of the title must be adduced to
overcome the predisposition in law in favor of a holder of a Torrens title. Thus,
contrary to the appellate courts ruling, the appearance of a mere thumbmark of Don
Julian instead of his signature in the Supplemental Deed would not affect the validity
of petitioners title for this Court has ruled that a thumbmark is a recognized mode of
signature.51
The truth, however, is that the replacement of OCT No. 5203 in the name of Julian by
T.C.T. No. T-375 is marred by a grave irregularity which is also an illegality, as it
contravenes the orthodox, conventional and normal process established by law. And,
worse still, the illegality is reflected on the face of both titles. Where, as in this case,
the transferee relies on a voluntary instrument to secure the issuance of a new title in
his name such instrument has to be presented to the Registry of Deeds. This is
evident from Sections 53 and 57 of Presidential Decree (P.D.) No. 1529 or
the Property Registration Decree. The sections read, thus:
SEC. 53. Presentation of owners duplicate upon entry of new certificate.
No voluntary instrument shall be registered by the Register of Deeds
unless the owners duplicate certificate is presented with such instrument,
except in cases expressly provided for in this Decree or upon order of the
court, for cause shown. (Emphasis supplied)
....
SEC. 57. Procedure in registration of conveyances. An owner desiring to
convey his registered land in fee simple shall execute and register a deed of

Page 43 of 59

conveyance in a form sufficient in law. The Register of Deeds shall

thereafter make out in the registration book a new certificate of title to the
grantee and shall prepare and deliver to him an owners duplicate certificate.
The Register of Deeds shall note upon the original and duplicate certificate
the date of transfer, the volume and page of the registration book in which
the new certificate is registered and a reference by number to the last
preceding certificate. The original and the owners duplicate of the grantors
certificate shall be stamped "cancelled." The deed of conveyance shall be
filed and endorsed with the number and the place of registration of the
certificate of title of the land conveyed. (Emphasis supplied)
As petitioner bases its right to the subject lot on the Supplemental Deed, it should
have presented it to the Register of Deeds to secure the transfer of the title in its
name. Apparently, it had not done so. There is nothing on OCT No. 5203 or on the
succeeding TCT No. T-375 either which shows that it had presented
the Supplemental Deed. In fact, there is absolutely no mention of a reference to said
document in the original and transfer certificates of title. It is in this regard that the
finding of the Court of Appeals concerning the absence of entries on the blanks
intended for the Book No. and Page No. gains significant relevance. Indeed, this
aspect fortifies the conclusion that the cancellation of OCT No. 5203 and the
consequent issuance of TCT No. T-375 in its place are not predicated on a valid
transaction.
What appears instead on OCT No. 5203 is the following pertinent entry:
Entry No. 1374: Kind: Order: Executed in favor of J.L.T. AGRO, INC.
CONDITIONS: Lost owners duplicate is hereby cancelled, and null and
void and a new Certificate of Title No. 375 is issued per Order of the
Court of First Instance on file in this office.
Date of Instrument: November 12, 1979
Date of Inscription: Nov. 12, 1979 4:00 P.M.

(SGD)
MANUEL
Acting
Deputy
Register
(Emphasis supplied)52

C.
of

MONTESA
Deeds
II

What the entry indicates is that the owners duplicate of OCT No. 5203 was lost, a
petition for the reconstitution of the said owners duplicate was filed in court, and the
court issued an order for the reconstitution of the owners duplicate and its
replacement with a new one. But if the entry is to be believed, the court concerned

(CFI, according to the entry) issued an order for the issuance of a new title which is
TCT No. T-375 although the original of OCT No. 5203 on file with the Registry of
Deeds had not been lost.

Lot No. 63, Tax Dec. No. 33, Certificate of Title No. 5203, together with all
improvements. Assessed value -P2,720.00
....

Going by the legal, accepted and normal process, the reconstitution court may order
the reconstitution and replacement of the lost title only, nothing else. Since what was
lost is the owners copy of OCT No. 5203, only that owners copy could be ordered
replaced. Thus, the Register of Deeds exceeded his authority in issuing not just a
reconstituted owners copy of the original certificate of title but a new transfer
certificate of title in place of the original certificate of title. But if the court order, as the
entry intimates, directed the issuance of a new transfer certificate of titleeven
designating the very number of the new transfer certificate of title itselfthe order
would be patently unlawful. A court cannot legally order the cancellation and
replacement of the original of the O.C.T. which has not been lost, 53 as the petition for
reconstitution is premised on the loss merely of the owners duplicate of the OCT
Apparently, petitioner had resorted to the court order as a convenient contrivance to
effect the transfer of title to the subject lot in its name, instead of the Supplemental
Deed which should be its proper course of action. It was so constrained to do
because the Supplemental Deed does not constitute a deed of conveyance of the
"registered land in fee simple" "in a form sufficient in law," as required by Section 57
of P.D. No. 1529.
A plain reading of the pertinent provisions of the Supplemental Deed discloses that
the assignment is not supported by any consideration. The provision reads:
....
WHEREAS, in the Deed of Assignment of Assets with the Assumption of
Liabilities executed by Julian L. Teves, Emilio B. Teves and Josefa T. Escao
at Dumaguete City on 16th day of November 1972 and ratified in the City of
Dumaguete before Notary Public Lenin Victoriano, and entered in the latters
notarial register as Doc. No. 367; Page No. 17; Book No. V; series of 1972,
Julian L. Teves, Emilio B. Teves and Josefa T. Escao, transferred,
conveyed and assigned unto J.L.T. AGRO, INC., all its assets and liabilities
as reflected in the Balance Sheet of the former as of December 31, 1971.
WHEREAS, on the compromise agreement, as mentioned in the Decision
made in the Court of First Instance of Negros Oriental, 12th Judicial District
Branch II, on Dec. 31, 1964 pertaining to Civil Case No. 3443 the following
properties were adjudicated to Don Julian L. Teves. We quote.
From
the
properties
Adjudicated to Don Julian L.Teves
....

Page 44 of 59

at

Bais

WHEREAS, this Deed of Assignment is executed by the parties herein in

order to effect the registration of the transfer of the above corporation.
NOW, THEREFORE, for and in consideration of the above premises the
ASSIGNOR hereby transfers, conveys, and assigns unto J.L.T. AGRO, INC.,
the above described parcel of land[s] with a fair market value of EIGHTYFOUR THOUSAND PESOS (P84,000.00), Philippine Currency, and which
transfer, conveyance and assignment shall become absolute upon
signing.54 (Emphasis supplied)
The amount of P84,000.00 adverted to in the dispositive portion of the instrument
does not represent the consideration for the assignment made by Don Julian. Rather,
it is a mere statement of the fair market value of allthe nineteen (19) properties
enumerated in the instrument, of which Lot No. 63 is just one, that were transferred
by Don Julian in favor of petitioner. Consequently, the testimony 55 of petitioners
accountant that the assignment is supported by consideration cannot prevail over the
clear provision to the contrary in the Supplemental Deed.
The Court of Appeals, on the other hand, apparently considered the 1948 mortgage
which is annotated on the back of the TCT No. T-375 as the consideration for the
assignment.56 However, the said annotation57 shows that the mortgage was actually
executed in favor of Rehabilitation Finance Corporation, not of petitioner.58 Clearly,
said mortgage, executed as it was in favor of the Rehabilitation Finance Corporation
and there being no showing that petitioner itself paid off the mortgate obligation, could
not have been the consideration for the assignment to petitioner.
Article 1318 of the New Civil Code enumerates the requisites of a valid contract,
namely: (1) consent of the contracting parties; (2) object certain which is the subject
matter of the contract; and (3) Cause of the obligation which is established.
Thus, Article 1352 declares that contracts without cause, or with unlawful cause
produce no effect whatsoever. Those contracts lack an essential element and they
are not only voidable but void or inexistent pursuant to Article 1409, paragraph
(2).59 The absence of the usual recital of consideration in a transaction which normally
should be supported by a consideration such as the assignment made by Don Julian
of all nineteen (19) lots he still had at the time, coupled with the fact that the assignee
is a corporation of which Don Julian himself was also the President and Director,
forecloses the application of the presumption of existence of consideration
established by law.60

Neither could the Supplemental Deed validly operate as a donation. Article 749 of the
New Civil Code is clear on the point, thus:
Art. 749. In order that the donation of the immovable may be valid, it must be
made in a public document, specifying therein the property donated and the
value of the charges which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate
public document, but it shall not take effect unless it is done during the
lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be
notified thereof in an authentic form, and this step shall be noted in both
instruments.

WHEREFORE, foregoing premises considered, the Decision dated 30 September

1999 of the Court of Appeals is hereby AFFIRMED. Costs against petitioner J.L.T.
Agro, Inc.
G.R. No. L-14070

March 29, 1961

MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS, LEONCIO GERVACIO

BLAS
and
LODA
GERVACIO
BLAS, plaintiffs-appellants,
vs.
ROSALINA SANTOS, in her capacity as Special Administratrix of the Estate of
the deceased MAXIMA SANTOS VDA. DE BLAS, in Sp. Proc. No. 2524, Court of
First Instance of Rizal, defendants-appellants. MARTA GERVACIO BLAS and
DR. JOSE CHIVI, defendants-appellants.
LABRADOR, J.:

In Sumipat, et al v. Banga, et al.,61 this Court declared that title to immovable property
does not pass from the donor to the donee by virtue of a deed of donation until and
unless it has been accepted in a public instrument and the donor duly notified thereof.
The acceptance may be made in the very same instrument of donation. If the
acceptance does not appear in the same document, it must be made in another.
Where the deed of donation fails to show the acceptance, or where the formal notice
of the acceptance, made in a separate instrument, is either not given to the donor or
else not noted in the deed of donation and in the separate acceptance, the donation
is null and void.
In the case at bar, although the Supplemental Deed appears in a public
document,62 the absence of acceptance by the donee in the same deed or even in a
separate document is a glaring violation of the requirement.
One final note. From the substantive and procedural standpoints, the cardinal
objectives to write finis to a protracted litigation and avoid multiplicity of suits are
worth pursuing at all times. 63 Thus, this Court has ruled that appellate courts have
ample authority to rule on specific matters not assigned as errors or otherwise not
raised in an appeal, if these are indispensable or necessary to the just resolution of
the pleaded issues.64 Specifically, matters not assigned as errors on appeal but
consideration of which are necessary in arriving at a just decision and complete
resolution of the case, or to serve the interest of justice or to avoid dispensing
piecemeal justice.65
In the instant case, the correct characterization of the Supplemental Deed, i.e.,
whether it is valid or void, is unmistakably determinative of the underlying controversy.
In other words, the issue of validity or nullity of the instrument which is at the core of
the controversy is interwoven with the issues adopted by the parties and the rulings of
the trial court and the appellate court.66 Thus, this Court is also resolute in striking
down the alleged deed in this case, especially as it appears on its face to be a blatant
nullity.

Page 45 of 59

This action was instituted by plaintiffs against the administration of the estate of
Maxima Santos, to secure a judicial declaration that one-half of the properties left by
Maxima Santos Vda. de Blas, the greater bulk of which are set forth and described in
the project of partition presented in the proceedings for the administration of the
estate of the deceased Simeon Blas, had been promised by the deceased Maxima
Santos to be delivered upon her death and in her will to the plaintiffs, and requesting
that the said properties so promised be adjudicated to the plaintiffs. The complaint
also prays for actual damages in the amount of P50,000. (Record on Appeal, pp. 165.) The alleged promise of the deceased Maxima Santos is contained in a document
executed by Maxima Santos on December 26, 1936 attached to the complaint as
Annex "H" and introduced at the trial as Exhibit "A". (Ibid., pp. 258-259.) The
complaint also alleges that the plaintiffs are entitled to inherit certain properties
enumerated in paragraph 3 thereof, situated in Malabon, Rizal and Obando, Bulacan,
but which properties have already been in included in the inventory of the estate of
the deceased Simeon Blas and evidently partitioned and conveyed to his heirs in the
proceedings for the administration of his (Simeon Blas) estate.
Defendant, who is the administratrix of the estate of the deceased Maxima Santos
Vda. de Blas, filed an answer with a counterclaim, and later, an amended answer and
a counterclaim. The said amended answer admits the allegations of the complaint as
to her capacity as administratrix the death of Simeon Blas on January 3, 1937; the
fact that Simeon Blas and Marta Cruz begot three children only one of whom, namely,
Eulalio Blas, left legitimate descendants; that Simeon Blas contracted a second
marriage with Maxima Santos on June 28, 1898. She denies for lack of sufficient
information and belief, knowledge edge of the first marriage of Simeon Blas to Marta
Cruz, the averment that Simeon Blas and Marta Cruz acquired properties situated in
Obando, Bulacan, that said properties were utilized as capital, etc. As special
defenses, she alleges that the properties of the spouses Blas and Santos had been
settled and liquidated in the project of partition of the estate of said Simeon Blas; that
pursuant to the project of partition, plaintiffs and some defendants had already
received the respective properties adjudicated to them; that the plaintiffs and the

defendants Marta Geracio and Jose Chivi are estopped from impugning the validity of
the project of partition of the estate of the deceased Simeon Blas and from
questioning the ownership in the properties conveyed in the project of partition to
Maxima Santos as her own exclusive property; that the testament executed by
Maxima Santos is valid, the plain plaintiffs having no right to recover any portion of
Maxima Santos' estate now under administration by the court. A counterclaim for the
amount of P50,000 as damages is also included in the complaint, as also a crossclaim against Marta Gervacio Blas and Jose Chivi.
Trial of the case was Conducted and, thereafter, the court, Hon. Gustave Victoriano,
presiding, rendered judgment dismissing the complaint, with costs against plaintiff,
and dismissing also the counterclaim and cross-claim decision ,the plaintiffs filed by
the defendants. From this district have appealed to this Court.
The facts essential to an understanding of the issues involved in the case may be
briefly summarized as follows: Simeon Blas contracted a first marriage with Marta
Cruz sometime before 1898. They had three children, only one of whom, Eulalio, left
children, namely, Maria Gervacio Blas, one of the plaintiffs, Marta Gervacio Blas, one
of the defendants, and Lazaro Gervacio Blas. Lazaro died in 1950, and is survived by
three legitimate children who are plaintiffs herein, namely, Manuel Gervacio Blas,
Leoncio Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in 1898, and the
following year, Simeon Blas contracted a second marriage with Maxima Santos. At
the time of this second marriage, no liquidation of the properties required by Simeon
Blas and Marta Cruz was made. Three of the properties left are fishponds located in
Obando, Bulacan. Maxima Santos does not appear to have apported properties to
her marriage with Simeon Blas.
On December 26, 1936, only over a week before over a week before his death on
January 9, 1937, Simeon Blas executed a last will and testament. In the said
testament Simeon Blas makes the following declarations:
I
2. Sa panahon ng aking pangalawang asawa, MAXIMA SANTOS DE BLAS,
ay nagkaroon ako at nakatipon ng mga kayamanan (bienes) at pag-aari
(propriedades) na ang lahat ng lupa, palaisdaan at iba pang pag-aari ay
umaabot sa halagang ANIM NA RAAN PITONG PU'T WALONG DAAN LIBO
WALONG DAAN WALONG PUNG PISO (678,880-00) sang-ayon sa mga
halaga sa amillarimento (valor Amillarado.)
II
1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang lahat
ng aking o aming pag-kakautang na mag-asawa, kung mayroon man,
yayamang ang lahat ng ito ay kita sa loob ng matrimonio (bienes ganaciales)
ay bahagi ng para sa aking asawa, MAXIMA SANTOS DE BLAS, sang-ayon
sa batas. (Record on Appeal, pp. 250-251.)

Page 46 of 59

The above testamentary provisions may be translated as follows:

I
2. During my second marriage with Maxima Santos de Blas, I possessed
and acquired wealth and properties, consisting of lands, fishponds and other
kinds of properties, the total assessed value of which reached the amount
P678,880.00.
II
1. One-half of our properties, after the payment of my and our indebtedness,
all these properties having been acquired during marriage (conjugal
properties), constitutes the share of my wife Maxima Santos de Blas,
according to the law.
At the time of the execution of said will, Andres Pascual a son-in-law of the testator,
and Avelina Pascual and others, were present. Andres Pascual had married a
descendant by the first marriage. The will was prepared by Andres Pascual, with the
help of his nephew Avelino Pascual. The testator asked Andres Pascual to prepare a
document which was presented in court as Exhibit "A", thus:
Q Was there anybody who asked you to prepare this document?
A Don Simeon Blas asked me to prepare this document (referring to
Exhibit "A"), (t.s.n., Sarmiento to, P. 24).
The reason why the testator ordered the preparation of Exhibit "A" was because the
properties that the testator had acquired during his first marriage with Marta Cruz had
not been liquidated and were not separated from those acquired during the second
marriage. Pascual's testimony is as follows:
Q To whom do you refer with the word "they"?
A Simeon Blas and his first wife, Marta Cruz. When Marta Cruz died they
had not made a liquidation of their conjugal properties and so all those
properties were included all in the assets of the second marriage, and that is
the reason why this document was prepared. (t.s.n., Sarmiento, p. 36.)
The above testimony is fully corroborated by that of Leoncio Gervacio, son-in-law of
Simeon Blas.
Q Please state to the Court?

A My children were claiming from their grandfather Simeon Blas the

properties left by their grandmother Marta Cruz in the year 1936.

and which, translated into English, reads as follows:

KNOW ALL MEN BY THESE PRESENTS:

Q And what happened with that claim of your children against Simeon
Blas regarding the assets or properties of the first marriage that were left
after the death of Marta Cruz in 1936?
A The claim was not pushed through because they reached into an
agreement whereby the parties Simeon Blas Maxima Santos, Maria
Gervacio Bias, Marta Gervacio Blas and Lazaro Gervacio Blas agreed that
Simeon Blas and Maxima Blas will give one-half of the estate of Simeon
Blas. (t.s.n., Sarmiento, pp. 143-144).
The document which was thus prepared and which is marked as Exhibit "A" reads in
Tagalog, thus:

That I MAXIMA SANTOS DE BLAS, of legal age, married to SIMEON BLAS,

resident of Malabon, Rizal, Philippines, voluntarily state:
That I have read and knew the contents of the will signed by my husband,
SIMEON BLAS, (2) and I promise on my word of honor in the presence of
my husband that I will respect and obey all and every disposition of said will
(3) and furthermore, I promise in this document that all the properties my
husband and I will leave, the portion and share corresponding to me when I
make my will, I will give one-half () to the heirs and legatees or the
beneficiaries named in the will of my husband, (4) and that I can select or
choose any of them, to whom I will give depending upon the respect, service
and treatment accorded to me.

MAUNAWA NG SINO MANG MAKABABASA:

Na akong si MAXIMA SANTOS DE BLAS, nasa hustong gulang, kasal kay
SIMEON BLAS, taga bayan ng Malabon, Rizal, Philippines, sa pamamagitan
ng kasulatang ito ay malaya kong ipinahahayag:
Na aking nabasa at naunawa ang testamento at huling kalooban na
nilagdaan ng aking asawa, SIMEON BLAS, at ipinahahayag ko sa ilalim ng
aking karangalan at sa harap ng aking asawa na igagalang at
pagpipitaganan ang lahat at bawa't isang bahagi ng nabanggit na
testamento at ipinangangako ko pa sa pamamagitan ng kasulatang ito na
ang lahat ng maiiwang pag-aari at kayamanan naming mag-asawa, na
nauukol at bahaging para sa akin sa paggawa ko naman ng aking
testamento ay ipagkakaloob ko ang kalahati () sa mga herederos at
legatarios o pinamamanahan ng aking nabanggit na asawa, SIMEON BLAS,
sa kaniyang testamento, na ako'y makapipili o makahihirang na kahit
kangino sa kanila ng aking pagbibigyan at pamamanahan sang-ayon sa
paggalang, paglilingkod, at pakikisama ng gagawin sa akin.
SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko ang kasulatang ito
ngayon ika 26 ng Diciembre ng taong 1936, dito sa San Francisco del
Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 29-30 Appellant's
brief).

(Fdo.) MAXIMA SANTOS DE BLAS

Page 47 of 59

IN WITNESS WHEREOF, I signed this document this 26th day of December,

1936 at San Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A",
pp. 30-31, Appellant's brief).

(Sgd.) MAXIMA SANTOS DE BLAS

The court below held that said Exhibit "A" has not created any right in favor of
plaintiffs which can serve as basis for the complaint; that neither can it be considered
as a valid and enforceable contract for lack of consideration and because it deals with
future inheritance. The court also declared that Exhibit "A" is not a will because it
does not comply with the requisites for the execution of a will; nor could it be
considered as a donation, etc.
Both the court below in its decision and the appellees in their brief before us, argue
vehemently that the heirs of Simeon Blas and his wife Marta Cruz can no longer
make any claim for the unliquidated conjugal properties acquired during said first
marriage, because the same were already included in the mass of properties
constituting the estate of the deceased Simeon Blas and in the adjudications made by
virtue of his will, and that the action to recover the same has prescribed. This
contention is correct. The descendants of Marta Cruz can no longer claim the
conjugal properties that she and her husband may have required during their
marriage although no liquidation of such properties and delivery thereof to the heirs of
Marta Cruz have been made, no action to recover said propertied having been
presented in the proceedings for the settlement of the estate of Simeon Blas.

But the principal basis for the plaintiffs' action in the case at bar is the document
Exhibit "A". It is not disputed that this document was prepared at the instance of
Simeon Blas for the reason that the conjugal properties of me on Blas for the reason
his first marriage had not been liquidated; that it was prepared at the same time as
the will of Simeon Blas on December 26, 1936, at the instance of the latter himself. It
is also not disputed that the document was signed by Maxima Santos and one copy
thereof, which was presented in court as Exhibit "A", was kept by plaintiffs' witness
Andres Pascual.
Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement and a
contract in the nature of a compromise to avoid litigation. Defendants-appellees, in
answer, claim that it is neither a trust agreement nor a compromise a agreement.
Considering that the properties of the first marriage of Simeon Blas had not been
liquidated when Simeon Blas executed his will on December 26, 1936', and the
further fact such properties where actually , and the further fact that included as
conjugal properties acquired during the second marriage, we find, as contended by
plaintiffs-appellants that the preparation and execution of Exhibit "A" was ordered by
Simeon Blas evidently to prevent his heirs by his first marriage from contesting his will
and demanding liquidation of the conjugal properties acquired during the first
marriage, and an accounting of the fruits and proceeds thereof from the time of the
death of his first wife.
Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the
Civil Code of Spain, in force at the time of the execution of Exhibit "A", which provides
as follows:
Compromise is a contract by which each of the parties in interest, by
giving, promising, or retaining something avoids the provocation of a suitor
terminates one which has already the provocation been instituted.
(Emphasis supplied.)
Exhibit "A" states that the maker (Maxima Santos) had read and knew the contents of
the will of her husband read and knew the contents of the will Simeon Blas she
was evidently referring to the declaration in the will(of Simeon Blas) that his properties
are conjugal properties and one-half thereof belongs to her (Maxima Santos) as her
share of the conjugal assets under the law. The agreement or promise that Maxima
Santos makes in Exhibit "A" is to hold one-half of her said share in the conjugal
assets in trust for the heirs and legatees of her husband in his will, with the obligation
of conveying the same to such of his heirs or legatees as she may choose in her last
will and testament. It is to be noted that the conjugal properties referred to are those
that were actually existing at that time, December 26, 1936. Simeon Blas died on
January 9, 1937. On June 2, 1937, an inventory of the properties left by him, all
considered conjugal, was submitted by Maxima Santos herself as administratrix of his
estate. A list of said properties is found in Annex "E", the complete inventory
submitted by Maxima Santos Vda. de Blas, is administratrix of the estate of her
husband, dated March 10, 1939. The properties which were given to Maxima Santos
as her share in the conjugal properties are also specified in the project of partition
submitted by said Maxima Santos herself on March 14, 1939. (Record on Appeal, pp.

Page 48 of 59

195-241.) Under Exhibit "A", therefore, Maxima Santos contracted the obligation and
promised to give one-half of the above indicated properties to the heirs and legatees
of Simeon Blas.
Counsel for the defendant-appellee claims Exhibit "A" is a worthless piece of paper
because it is not a will nor a donation mortis causa nor a contract. As we have in
indicated above, it is a compromise and at the same time a contract with a sufficient
cause or consideration. It is also contended that it deals with future inheritance. We
do not think that Exhibit "A" is a contract on future inheritance. it is an obligation or
promise made by the maker to transmit one-half of her share in the conjugal
properties acquired with her husband, which properties are stated or declared to be
conjugal properties in the will of the husband. The conjugal properties were in
existence at the time of the execution of Exhibit "A" on December 26, 1936. As a
matter of fact, Maxima Santos included these properties in her inventory of her
husband's estate of June 2, 1937. The promise does not refer to any properties that
the maker would inherit upon the death of her husband, because it is her share in the
conjugal assets. That the kind of agreement or promise contained in Exhibit "A" is not
void under Article 1271 of the old Civil Code, has been decided by the Supreme Court
of Spain in its decision of October 8, 19154, thus:
Que si bien el art. 1271 del Codigo civil dispone que sobre la herenciafutura
no se podra celebrar otros contratos que aquellos cuyo objecto seapracticar
entre vivos la division de un caudal, conforme al articulo 1056, esta
prohibicion noes aplicable al caso, porque la obligacion que contrajoel
recurr en contrato privado de otorgar testamento e instituir heredera a su
subrina de los bienes que adquirio en virtud de herencia, procedentes desu
finada consorte que le quedasen sobrantes despues de pagar las deudas, y
del ganacial que se expresa, asi como de reconocer, ademas, con alguna
cosaa otros sobrinos, se refiere a bienes conocidos y determinados
existentes cuando tal compromisi se otorgo, y no a la universalidad de una
herencia que, sequn el art. 659 del citado Codigo civil, as determina a
muerte, constituyendola todos los bienes, derechos y obligaciones que por
ella no sehayan extinguido: ..." (Emphasis supplied.)
It will be noted that what is prohibited to be the subject matter of a contract under
Article 1271 of the Civil Code is "future inheritance." To us future inheritance is any
property or right not in existence or capable of determination at the time of the
contract, that a person may in the future acquire by succession. The properties
subject of the contract Exhibit "A" are well defined properties, existing at the time of
the agreement, which Simeon Blas declares in his statement as belonging to his wife
as her share in the conjugal partnership. Certainly his wife's actual share in the
conjugal properties may not be considered as future inheritance because they were
actually in existence at the time Exhibit "A" was executed.
The trial court held that the plaintiffs-appellants in the case at bar are concluded by
the judgement rendered in the proceedings for the settlement of the estate of Simeon
Blas for the reason that the properties left by him belonged to himself and his wife
Maxima Santos; that the project of partition in the said case, adjudicating to Maxima

Santos one-half as her share in the conjugal properties, is a bar to another action on
the same subject matter, Maxima Santos having become absolute owner of the said
properties adjudicated in her favor. As already adverted to above, these contentions
would be correct if applied to the claim of the plaintiffs-appellants that said properties
were acquired with the first wife of Simeon Blas, Marta Cruz. But the main ground
upon which plaintiffs base their present action is the document Exhibit "A", already
fully considered above. As this private document contains the express promise made
by Maxima Santos to convey in her testament, upon her death, one-half of the
conjugal properties she would receive as her share in the conjugal properties, the
action to enforce the said promise did not arise until and after her death when it was
found that she did not comply with her above-mentioned promise. (Art. 1969, old Civil
Code.) The argument that the failure of the plaintiffs-appellants herein to oppose the
project of partition in the settlement of the estate of Simeon Blas, especially that
portion of the project which assigned to Maxima Santos one-half of all the conjugal
properties bars their present action, is, therefore, devoid of merit. It may be added
that plaintiffs-appellants did not question the validity of the project of partition
precisely because of the promise made by Maxima Santos in the compromise Exhibit
"A"; they acquised in the approval of said project of partition because they were
relying on the promise made by Maxima Santos in Exhibit "A", that she would transmit
one-half of the conjugal properties that she was going to receive as her share in the
conjugal partnership upon her death and in her will, to the heirs and legatees of her
husband Simeon Blas.
Neither can the claim of prescription be considered in favor of the defendants. The
right of action arose at the time of the death of Maxima Santos on October 5,1956,
when she failed to comply with the promise made by her in Exhibit "A". The plaintiffsappellants immediately presented this action on December 27, 1956, upon learning of
such failure on the part of Maxima Santos to comply with said promise. This defense
is, therefore, also without merit.

34. Batang Pirasuan, Lubao, Pampanga

11.9515

"

35. Calangian, Lubao, Pampanga

30.2059

"

38. Bakuling, Lubao, Pampanga

215.4325

39. Bakuling, Lubao, Pampanga

8.3763

40. Bangkal, Sinubli

23.0730

41. Tagulod,

6.8692

44. Bangkal Pugad

It is next contended by the defendant-appellee that Maxima Santos complied with her
above-mentioned promise, that Andres Pascual, Tomasa Avelino, Justo Garcia,
Ludovico Pimpin and Marta Gervacio Blas were given substancial legacies in the will
and testament of Maxima Santos. To determine whether she had actually complied
with the promise made in Exhibit "A", there is herein set forth a list only of the
fishponds and their respective areas as contained in the list of properties she
acquired as her share in the conjugal partnership, which list includes, besides many
ricelands as well as residential lots, thus:

31. Paco, Obando, Bulacan

5.8396 has.

32. Pangjolo, Obando

3.5857

Page 49 of 59

"

"

"

"

(a
) 34.2779

"

(b
) 51.7919

"

(c) 2.5202

45. Magtapat Bangkal, Lubao, Pampanga

"

"

(a
) 18.0024

(b
) 7.3265

"

"

(c) 53.5180

46. Pinanganakan, Lubao, Pampanga

47. Emigdio Lingid, Lubao, Pampanga

48. Propios, Lubao, Pampanga

"

159.0078

"

34.5229

(c) 1.4638

"

(d
) 1.4638

"

(e
) 2.8316

"

"

80.5382

"
(f) 10.4412

49. Batang Mabuanbuan, Sexmoan, Pampanga

43.3350

"
(g
) 3.9033

50. Binatang Mabuanbuan, Sexmoan, Pampanga

3.5069

51. Sapang Magtua, Sexmoan, Pampanga

56,8242

52. Kay Limpin, Sexmoan, Pampanga

5.0130

53. Calise Mabalumbum, Sexmoan, Pampanga

23.8935

54. Messapinit Kineke, Sexmoan, Pampanga

(a
) 5.2972

(b
) 5.9230

Page 50 of 59

"

"

"
(h
) 11.9263

"

(i) 6.0574

"

"

55. Dalang, Banga, Sexmoan, Pampanga

23.3989

62. Alaminos, Pangasinan

147.1242

80. Mangasu Sexmoan, Pampanga

10.000

81. Don Tomas, Sexmoan, Pampanga

21.6435

"

"

"

"

"
"

"
"

82. Matikling, Lubao, Pampanga

Page 51 of 59

16.0000

"

Total area ...............................

1045.7863

"

(See Record on Record, pp. 195-241.)

Simeon Blas) file adversary pleadings to determine the participation of each and
every one of them in said properties. Costs against the defendant- appellee Rosalina
Santos.
G.R. No. 165300

In her will, Maxima Santos devised to Marta Gervacio Blas the 80-hectare fishpond
situated in Lubao, Pampanga. The fishpond devised is evidently that designated as
"Propios" in Lubao, Pampanga, item No. 8 in the list of properties adjudicated to her
in the project of partition. (Record on Appeal, p. 215.) Considering that the total area
of the fishponds amount to 1045.7863 hectares, the 80 hectares devised to Marta
Gervacio Blas is not even one-tenth of the total area of the fishponds. Add to this the
fact that in the will she imposed upon Marta Gervacio Blas de Chivi an existing
obligation on said fishponds, namely, its lease in 1957 and the duty to pay out of the
rentals thereof an obligation to the Rehabilitation Finance Corporation RFC (Ibid., pp.
262-263.) Angelina Blas was given only a lot of 150 square meters in Hulong Duhat,
Malabon, Rizal, and Leony Blas, the sum of P300.00 (Ibid., p. 264.)
It is evident from a consideration of the above figures and facts that Maxima Santos
did not comply with her obligation to devise one-half of her conjugal properties to the
heirs and legatees of her husband. She does not state that she had complied with
such obligation in her will. If she intended to comply therewith by giving some of the
heirs of Simeon Blas the properties mentioned above, the most that can be
considered in her favor is to deduct the value of said properties from the total amount
of properties which she had undertaken to convey upon her death.
All the issues in the pleadings of the parties and in their respective briefs, have now
been fully discussed and considered. Reiterating what we have stated above, we
declare that by Exhibit "A", a compromise to avoid litigation, Maxima Santos promised
to devise to the heirs and legatees of her husband Simeon Blas, one-half of the
properties she received as her share in the conjugal partnership of herself and her
husband, which share is specified in the project of partition submitted by herself on
March 14, 1939 in the settlement of the estate of her husband, and which is found on
pages 195 to 240 of the record on appeal and on pages 27 to 46 of the project of
partition, submitted by Maxima Santos herself before the Court of First Instance of
Rizal in Civil Case No. 6707, entitled "Testamentaria del Finado Don Simeon Blas,
Maxima Santos Vda. de Bias, Administradora"; and that she failed to comply with her
aforementioned obligation. (Exhibit "A")
WHEREFORE, the judgment appealed from is hereby reversed and the defendantappellee, administratrix of the estate of Maxima Santos, is ordered to convey and
deliver one-half of the properties adjudicated o Maxima Santos as her share in the
conjugal properties in said Civil Case No. 6707, entitled "Testamentaria del Finado
Don Simeon Blas, Maxima Santos Vda. de Blas, Administradora", to the heirs and the
legatees of her husband Simeon Blas. Considering that all said heirs and legatees,
designated in the will of Simeon Blas as the persons for whose benefit Exhibit "A" had
been executed, have not appeared in these proceedings, the record is hereby
remanded to the court below, with instructions that, after the conveyance of the
properties hereinabove ordered had been effected, the said heirs and legatees (of

Page 52 of 59

April 23, 2010

ATTY.
PEDRO
M.
FERRER, Petitioner,
vs.
SPOUSES ALFREDO DIAZ and IMELDA DIAZ, REINA COMANDANTE and
SPOUSES BIENVENIDO PANGAN and ELIZABETH PANGAN, Respondents.
DEL CASTILLO, J.:
The basic questions to be resolved in this case are: Is a waiver of hereditary rights in
favor of another executed by a future heir while the parents are still living valid? Is an
adverse claim annotated on the title of a property on the basis of such waiver likewise
valid and effective as to bind the subsequent owners and hold them liable to the
claimant?
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the
December 12, 2003 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No.
70888.3 Said Decision modified the June 14, 2001 Summary Judgment 4 of the
Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-99-38876 by holding
respondents Spouses Bienvenido and Elizabeth Pangan (the Pangans) not solidarily
liable with the other respondents, Spouses Alfredo and Imelda Diaz (the Diazes) and
Reina Comandante (Comandante), to petitioner Atty. Pedro M. Ferrer (Atty. Ferrer).
Likewise assailed is the CA Resolution 5 dated September 10, 2004 which denied
petitioners as well as respondents Spouses Diaz and Comandantes respective
motions for reconsideration.
The parties respective versions of the factual antecedents are as follows:
Version of the Petitioner
Petitioner Atty. Ferrer claimed in his original Complaint 6 that on May 7, 1999, the
Diazes, as represented by their daughter Comandante, through a Special Power of
Attorney (SPA),7 obtained from him a loan of P1,118,228.00. The loan was secured by
a Real Estate Mortgage Contract 8 by way of second mortgage over Transfer
Certificate of Title (TCT) No. RT-6604 9 and a Promissory Note10 payable within six
months or up to November 7, 1999. Comandante also issued to petitioner postdated
checks to secure payment of said loan.

Petitioner further claimed that prior to this or on May 29, 1998, Comandante, for a
valuable consideration ofP600,000.00, which amount formed part of the
abovementioned secured loan, executed in his favor an instrument entitled Waiver of
Hereditary Rights and Interests Over a Real Property (Still Undivided), 11 the pertinent
portions of which read:
I, REINA D. COMANDANTE, of legal age, Filipino, married, with residence and postal
address at No. 6, Road 20, Project 8, Quezon City, Metro Manila, Philippines, for a
valuable consideration of SIX HUNDRED THOUSAND PESOS (P600,000.00) which
constitutes my legal obligation/loan to Pedro M. Ferrer, likewise of legal age, Filipino,
married to Erlinda B. Ferrer, with residence and postal address at No. 9, Lot 4, Puerto
Rico Street, Loyola Grand Villas, Quezon City, Metro Manila, Philippines, by virtue of
these presents, do hereby WAIVE, and/or REPUDIATE all my hereditary rights and
interests as a legitimate heir/daughter of Sps. Alfredo T. Diaz and Imelda G. Diaz in
favor of said Pedro M. Ferrer, his heirs and assigns over a certain parcel of land
together with all the improvements found thereon and which property is more
particularly described as follows:
TRANSFER
CERTIFICATE
NO. RT-6604 (82020) PR-18887

OF

and which property is titled and registered in the name of my parents Alfredo T. Diaz
and Imelda G. Diaz, as evidenced by Transfer Certificate of Title No. RT 6604 (82020)
PR-18887.

D.

COMANDANTE

On the basis of said waiver, petitioner executed an Affidavit of Adverse Claim 12 which
he caused to be annotated at the back of TCT No. RT-6604 on May 26, 1999.
The Diazes, however, reneged on their obligation as the checks issued by
Comandante were dishonored upon presentment. Despite repeated demands, said
respondents still failed and refused to settle the loan. Thus, petitioner filed on
September 29, 1999 a Complaint13 for Collection of Sum of Money Secured by Real
Estate Mortgage Contract against the Diazes and Comandante docketed as Civil
Case No. Q-99-38876 and raffled to Branch 224 of RTC, Quezon City.

Page 53 of 59

Version of the Respondents

In her Answer15 to petitioners original complaint, Comandante alleged that petitioner
and his wife were her fellow members in the Couples for Christ Movement. Sometime
in 1998, she sought the help of petitioner with regard to the mortgage with a bank of
her parents lot located at No. 6, Rd. 20, Project 8, Quezon City and covered by TCT
No. RT-6604. She also sought financial accommodations from the couple on several
occasions which totaledP500,000.00. Comandante, however, claimed that these
loans were secured by chattel mortgages over her taxi units in addition to several
postdated checks she issued in favor of petitioner.

TITLE

xxxx

(sgd.)
REINA
Affiant

Petitioner twice amended his complaint. First, by including as an alternative relief the
Judicial Foreclosure of Mortgage14 and, second, by impleading as additional
defendants the Pangans as the mortgaged property covered by TCT No. RT-6604
was already transferred under their names in TCT No. N-209049. Petitioner prayed in
his second amended complaint that all the respondents be ordered to jointly and
solidarily pay him the sum ofP1,118,228.00, exclusive of interests, and/or for the
judicial foreclosure of the property pursuant to the Real Estate Mortgage Contract.

As she could not practically comply with her obligation, petitioner and his wife,
presented to Comandante sometime in May 1998 a document denominated as
Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided)
pertaining to a waiver of her hereditary share over her parents abovementioned
property. Purportedly, the execution of said waiver was to secure Comandantes loan
with the couple which at that time had already ballooned to P600,000.00 due to
interests.
A year later, the couple again required Comandante to sign the following documents:
(1) a Real Estate Mortgage Contract over her parents property; and, (2) an undated
Promissory Note, both corresponding to the amount ofP1,118,228.00, which petitioner
claimed to be the total amount of Comandantes monetary obligation to him exclusive
of charges and interests. Comandante alleged that she reminded petitioner that she
was not the registered owner of the subject property and that although her parents
granted her SPA, same only pertains to her authority to mortgage the property to
banks and other financial institutions and not to individuals. Petitioner nonetheless
assured Comandante that the SPA was also applicable to their transaction. As
Comandante was still hesitant, petitioner and his wife threatened to foreclose the
formers taxi units and present the postdated checks she issued to the bank for
payment. For fear of losing her taxi units which were the only source of her livelihood,
Comandante was thus constrained to sign the mortgage agreement as well as the
promissory note. Petitioner, however, did not furnish her with copies of said
documents on the pretext that they still have to be notarized, but, as can be gleaned

from the records, the documents were never notarized. Moreover, Comandante
claimed that the SPA alluded to by petitioner in his complaint was not the same SPA
under which she thought she derived the authority to execute the mortgage contract.
Comandante likewise alleged that on September 29, 1999 at 10:00 o clock in the
morning, she executed an Affidavit of Repudiation/Revocation of Waiver of Hereditary
Rights and Interests Over A (Still Undivided) Real Property,16 which she caused to be
annotated on the title of the subject property with the Registry of Deeds of Quezon
City on the same day. Interestingly, petitioner filed his complaint later that day too.
By way of special and affirmative defenses, Comandante asserted in her Answer to
the amended complaint17 that said complaint states no cause of action against her
because the Real Estate Mortgage Contract and the waiver referred to by petitioner in
his complaint were not duly, knowingly and validly executed by her; that the Waiver of
Hereditary Rights and Interests Over a Real Property (Still Undivided) is a useless
document as its execution is prohibited by Article 1347 of the Civil Code, 18 hence, it
cannot be the source of any right or obligation in petitioners favor; that the Real
Estate Mortgage was of doubtful validity as she executed the same without valid
authority from her parents; and, that the prayer for collection and/or judicial
foreclosure was irregular as petitioner cannot seek said remedies at the same time.
Apart from executing the affidavit of repudiation, Comandante also filed on October 4,
1999 a Petition for Cancellation of Adverse Claim (P.E. 2468) Under The
Memorandum of Encumbrances of TCT No. RT-6604 (82020) PR-18887 19 docketed
as LRC Case No. Q-12009 (99) and raffled to Branch 220 of RTC, Quezon City.
Petitioner who was impleaded as respondent therein moved for the consolidation of
said case20 with Civil Case No. Q-99-38876. On June 24, 2000, Branch 220 of RTC,
Quezon City ordered the consolidation of LRC Case No. Q-12009 (99) with Civil Case
No. Q-99-38876. Accordingly, the records of the former case was forwarded to
Branch 224.
For their part, the Diazes asserted that petitioner has no cause of action against
them. They claimed that they do not even know petitioner and that they did not
execute any SPA in favor of Comandante authorizing her to mortgage for the second
time the subject property. They also contested the due execution of the SPA as it was
neither authenticated before the Philippine Consulate in the United States nor
notarized before a notary public in the State of New York where the Diazes have been
residing for 16 years. They claimed that they do not owe petitioner anything. The
Diazes also pointed out that the complaint merely refers to Comandantes personal
obligation to petitioner with which they had nothing to do. They thus prayed that the
complaint against them be dismissed.21

Page 54 of 59

At the Pangans end, they alleged that they acquired the subject property by purchase
in good faith and for a consideration of P3,000,000.00 on November 11, 1999 from
the Diazes through the latters daughter Comandante who was clothed with SPA
acknowledged before the Consul of New York. The Pangans immediately took actual
possession of the property without anyone complaining or protesting. Soon thereafter,
they were issued TCT No. N-209049 in lieu of TCT No. RT-6604 which was
cancelled. 22
However, on December 21, 1999, they were surprised upon being informed by
petitioner that the subject land had been mortgaged to him by the Diazes. Upon
inquiry from Comandante, the latter readily admitted that she has a personal loan with
petitioner for which the mortgage of the property in petitioners favor was executed.
She admitted, though, that her parents were not aware of such mortgage and that
they did not authorize her to enter into such contract. Comandante also informed the
Pangans that the signatures of her parents appearing on the SPA are fictitious and
that it was petitioner who prepared such document.
As affirmative defense, the Pangans asserted that the annotation of petitioners
adverse claim on TCT No. RT-6604 cannot impair their rights as new owners of the
subject property. They claimed that the Waiver of Hereditary Rights and Interests
Over a Real Property (Still Undivided) upon which petitioners adverse claim is
anchored cannot be the source of any right or interest over the property considering
that it is null and void under paragraph 2 of Article 1347 of the Civil Code.
Moreover, the Pangans asserted that the Real Estate Mortgage Contract cannot bind
them nor in any way impair their ownership of subject property because it was not
registered before the Register of Deeds.23
All the respondents interposed their respective counterclaims and prayed for moral
and exemplary damages and attorneys fees in varying amounts.
After the parties have submitted their respective pre-trial briefs, the Diazes filed on
March 29, 2001 a Motion for Summary Judgment 24 alleging that: first, since the
documents alluded to by petitioner in his complaint were defective, he was not
entitled to any legal right or relief; and, second, it was clear from the pleadings that it
is Comandante who has an outstanding obligation with petitioner which the latter
never denied. With these, the Diazes believed that there is no genuine issue as to
any material fact against them and, hence, they were entitled to summary judgment.
On May 7, 2001, petitioner also filed a Motion for Summary Judgment, 25 claiming that
his suit against the respondents is meritorious and well-founded and that same is
documented and supported by law and jurisprudence. He averred that his adverse

claim annotated at the back of TCT No. RT-6604, which was carried over in TCT No.
209049 under the names of the Pangans, is not merely anchored on the Waiver of
Hereditary Rights and Interests Over a Real Property (Still Undivided) executed by
Comandante, but also on the Real Estate Mortgage likewise executed by her in
representation of her parents and in favor of petitioner. Petitioner insisted that said
adverse claim is not frivolous and invalid and is registrable under Section 70 of
Presidential Decree (PD) No. 1529. In fact, the Registrar of Deeds of Quezon City
had already determined the sufficiency and/or validity of such registration by
annotating said claim, and this, respondents failed to question. Petitioner further
averred that even before the sale and transfer to the Pangans of the subject property,
the latter were already aware of the existence of his adverse claim. In view of these,
petitioner prayed that his Motion for Summary Judgment be granted.
Ruling of the Regional Trial Court
After the filing of the parties respective Oppositions to the said motions for summary
judgment, the trial court, in an Order dated May 31, 2001, 26 deemed both motions for
summary judgment submitted for resolution. Quoting substantially petitioners
allegations in his Motion for Summary Judgment, it thereafter rendered on June 14,
2001 a Summary Judgment27 in favor of petitioner, the dispositive portion of which
reads:
WHEREFORE, premises considered, summary judgment is hereby rendered in favor
of plaintiff and against defendants by:
a) ORDERING all defendants jointly and solidarily to pay plaintiff the sum of
ONE MILLION ONE HUNDRED EIGHTEEN THOUSAND TWO HUNDRED
TWENTY EIGHT PESOS (P1,118,228.00) which is blood money of plaintiff;
b) ORDERING the Honorable Registrar of Deeds of Quezon City that the
rights and interest of the plaintiff over subject property be annotated at the
back of T.C.T. No. N-209049;
c) SENTENCING all defendants to pay plaintiffs expenses of TEN
THOUSAND PESOS (P10,000.00) and to pay the costs of suit.

total amount of P1,118,228.00. The Diazes and Comandante, on the other hand,
imputed error upon the trial court in rendering summary judgment in favor of
petitioner. They averred that assuming the summary judgment was proper, the trial
court should not have considered the Real Estate Mortgage Contract and the
Promissory Note as they were defective, as well as petitioners frivolous and nonregistrable adverse claim.
In its Decision30 dated December 12, 2003, the CA declared Comandantes waiver of
hereditary rights null and void. However, it found the Real Estate Mortgage executed
by Comandante on behalf of her parents as binding between the parties thereto.
As regards the Pangans, the CA ruled that the mortgage contract was not binding
upon them as they were purchasers in good faith and for value. The property was free
from the mortgage encumbrance of petitioner when they acquired it as they only
came to know of the adverse claim through petitioners phone call which came right
after the formers acquisition of the property. The CA further ruled that as
Comandantes waiver of hereditary rights and interests upon which petitioners
adverse claim was based is a nullity, it could not be a source of any right in his favor.
Hence, the Pangans were not bound to take notice of such claim and are thus not
liable to petitioner.
Noticeably, the appellate court did not rule on the propriety of the issuance of the
Summary Judgment as raised by the Diazes and Comandante. In the ultimate, the
CA merely modified the assailed Summary Judgment of the trial court by excluding
the Pangans among those solidarily liable to petitioner, in effect affirming in all other
respects the assailed summary judgment, viz:
WHEREFORE, foregoing premises considered, the Decision of the Regional Trial
Court of Quezon City, Branch 224 in Civil Case No. Q-99-38876 is hereby
MODIFIED, as follows:
1. Ordering defendants-appellants Comandante and Spouses Diaz to jointly
and severally pay plaintiff the sum of Php 1,118, 228.00; and
2. Ordering defendants-appellants Comandante and Spouses Diaz to jointly
and severally pay plaintiff the amount of Php10,000.00 plus cost of suit.

IT IS SO ORDERED.28
SO ORDERED.31
The Pangans, the Diazes, and Comandante appealed to the CA. 29 The Pangans
faulted the trial court in holding them jointly and severally liable with the Diazes and
Comandante for the satisfaction of the latters personal obligation to petitioner in the

Page 55 of 59

Petitioners Motion for Reconsideration32 having been denied by the CA in its

Resolution33 dated September 10, 2004, he now comes to us through this petition for

review on certiorari insisting that the Pangans should, together with the other
respondents, be held solidarily liable to him for the amount of P1,118,228.00.
Our Ruling
The petition lacks merit.
Petitioner merely reiterates his contentions in the Motion for Summary Judgment he
filed before the trial court. He insists that his Adverse Claim annotated at the back of
TCT No. RT-6604 is not merely anchored on Comandantes Waiver of Hereditary
Rights and Interests Over A Real Property (Still Undivided) but also on her being the
attorney-in-fact of the Diazes when she executed the mortgage contract in favor of
petitioner. He avers that his adverse claim is not frivolous or invalid and is registrable
as the Registrar of Deeds of Quezon City even allowed its annotation. He also claims
that even prior to the sale of subject property to the Pangans, the latter already knew
of his valid and existing adverse claim thereon and are, therefore, not purchasers in
good faith. Thus, petitioner maintains that the Pangans should be held, together with
the Diazes and Comandante, jointly and severally liable to him in the total amount
of P1,118,228.00.
Petitioners contentions are untenable.
The Affidavit of Adverse Claim executed by petitioner reads in part:

3. That I am executing this Affidavit in order to attest (to) the truth of the
foregoing facts and to petition the Honorable Registrar of Deeds, Quezon
City, to annotate this Affidavit of Adverse Claim at the back of the said title
particularly the original copy of Transfer Certificate of Title No. RT-6604
(82020) PR-18887 which is on file with the said office, so that my interest as
Recipient/Benefactor of the said property will be protected especially the
registered owner/parents, in a fraudulent manner might dispose (of) and/or
encumber the same without my knowledge and consent. (Emphasis ours)
Clearly, petitioners Affidavit of Adverse Claim was based solely on the waiver of
hereditary interest executed by Comandante. This fact cannot be any clearer
especially so when the inscription of his adverse claim at the back of TCT No. RT6604 reads as follows:
P.E. 2468/T-(82020)RT-6604 - - AFFIDAVIT OF ADVERSE CLAIM - - Executed under
oath by PEDRO M. FERRER, married to Erlinda B. Ferrer, claiming among others
that they have a claim, the interest over said property as Recipient/Benefactor,
by virtue of a waiver of Hereditary Rights and Interest over a real property x x
x34(Emphasis ours)
Therefore, there is no basis for petitioners assertion that the adverse claim was also
anchored on the mortgage contract allegedly executed by Comandante on behalf of
her parents.
The questions next to be resolved are: Is Comandantes waiver of hereditary rights
valid? Is petitioners adverse claim based on such waiver likewise valid and effective?

xxxx
1. That I am the Recipient/Benefactor of compulsory heirs share over an
undivided certain parcel of land together with all the improvements found
therein x x x as evidenced by Waiver of Hereditary Rights and Interests Over
A Real Property, executed by REINA D. COMANDANTE (a
compulsory/legitimate heir of Sps. Alfredo T. Diaz and Imelda G. Diaz), x x x.
2. That in order to protect my interest over said property as a
Recipient/Benefactor, for the registered owners/parents might dispose (of)
and/or encumber the same in a fraudulent manner without my knowledge
and consent, for the owners duplicate title was not surrendered to me, it is
petitioned that this Affidavit of Adverse Claim be ANNOTATED at the back of
the said title particularly on the original copy of Transfer Certificate of Title
No. RT-6604 (82020) PR-18887 which is on file with the Register of Deeds
of Quezon City.

Page 56 of 59

We note at the outset that the validity of petitioners adverse claim should have been
determined by the trial court after the petition for cancellation of petitioners adverse
claim filed by Comandante was consolidated with Civil Case No. Q-99-38876. 35 This
is in consonance with Section 70 of PD 1529 which provides:
Section 70. Adverse Claim. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in this Decree for registering the same,
make a statement in writing setting forth fully his alleged right or interest, and how or
under whom acquired, a reference to the number of the certificate of title of the
registered owner, the name of the registered owner, and a description of the land in
which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimants
residence, and a place at which all notices may be served upon him. This statement

shall be entitled to registration as an adverse claim on the certificate of title. The

adverse claim shall be effective for a period of thirty days from the date of registration.
After the lapse of said period, the annotation of adverse claim may be cancelled upon
filing of a verified petition therefor by the party in interest: Provided, however, That
after cancellation, no second adverse claim based on the same ground shall be
registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the
Court of First Instance where the land is situated for the cancellation of the adverse
claim, and the court shall grant a speedy hearing upon the question of validity of such
adverse claim, and shall render judgment as may be just and equitable. If the
adverse claim is adjudged to be invalid, the registration thereof shall be ordered
cancelled. If, in any case, the court, after notice and hearing, shall find that the
adverse claim thus registered was frivolous, it may fine the claimant in an amount not
less than one thousand pesos nor more than five thousand pesos, in its discretion.
Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing
with the Register of Deeds a sworn petition to that effect. (Emphasis ours)
Pursuant to the third paragraph of the afore-quoted provision, it has been held that
the validity or efficaciousness of an adverse claim may only be determined by the
Court upon petition by an interested party, in which event, the Court shall order the
immediate hearing thereof and make the proper adjudication as justice and equity
may warrant. And, it is only when such claim is found unmeritorious that the
registration of the adverse claim may be cancelled.36
As correctly pointed out by respondents, the records is bereft of any showing that the
trial court conducted any hearing on the matter. Instead, what the trial court did was to
include this material issue among those for which it has rendered its summary
judgment as shown by the following portion of the judgment:
x x x it will be NOTED that subject Adverse Claim annotated at the back of Transfer
Certificate of Title No. RT-6604 (82020) PR-18887, and carried over to defendantsSps. Pangans Title No. N-20909, is not merely anchored on defendant Reina
Comandantes "Waiver of Hereditary Rights and Interest Over a Real Property" but
also on her being the Attorney-In-Fact of the previous registered
owners/parents/defendants Sps. Alfredo and Imelda Diaz about the Real Estate
Mortgage Contract for a loan of P1,118,228.00 which is a blood money of the
plaintiff.Moreover, subject Adverse Claim in LRC Case No. Q-12009 (99) is NOT
frivolous and invalid and consequently, REGISTRABLE by virtue of Section 110 of the
Land Registration Act (now Section 70 of Presidential Decree No. 1529). 37 (Emphasis
ours)

Page 57 of 59

It does not escape our attention that the trial court merely echoed the claim of
petitioner that his adverse claim subject of LRC Case No. Q-12009 (99) is not
frivolous, invalid and is consequently registrable. We likewise lament the apparent
lack of effort on the part of said court to make even a short ratiocination as to how it
came up with said conclusion. In fact, what followed the above-quoted portion of the
summary judgment are mere recitals of the arguments raised by petitioner in his
motion for summary judgment. And in the dispositive portion, the trial court merely
casually ordered that petitioners adverse claim be inscribed at the back of the title of
the Pangans. What is worse is that despite this glaring defect, the CA manifestly
overlooked the matter even if respondents vigorously raised the same before it.
Be that as it may, respondents efforts of pointing out this flaw, which we find
significant, have not gone to naught as will be hereinafter discussed.
All the respondents contend that the Waiver of Hereditary Rights and Interest Over a
Real Property (Still Undivided) executed by Comandante is null and void for being
violative of Article 1347 of the Civil Code, hence, petitioners adverse claim which was
based upon such waiver is likewise void and cannot confer upon the latter any right or
interest over the property.
We agree with the respondents.
Pursuant to the second paragraph of Article 1347 of the Civil Code, no contract may
be entered into upon a future inheritance except in cases expressly authorized by law.
For the inheritance to be considered "future", the succession must not have been
opened at the time of the contract. A contract may be classified as a contract upon
future inheritance, prohibited under the second paragraph of Article 1347, where the
following requisites concur:
(1) That the succession has not yet been opened.
(2) That the object of the contract forms part of the inheritance; and,
(3) That the promissor has, with respect to the object, an expectancy of a
right which is purely hereditary in nature.38
In this case, there is no question that at the time of execution of Comandantes
Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided),
succession to either of her parents properties has not yet been opened since both of
them are still living. With respect to the other two requisites, both are likewise present
considering that the property subject matter of Comandantes waiver concededly

forms part of the properties that she expect to inherit from her parents upon their
death and, such expectancy of a right, as shown by the facts, is undoubtedly purely
hereditary in nature.
From the foregoing, it is clear that Comandante and petitioner entered into a contract
involving the formers future inheritance as embodied in the Waiver of Hereditary
Rights and Interest Over a Real Property (Still Undivided) executed by her in
petitioners favor.
In Taedo v. Court of Appeals,39 we invalidated the contract of sale between Lazaro
Taedo and therein private respondents since the subject matter thereof was a "one
hectare of whatever share the former shall have over Lot 191 of the cadastral survey
of Gerona, Province of Tarlac and covered by Title T-13829 of the Register of Deeds
of Tarlac." It constitutes a part of Taedos future inheritance from his parents, which
cannot be the source of any right nor the creator of any obligation between the
parties.
Guided by the above discussions, we similarly declare in this case that the Waiver of
Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by
Comandante in favor of petitioner as not valid and that same cannot be the source of
any right or create any obligation between them for being violative of the second
paragraph of Article 1347 of the Civil Code.
Anent the validity and effectivity of petitioners adverse claim, it is provided in Section
70 of PD 1529, that it is necessary that the claimant has a right or interest in the
registered land adverse to the registered owner and that it must arise subsequent to
registration. Here, as no right or interest on the subject property flows from
Comandantes invalid waiver of hereditary rights upon petitioner, the latter is thus not
entitled to the registration of his adverse claim. Therefore, petitioners adverse claim
is without any basis and must consequently be adjudged invalid and ineffective and
perforce be cancelled.
Albeit we have already resolved the issues raised by petitioner, we shall not stop here
as the Diazes and Comandante in their Comment 40 call our attention to the failure of
the CA to pass upon the issue of the propriety of the issuance by the trial court of the
Summary Judgment in favor of petitioner despite the fact that they have raised this
issue before the appellate court. They argue that summary judgment is proper only
when there is clearly no genuine issue as to any material fact in the action. Thus,
where the defendant presented defenses tendering factual issue which call for
presentation of evidence, as when he specifically denies the material allegations in
the complaint, summary judgment cannot be rendered.

Page 58 of 59

The Diazes and Comandante then enumerate the genuine issues in the case which
they claim should have precluded the trial court from issuing a summary judgment in
petitioners favor. First, the execution of the SPA in favor of Comandante referred to
by petitioner in his complaint was never admitted by the Diazes. They assert that as
such fact is disputed, trial should have been conducted to determine the truth of the
matter, same being a genuine issue. Despite this, the trial court merely took the word
of the plaintiff and assumed that said document was indeed executed by
them. Second, although Comandante acknowledges that she has a personal
obligation with petitioner, she nevertheless, did not admit that it was in the amount
of P1,118,228.00. Instead, she claims only the amount of P500,000.00
or P600,000.00 (if inclusive of interest) as her obligation. Moreover, the Diazes deny
borrowing any money from petitioner and neither did the Pangans owe him a single
centavo. Thus, the true amount of the obligation due the petitioner and how each of
the respondents are responsible for such amount are genuine issues which need
formal presentation of evidence. Lastly, they aver that the trial court ignored factual
and material issues such as the lack of probative value of Comandantes waiver of
hereditary rights as well as of the SPA; the fact that Comandante signed the
mortgage contract and promissory note in her personal capacity; and, that all such
documents were prepared by petitioner who acted as a lawyer and the creditor of
Comandante at the same time.
Rule 35 of the Rules of Court provides for summary judgment, the pertinent
provisions of which are the following:
Section 1. Summary Judgment for claimant. A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.
Section 2. Summary Judgment for the defending party. A party against whom a claim,
counterclaim or cross-claim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof.
Section 3. Motion and proceedings thereon. The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party may serve
opposing affidavits, depositions, or admissions at least three (3) days before the
hearing. After the hearing, the judgment sought shall be rendered forthwith if the
pleadings, supporting affidavits, depositions and admissions on file, show that, except
as to the amount of damages, there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.

As can be deduced from the above provisions, summary judgment is a procedural

devise resorted to in order to avoid long drawn out litigations and useless delays.
When the pleadings on file show that there are no genuine issues of facts to be tried,
the Rules of Court allows a party to obtain immediate relief by way of summary
judgment. That is, when the facts are not in dispute, the court is allowed to decide the
case summarily by applying the law to the material facts. Conversely, where the
pleadings tender a genuine issue, summary judgment is not proper. A genuine issue
is such fact which requires the presentation of evidence as distinguished from a
sham, fictitious, contrived or false claim.41
Here, we find the existence of genuine issues which removes the case from the
coverage of summary judgment. The variance in the allegations of the parties in their
pleadings is evident.
Petitioner anchors his complaint for sum of money and/or judicial foreclosure on the
alleged real estate mortgage over the subject property allegedly entered into by
Comandante in behalf of her parents to secure payment of a loan amounting
to P1,118,228.00. To support this claim, petitioner attached to his complaint (1) the
SPA alleged to have been executed by the Diazes; (2) the Real Estate Mortgage
Contract pertaining to the amount ofP1,118,228.00; and, (3) a Promissory Note.
Comandante, in her Answer to petitioners Amended Complaint, assailed the validity
and due execution of the abovementioned documents. She asserted that the same
were not duly, knowingly and validly executed by her and that it was petitioner who
prepared all of them. Also, although she admitted owing petitioner, same was not an
absolute admission as she limited herself to an obligation amounting only
to P600,000.00 inclusive of charges and interests. She likewise claimed that such
obligation is her personal obligation and not of her parents.
The Diazes, for their part, also denied that they executed the SPA authorizing their
daughter to mortgage their property to petitioner as well as having any obligation to
the latter.

Page 59 of 59

Clearly, there are genuine issues in this case which require the presentation of
evidence. For one, it is necessary to ascertain in a full blown trial the validity and due
execution of the SPA, the Real Estate Mortgage and the Promissory Notes because
the determination of the following equally significant questions depends on them, to
wit: (1) Are the Diazes obligated to petitioner or is the obligation a purely personal
obligation of Comandante? and, (2) Is the sum of P1,118,228.00 as shown in the Real
Estate Mortgage and the Promissory Note, the amount which is really due the
petitioner?
To stress, trial courts have limited authority to render summary judgments and may do
so only when there is clearly no genuine issue as to any material fact. When the facts
as pleaded by the parties are disputed or contested, proceedings for summary
judgment cannot take the place of trial.42 From the foregoing, it is apparent that the
trial court should have refrained from issuing the summary judgment but instead
proceeded to conduct a full blown trial of the case. In view of this, the present case
should be remanded to the trial court for further proceedings and proper disposition
according to the rudiments of a regular trial on the merits and not through an
abbreviated termination of the case by summary judgment.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals
dated December 12, 2003 insofar as it excluded the respondents Spouses
Bienvenido Pangan and Elizabeth Pangan from among those solidarily liable to
petitioner Atty. Pedro M. Ferrer, is AFFIRMED. The inscription of the adverse claim of
petitioner Atty. Pedro M. Ferrer on T.C.T. No. N-209049 is hereby
ordered CANCELLED. Insofar as its other aspects are concerned, the assailed
Decision is SET ASIDE and VACATED. The case is REMANDED to the Regional
Trial Court of Quezon City, Branch 224 for further proceedings in accordance with this
Decision.