SECOND DIVISION

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

UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND

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

(3) tractors; that is, two (2) tractors for Edmund and one (1) tractor for
Florence. Each of them was to assume the indebtedness of their late father
to FCCC, corresponding to the tractor respectively taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of
Liabilities[9] was executed by and between FCCC and Union Savings and
Mortgage Bank, wherein the FCCC as the assignor, among others, assigned
all its assets and liabilities to Union Savings and Mortgage Bank.
Demand letters[10] for the settlement of his account were sent by
petitioner Union Bank of the Philippines (UBP) to Edmund, but the latter
failed to heed the same and refused to pay. Thus, on February 5, 1988, the
petitioner filed a Complaint[11] for sum of money against the heirs of Efraim
Santibaez, Edmund and Florence, before the RTC of Makati City, Branch 150,
docketed as Civil Case No. 18909. Summonses were issued against both, but
the one intended for Edmund was not served since he was in the United
States and there was no information on his address or the date of his return
to the Philippines.[12] Accordingly, the complaint was narrowed down to
respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her
Answer[13] and alleged that the loan documents did not bind her since she
was not a party thereto. Considering that the joint agreement signed by her
and her brother Edmund was not approved by the probate court, it was null
and void; hence, she was not liable to the petitioner under the joint
agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC of
Makati City, Branch 63.[14] Consequently, trial on the merits ensued and a
decision was subsequently rendered by the court dismissing the complaint
for lack of merit. The decretal portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for
lack of merit.[15]
The trial court found that the claim of the petitioner should have been
filed with the probate court before which the testate estate of the late Efraim
Santibaez was pending, as the sum of money being claimed was an
obligation incurred by the said decedent. The trial court also found that the
Joint Agreement apparently executed by his heirs, Edmund and Florence, on
July 22, 1981, was, in effect, a partition of the estate of the decedent.
However, the said agreement was void, considering that it had not been
approved by the probate court, and that there can be no valid partition until
after the will has been probated. The trial court further declared that
petitioner failed to prove that it was the now defunct Union Savings and
Mortgage Bank to which the FCCC had assigned its assets and liabilities. The
court also agreed to the contention of respondent Florence S. Ariola that the
list of assets and liabilities of the FCCC assigned to Union Savings and

Mortgage Bank did not clearly refer to the decedents account. Ruling that the
joint agreement executed by the heirs was null and void, the trial court held
that the petitioners cause of action against respondent Florence S. Ariola
must necessarily fail.
The petitioner appealed from the RTC decision and elevated its case to
the Court of Appeals (CA), assigning the following as errors of the trial court:
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT
(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO
VALID PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS
BEEN PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT
HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE
ESTATE PROCEEDING.[16]
The petitioner asserted before the CA that the obligation of the deceased
had passed to his legitimate children and heirs, in this case, Edmund and
Florence; the unconditional signing of the joint agreement marked as Exhibit
A estopped respondent Florence S. Ariola, and that she cannot deny her
liability under the said document; as the agreement had been signed by both
heirs in their personal capacity, it was no longer necessary to present the
same before the probate court for approval; the property partitioned in the
agreement was not one of those enumerated in the holographic will made by
the deceased; and the active participation of the heirs, particularly
respondent Florence S. Ariola, in the present ordinary civil action was
tantamount to a waiver to re-litigate the claim in the estate proceedings.
On the other hand, respondent Florence S. Ariola maintained that the
money claim of the petitioner should have been presented before the
probate court.[17]
The appellate court found that the appeal was not meritorious and held
that the petitioner should have filed its claim with the probate court as
provided under Sections 1 and 5, Rule 86 of the Rules of Court. It further held
that the partition made in the agreement was null and void, since no valid
partition may be had until after the will has been probated. According to the
CA, page 2, paragraph (e) of the holographic will covered the subject
properties (tractors) in generic terms when the deceased referred to them as
all other properties. Moreover, the active participation of respondent
Florence S. Ariola in the case did not amount to a waiver. Thus, the CA
affirmed the RTC decision, viz.:
WHEREFORE, premises considered, the appealed Decision of the Regional
Trial Court of Makati City, Branch 63, is hereby AFFIRMED in toto.

SO ORDERED.[18]
In the present recourse, the petitioner ascribes the following errors to the
CA:
I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT
AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL AFTER
THE WILL HAS BEEN PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT
HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH
THE PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAEZ ON THE STRENGTH OF
THE CONTINUING GUARANTY AGREEMENT EXECUTED IN FAVOR OF
PETITIONER-APPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00
AND DECEMBER 13, 1980 IN THE AMOUNT OF P123,000.00 CATEGORICALLY
ESTABLISHED THE FACT THAT THE RESPONDENTS BOUND THEMSELVES
JOINTLY AND SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM SANTIBAEZ
IN FAVOR OF PETITIONER UNION BANK.[19]
The petitioner claims that the obligations of the deceased were
transmitted to the heirs as provided in Article 774 of the Civil Code; there
was thus no need for the probate court to approve the joint agreement
where the heirs partitioned the tractors owned by the deceased and
assumed the obligations related thereto. Since respondent Florence S. Ariola
signed the joint agreement without any condition, she is now estopped from
asserting any position contrary thereto. The petitioner also points out that
the holographic will of the deceased did not include nor mention any of the
tractors subject of the complaint, and, as such was beyond the ambit of the

said will. The active participation and resistance of respondent Florence S.

Ariola in the ordinary civil action against the petitioners claim amounts to a
waiver of the right to have the claim presented in the probate proceedings,
and to allow any one of the heirs who executed the joint agreement to
escape liability to pay the value of the tractors under consideration would be
equivalent to allowing the said heirs to enrich themselves to the damage and
prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both the trial and
appellate courts failed to consider the fact that respondent Florence S. Ariola
and her brother Edmund executed loan documents, all establishing
the vinculum juris or the legal bond between the late Efraim Santibaez and
his heirs to be in the nature of a solidary obligation. Furthermore, the
Promissory Notes dated May 31, 1980 and December 13, 1980 executed by
the late Efraim Santibaez, together with his heirs, Edmund and respondent
Florence, made the obligation solidary as far as the said heirs are concerned.
The petitioner also proffers that, considering the express provisions of the
continuing guaranty agreement and the promissory notes executed by the
named respondents, the latter must be held liable jointly and severally liable
thereon. Thus, there was no need for the petitioner to file its money claim
before the probate court. Finally, the petitioner stresses that both surviving
heirs are being sued in their respective personal capacities, not as heirs of
the deceased.
In her comment to the petition, respondent Florence S. Ariola maintains
that the petitioner is trying to recover a sum of money from the deceased
Efraim Santibaez; thus the claim should have been filed with the probate
court. She points out that at the time of the execution of the joint agreement
there was already an existing probate proceedings of which the petitioner
knew about. However, to avoid a claim in the probate court which might
delay payment of the obligation, the petitioner opted to require them to
execute the said agreement.
According to the respondent, the trial court and the CA did not err in
declaring that the agreement was null and void. She asserts that even if the
agreement was voluntarily executed by her and her brother Edmund, it
should still have been subjected to the approval of the court as it may
prejudice the estate, the heirs or third parties. Furthermore, she had not
waived any rights, as she even stated in her answer in the court a quo that
the claim should be filed with the probate court. Thus, the petitioner could
not invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as
evidence to show that she had caused herself to be bound by the obligation
of her late father.
The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the
partition in the Agreement executed by the heirs is valid; b) whether or not
the heirs assumption of the indebtedness of the deceased is valid; and c)
whether the petitioner can hold the heirs liable on the obligation of the
deceased.
At the outset, well-settled is the rule that a probate court has the
jurisdiction to determine all the properties of the deceased, to determine
whether they should or should not be included in the inventory or list of
properties to be administered.[20] The said court is primarily concerned with
the administration, liquidation and distribution of the estate.[21]
In our jurisdiction, the rule is that there can be no valid partition among
the heirs until after the will has been probated:
In testate succession, there can be no valid partition among the heirs until
after the will has been probated. The law enjoins the probate of a will and the
public requires it, because unless a will is probated and notice thereof given
to the whole world, the right of a person to dispose of his property by will
may be rendered nugatory. The authentication of a will decides no other
question than such as touch upon the capacity of the testator and the
compliance with those requirements or solemnities which the law prescribes
for the validity of a will.[22]
This, of course, presupposes that the properties to be partitioned are the
same properties embraced in the will. [23] In the present case, the deceased,
Efraim Santibaez, left a holographic will [24] which contained, inter alia, the
provision which reads as follows:
(e) All other properties, real or personal, which I own and may be discovered
later after my demise, shall be distributed in the proportion indicated in the
immediately preceding paragraph in favor of Edmund and Florence, my
children.
We agree with the appellate court that the above-quoted is an allencompassing provision embracing all the properties left by the decedent
which might have escaped his mind at that time he was making his will, and
other properties he may acquire thereafter. Included therein are the three (3)
subject tractors. This being so, any partition involving the said tractors
among the heirs is not valid. The joint agreement [25] executed by Edmund
and Florence, partitioning the tractors among themselves, is invalid, specially
so since at the time of its execution, there was already a pending proceeding
for the probate of their late fathers holographic will covering the said
tractors.
It must be stressed that the probate proceeding had already acquired
jurisdiction over all the properties of the deceased, including the three (3)

tractors. To dispose of them in any way without the probate courts approval
is tantamount to divesting it with jurisdiction which the Court cannot allow.
[26]
Every act intended to put an end to indivision among co-heirs and
legatees or devisees is deemed to be a partition, although it should purport
to be a sale, an exchange, a compromise, or any other transaction. [27] Thus,
in executing any joint agreement which appears to be in the nature of an
extra-judicial partition, as in the case at bar, court approval is imperative,
and the heirs cannot just divest the court of its jurisdiction over that part of
the estate. Moreover, it is within the jurisdiction of the probate court to
determine the identity of the heirs of the decedent.[28] In the instant case,
there is no showing that the signatories in the joint agreement were the only
heirs of the decedent. When it was executed, the probate of the will was still
pending before the court and the latter had yet to determine who the heirs of
the decedent were. Thus, for Edmund and respondent Florence S. Ariola to
adjudicate unto themselves the three (3) tractors was a premature act, and
prejudicial to the other possible heirs and creditors who may have a valid
claim against the estate of the deceased.
The question that now comes to fore is whether the heirs assumption of
the indebtedness of the decedent is binding. We rule in the negative.
Perusing the joint agreement, it provides that the heirs as parties
thereto have agreed to divide between themselves and take possession and
use the above-described chattel and each of them to assume the
indebtedness corresponding to the chattel taken as herein after stated which
is in favor of First Countryside Credit Corp. [29] The assumption of liability was
conditioned upon the happening of an event, that is, that each heir shall take
possession and use of their respective share under the agreement. It was
made dependent on the validity of the partition, and that they were to
assume the indebtedness corresponding to the chattel that they were each
to receive. The partition being invalid as earlier discussed, the heirs in effect
did not receive any such tractor. It follows then that the assumption of
liability cannot be given any force and effect.
The Court notes that the loan was contracted by the decedent. The
petitioner, purportedly a creditor of the late Efraim Santibaez, should have
thus filed its money claim with the probate court in accordance with Section
5, Rule 86 of the Revised Rules of Court, which provides:
Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. All claims for money against the decedent, arising from contract,
express or implied, whether the same be due, not due, or contingent, all
claims for funeral expenses for the last sickness of the decedent, and
judgment for money against the decedent, must be filed within the time
limited in the notice; otherwise they are barred forever, except that they may
be set forth as counterclaims in any action that the executor or administrator
may bring against the claimants. Where an executor or administrator
commences an action, or prosecutes an action already commenced by the

deceased in his lifetime, the debtor may set forth by answer the claims he
has against the decedent, instead of presenting them independently to the
court as herein provided, and mutual claims may be set off against each
other in such action; and if final judgment is rendered in favor of the
defendant, the amount so determined shall be considered the true balance
against the estate, as though the claim had been presented directly before
the court in the administration proceedings. Claims not yet due, or
contingent, may be approved at their present value.
The filing of a money claim against the decedents estate in the probate
court is mandatory.[30] As we held in the vintage case of Py Eng Chong v.
Herrera:[31]
This requirement is for the purpose of protecting the estate of the deceased
by informing the executor or administrator of the claims against it, thus
enabling him to examine each claim and to determine whether it is a proper
one which should be allowed. The plain and obvious design of the rule is the
speedy settlement of the affairs of the deceased and the early delivery of the
property to the distributees, legatees, or heirs. `The law strictly requires the
prompt presentation and disposition of the claims against the decedent's
estate in order to settle the affairs of the estate as soon as possible, pay off
its debts and distribute the residue.[32]
Perusing the records of the case, nothing therein could hold private
respondent Florence S. Ariola accountable for any liability incurred by her
late father. The documentary evidence presented, particularly the promissory
notes and the continuing guaranty agreement, were executed and signed
only by the late Efraim Santibaez and his son Edmund. As the petitioner
failed to file its money claim with the probate court, at most, it may only go
after Edmund as co-maker of the decedent under the said promissory notes
and continuing guaranty, of course, subject to any defenses Edmund may
have as against the petitioner. As the court had not acquired jurisdiction over
the person of Edmund, we find it unnecessary to delve into the matter
further.
We agree with the finding of the trial court that the petitioner had not
sufficiently shown that it is the successor-in-interest of the Union Savings and
Mortgage Bank to which the FCCC assigned its assets and liabilities. [33] The
petitioner in its complaint alleged that by virtue of the Deed of Assignment
dated August 20, 1981 executed by and between First Countryside Credit
Corporation and Union Bank of the Philippines [34] However, the documentary
evidence[35] clearly reflects that the parties in the deed of assignment with
assumption of liabilities were the FCCC, and the Union Savings and Mortgage
Bank, with the conformity of Bancom Philippine Holdings, Inc. Nowhere can
the petitioners participation therein as a party be found. Furthermore, no
documentary or testimonial evidence was presented during trial to show that

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

[1]

Penned by Associate Justice Bienvenido L. Reyes with Associate Justices

Eubulo G. Verzola (deceased), and Marina L. Buzon, concurring.

[2]

Penned by Presiding Judge Julio R. Logarta.

[3]

Records, pp. 8-12.

[4]

Id. at 13-18.

[5]

Id. at 19-20.

[6]

Exhibit 7.

[7]

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

[8]

Exhibit A.

[9]

Exhibit G.

[10]

Exhibits E and F.

[11]

Records, p. 1.

[12]

See Sheriffs Return of Service, Id. at 39.

[13]

Records, p. 42.

[14]

Id. at 83.

[15]

Id. at 522.

[16]

CA Rollo, p. 43.

[17]

Id. at 76.

[18]

Rollo, p. 30.

[19]

Id. at 7-8.

[20]

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

[21]

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

[22]

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

[23]

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

[24]

Exhibit 7.

[25]

Exhibit A.

[26]

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

[27]

Article 1082, New Civil Code.

[28]

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

[29]

See Exhibit 7.

[30]

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

[31]

70 SCRA 130 (1976).

[32]

Ibid.

[33]

See Exhibit G.

[34]

Records, p. 4.

[35]

Exhibit G.

[36]

Records, p. 521.
EN BANC
[G.R. No. L-8437. November 28, 1956.]

ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,

claimant-Appellant.
DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court of First Instance
of Rizal, presided by Judge Hermogenes Caluag, dismissing its claim against

the Estate of K. H. Hemady (Special Proceeding No. Q-293) for failure to state
a cause of action.
The Luzon Surety Co. had filed a claim against the Estate based on twenty
different indemnity agreements, or counter bonds, each subscribed by a
distinct principal and by the deceased K. H. Hemady, a surety solidary
guarantor) in all of them, in consideration of the Luzon Surety Co.s of having
guaranteed, the various principals in favor of different creditors. The twenty
counterbonds, or indemnity agreements, all contained the following
stipulations:chanroblesvirtuallawlibrary
Premiums. As consideration for this suretyship, the undersigned jointly
and severally, agree to pay the COMPANY the sum of ________________
(P______) pesos, Philippines Currency, in advance as premium there of for
every __________ months or fractions thereof, this ________ or any renewal or
substitution thereof is in effect.
Indemnity. The undersigned, jointly and severally, agree at all times to
indemnify the COMPANY and keep it indemnified and hold and save it
harmless from and against any and all damages, losses, costs, stamps,
taxes, penalties, charges, and expenses of whatsoever kind and nature which
the COMPANY shall or may, at any time sustain or incur in consequence of
having become surety upon this bond or any extension, renewal, substitution
or alteration thereof made at the instance of the undersigned or any of them
or any order executed on behalf of the undersigned or any of them; chan
roblesvirtualawlibraryand to pay, reimburse and make good to the COMPANY,
its successors and assigns, all sums and amount of money which it or its
representatives shall pay or cause to be paid, or become liable to pay, on
account of the undersigned or any of them, of whatsoever kind and nature,
including 15% of the amount involved in the litigation or other matters
growing out of or connected therewith for counsel or attorneys fees, but in
no case less than P25. It is hereby further agreed that in case of extension or
renewal of this ________ we equally bind ourselves for the payment thereof
under the same terms and conditions as above mentioned without the
necessity of executing another indemnity agreement for the purpose and
that we hereby equally waive our right to be notified of any renewal or
extension of this ________ which may be granted under this indemnity
agreement.
Interest on amount paid by the Company. Any and all sums of money so
paid by the company shall bear interest at the rate of 12% per annum which
interest, if not paid, will be accummulated and added to the capital quarterly
order to earn the same interests as the capital and the total sum thereof, the
capital and interest, shall be paid to the COMPANY as soon as the COMPANY
shall have become liable therefore, whether it shall have paid out such sums
of money or any part thereof or not.
xxx

xxx

xxx

Waiver. It is hereby agreed upon by and between the undersigned that any
question which may arise between them by reason of this document and
which has to be submitted for decision to Courts of Justice shall be brought
before the Court of competent jurisdiction in the City of Manila, waiving for
this purpose any other venue. Our right to be notified of the acceptance and
approval of this indemnity agreement is hereby likewise waived.
xxx

xxx

xxx

Our Liability Hereunder. It shall not be necessary for the COMPANY to bring
suit against the principal upon his default, or to exhaust the property of the
principal, but the liability hereunder of the undersigned indemnitor shall be
jointly and severally, a primary one, the same as that of the principal, and
shall be exigible immediately upon the occurrence of such default. (Rec.
App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent claim, of the
value of the twenty bonds it had executed in consideration of the
counterbonds, and further asked for judgment for the unpaid premiums and
documentary stamps affixed to the bonds, with 12 per cent interest thereon.
Before answer was filed, and upon motion of the administratrix of Hemadys
estate, the lower court, by order of September 23, 1953, dismissed the
claims of Luzon Surety Co., on two grounds:chanroblesvirtuallawlibrary (1)
that the premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since they were not liabilities
incurred
after
the
execution
of
the
counterbonds; chan
roblesvirtualawlibraryand (2) that whatever losses may occur after
Hemadys death, are not chargeable to his estate, because upon his death
he ceased to be guarantor.
Taking up the latter point first, since it is the one more far reaching in effects,
the reasoning of the court below ran as follows:chanroblesvirtuallawlibrary
The administratrix further contends that upon the death of Hemady, his
liability as a guarantor terminated, and therefore, in the absence of a
showing that a loss or damage was suffered, the claim cannot be considered
contingent. This Court believes that there is merit in this contention and finds
support in Article 2046 of the new Civil Code. It should be noted that a new
requirement has been added for a person to qualify as a guarantor, that
is:chanroblesvirtuallawlibrary integrity. As correctly pointed out by the
Administratrix, integrity is something purely personal and is not
transmissible. Upon the death of Hemady, his integrity was not transmitted
to his estate or successors. Whatever loss therefore, may occur after
Hemadys death, are not chargeable to his estate because upon his death he
ceased to be a guarantor.
Another clear and strong indication that the surety company has exclusively
relied on the personality, character, honesty and integrity of the now

deceased K. H. Hemady, was the fact that in the printed form of the
indemnity agreement there is a paragraph entitled Security by way of first
mortgage, which was expressly waived and renounced by the security
company. The security company has not demanded from K. H. Hemady to
comply with this requirement of giving security by way of first mortgage. In
the supporting papers of the claim presented by Luzon Surety Company, no
real property was mentioned in the list of properties mortgaged which
appears at the back of the indemnity agreement. (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present Civil Code (Article
1311), as well as under the Civil Code of 1889 (Article 1257), the rule is that

Contracts take effect only as between the parties, their assigns and heirs,
except in the case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation or by provision of law.
While in our successional system the responsibility of the heirs for the debts
of their decedent cannot exceed the value of the inheritance they receive
from him, the principle remains intact that these heirs succeed not only to
the rights of the deceased but also to his obligations. Articles 774 and 776 of
the New Civil Code (and Articles 659 and 661 of the preceding one) expressly
so provide, thereby confirming Article 1311 already quoted.
ART. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the inheritance,
of a person are transmitted through his death to another or others either by
his will or by operation of law.
ART. 776. The inheritance includes all the property, rights and obligations
of a person which are not extinguished by his death.
In
Mojica
vs.
Fernandez,
9
ruled:chanroblesvirtuallawlibrary

Phil.

403,

this

Supreme

Court

Under the Civil Code the heirs, by virtue of the rights of succession are
subrogated to all the rights and obligations of the deceased (Article 661) and
cannot be regarded as third parties with respect to a contract to which the
deceased was a party, touching the estate of the deceased (Barrios vs.
Dolor, 2 Phil. 44).
xxx

xxx

xxx

The principle on which these decisions rest is not affected by the provisions
of the new Code of Civil Procedure, and, in accordance with that principle,
the heirs of a deceased person cannot be held to be third persons in
relation to any contracts touching the real estate of their decedent which
comes
in
to
their
hands
by
right
of
inheritance; chan
roblesvirtualawlibrarythey take such property subject to all the obligations
resting thereon in the hands of him from whom they derive their rights.

(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman
vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party is not
altered by the provision in our Rules of Court that money debts of a
deceased must be liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is that whatever payment
is thus made from the estate is ultimately a payment by the heirs and
distributees, since the amount of the paid claim in fact diminishes or reduces
the shares that the heirs would have been entitled to receive.
Under our law, therefore, the general rule is that a partys contractual rights
and obligations are transmissible to the successors. The rule is a
consequence of the progressive depersonalization of patrimonial rights and
duties that, as observed by Victorio Polacco, has characterized the history of
these institutions. From the Roman concept of a relation from person to
person, the obligation has evolved into a relation from patrimony to
patrimony, with the persons occupying only a representative position,
barring those rare cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its performance by a specific
person and by no other. The transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the obligation of
the surety or guarantor does not warrant the conclusion that his peculiar
individual qualities are contemplated as a principal inducement for the
contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady
when it accepted the latter as surety in the counterbonds? Nothing but the
reimbursement of the moneys that the Luzon Surety Co. might have to
disburse on account of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting from an obligation
to give; chan roblesvirtualawlibraryand to the Luzon Surety Co., it was
indifferent that the reimbursement should be made by Hemady himself or by
some one else in his behalf, so long as the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by stipulation
of the parties. Being exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must be expressly
established, or at the very least, clearly inferable from the provisions of the
contract itself, and the text of the agreements sued upon nowhere indicate
that they are non-transferable.
(b) Intransmisibilidad por pacto. Lo general es la transmisibilidad de
darechos y obligaciones; chan roblesvirtualawlibraryle excepcion, la
intransmisibilidad. Mientras nada se diga en contrario impera el principio de
la transmision, como elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester el pacto expreso,
porque si no, lo convenido entre partes trasciende a sus herederos.

Siendo estos los continuadores de la personalidad del causante, sobre ellos

recaen los efectos de los vinculos juridicos creados por sus antecesores, y
para evitarlo, si asi se quiere, es indespensable convension terminante en tal
sentido.
Por su esencia, el derecho y la obligacion tienden a ir ms all de las
personas que les dieron vida, y a ejercer presion sobre los sucesores de esa
persona; chan roblesvirtualawlibrarycuando no se quiera esto, se impone
una estipulacion limitativa expresamente de la transmisibilidad o de cuyos
tirminos claramente se deduzca la concresion del concreto a las mismas
personas que lo otorgon. (Scaevola, Codigo Civil, Tomo XX, p. 541-542)
(Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a contract is
deemed to have contracted for himself and his heirs and assigns, it is
unnecessary for him to expressly stipulate to that effect; chan
roblesvirtualawlibraryhence, his failure to do so is no sign that he intended
his bargain to terminate upon his death. Similarly, that the Luzon Surety Co.,
did not require bondsman Hemady to execute a mortgage indicates nothing
more than the companys faith and confidence in the financial stability of the
surety, but not that his obligation was strictly personal.
The third exception to the transmissibility of obligations under Article 1311
exists when they are not transmissible by operation of law. The provision
makes reference to those cases where the law expresses that the rights or
obligations are extinguished by death, as is the case in legal support (Article
300), parental authority (Article 327), usufruct (Article 603), contracts for a
piece of work (Article 1726), partnership (Article 1830 and agency (Article
1919). By contract, the articles of the Civil Code that regulate guaranty or
suretyship (Articles 2047 to 2084) contain no provision that the guaranty is
extinguished upon the death of the guarantor or the surety.
The lower court sought to infer such a limitation from Art. 2056, to the effect
that one who is obliged to furnish a guarantor must present a person who
possesses integrity, capacity to bind himself, and sufficient property to
answer for the obligation which he guarantees. It will be noted, however,
that the law requires these qualities to be present only at the time of the
perfection of the contract of guaranty. It is self-evident that once the contract
has become perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the eventual liability he has
contracted; chan roblesvirtualawlibraryand if that be true of his capacity to
bind himself, it should also be true of his integrity, which is a quality
mentioned in the article alongside the capacity.
The foregoing concept is confirmed by the next Article 2057, that runs as
follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be convicted in first instance of a crime
involving dishonesty or should become insolvent, the creditor may demand

another who has all the qualifications required in the preceding article. The
case is excepted where the creditor has required and stipulated that a
specified person should be guarantor.
From this article it should be immediately apparent that the supervening
dishonesty of the guarantor (that is to say, the disappearance of his integrity
after he has become bound) does not terminate the contract but merely
entitles the creditor to demand a replacement of the guarantor. But the step
remains optional in the creditor:chanroblesvirtuallawlibrary it is his right, not
his duty; chan roblesvirtualawlibraryhe may waive it if he chooses, and hold
the guarantor to his bargain. Hence Article 2057 of the present Civil Code is
incompatible with the trial courts stand that the requirement of integrity in
the guarantor or surety makes the latters undertaking strictly personal, so
linked to his individuality that the guaranty automatically terminates upon
his death.
The contracts of suretyship entered into by K. H. Hemady in favor of Luzon
Surety Co. not being rendered intransmissible due to the nature of the
undertaking, nor by the stipulations of the contracts themselves, nor by
provision of law, his eventual liability thereunder necessarily passed upon his
death to his heirs. The contracts, therefore, give rise to contingent claims
provable against his estate under section 5, Rule 87 (2 Moran, 1952 ed., p.
437; chan roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).
The most common example of the contigent claim is that which arises when
a person is bound as surety or guarantor for a principal who is insolvent or
dead. Under the ordinary contract of suretyship the surety has no claim
whatever against his principal until he himself pays something by way of
satisfaction upon the obligation which is secured. When he does this, there
instantly arises in favor of the surety the right to compel the principal to
exonerate the surety. But until the surety has contributed something to the
payment of the debt, or has performed the secured obligation in whole or in
part, he has no right of action against anybody no claim that could be
reduced
to
judgment.
(May
vs.
Vann,
15
Pla.,
553; chan
roblesvirtualawlibraryGibson
vs.
Mithell,
16
Pla.,
519; chan
roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs.
Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs. Nou, 63
Wis., 134.)
For Defendant administratrix it is averred that the above doctrine refers to a
case where the surety files claims against the estate of the principal
debtor; chan roblesvirtualawlibraryand it is urged that the rule does not
apply to the case before us, where the late Hemady was a surety, not a
principal debtor. The argument evinces a superficial view of the relations
between parties. If under the Gaskell ruling, the Luzon Surety Co., as
guarantor, could file a contingent claim against the estate of the principal
debtors if the latter should die, there is absolutely no reason why it could not
file such a claim against the estate of Hemady, since Hemady is a solidary

co-debtor of his principals. What the Luzon Surety Co. may claim from the
estate of a principal debtor it may equally claim from the estate of Hemady,
since, in view of the existing solidarity, the latter does not even enjoy the
benefit of exhaustion of the assets of the principal debtor.
The foregoing ruling is of course without prejudice to the remedies of the
administratrix against the principal debtors under Articles 2071 and 2067 of
the New Civil Code.
Our conclusion is that the solidary guarantors liability is not extinguished by
his death, and that in such event, the Luzon Surety Co., had the right to file
against the estate a contingent claim for reimbursement. It becomes
unnecessary now to discuss the estates liability for premiums and stamp
taxes, because irrespective of the solution to this question, the Luzon
Suretys claim did state a cause of action, and its dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the records are ordered
remanded to the court of origin, with instructions to proceed in accordance
with law. Costs against the Administratrix- Appellee. SO ORDERED.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo,
Labrador, Concepcion, Endencia and Felix, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15499

February 28, 1962

ANGELA M. BUTTE, plaintiff-appellant,

vs.
MANUEL UY and SONS, INC., defendant-appellee.
Delgado, Flores and Macapagal for plaintiff-appellant.
Pelaez and Jalandoni for defendant-appellee.
REYES, J.B.L., J.:
Appeal from a decision of the Court of First instance of Manila dismissing the
action for legal redemption filed by plaintiff-appellant.
It appears that Jose V. Ramirez, during his lifetime, was a co-owner of a
house and lot located at Sta. Cruz, Manila, as shown by Transfer Certificate of
Title No. 52789, issued in the name of the following co-owners: Marie Garnier

Vda. de Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6; Rita de
Ramirez, 1/6; and Jose Ma. Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died. Subsequently, Special Proceeding
No. 15026 was instituted to settle his estate, that included the one-sixth
(1/6) undivided share in the aforementioned property. And although his last
will and testament, wherein he bequeathed his estate to his children and
grandchildren and one-third (1/3) of the free portion to Mrs. Angela M. Butte,
hereinafter referred to as plaintiff-appellant, has been admitted to probate,
the estate proceedings are still pending up to the present on account of the
claims of creditors which exceed the assets of the deceased. The Bank of the
Philippine Islands was appointed judicial administrator.
Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de Ramirez, one
of the co-owners of the late Jose V. Ramirez in the Sta. Cruz property, sold
her undivided 1/6 share to Manuel Uy & Sons, Inc. defendant-appellant
herein, for the sum of P500,000.00. After the execution by her attorney-infact, Mrs. Elsa R. Chambers, of an affidavit to the effect that formal notices of
the sale had been sent to all possible redemptioners, the deed of sale was
duly registered and Transfer Certificate of Title No. 52789 was cancelled in
lieu of which a new one was issued in the name of the vendee and the otherco-owners.
On the same day (December 9, 1958), Manuel Uy & Sons, Inc. sent a letter to
the Bank of the Philippine Islands as judicial administrator of the estate of
the late Jose V. Ramirez informing it of the above-mentioned sale. This letter,
together with that of the bank, was forwarded by the latter to Mrs. Butte c/o
her counsel Delgado, Flores & Macapagal, Escolta, Manila, and having
received the same on December 10, 1958, said law office delivered them to
plaintiff-appellant's son, Mr. Miguel Papa, who in turn personally handed the
letters to his mother, Mrs. Butte, on December 11 and 12, 1958. Aside from
this letter of defendant-appellant, the vendor, thru her attorney-in-fact Mrs.
Chambers, wrote said bank on December 11, 1958 confirming vendee's
letter regarding the sale of her 1/6 share in the Sta. Cruz property for the
sum of P500,000.00. Said letter was received by the bank on December 15,
1958 and having endorsed it to Mrs. Butte's counsel, the latter received the
same on December 16, 1958. Appellant received the letter on December 19,
1958.

On January 15, 1959, Mrs. Angela M. Butte, thru Atty. Resplandor Sobretodo,
sent a letter and a Philippine National Bank cashier's check in the amount of
P500,000.00 to Manuel Uy & Sons, Inc. offering to redeem the 1/6 share sold
by Mrs. Marie Garnier Vda. de Ramirez. This tender having been refused,
plaintiff on the same day consigned the amount in court and filed the
corresponding action for legal redemption. Without prejudice to the
determination by the court of the reasonable and fair market value of the
property sold which she alleged to be grossly excessive, plaintiff prayed for
conveyance of the property, and for actual, moral and exemplary damages.
After the filing by defendant of its answer containing a counterclaim, and
plaintiff's reply thereto, trial was held, after which the court rendered
decision on May 13, 1959, dismissing plaintiff's complaint on the grounds
that she has no right to redeem the property and that, if ever she had any,
she exercised the same beyond the statutory 30-day period for legal
redemptions provided by the Civil Code. The counterclaim of defendant for
damages was likewise dismissed for not being sufficiently established. Both
parties appealed directly to this Court.
Based on the foregoing facts, the main issues posed in this appeal are: (1)
whether or not plaintiff-appellant, having been bequeathed 1/3 of the free
portion of the estate of Jose V. Ramirez, can exercise the right of legal
redemption over the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez
despite the presence of the judicial administrator and pending the final
distribution of her share in the testate proceedings; and (2) whether or not
she exercised the right of legal redemption within the period prescribed by
law.
The applicable law involved in the present case is contained in Articles 1620,
p. 1, and 1623 of the Civil Code of the Philippines, which read as follows:
ART. 1620. A co-owner of a thing may exercise the right of redemption
in case the shares of all the other-co-owners or of any of them, are sold
to a third person. If the price of the alienation is grossly excessive, the
redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share they may
respectively have in the thing owned in common. (1522a)

ART. 1623. The right of legal predemption or redemption shall not be

exercised except within thirty days from the notice in writing by the
respective vendor, or by the vendor, as the case may be. The deed of
sale shall not be accorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written
notice thereof at all possible redemptioners.
The right of redemption of co-owners excludes that of adjoining
owners. (1524a)
That the appellant Angela M. Butte is entitled to exercise the right of legal
redemption is clear. As testamentary heir of the estate of J.V. Ramirez, she
and her co-heirs acquired an interest in the undivided one-sixth (1/6) share
owned by her predecessor (causante) in the Santa Cruz property, from the
moment of the death of the aforesaid co-owner, J.V. Ramirez. By law, the
rights to the succession of a deceased persons are transmitted to his heirs
from the moment of his death, and the right of succession includes all
property rights and obligations that survive the decedent.
ART. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death. (659)
ART. 777. The rights to the succession are transmitted from the
moment of the death of the decedent. (657a)
ART. 947. The legatee or devisee acquires a right to the pure and
simple legacies or devisees from the death of the testator, and
transmits it to his heirs. (881a)
The principle of transmission as of the time of the predecessor's death is
basic in our Civil Code, and is supported by other related articles. Thus, the
capacity of the heir is determined as of the time the decedent died (Art.
1034); the legitime is to be computed as of the same moment(Art. 908), and
so is the in officiousness of the donationinter vivos (Art. 771). Similarly, the
legacies of credit and remission are valid only in the amount due and
outstanding at the death of the testator (Art. 935),and the fruits accruing
after that instant are deemed to pertain to the legatee (Art. 948).
As a consequence of this fundamental rule of succession, the heirs of Jose V.
Ramirez acquired his undivided share in the Sta. Cruz property from the
moment of his death, and from that instant, they became co-owners in the

aforesaid property, together with the original surviving co-owners of their

decedent (causante). A co-owner of an undivided share is necessarily a coowner of the whole. Wherefore, any one of the Ramirez heirs, as such coowner, became entitled to exercise the right of legal redemption (retracto de
comuneros) as soon as another co-owner (Maria Garnier Vda. de Ramirez)
had sold her undivided share to a stranger, Manuel Uy & Sons, Inc. This right
of redemption vested exclusively in consideration of the redemptioner's
share which the law nowhere takes into account.
The situation is in no wise altered by the existence of a judicial administrator
of the estate of Jose V. Ramirez while under the Rules of Court the
administrator has the right to the possession of the real and personal estate
of the deceased, so far as needed for the payment of the decedent's debts
and the expenses of administration (sec. 3, Rule 85), and the administrator
may bring or defend actions for the recovery or protection of the property or
rights of the deceased (sec. 2, Rule 88), such rights of possession and
administration do not include the right of legal redemption of the undivided
share sold to Uy & Company by Mrs. Garnier Ramirez. The reason is obvious:
this right of legal redemption only came into existence when the sale to Uy &
Sons, Inc. was perfected, eight (8) years after the death of Jose V. Ramirez,
and formed no part of his estate. The redemption right vested in the heirs
originally, in their individual capacity, they did not derivatively acquire it
from their decedent, for when Jose V. Ramirez died, none of the other coowners of the Sta. Cruz property had as yet sold his undivided share to a
stranger. Hence, there was nothing to redeem and no right of redemption;
and if the late Ramirez had no such right at his death, he could not transmit
it to his own heirs. Much less could Ramirez acquire such right of redemption
eight years after his death, when the sale to Uy & Sons, Inc. was made;
because death extinguishes civil personality, and, therefore, all further
juridical capacity to acquire or transmit rights and obligations of any kind
(Civil Code of the Phil., Art. 42).
It is argued that the actual share of appellant Mrs. Butte in the estate of Jose
V. Ramirez has not been specifically determined as yet, that it is still
contingent; and that the liquidation of estate of Jose V. Ramirez may require
the alienation of the decedent's undivided portion in the Sta. Cruz property,
in which event Mrs. Butte would have no interest in said undivided portion.
Even if it were true, the fact would remain that so long as that undivided
share remains in the estate, the heirs of Jose V. Ramirez own it, as the
deceased did own it before his demise, so that his heirs are now as much co-

owners of the Sta. Cruz property as Jose V. Ramirez was himself a co-owner
thereof during his lifetime. As co-owners of the property, the heirs of Jose V.
Ramirez, or any one of them, became personally vested with right of legal
redemption as soon as Mrs. Garnier sold her own pro-indiviso interest to Uy &
Sons. Even if subsequently, the undivided share of Ramirez (and of his heirs)
should eventually be sold to satisfy the creditors of the estate, it would not
destroy their ownership of it before the sale, but would only convey or
transfer it as in turn sold (of it actually is sold) to pay his creditors. Hence,
the right of any of the Ramirez heirs to redeem the Garnier share will not be
retroactively affected. All that the law requires is that the legal redemptioner
should be a co-owner at the time the undivided share of another co-owner is
sold to a stranger. Whether or not the redemptioner will continue being a coowner after exercising the legal redemptioner is irrelevant for the purposes
of law.
Nor it can be argued that if the original share of Ramirez is sold by the
administrator, his heirs would stand in law as never having acquired that
share. This would only be true if the inheritance is repudiated or the heir's
quality as such is voided. But where the heirship is undisputed, the purchaser
of hereditary property is not deemed to have acquired the title directly from
the deceased Ramirez, because a dead man can not convey title, nor from
the administrator who owns no part of the estate; the purchaser can only
derive his title from the Ramirez heirs, represented by the administrator, as
their trustee or legal representative.
The right of appellant Angela M. Butte to make the redemption being
established, the next point of inquiry is whether she had made or tendered
the redemption price within the 30 days from notices as prescribed by law.
This period, be it noted, is peremptory, because the policy of the law is not to
leave the purchaser's title in uncertainty beyond the established 30-day
period. In considering whether or not the offer to redeem was timely, we
think that the notice given by the vendee (buyer) should not be taken into
account. The text of Article 1623 clearly and expressly prescribes that the
thirty days for making the redemption are to be counted from notice in
writing by the vendor. Under the old law (Civ. Code of 1889, Art. 1524), it was
immaterial who gave the notice; so long as the redeeming co-owner learned
of the alienation in favor of the stranger, the redemption period began to
run. It is thus apparent that the Philippine legislature in Article 1623
deliberately selected a particular method of giving notice, and that method
must be deemed exclusive (39 Am. Jur., 237; Payne vs. State, 12 S.W. [2d]

528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed.
[U.S.] 275)
Why these provisions were inserted in the statute we are not informed,
but we may assume until the contrary is shown, that a state of facts in
respect thereto existed, which warranted the legislature in so
legislating.
The reasons for requiring that the notice should be given by the seller, and
not by the buyer, are easily divined. The seller of an undivided interest is in
the best position to know who are his co-owners that under the law must be
notified of the sale. Also, the notice by the seller removes all doubts as to the
fact of the sale, its perfection; and its validity, the notice being a
reaffirmation thereof, so that the party need not entertain doubt that the
seller may still contest the alienation. This assurance would not exist if the
notice should be given by the buyer.
The notice which became operative is that given by Mrs. Chambers, in her
capacity as attorney-in-fact of the vendor Marie Garnier Vda. de Ramirez.
Under date of December 11, 1958, she wrote the Administrator Bank of the
Philippine Islands that her principal's one-sixth (1/6) share in the Sta. Cruz
property had been sold to Manuel Uy & Sons, Inc. for P500,000.00. The Bank
received this notice on December 15, 1958, and on the same day endorsed it
to Mrs. Butte, care of Delgado, Flores and Macapagal (her attorneys), who
received the same on December 16, 1958. Mrs. Butte tendered redemption
and upon the vendee's refusal, judicially consigned the price of P500,000.00
on January 15, 1959. The latter date was the last one of the thirty days
allowed by the Code for the redemption, counted by excluding December 16,
1958 and including January 15, 1959, pursuant to Article 13 of the Civil Code.
Therefore, the redemption was made in due time.
The date of receipt of the vendor's notice by the Administrator Bank
(December 15) can not be counted as determining the start of thirty days;
for the Administrator of the estate was not a proper redemptioner, since, as
previously shown, the right to redeem the share of Marie Garnier did not
form part of the estate of Jose V. Ramirez.
We find no jurisdiction for appellant's claim that the P500,000,00. paid by Uy
& Sons, Inc. for the Garnier share is grossly excessive. Gross excess cannot
be predicated on mere individual estimates of market price by a single
realtor.

The redemption and consignation having been properly made, the Uy

counterclaim for damages and attorney's fees predicated on the assumption
that plaintiff's action was clearly unfounded, becomes untenable.
PREMISES CONSIDERED, the judgment appealed from is hereby reversed and
set aside, and another one entered:
(a) Declaring the consignation of P500,000,00 made by appellant
Angela M. Butte duly and properly made;
(b) Declaring that said appellant properly exercised in due time the
legal redemption of the one-sixth (1/6) undivided portion of the land
covered by Certificate of Title No. 59363 of the Office of the Register of
Deeds of the City of Manila, sold on December 9, 1958 by Marie
Garnier Vda. de Ramirez to appellant Manuel Uy & Sons, Inc.
(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned
price and to convey to Angela M. Butte the undivided portion above
referred to, within 30 days from the time our decision becomes final,
and subsequently to account for the rentals and fruits of the redeemed
share from and after January 15, 1958, until its conveyance; and.
(d) Ordering the return of the records to the court of origin for further
proceedings conformable to this opinion.
Without finding as to costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and
Dizon, JJ., concur.
Paredes and De Leon, JJ., took no par
FIRST DIVISION

[G.R. No. 131953. June 5, 2002]

MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S.

CABATINGAN, petitioners, vs.
THE
HEIRS
OF
CORAZON
CABATINGAN, namely, LUZ M. BOQUIA, PERLA M. ABELLA,
ESTRELLA M. CAETE, LOURDES M. YUSON, and JULIA L. MAYOL,

HEIRS OF GENOVIVA C. NATIVIDAD namely, OSCAR C.

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

caused the execution of the deeds of donation, and, that the documents are
void for failing to comply with the provisions of the Civil Code regarding
formalities of wills and testaments, considering that these are
donations mortis causa.[4] Respondents prayed that a receiver be appointed
in order to preserve the disputed properties, and, that they be declared as
co-owners of the properties in equal shares, together with petitioner Nicolas
Cabatingan.[5]
Petitioners in their Amended Answer, deny respondents allegations
contending that Conchita Cabatingan freely, knowingly and voluntarily
caused the preparation of the instruments. [6]
On respondents motion, the court a quo rendered a partial judgment on
the pleadings on December 2, 1997 in favor of respondents, with the
following dispositive portion:
WHEREREFORE, and in consideration of all the foregoing, judgment is hereby
rendered in favor of the plaintiffs and against the defendant and unwilling coplaintiff with regards (sic) to the four Deeds of Donation Annexes A, A-1, B
and Annex C which is the subject of this partial decision by:
Declaring the four Deeds of Donation as null and void ab initio for being a
donation Mortis Causa and for failure to comply with formal and solemn
requisite under Art. 806 of the New Civil Code;
b) To declare the plaintiffs and defendants as well as unwilling coplaintiff as the heirs of the deceased Conchita Cabatingan and
therefore hereditary co-owners of the properties subject of this
partial decision, as mandated under Art. 777 of the New Civil Code;
SO ORDERED.[7]
The court a quo ruled that the donations are donations mortis causa and
therefore the four (4) deeds in question executed on January 14, 1995 are
null and void for failure to comply with the requisites of Article 806 of the
Civil Code on solemnities of wills and testaments.[8]
Raising questions of law, petitioners elevated the court a quos decision to
this Court,[9] alleging that:
THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-WELLESTABLISHED RULINGS OF THIS HONORABLE SUPREME COURT ON THE
CHARACTERIZATION OF DONATIONS AS INTER VIVOS OR MORTIS CAUSA AND,
INSTEAD, PROCEEDED TO INTERPRET THE DONATIONS IN QUESTION IN A
MANNER CONTRARY THERETO.[10]

Petitioners insist that the donations are inter vivos donations as these
were made by the late Conchita Cabatingan in consideration of the love and
affection of the donor for the donee, and there is nothing in the deeds which
indicate that the donations were made in consideration of Cabatingans
death.[11] In addition, petitioners contend that the stipulation on rescission in
case petitioners die ahead of Cabatingan is a resolutory condition that
confirms the nature of the donation as inter vivos.
Petitioners arguments are bereft of merit.
In a donation mortis causa, the right of disposition is not transferred to
the donee while the donor is still alive.[12] In determining whether a donation
is one of mortis causa, the following characteristics must be taken into
account:
(1) It conveys no title or ownership to the transferee before the death of the
transferor; or what amounts to the same thing, that the transferor should
retain the ownership (full or naked) and control of the property while alive;
(2) That before his death, the transfer should be revocable by the transferor
at will, ad nutum; but revocability may be provided for indirectly by means of
a reserved power in the donor to dispose of the properties conveyed;
and
(3) That the transfer should be void if the transferor should survive the
transferee.[13]
In the present case, the nature of the donations as mortis causa is
confirmed by the fact that the donations do not contain any clear provision
that intends to pass proprietary rights to petitioners prior to Cabatingans
death.[14] The phrase to become effective upon the death of the
DONOR admits of no other interpretation but that Cabatingan did not intend
to transfer the ownership of the properties to petitioners during her
lifetime. Petitioners themselves expressly confirmed the donations as mortis
causa in the following Acceptance and Attestation clauses, uniformly found in
the subject deeds of donation, to wit:
That the DONEE does hereby accept the foregoing donation mortis causa
under the terms and conditions set forth therein, and avail herself of this
occasion to express her profound gratitude for the kindness and generosity
of the DONOR.
xxx
SIGNED by the above-named DONOR and DONEE at the foot of this Deed of
Donation mortis causa, which consists of two (2) pages x x x.[15]

That the donations were made in consideration of the love and affection
of the donor does not qualify the donations as inter vivos because
transfers mortis causa may also be made for the same reason.[16]
Well
in
point is National
Treasurer
of
the
Phils. v. Vda. de Meimban. [17] In said case, the questioned donation
contained the provision:
"That for and in consideration of the love and affection which the DONOR has
for the DONEE, the said Donor by these presents does hereby give, transfer,
and convey unto the DONEE, her heirs and assigns a portion of ONE
HUNDRED THOUSAND (100,000) SQUARE METERS, on the southeastern part
Pro-indiviso of the above described property. (The portion herein donated is
within Lot 2-B of the proposed amendment Plan Subdivision of Lots Nos. 1
and 2, Psu-109393), with all the buildings and improvements thereon, to
become effective upon the death of the DONOR. (italics supplied.)" [18]
Notably, the foregoing provision is similar to that contained in the donation
executed by Cabatingan. We held in Meimban case that the donation is
a mortis causa donation, and that the above quoted provision establishes the
donors intention to transfer the ownership and possession of the donated
property to the donee only after the formers death. Further:
As the donation is in the nature of a mortis causa disposition, the formalities
of a will should have been complied with under Article 728 of the Civil Code,
otherwise, the donation is void and would produce no effect. As we have held
in Alejandro v. Geraldez (78 SCRA 245,253), If the donation is made in
contemplation of the donors death, meaning that the full or naked ownership
of the donated properties will pass to the donee because of the donors
death, then it is at that time that the donation takes effect, and it is a
donation mortis causa which should be embodied in a last will and
testament. (Citing Bonsato v. Court of Appeals, 95 Phil. 481).[19]
We apply the above rulings to the present case. The herein subject deeds
expressly provide that the donation shall be rescinded in case petitioners
predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda,[20] one
of the decisive characteristics of a donation mortis causa is that the transfer
should be considered void if the donor should survive the donee. This is
exactly what Cabatingan provided for in her donations. If she really intended
that the donation should take effect during her lifetime and that the
ownership of the properties donated be transferrred to the donee or
independently of, and not by reason of her death, she would have not
expressed such proviso in the subject deeds.
Considering that the disputed donations are donations mortis causa, the
same partake of the nature of testamentary provisions [21] and as such, said

deeds must be executed in accordance with the requisites on solemnities of

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

[1]

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

[2]

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

[3]

Ibid.

[4]

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

[5]

Original Records, p. 97.

[6]

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

[7]

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

[8]

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

[9]

The petition was given due course per S.C. Resolution dated April 24,
1998.
[10]

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

[11]

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

[12]

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

[13]

Reyes v. Mosqueda, 187 SCRA 661 [1990], at pp. 670-671, citing Bonsato,
et al. v. Court of Appeals, et al., 95 Phil. 481 [1954].
[14]

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

[15]

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

[16]

Sicad v. Court of Appeals, supra, p. 194, citing Alejandro v. Geraldez, 78

SCRA 245 [1977].
[17]

131 SCRA 264 [1984].

[18]

Ibid., p. 269.

[19]

Ibid, p. 270.

[20]

See Note 13.

[21]

Article 728, Civil Code.

THIRD DIVISION

[G.R. No. 146006. February 23, 2004]

JOSE C. LEE AND ALMA AGGABAO, in their capacities as President

and
Corporate
Secretary,
respectively,
of
Philippines
Internationl Life Insurance Company, and FILIPINO LOAN
ASSISTANCE GROUP, petitioners, vs. REGIONAL TRIAL COURT
OF QUEZON CITY BRANCH 85 presided by JUDGE PEDRO M.
AREOLA, BRANCH CLERK OF COURT JANICE Y. ANTERO, DEPUTY
SHERIFFS ADENAUER G. RIVERA and PEDRO L. BORJA, all of the

Regional Trial Court of Quezon City Branch 85, MA. DIVINA

ENDERES claiming to be Special Administratrix, and other
persons/
public
officers
acting
for
and
in
their
behalf, respondents.
DECISION
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to
reverse and set aside the decision [1] of the Court of Appeals, First Division,
dated July 26, 2000, in CA G.R. 59736, which dismissed the petition for
certiorari filed by petitioners Jose C. Lee and Alma Aggabao (in their
capacities as president and secretary, respectively, of Philippine International
Life Insurance Company) and Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life
Insurance Company, Inc. on July 6, 1956. At the time of the companys
incorporation, Dr. Ortaez owned ninety percent (90%) of the subscribed
capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado
Ortaez), three legitimate children (Rafael, Jose and Antonio Ortaez) and five
illegitimate children by Ligaya Novicio (herein private respondent Ma. Divina
Ortaez-Enderes and her siblings Jose, Romeo, Enrico Manuel and Cesar, all
surnamed Ortaez).[2]
On September 24, 1980, Rafael Ortaez filed before the Court of First
Instance of Rizal, Quezon City Branch (now Regional Trial Court of Quezon
City) a petition for letters of administration of the intestate estate of Dr.
Ortaez, docketed as SP Proc. Q-30884 (which petition to date remains
pending at Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an
opposition to the petition for letters of administration and, in a subsequent
urgent motion, prayed that the intestate court appoint a special
administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of
Branch 85, appointed Rafael and Jose Ortaez joint special administrators of
their fathers estate. Hearings continued for the appointment of a regular
administrator (up to now no regular administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose
Ortaez submitted an inventory of the estate of their father which included,
among other properties, 2,029[3]shares of stock in Philippine International Life
Insurance Company (hereafter Philinterlife), representing 50.725% of the
companys outstanding capital stock.

On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that
she owned 1,014[4] Philinterlife shares of stock as her conjugal share in the
estate, sold said shares with right to repurchase in favor of herein petitioner
Filipino Loan Assistance Group (FLAG), represented by its president, herein
petitioner Jose C. Lee. Juliana Ortaez failed to repurchase the shares of stock
within the stipulated period, thus ownership thereof was consolidated by
petitioner FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his
personal capacity and claiming that he owned the remaining
1,011[5] Philinterlife shares of stocks as his inheritance share in the estate,
sold said shares with right to repurchase also in favor of herein petitioner
FLAG, represented by its president, herein petitioner Jose C. Lee. After one
year, petitioner FLAG consolidated in its name the ownership of the
Philinterlife shares of stock when Jose Ortaez failed to repurchase the same.
It appears that several years before (but already during the pendency of
the intestate proceedings at the Regional Trial Court of Quezon City, Branch
85), Juliana Ortaez and her two children, Special Administrators Rafael and
Jose Ortaez, entered into a memorandum of agreement dated March 4, 1982
for the extrajudicial settlement of the estate of Dr. Juvencio Ortaez,
partitioning the estate (including the Philinterlife shares of stock) among
themselves. This was the basis of the number of shares separately sold by
Juliana Ortaez on April 15, 1989 (1,014 shares) and by Jose Ortaez on
October 30, 1991 (1,011 shares) in favor of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes
and her siblings (hereafter referred to as private respondents Enderes et al.)
filed a motion for appointment of special administrator of Philinterlife shares
of stock. This move was opposed by Special Administrator Jose Ortaez.
On November 8, 1995, the intestate court granted the motion of private
respondents Enderes et al. and appointed private respondent Enderes special
administratrix of the Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent
motion to declare void ab initio the memorandum of agreement dated March
4, 1982. On January 9, 1996, she filed a motion to declare the partial nullity
of the extrajudicial settlement of the decedents estate. These motions were
opposed by Special Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion
to declare void ab initio the deeds of sale of Philinterlife shares of stock,
which move was again opposed by Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the
approval of the deeds of sale of the Philinterlife shares of stock and (2) the
release of Ma. Divina Ortaez-Enderes as special administratrix of the

Philinterlife shares of stock on the ground that there were no longer any
shares of stock for her to administer.
On August 11, 1997, the intestate court denied the omnibus motion of
Special Administrator Jose Ortaez for the approval of the deeds of sale for the
reason that:
Under the Godoy case, supra, it was held in substance that a sale of a
property of the estate without an Order of the probate court is void and
passes no title to the purchaser. Since the sales in question were entered
into by Juliana S. Ortaez and Jose S. Ortaez in their personal capacity without
prior approval of the Court, the same is not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of
Philinterlife shares of stock and release of Ma. Divina Ortaez-Enderes as
Special Administratrix is hereby denied.[6]
On August 29, 1997, the intestate court issued another order granting
the motion of Special Administratrix Enderes for the annulment of the March
4, 1982 memorandum of agreement or extrajudicial partition of estate. The
court reasoned that:
In consonance with the Order of this Court dated August 11, 1997 DENYING
the approval of the sale of Philinterlife shares of stocks and release of Ma.
Divina Ortaez-Enderes as Special Administratrix, the Urgent Motion to
Declare Void Ab Initio Memorandum of Agreement dated December 19, 1995.
. . is hereby impliedly partially resolved insofar as the
transfer/waiver/renunciation of the Philinterlife shares of stock are
concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the Memorandum
of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement
dated March 4, 1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and Jose
S. Ortaez as partially void ab initio insofar as the transfer/waiver/renunciation
of the Philinterlife shares of stocks are concerned.[7]
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez
filed, on December 22, 1997, a petition for certiorari in the Court of Appeals.
The appellate court denied his petition, however, ruling that there was no
legal justification whatsoever for the extrajudicial partition of the estate by
Jose Ortaez, his brother Rafael Ortaez and mother Juliana Ortaez during the
pendency of the settlement of the estate of Dr. Ortaez, without the requisite
approval of the intestate court, when it was clear that there were other heirs
to the estate who stood to be prejudiced thereby. Consequently, the sale
made by Jose Ortaez and his mother Juliana Ortaez to FLAG of the shares of

stock they invalidly appropriated for themselves, without approval of the

intestate court, was void.[8]
Special Administrator Jose Ortaez filed a motion for reconsideration of the
Court of Appeals decision but it was denied. He elevated the case to the
Supreme Court via petition for review under Rule 45 which the Supreme
Court dismissed on October 5, 1998, on a technicality. His motion for
reconsideration was denied with finality on January 13, 1999. On February
23, 1999, the resolution of the Supreme Court dismissing the petition of
Special Administrator Jose Ortaez became final and was subsequently
recorded in the book of entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest
of the FLAG-controlled board of directors, increased the authorized capital
stock of Philinterlife, diluting in the process the 50.725% controlling interest
of the decedent, Dr. Juvencio Ortaez, in the insurance company. [9] This
became the subject of a separate action at the Securities and Exchange
Commission filed by private respondent-Special Administratrix Enderes
against petitioner Jose Lee and other members of the FLAG-controlled board
of Philinterlife on November 7, 1994. Thereafter, various cases were filed by
Jose Lee as president of Philinterlife and Juliana Ortaez and her sons against
private respondent-Special Administratrix Enderes in the SEC and civil courts.
[10]
Somehow, all these cases were connected to the core dispute on the
legality of the sale of decedent Dr. Ortaezs Philinterlife shares of stock to
petitioner FLAG, represented by its president, herein petitioner Jose Lee who
later became the president of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and
her siblings filed a motion for execution of the Orders of the intestate court
dated August 11 and August 29, 1997 because the orders of the intestate
court nullifying the sale (upheld by the Court of Appeals and the Supreme
Court) had long became final. Respondent-Special Administratrix Enderes
served a copy of the motion to petitioners Jose Lee and Alma Aggabao as
president and secretary, respectively, of Philinterlife, [11] but petitioners
ignored the same.
On July 6, 2000, the intestate court granted the motion for execution, the
dispositive portion of which read:
WHEREFORE, premises considered, let a writ of execution issue as follows:
1. Confirming the nullity of the sale of the 2,029 Philinterlife shares
in the name of the Estate of Dr. Juvencio Ortaez to Filipino
Loan Assistance Group (FLAG);
2. Commanding the President and the Corporate Secretary of
Philinterlife to reinstate in the stock and transfer book of
Philinterlife the 2,029 Philinterlife shares of stock in the name

of the Estate of Dr. Juvencio P. Ortaez as the owner thereof

without prejudice to other claims for violation of pre-emptive
rights pertaining to the said 2,029 Philinterlife shares;
3. Directing the President and the Corporate Secretary of
Philinterlife to issue stock certificates of Philinterlife for 2,029
shares in the name of the Estate of Dr. Juvencio P. Ortaez as
the owner thereof without prejudice to other claims for
violations of pre-emptive rights pertaining to the said 2,029
Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina
Ortaez-Enderes, has the power to exercise all the rights
appurtenant to the said shares, including the right to vote
and to receive dividends.
5. Directing Philinterlife and/or any other person or persons
claiming to represent it or otherwise, to acknowledge and
allow the said Special Administratrix to exercise all the
aforesaid rights on the said shares and to refrain from
resorting to any action which may tend directly or indirectly
to impede, obstruct or bar the free exercise thereof under
pain of contempt.
6. The President, Corporate Secretary, any responsible officer/s of
Philinterlife, or any other person or persons claiming to
represent it or otherwise, are hereby directed to comply with
this order within three (3) days from receipt hereof under
pain of contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby
directed to implement the writ of execution with dispatch to
forestall any and/or further damage to the Estate.
SO ORDERED.[12]
In the several occasions that the sheriff went to the office of petitioners
to execute the writ of execution, he was barred by the security guard upon
petitioners instructions. Thus, private respondent-Special Administratrix
Enderes filed a motion to cite herein petitioners Jose Lee and Alma Aggabao
(president and secretary, respectively, of Philinterlife) in contempt. [13]
Petitioners Lee and Aggabao subsequently filed before the Court of
Appeals a petition for certiorari, docketed as CA G.R. SP No. 59736.
Petitioners alleged that the intestate court gravely abused its discretion in
(1) declaring that the ownership of FLAG over the Philinterlife shares of stock
was null and void; (2) ordering the execution of its order declaring such
nullity and (3) depriving the petitioners of their right to due process.

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

However, upon motion for reconsideration filed by petitioners Lee and

Aggabao, the Supreme Court granted the motion and reinstated their
petition on September 5, 2001. The parties were then required to submit
their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19,
2000, filed a motion to direct the branch clerk of court in lieu of herein
petitioners Lee and Aggabao to reinstate the name of Dr. Ortaez in the stock
and transfer book of Philinterlife and issue the corresponding stock certificate
pursuant to Section 10, Rule 39 of the Rules of Court which provides that the
court may direct the act to be done at the cost of the disobedient party by
some other person appointed by the court and the act when so done shall
have the effect as if done by the party. Petitioners Lee and Aggabao opposed
the motion on the ground that the intestate court should refrain from acting
on the motion because the issues raised therein were directly related to the
issues raised by them in their petition for certiorari at the Court of Appeals
docketed as CA-G.R. SP No. 59736. On October 30, 2000, the intestate court
granted the motion, ruling that there was no prohibition for the intestate
court to execute its orders inasmuch as the appellate court did not issue any
TRO or writ of preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for
certiorari in the Court of Appeals, docketed as CA-G.R. SP No. 62461,
questioning this time the October 30, 2000 order of the intestate court
directing the branch clerk of court to issue the stock certificates. They also
questioned in the Court of Appeals the order of the intestate court nullifying
the sale made in their favor by Juliana Ortaez and Jose Ortaez. On November
20, 2002, the Court of Appeals denied their petition and upheld the power of
the intestate court to execute its order. Petitioners Lee and Aggabao then
filed motion for reconsideration which at present is still pending resolution by
the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary,
respectively, of Philinterlife) and FLAG now raise the following errors for our
consideration:
THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR:
A. IN FAILING TO RECONSIDER ITS PREVIOUS RESOLUTION
DENYING THE PETITION DESPITE THE FACT THAT THE
APPELLATE COURTS MISTAKE IN APPREHENDING THE FACTS
HAD BECOME PATENT AND EVIDENT FROM THE MOTION FOR
RECONSIDERATION AND THE COMMENT OF RESPONDENT
ENDERES WHICH HAD ADMITTED THE FACTUAL ALLEGATIONS
OF PETITIONERS IN THE PETITION AS WELL AS IN THE MOTION
FOR RECONSIDERATION. MOREOVER, THE RESOLUTION OF THE
APPELLATE COURT DENYING THE MOTION FOR

RECONSIDERATION WAS CONTAINED IN ONLY ONE PAGE

WITHOUT EVEN TOUCHING ON THE SUBSTANTIVE MERITS OF
THE EXHAUSTIVE DISCUSSION OF FACTS AND SUPPORTING LAW
IN THE MOTION FOR RECONSIDERATION IN VIOLATION OF THE
RULE ON ADMINISTRATIVE DUE PROCESS;
B. IN FAILING TO SET ASIDE THE VOID ORDERS OF THE INTESTATE
COURT ON THE ERRONEOUS GROUND THAT THE ORDERS WERE
FINAL AND EXECUTORY WITH REGARD TO PETITIONERS EVEN
AS THE LATTER WERE NEVER NOTIFIED OF THE PROCEEDINGS
OR ORDER CANCELING ITS OWNERSHIP;
C. IN NOT FINDING THAT THE INTESTATE COURT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF
JURISDICTION (1) WHEN IT ISSUED THE OMNIBUS ORDER
NULLIFYING THE OWNERSHIP OF PETITIONER FLAG OVER
SHARES OF STOCK WHICH WERE ALLEGED TO BE PART OF THE
ESTATE AND (2) WHEN IT ISSUED A VOID WRIT OF EXECUTION
AGAINST PETITIONER FLAG AS PRESENT OWNER TO IMPLEMENT
MERELY PROVISIONAL ORDERS, THEREBY VIOLATING FLAGS
CONSTITUTIONAL RIGHT AGAINST DEPRIVATION OF PROPERTY
WITHOUT DUE PROCESS;
D. IN FAILING TO DECLARE NULL AND VOID THE ORDERS OF THE
INTESTATE COURT WHICH NULLIFIED THE SALE OF SHARES OF
STOCK BETWEEN THE LEGITIMATE HEIR JOSE S. ORTAEZ AND
PETITIONER FLAG BECAUSE OF SETTLED LAW AND
JURISPRUDENCE, I.E., THAT AN HEIR HAS THE RIGHT TO
DISPOSE OF THE DECEDENTS PROPERTY EVEN IF THE SAME IS
UNDER ADMINISTRATION PURSUANT TO CIVIL CODE PROVISION
THAT POSSESSION OF HEREDITARY PROPERTY IS TRANSMITTED
TO THE HEIR THE MOMENT OF DEATH OF THE DECEDENT
(ACEDEBO VS. ABESAMIS, 217 SCRA 194);
E. IN DISREGARDING THE FINAL DECISION OF THE SUPREME
COURT IN G.R. NO. 128525 DATED DECEMBER 17, 1999
INVOLVING SUBSTANTIALLY THE SAME PARTIES, TO WIT,
PETITIONERS JOSE C. LEE AND ALMA AGGABAO WERE
RESPONDENTS IN THAT CASE WHILE RESPONDENT MA. DIVINA
ENDERES WAS THE PETITIONER THEREIN. THAT DECISION,
WHICH CAN BE CONSIDERED LAW OF THE CASE, RULED THAT
PETITIONERS CANNOT BE ENJOINED BY RESPONDENT ENDERES
FROM EXERCISING THEIR POWER AS DIRECTORS AND OFFICERS
OF PHILINTERLIFE AND THAT THE INTESTATE COURT IN CHARGE
OF THE INTESTATE PROCEEDINGS CANNOT ADJUDICATE TITLE

TO PROPERTIES CLAIMED TO BE PART OF THE ESTATE AND

WHICH ARE EQUALLY CLAIMED BY PETITIONER FLAG.[17]
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and
FLAG, assail before us not only the validity of the writ of execution issued by
the intestate court dated July 7, 2000 but also the validity of the August 11,
1997 order of the intestate court nullifying the sale of the 2,029 Philinterlife
shares of stock made by Juliana Ortaez and Jose Ortaez, in their personal
capacities and without court approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of
the Philinterlife shares of stock in their favor because this was already settled
a long time ago by the Court of Appeals in its decision dated June 23, 1998 in
CA-G.R. SP No. 46342. This decision was effectively upheld by us in our
resolution dated October 9, 1998 in G.R. No. 135177 dismissing the petition
for review on a technicality and thereafter denying the motion for
reconsideration on January 13, 1999 on the ground that there was no
compelling reason to reconsider said denial. [18] Our decision became final on
February 23, 1999 and was accordingly entered in the book of entry of
judgments. For all intents and purposes therefore, the nullity of the sale of
the Philinterlife shares of stock made by Juliana Ortaez and Jose Ortaez in
favor of petitioner FLAG is already a closed case. To reopen said issue would
set a bad precedent, opening the door wide open for dissatisfied parties to
relitigate unfavorable decisions no end. This is completely inimical to the
orderly and efficient administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342
affirming the nullity of the sale made by Jose Ortaez and his mother Juliana
Ortaez of the Philinterlife shares of stock read:
Petitioners asseverations relative to said [memorandum] agreement were
scuttled during the hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement
was executed, did the children of Juliana Salgado know already
that there was a claim for share in the inheritance of the children
of Novicio?
ATTY. CALIMAG:
Your Honor please, at that time, Your Honor, it is already
known to them.
JUSTICE AQUINO:

What can be your legal justification for extrajudicial

settlement of a property subject of intestate proceedings when
there is an adverse claim of another set of heirs, alleged heirs?
What would be the legal justification for extra-judicially settling a
property under administration without the approval of the
intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement
there is an approval of the honorable court as to the propertys
partition x x x. There were as mentioned by the respondents
counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under
intestate proceedings without the approval of the court. That is
basic unless you can present justification on that. In fact, there are
two steps: first, you ask leave and then execute the document and
then ask for approval of the document executed. Now, is there any
legal justification to exclude this particular transaction from those
steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY BUYCO:
With that admission that there is no legal justification, Your
Honor, we rest the case for the private respondent. How can the
lower court be accused of abusing its discretion? (pages 33-35,
TSN of January 29, 1998).
Thus, We find merit in the following postulation by private respondent:
What we have here is a situation where some of the heirs of the decedent
without securing court approval have appropriated as their own personal
property the properties of [the] Estate, to the exclusion and the extreme
prejudice of the other claimant/heirs. In other words, these heirs, without
court approval, have distributed the asset of the estate among themselves
and proceeded to dispose the same to third parties even in the absence of
an order of distribution by the Estate Court. As admitted by petitioners
counsel, there was absolutely no legal justification for this action by the
heirs. There being no legal justification, petitioner has no basis for
demanding that public respondent [the intestate court] approve the sale of

the Philinterlife shares of the Estate by Juliana and Jose Ortaez in favor of the
Filipino Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of Agreement
dated March 4, 1982 (see Annex 7 of the Comment). . . are not the only heirs
claiming an interest in the estate left by Dr. Juvencio P. Ortaez. The records of
this case. . . clearly show that as early as March 3, 1981 an Opposition to the
Application for Issuance of Letters of Administration was filed by the
acknowledged natural children of Dr. Juvencio P. Ortaez with Ligaya Novicio. .
. This claim by the acknowledged natural children of Dr. Juvencio P. Ortaez is
admittedly known to the parties to the Memorandum of Agreement before
they executed the same. This much was admitted by petitioners counsel
during the oral argument. xxx
Given the foregoing facts, and the applicable jurisprudence, public
respondent can never be faulted for not approving. . . the subsequent sale by
the petitioner [Jose Ortaez] and his mother [Juliana Ortaez] of the Philinterlife
shares belonging to the Estate of Dr. Juvencio P. Ortaez. (pages 3-4 of Private
Respondents Memorandum; pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion amounting to
excess or want of jurisdiction committed by respondent judge. [19]
From the above decision, it is clear that Juliana Ortaez, and her three
sons, Jose, Rafael and Antonio, all surnamed Ortaez, invalidly entered into a
memorandum of agreement extrajudicially partitioning the intestate estate
among themselves, despite their knowledge that there were other heirs or
claimants to the estate and before final settlement of the estate by the
intestate court. Since the appropriation of the estate properties by Juliana
Ortaez and her children (Jose, Rafael and Antonio Ortaez) was invalid, the
subsequent sale thereof by Juliana and Jose to a third party (FLAG), without
court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that
possession of hereditary property is deemed transmitted to the heir without
interruption from the moment of death of the decedent. [20] However, an heir
can only alienate such portion of the estate that may be allotted to him in
the division of the estate by the probate or intestate court after final
adjudication, that is, after all debtors shall have been paid or the devisees or
legatees shall have been given their shares. [21]This means that an heir may
only sell his ideal or undivided share in the estate, not any specific property
therein. In the present case, Juliana Ortaez and Jose Ortaez sold specific
properties of the estate (1,014 and 1,011 shares of stock in Philinterlife) in
favor of petitioner FLAG. This they could not lawfully do pending the final
adjudication of the estate by the intestate court because of the undue

prejudice it would cause the other claimants to the estate, as what happened
in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate,
without court approval. It is well-settled that court approval is necessary for
the validity of any disposition of the decedents estate. In the early case
of Godoy vs. Orellano,[22] we laid down the rule that the sale of the property
of the estate by an administrator without the order of the probate court is
void and passes no title to the purchaser. And in the case of Dillena vs. Court
of Appeals,[23] we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were
included in the inventory of properties of the estate submitted by then
Administratrix Fausta Carreon Herrera on November 14, 1974. Private
respondent was appointed as administratrix of the estate on March 3, 1976
in lieu of Fausta Carreon Herrera. On November 1, 1978, the questioned deed
of sale of the fishponds was executed between petitioner and private
respondent without notice and approval of the probate court. Even after the
sale, administratrix Aurora Carreon still included the three fishponds as
among the real properties of the estate in her inventory submitted on August
13, 1981. In fact, as stated by the Court of Appeals, petitioner, at the time of
the sale of the fishponds in question, knew that the same were part of the
estate under administration.
xxxxxxxxx
The subject properties therefore are under the jurisdiction of the probate
court which according to our settled jurisprudence has the authority to
approve any disposition regarding properties under administration. . . More
emphatic is the declaration We made in Estate of Olave vs. Reyes (123 SCRA
767) where We stated that when the estate of the deceased person is
already the subject of a testate or intestate proceeding, the administrator
cannot enter into any transaction involving it without prior approval of the
probate court.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174),
We held that the sale of an immovable property belonging to the estate of a
decedent, in a special proceedings, needs court approval. . . This
pronouncement finds support in the previous case of Dolores Vda. De Gil vs.
Agustin Cancio (14 SCRA 797) wherein We emphasized that it is within the
jurisdiction of a probate court to approve the sale of properties of a deceased
person by his prospective heirs before final adjudication. x x x
It being settled that property under administration needs the approval of the
probate court before it can be disposed of, any unauthorized disposition does
not bind the estate and is null and void. As early as 1921 in the case of

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

jurisdiction and grossly violated settled law and jurisprudence, i.e., that the
determination by a probate or intestate court of whether a property is
included or excluded in the inventory of the estate being provisional in
nature, cannot be the subject of execution.[24] (emphasis ours)
Petitioners argument is misplaced. There is no question, based on the
facts of this case, that the Philinterlife shares of stock were part of the estate
of Dr. Juvencio Ortaez from the very start as in fact these shares were
included in the inventory of the properties of the estate submitted by Rafael
Ortaez after he and his brother, Jose Ortaez, were appointed special
administrators by the intestate court.[25]
The controversy here actually started when, during the pendency of the
settlement of the estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014
Philinterlife shares of stock in favor petitioner FLAG without the approval of
the intestate court. Her son Jose Ortaez later sold the remaining 1,011
Philinterlife shares also in favor of FLAG without the approval of the intestate
court.
We are not dealing here with the issue of inclusion or exclusion of
properties in the inventory of the estate because there is no question that,
from the very start, the Philinterlife shares of stock were owned by the
decedent, Dr. Juvencio Ortaez. Rather, we are concerned here with the
effect of the sale made by the decedents heirs, Juliana Ortaez and
Jose Ortaez, without the required approval of the intestate
court. This being so, the contention of petitioners that the determination of
the intestate court was merely provisional and should have been threshed
out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of
execution should not be executed against them because they were not
notified, nor they were aware, of the proceedings nullifying the sale of the
shares of stock.
We are not persuaded. The title of the purchaser like herein petitioner
FLAG can be struck down by the intestate court after a clear showing of the
nullity of the alienation. This is the logical consequence of our ruling
in Godoy and in several subsequent cases.[26] The sale of any property of
the estate by an administrator or prospective heir without order of
the probate or intestate court is void and passes no title to the
purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto, G.R. No.
56451, June 19, 1985, we ordered the probate court to cancel the transfer
certificate of title issued to the vendees at the instance of the administrator
after finding that the sale of real property under probate proceedings was
made without the prior approval of the court. The dispositive portion of our
decision read:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated

February 18, 1981 of the respondent Judge approving the questioned
Amicable Settlement is declared NULL and VOID and hereby SET ASIDE.
Consequently, the sale in favor of Sotero Dioniosio III and by the latter to
William Go is likewise declared NULL and VOID. The Transfer Certificate of
Title issued to the latter is hereby ordered cancelled.
It goes without saying that the increase in Philinterlifes authorized capital
stock, approved on the vote of petitioners non-existent shareholdings and
obviously calculated to make it difficult for Dr. Ortaezs estate to reassume its
controlling interest in Philinterlife, was likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.
The facts show that petitioners, for reasons known only to them, did not
appeal the decision of the intestate court nullifying the sale of shares of
stock in their favor. Only the vendor, Jose Ortaez, appealed the case. A
careful review of the records shows that petitioners had actual knowledge of
the estate settlement proceedings and that they knew private respondent
Enderes was questioning therein the sale to them of the Philinterlife shares
of stock.
It must be noted that private respondent-Special Administratrix Enderes
filed before the intestate court (RTC of Quezon City, Branch 85) a Motion to
Declare Void Ab Initio Deeds of Sale of Philinterlife Shares of Stock on March
22, 1996. But as early as 1994, petitioners already knew of the pending
settlement proceedings and that the shares they bought were under the
administration by the intestate court because private respondent Ma. Divina
Ortaez-Enderes and her mother Ligaya Novicio had filed a case against them
at the Securities and Exchange Commission on November 7, 1994, docketed
as SEC No. 11-94-4909, for annulment of transfer of shares of stock,
annulment of sale of corporate properties, annulment of subscriptions on
increased capital stocks, accounting, inspection of corporate books and
records and damages with prayer for a writ of preliminary injunction and/or
temporary restraining order. [27] In said case, Enderes and her mother
questioned the sale of the aforesaid shares of stock to petitioners. The SEC
hearing officer in fact, in his resolution dated March 24, 1995, deferred to the
jurisdiction of the intestate court to rule on the validity of the sale of shares
of stock sold to petitioners by Jose Ortaez and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortaez
who died, in 1980, are part of his estate which is presently the subject
matter of an intestate proceeding of the RTC of Quezon City, Branch 85.
Although, private respondents [Jose Lee et al.] presented the documents of
partition whereby the foregoing share of stocks were allegedly partitioned
and conveyed to Jose S. Ortaez who allegedly assigned the same to the other

private respondents, approval of the Court was not presented. Thus, the
assignments to the private respondents [Jose Lee et al.] of the subject shares
of stocks are void.
xxxxxxxxx
With respect to the alleged extrajudicial partition of the shares of stock
owned by the late Dr. Juvencio Ortaez, we rule that the matter properly
belongs to the jurisdiction of the regular court where the intestate
proceedings are currently pending.[28]
With this resolution of the SEC hearing officer dated as early as March 24,
1995 recognizing the jurisdiction of the intestate court to determine the
validity of the extrajudicial partition of the estate of Dr. Ortaez and the
subsequent sale by the heirs of the decedent of the Philinterlife shares of
stock to petitioners, how can petitioners claim that they were not aware of
the intestate proceedings?
Futhermore, when the resolution of the SEC hearing officer reached the
Supreme Court in 1996 (docketed as G.R. 128525), herein petitioners who
were respondents therein filed their answer which contained statements
showing that they knew of the pending intestate proceedings:
[T]he subject matter of the complaint is not within the jurisdiction of the SEC
but with the Regional Trial Court; Ligaya Novicio and children represented
themselves to be the common law wife and illegitimate children of the late
Ortaez; that on March 4, 1982, the surviving spouse Juliana Ortaez, on her
behalf and for her minor son Antonio, executed a Memorandum of
Agreement with her other sons Rafael and Jose, both surnamed Ortaez,
dividing the estate of the deceased composed of his one-half (1/2) share in
the conjugal properties; that in the said Memorandum of Agreement, Jose S.
Ortaez acquired as his share of the estate the 1,329 shares of stock in
Philinterlife; that on March 4, 1982, Juliana and Rafael assigned their
respective shares of stock in Philinterlife to Jose; that contrary to the
contentions of petitioners, private respondents Jose Lee, Carlos Lee,
Benjamin Lee and Alma Aggabao became stockholders of Philinterlife on
March 23, 1983 when Jose S. Ortaez, the principal stockholder at that time,
executed a deed of sale of his shares of stock to private respondents; and
that the right of petitioners to question the Memorandum of Agreement and
the acquisition of shares of stock of private respondent is barred by
prescription.[29]
Also, private respondent-Special Administratrix Enderes offered additional
proof of actual knowledge of the settlement proceedings by petitioners which
petitioners never denied: (1) that petitioners were represented by Atty.
Ricardo Calimag previously hired by the mother of private respondent

Enderes to initiate cases against petitioners Jose Lee and Alma Aggaboa for
the nullification of the sale of the shares of stock but said counsel made a
conflicting turn-around and appeared instead as counsel of petitioners, and
(2) that the deeds of sale executed between petitioners and the heirs of the
decedent (vendors Juliana Ortaez and Jose Ortaez) were acknowledged
before Atty. Ramon Carpio who, during the pendency of the settlement
proceedings, filed a motion for the approval of the sale of Philinterlife shares
of stock to the Knights of Columbus Fraternal Association, Inc. (which motion
was, however, later abandoned).[30] All this sufficiently proves that
petitioners, through their counsels, knew of the pending settlement
proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal
Case No. 97-7179-81), grave coercion (Criminal Case No. 84624) and robbery
(Criminal Case No. Q-96-67919) against private respondents mother Ligaya
Novicio who was a director of Philinterlife, [31] all of which criminal cases were
related to the questionable sale to petitioners of the Philinterlife shares of
stock.
Considering these circumstances, we cannot accept petitioners claim of
denial of due process. The essence of due process is the reasonable
opportunity to be heard. Where the opportunity to be heard has been
accorded, there is no denial of due process.[32] In this case, petitioners knew
of the pending instestate proceedings for the settlement of Dr. Juvencio
Ortaezs estate but for reasons they alone knew, they never intervened.
When the court declared the nullity of the sale, they did not bother to appeal.
And when they were notified of the motion for execution of the Orders of the
intestate court, they ignored the same. Clearly, petitioners alone should bear
the blame.
Petitioners next contend that we are bound by our ruling in G.R. No.
128525 entitled Ma. Divina Ortaez-Enderes vs. Court of Appeals, dated
December 17, 1999, where we allegedly ruled that the intestate court may
not pass upon the title to a certain property for the purpose of determining
whether the same should or should not be included in the inventory but such
determination is not conclusive and is subject to final decision in a separate
action regarding ownership which may be constituted by the parties.
We are not unaware of our decision in G.R. No. 128525. The issue therein
was whether the Court of Appeals erred in affirming the resolution of the SEC
that Enderes et al. were not entitled to the issuance of the writ of preliminary
injunction. We ruled that the Court of Appeals was correct in affirming the
resolution of the SEC denying the issuance of the writ of preliminary
injunction because injunction is not designed to protect contingent rights.
Said case did not rule on the issue of the validity of the sale of shares of
stock belonging to the decedents estate without court approval nor of the
validity of the writ of execution issued by the intestate court. G.R. No.

128525 clearly involved a different issue and it does not therefore apply to
the present case.
Petitioners and all parties claiming rights under them are hereby warned
not to further delay the execution of the Orders of the intestate court dated
August 11 and August 29, 1997.
WHEREFORE, the petition is hereby DENIED. The decision of the Court of
Appeals in CA-G.R. S.P. No. 59736 dated July 26, 2000, dismissing petitioners
petition for certiorari and affirming the July 6, 2000 order of the trial court
which ordered the execution of its (trial courts) August 11 and 29, 1997
orders, is hereby AFFIRMED.
SO ORDERED.
Vitug, (Chairman), and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., no part.

[1]

Penned by Associate Justice Martin S. Villarama, concurred in by Associate

Justices Salome A. Montoya (Chairman of the First Division) and Romeo
Callejo, Sr. (now Associate Justice of the Supreme Court).

[2]

Recognized by the decedent, Dr. Juvencio P. Ortaez and declared by the

intestate court as lawful heirs of Dr. Ortaez in its resolution dated
September 22, 2000; Rollo, pp. 203-214.

[3]

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

[4]

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

[5]

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

[6]

Rollo, pp. 39-41.

[7]

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

[8]

Rollo, pp. 238-258.

[9]

Rollo, p. 709.

[10]

Rollo, pp. 524-526.

[11]

Rollo, p. 70.

[12]

Rollo, p. 47-48.

[13]

Rollo, pp. 266-268.

[14]

Rollo, pp. 34-35.

[15]

Rollo, p. 38.

[16]

Rollo, p. 115.

[17]

Rollo, pp. 15-17.

[18]

Rollo, pp. 260-262.

[19]

Rollo, pp. 254-256.

[20]

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

[21]

Based on the Civil Code provisions on co-ownership (Article

493). Acebedo vs. Abesamis, 217 SCRA 186 [1993], citing Reyes vs.
Concepcion, 190 SCRA 171 [1990], PNB vs. Court of Appeals, 98 SCRA
207 [1980],Mercado vs. Liwanag, 5 SCRA 472 [1962].

[22]

42 Phil 347 [1921].

[23]

163 SCRA 631 [1988].

[24]

Rollo, pp. 603-604.

[25]

Inventory and Accounting of Properties of the Estate dated March 13,

1984, Rollo, pp. 571-754.

[26]

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

[27]

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

[28]

Rollo, pp. 147-149.

[29]

Rollo, p. 136.

[30]

Rollo, pp. 728-729.

[31]

Rollo, pp. 524-526.

[32]

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

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68053 May 7, 1990

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO

ALVAREZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES,
ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO
YANES, respondents.
Francisco G. Banzon for petitioner.
Renecio R. Espiritu for private respondents.

FERNAN, C.J.:
This is a petition for review on certiorari seeking the reversal of: (a) the
decision of the Fourth Civil Cases Division of the Intermediate Appellate
Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes
et al. v. Dr. Rodolfo Siason et al." affirming the decision dated July 8, 1974 of
the Court of First Instance of Negros Occidental insofar as it ordered the
petitioners to pay jointly and severally the private respondents the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the
cadastral survey of Murcia, Negros Occidental and reversing the subject
decision insofar as it awarded the sums of P2,000.00, P5,000.00 and
P2,000.00 as actual damages, moral damages and attorney's fees,
respectively and (b) the resolution of said appellate court dated May 30,
1984, denying the motion for reconsideration of its decision.
The real properties involved are two parcels of land identified as Lot 773-A
and Lot 773-B which were originally known as Lot 773 of the cadastral survey
of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square
meters, was registered in the name of the heirs of Aniceto Yanes under
Original Certificate of Title No. RO-4858 (8804) issued on October 9, 1917 by
the Register of Deeds of Occidental Negros (Exh. A).
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora.
Herein private respondents, Estelita, Iluminado and Jesus, are the children of
Rufino who died in 1962 while the other private respondents, Antonio and
Rosario Yanes, are children of Felipe. Teodora was survived by her child,
Jovita (Jovito) Alib. 1 It is not clear why the latter is not included as a party in
this case.

Aniceto left his children Lots 773 and 823. Teodora cultivated only three
hectares of Lot 823 as she could not attend to the other portions of the two
lots which had a total area of around twenty-four hectares. The record does
not show whether the children of Felipe also cultivated some portions of the
lots but it is established that Rufino and his children left the province to
settle in other places as a result of the outbreak of World War II. According to
Estelita, from the "Japanese time up to peace time", they did not visit the
parcels of land in question but "after liberation", when her brother went there
to get their share of the sugar produced therein, he was informed that
Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession
of Lot 773. 2
It is on record that on May 19, 1938, Fortunato D. Santiago was issued
Transfer Certificate of Title No. RF 2694 (29797) covering Lot 773-A with an
area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot 773-A as a
portion of Lot 773 of the cadastral survey of Murcia and as originally
registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of 118,831 square meters was
also registered in the name of Fortunato D. Santiago on September 6, 1938
Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also
contains a certification to the effect that Lot 773-B was originally registered
under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B.
Fuentebella, Jr. in consideration of the sum of P7,000.00. 5 Consequently, on
February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in
Fuentebella's name. 6
After Fuentebella's death and during the settlement of his estate, the
administratrix thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in
Special Proceedings No. 4373 in the Court of First Instance of Negros
Occidental, a motion requesting authority to sell Lots 773-A and 773-B. 7 By
virtue of a court order granting said motion, 8 on March 24, 1958, Arsenia
Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence,
on April 1, 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773B 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 T23166 in the name of said defendant, and thereafter to deliver
the possession of said lots to the plaintiffs. No special
pronouncement as to costs.
SO ORDERED.

16

It will be noted that the above-mentioned manifestation of Jesus Yanes was

not mentioned in the aforesaid decision.
However, execution of said decision proved unsuccessful with respect to Lot
773. In his return of service dated October 20, 1965, the sheriff stated that
he discovered that Lot 773 had been subdivided into Lots 773-A and 773-B;

that they were "in the name" of Rodolfo Siason who had purchased them
from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as
Siason was "not a party per writ of execution." 17
The execution of the decision in Civil Case No. 5022 having met a hindrance,
herein private respondents (the Yaneses) filed on July 31, 1965, in the Court
of First Instance of Negros Occidental a petition for the issuance of a new
certificate of title and for a declaration of nullity of TCT Nos. T-23165 and T23166 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 773A, 773-B and 658, not Lots 773 and 823, "in good faith and for a valuable
consideration without any knowledge of any lien or encumbrances against
said properties"; that the decision in the cadastral proceeding 19 could not be
enforced against him as he was not a party thereto; and that the decision in
Civil Case No. 5022 could neither be enforced against him not only because
he was not a party-litigant therein but also because it had long become final
and executory. 20 Finding said manifestation to be well-founded, the cadastral
court, in its order of September 4, 1965, nullified its previous order requiring
Siason to surrender the certificates of title mentioned therein. 21
In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ
of execution in Civil Case No. 5022. Siason opposed it. 22 In its order of
September 28, 1968 in Civil Case No. 5022, the lower court, noting that the
Yaneses had instituted another action for the recovery of the land in
question, ruled that at the judgment therein could not be enforced against
Siason as he was not a party in the case. 23
The action filed by the Yaneses on February 21, 1968 was for recovery of real
property with damages. 24 Named defendants therein were Dr. Rodolfo
Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of
Deeds of Negros Occidental. The Yaneses prayed for the cancellation of TCT
Nos. T-19291 and 19292 issued to Siason (sic) for being null and void; the
issuance of a new certificate of title in the name of the Yaneses "in
accordance with the sheriffs return of service dated October 20, 1965;"
Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery
thereof could not be effected, or, if the issuance of a new title could not be
made, that the Alvarez and Siason jointly and severally pay the Yaneses the
sum of P45,000.00. They also prayed that Siason render an accounting of the

fruits of Lot 773 from November 13, 1961 until the filing of the complaint;
and that the defendants jointly and severally pay the Yaneses moral
damages of P20,000.00 and exemplary damages of P10,000.00 plus
attorney's fees of P4, 000.00. 25
In his answer to the complaint, Siason alleged that the validity of his titles to
Lots 773-A and 773-B, having been passed upon by the court in its order of
September 4, 1965, had become res judicata and the Yaneses were estopped
from questioning said order. 26 On their part, the Alvarez stated in their
answer that the Yaneses' cause of action had been "barred by res judicata,
statute of limitation and estoppel." 27
In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who
purchased the properties in question thru an agent as he was then in Mexico
pursuing further medical studies, was a buyer in good faith for a valuable
consideration. Although the Yaneses were negligent in their failure to place a
notice of lis pendens"before the Register of Deeds of Negros Occidental in
order to protect their rights over the property in question" in Civil Case No.
5022, equity demanded that they recover the actual value of the land
because the sale thereof executed between Alvarez and Siason was without
court approval. 28 The dispositive portion of the decision states:
IN VIEW OF THE FOREGOING CONSIDERATION, judgment is
hereby rendered in the following manner:
A. The case against the defendant Dr. Rodolfo Siason and the
Register of Deeds are (sic) hereby dismmissed,
B. The defendants, Laura, Flora and Raymundo, all surnamed
Alvarez being the legitimate children of the deceased Rosendo
Alvarez are hereby ordered to pay jointly and severally the
plaintiffs the sum of P20,000.00 representing the actual value of
Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros
Occidental; the sum of P2,000.00 as actual damages suffered by
the plaintiff; the sum of P5,000.00 representing moral damages
and the sum of P2.000 as attorney's fees, all with legal rate of
interest from date of the filing of this complaint up to final
payment.

C. The cross-claim filed by the defendant Dr. Rodolfo Siason

against the defendants, Laura, Flora and Raymundo, all
surnamed Alvarez is hereby dismissed.
D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez
are hereby ordered to pay the costs of this suit.
SO ORDERED.

29

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

32

Finding no cogent reason to grant appellants motion for reconsideration, said

appellate court denied the same.
Hence, the instant petition. ln their memorandum petitioners raised the
following issues:
1. Whethere or not the defense of prescription and estoppel had
been timely and properly invoked and raised by the petitioners in
the lower court.
2. Whether or not the cause and/or causes of action of the
private respondents, if ever there are any, as alleged in their

complaint dated February 21, 1968 which has been docketed in

the trial court as Civil Case No. 8474 supra, are forever barred by
statute of limitation and/or prescription of action and estoppel.
3. Whether or not the late Rosendo Alvarez, a defendant in Civil
Case No. 5022, supra and father of the petitioners become a
privy and/or party to the waiver (Exhibit 4-defendant Siason) in
Civil Case No. 8474, supra where the private respondents had
unqualifiedly and absolutely waived, renounced and quitclaimed
all their alleged rights and interests, if ever there is any, on Lots
Nos. 773-A and 773-B of Murcia Cadastre as appearing in their
written manifestation dated November 6, 1962 (Exhibits "4"
Siason) which had not been controverted or even impliedly or
indirectly denied by them.
4. Whether or not the liability or liabilities of Rosendo Alvarez
arising from the sale of Lots Nos. 773-A and 773-B of Murcia
Cadastre to Dr. Rodolfo Siason, if ever there is any, could be
legally passed or transmitted by operations (sic) of law to the
petitioners without violation of law and due process . 33
The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is powerless and for that matter
so is the Supreme Court, to review the decision in Civil Case No. 5022
ordering Alvarez to reconvey the lots in dispute to herein private
respondents. Said decision had long become final and executory and with the
possible exception of Dr. Siason, who was not a party to said case, the
decision in Civil Case No. 5022 is the law of the case between the parties
thereto. It ended when Alvarez or his heirs failed to appeal the decision
against them. 34
Thus, it is axiomatic that when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, so long as it remains
unreversed, it should be conclusive upon the parties and those in privity with
them in law or estate. 35 As consistently ruled by this Court, every litigation
must come to an end. Access to the court is guaranteed. But there must be a
limit to it. Once a litigant's right has been adjudicated in a valid final
judgment of a competent court, he should not be granted an unbridled
license to return for another try. The prevailing party should not be harassed
by subsequent suits. For, if endless litigation were to be allowed,

unscrupulous litigations will multiply in number to the detriment of the

administration of justice. 36
There is no dispute that the rights of the Yaneses to the properties in
question have been finally adjudicated in Civil Case No. 5022. As found by
the lower court, from the uncontroverted evidence presented, the Yaneses
have been illegally deprived of ownership and possession of the lots in
question. 37 In fact, Civil Case No. 8474 now under review, arose from the
failure to execute Civil Case No. 5022, as subject lots can no longer be
reconveyed to private respondents Yaneses, the same having been sold
during the pendency of the case by the petitioners' father to Dr. Siason who
did not know about the controversy, there being no lis pendens annotated on
the titles. Hence, it was also settled beyond question that Dr. Siason is a
purchaser in good faith.
Under the circumstances, the trial court did not annul the sale executed by
Alvarez in favor of Dr. Siason on November 11, 1961 but in fact sustained it.
The trial court ordered the heirs of Rosendo Alvarez who lost in Civil Case No.
5022 to pay the plaintiffs (private respondents herein) the amount of
P20,000.00 representing the actual value of the subdivided lots in dispute. It
did not order defendant Siason to pay said amount. 38
As to the propriety of the present case, it has long been established that the
sole remedy of the landowner whose property has been wrongfully or
erroneously registered in another's name is to bring an ordinary action in the
ordinary court of justice for reconveyance or, if the property has passed into
the hands of an innocent purchaser for value, for damages. 39 "It is one thing
to protect an innocent third party; it is entirely a different matter and one
devoid of justification if deceit would be rewarded by allowing the
perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by
the undeviating line of decisions coming from this Court, such an undesirable
eventuality is precisely sought to be guarded against." 40
The issue on the right to the properties in litigation having been finally
adjudicated in Civil Case No. 5022 in favor of private respondents, it cannot
now be reopened in the instant case on the pretext that the defenses of
prescription and estoppel have not been properly considered by the lower
court. Petitioners could have appealed in the former case but they did not.
They have therefore foreclosed their rights, if any, and they cannot now be

heard to complain in another case in order to defeat the enforcement of a

judgment which has longing become final and executory.
Petitioners further contend that the liability arising from the sale of Lots No.
773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be
the sole liability of the late Rosendo Alvarez or of his estate, after his death.
Such contention is untenable for it overlooks the doctrine obtaining in this
jurisdiction on the general transmissibility of the rights and obligations of the
deceased to his legitimate children and heirs. Thus, the pertinent provisions
of the Civil Code state:
Art. 774. Succession is a mode of acquisition by virtue of which
the property, rights and obligations to the extent of the value of
the inheritance, of a person are transmitted through his death to
another or others either by his will or by operation of law.
Art. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.
Art. 1311. Contract stake effect only between the parties, their
assigns and heirs except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is not liable beyond
the value of the property received from the decedent.
As explained by this Court through Associate Justice J.B.L. Reyes in the case
of Estate of Hemady vs. Luzon Surety Co., Inc. 41
The binding effect of contracts upon the heirs of the deceased
party is not altered by the provision of our Rules of Court that
money debts of a deceased must be liquidated and paid from his
estate before the residue is distributed among said heirs (Rule
89). The reason is that whatever payment is thus made from the
state is ultimately a payment by the heirs or distributees, since
the amount of the paid claim in fact diminishes or reduces the
shares that the heirs would have been entitled to receive.
Under our law, therefore. the general rule is that a party's
contractual rights and obligations are transmissible to the
successors.

The rule is a consequence of the progressive "depersonalization"

of patrimonial rights and duties that, as observed by Victorio
Polacco has characterized the history of these institutions. From
the Roman concept of a relation from person to person, the
obligation has evolved into a relation from patrimony to
patrimony with the persons occupying only a representative
position, barring those rare cases where the obligation is strictly
personal, i.e., is contracted intuitu personae, in consideration of
its performance by a specific person and by no other.
xxx xxx xxx
Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape
the legal consequences of their father's transaction, which gave rise to the
present claim for damages. That petitioners did not inherit the property
involved herein is of no moment because by legal fiction, the monetary
equivalent thereof devolved into the mass of their father's hereditary estate,
and we have ruled that the hereditary assets are always liable in their
totality for the payment of the debts of the estate. 42
It must, however, be made clear that petitioners are liable only to the extent
of the value of their inheritance. With this clarification and considering
petitioners' admission that there are other properties left by the deceased
which are sufficient to cover the amount adjudged in favor of private
respondents, we see no cogent reason to disturb the findings and
conclusions of the Court of Appeals.
WHEREFORE, subject to the clarification herein above stated, the assailed
decision of the Court of Appeals is hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Bidin J., took no part.

Footnotes

1 TSN, October 17, 1973, pp. 4-5.

2 TSN, December 11, 1973, pp. 11 & 55.
3 Exhibits 26 and 28.
4 Exhibit 27.
5 Exhibit B Alvarez.
6 Exhibits 23 and 24-Siason.
7 Exh. I-Alvarez Exh. 17-Siason.
8 Exh. 2-Alvarez.
9 Exh. 3-Alvarez.
10 Exh. 2-Siason.
11 Civil Case No. 5022; Exhibit B.
12 Exhibit F.
13 Exhibits 12 and 13.
14 Exhibits 10, 11, 14 and 15.
15 Exhibit 4-Alvarez.
16 Record on Appeal, p. 25.
17 Exhibit E.
18 Cad. Case No. 6; Exhibit 3.
19 Cad. Case No. 6.
20 Exhibit 5.
21 Exhibit 6.
22 Exhibit 78.

23 Exhibit 9.
24 Civil Case No. 8474.
25 Record on Appeal, pp. 8-9.
26 Record on Appeal, p. 36.
27 Ibid., p. 63.
28 Ibid, pp. 95-99.
29 Record on Appeal, pp. 100-101.
30 Porfirio V. Siason, Jr. J., ponente. Abdulwahid A. Bidin,
Marcelino R. Velocio and Desiderio P. Jurado, JJ., concurring.
31 Rollo, p. 32.
32 Rollo, p. 32.
33 Rollo, p. 119.
34 Rollo, p. 27.
35 Miranda v. C.A., 141 SCRA 302 [1986].
36 Ngo Bun Tiong v. Judge Sayo, G.R. No. 45825, June 30, 1988.
37 Record on Appeal, pp. 24-25.
38 Rollo, p. 27.
39 Quiniano et al. v. C.A., 39 SCRA 221 [1971].
40 Ibid.
41 100 Phil. 388.
42 Lopez vs. Enriquez, 16 Phil. 336 (1910).

Republic of the Philippines

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

November 23, 1938

SOCORRO LEDESMA and ANA QUITCO LEDESMA, plaintiffs-appellees,

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

VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by the defendants
Conchita McLachlin, Lorenzo Quitco, Jr., Sabina Quitco, Rafael Quitco and
Marcela Quitco, from the decision of the Court of First Instance of Occidental
Negros, the dispositive part of which reads:
For the foregoing considerations, the court renders judgment in this
case declaring Ana Quitco Ledesma an acknowledged natural daughter
of the deceased Lorenzo M. Quitco, for legal purposes, but absolving
the defendants as to the prayer in the first cause of action that the said
Ana Quitco Ledesma be declared entitled to share in the properties left
by the deceased Eusebio Quitco.
As to the second cause of action, the said defendants are ordered to
pay to the plaintiff Socorro Ledesma, jointly and severally, only the
sum of one thousand five hundred pesos(P1,500), with legal interest
thereon from the filing of this complaint until fully paid. No
pronouncement is made as to the costs. So ordered.
In support of their appeal, the appellants assign the following errors allegedly
committed by the trial court in its aforesaid decision:

1. That the trial court erred in holding, that the action for the recovery
of the sum of P1,500, representing the last installment of the note
Exhibit C has not yet prescribed.
2. That the trial court erred in holding that the property inherited by
the defendants from their deceased grandfather by the right of
representation is subject to the debts and obligations of their deceased
father who died without any property whatsoever.lawphi1.net
3. That the trial court erred in condemning the defendants to pay
jointly and severally the plaintiff Socorro Ledesma the sum of P1,500.
The only facts to be considered in the determination of the legal questions
raised in this appeal are those set out in the appealed decision, which have
been established at the trial, namely:
In the year 1916, the plaintiff Socorro Ledesma lived maritally with
Lorenzo M. Quitco, while the latter was still single, of which relation,
lasting until the year 1921, was born a daughter who is the other
plaintiff Ana Quitco Ledesma. In 1921, it seems hat the relation
between Socorro Ledesma and Lorenzo M. Quitco came to an end, but
the latter executed a deed (Exhibit A), acknowledging the plaintiff Ana
Quitco Ledesma as his natural daughter and on January 21, 1922, he
issued in favor of the plaintiff Socorro Ledesma a promissory note
(Exhibit C), of the following tenor:
P2,000. For value received I promise to pay Miss Socorro Ledesma the
sum of two thousand pesos (P2,000). Philippine currency under the
following terms: Two hundred and fifty pesos (P250) to be paid on the
first day of March 1922; another two hundred and fifty pesos (P250)to
be paid on the first day of
November 1922; the remaining one
thousand and five hundred (P1,500) to be paid two years from the date
of the execution of this note. San Enrique, Occ. Negros, P. I., Jan. 21,
1922.
Subsequently, Lorenzo M. Quitco married the defendant Conchita
McLachlin, with whom he had four children, who are the other
defendants. On March 9, 1930, Lorenzo M. Quitco died (Exhibit 5), and,
still later, that is, on December 15, 1932, his father Eusebio Quitco also
died, and as the latter left real and personal properties upon his death,
administration proceedings of said properties were instituted in this

court, the said case being known as the "Intestate of the deceased
Eusebio Quitco," civil case No. 6153 of this court.
Upon the institution of the intestate of the deceased Eusebio Quitco
and the appointment of the committee on claims and appraisal, the
plaintiff Socorro Ledesma, on August 26, 1935, filed before said
committee the aforequoted promissory note for payment, and the
commissioners, upon receipt of said promissory note, instead of
passing upon it, elevated the same to this court en consulta (Exhibit F),
and as the Honorable Jose Lopez Vito, presiding over the First Branch,
returned said consulta and refrained from giving his opinion thereon
(Exhibit C), the aforesaid commissioners on claims and appraisal,
alleging lack of jurisdiction to pass upon the claim, denied he same
(Exhibit H).
On
November 14, 1933 (Exhibit I), the court issued an order of
declaration of heirs in the intestate of the deceased Eusebio Quitco,
and as Ana Quitco Ledesma was not included among the declared
heirs, Socorro Ledesma, as mother of Ana Quitco Ledesma, asked for
the reconsideration of said order, a petition which the court denied.
From the order denying the said petition no appeal was taken, and in
lieu thereof there was filed the complaint which gives rise to this case.
The first question to be decided in this appeal, raised in the first assignment
of alleged error, is whether or not the action to recover the sum of P1,500,
representing the last installment for the payment of the promissory note
Exhibit C, has prescribed.
According to the promissory note Exhibit C, executed by the deceased
Lorenzo M. Quitco, on January 21, 1922, the last installment of P1,500 should
be paid two years from the date of the execution of said promissory note,
that is, on January 21, 1924. The complaint in the present case was filed on
June 26, 1934, that is, more than ten years after he expiration of the said
period. The fact that the plaintiff Socorro Ledesma filed her claim, on August
26, 1933, with the committee on claims and appraisal appointed in the
intestate of Eusebio Quitco, does not suspend the running of the prescriptive
period of the judicial action for the recovery of said debt, because the claim
for the unpaid balance of the amount of the promissory note should no have
been presented in the intestate of Eusebio Quitco, the said deceased not
being the one who executed the same, but in the intestate of Lorenzo M.

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

Wherefore, the appealed judgment is reversed, and the defendants are

absolved from the complaint, with the costs to the appellees. So ordered.
Avancea, C.J., Imperial, Diaz, Laurel and Concepcion, JJ., concur.

FIRST DIVISION
WILLIAM ONG GENATO, G.R. No. 171035
Petitioner,
- versus Present:
PUNO, C.J., Chairperson,
BENJAMIN BAYHON, MELANIE CARPIO,
BAYHON, BENJAMIN BAYHON, CORONA,
JR., BRENDA BAYHON, ALINA LEONARDO-DE CASTRO, and
BAYHON-CAMPOS, IRENE BERSAMIN, JJ.
BAYHON-TOLOSA, and the minor
GINO BAYHON, as represented
herein by his natural mother
as guardian-ad-litem, JESUSITA Promulgated:
M. BAYHON,
Respondents. __________________
x------------------------------------------------x

DECISION
PUNO, C.J.:
At bar is a Petition for Review on Certiorari assailing the Decision of the
Court of Appeals dated September 16, 2005[1] and Resolution denying the
petitioners motion for reconsideration issued on January 6, 2006.
This is a consolidated case stemming from two civil cases filed before
the Regional Trial Court (RTC) Civil Case No. Q-90-7012 and Civil Case No. Q90-7551.
Civil Case No. Q-90-7012

On October 18, 1990, respondents Benjamin M. Bayhon, Melanie

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

October 21, 1989 a dacion en pago in favor of the petitioner. The dacion en
pago was inscribed and recorded with the Registry of Deeds of Quezon City.
[11]

Petitioner further averred that despite demands, respondent refused to

execute the requisite documents to transfer to him the ownership of the lot
subject of the dacion en pago. Petitioner prayed, inter alia, for the court to
order the respondent to execute the final deed of sale and transfer of
possession of the said lot.[12]
Decision of the Consolidated Cases
The two cases were consolidated and transferred to the RTC, Quezon
City, Branch 215. On October 9, 1997, the trial court rendered its Decision. It
found that respondent obtained a loan in the amount of PhP 1,000,000.00
from the petitioner on July 3, 1989. The terms of the loan were interest
payment at 5% per month with an additional 3% penalty in case of
nonpayment.[13]
With respect to the dacion en pago, the trial court held that the parties
have

novated

the

agreement.[14] It

deduced

the

novation

from

the

subsequent payments made by the respondent to the petitioner. Of the

principal amount, the sum of PhP 102,870.00 had been paid: PhP 27,870.00
on March 23, 1990, PhP 55,000.00 on 26 March 1990 and PhP 20,000.00 on
16 November 1990.[15] All payments were made after the purported
execution of the dacion en pago.
The trial court likewise found that at the time of the execution of the
real estate mortgage, the wife of respondent, Amparo Mercado, was already
dead. It held that the property covered by TCT No. 38052 was owned in
common by the respondents and not by respondent Benjamin Bayhon alone.
It concluded that the said lot could not have been validly mortgaged by the
respondent alone; the deed of mortgage was not enforceable and only
served as evidence of the obligation of the respondent.[16]

In sum, the trial court upheld the respondents liability to the petitioner
and ordered the latter to pay the sum of Php 5,647,130.00. [17] This amount
included the principal, the stipulated interest of 5% per month, and the
penalty; and, was calculated from the date of demand until the date the RTC
rendered its judgment.
Appeal to the Court of Appeals
Respondents appealed before the Court of Appeals. On March 28,
2002, respondent Benjamin Bayhon died while the case was still pending
decision.[18] On September 16, 2005, the Court of Appeals rendered a
decision reversing the trial court.
The Court of Appeals held that the real estate mortgage and
the dacion en pago were both void. The appellate court ruled that at the time
the real estate mortgage and thedacion en pago were executed, or on July 3,
1989 and October 21, 1989, respectively, the wife of respondent Benjamin
Bayhon was already dead.[19] Thus, she could not have participated in the
execution of the two documents. The appellate court struck down both
the dacion en pago and the real estate mortgage as being simulated or
fictitious contracts pursuant to Article 1409 of the Civil Code.[20]
The Court of Appeals held further that while the principal obligation is
valid, the death of respondent Benjamin Bayhon extinguished it. [21] The heirs
could not be ordered to pay the debts left by the deceased. [22] Based on the
foregoing, the Court of Appeals dismissed petitioners appeal. Petitioners
motion for reconsideration was denied in a resolution dated January 6, 2006.
[23]

Petition for Review

Petitioner now comes before this Court assailing the decision of the
Court of Appeals and raising the following issues:
Whether or not Benjamin Bayhon is liable to Mr. Genato in the
amount of Php 5,647,130.00 in principal and interest as of
October 3, 1997 and 5% monthly interest thereafter until the
account shall have been fully paid.[24]

The Court of Appeals erred in declaring the Real Estate Mortgage

dated July 3, 1989 and the Dacion en Pago dated October 21,
1989, null and void.[25]
We shall first tackle the nullity of the dacion en pago.
We affirm the ruling of the appellate court that the subject dacion en
pago is a simulated or fictitious contract, and hence void. The evidence
shows that at the time it was allegedly signed by the wife of the respondent,
his wife was already dead. This finding of fact cannot be reversed.
We now go to the ruling of the appellate court extinguishing the
obligation of respondent. As a general rule, obligations derived from a
contract are transmissible. Article 1311, par.1 of the Civil Code provides:
Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not liable beyond
the value of the property he received from the decedent.
In Estate of Hemady v. Luzon Surety Co., Inc.,[26] the Court,
through Justice JBL Reyes, held:
While in our successional system the responsibility of the
heirs for the debts of their decedent cannot exceed the value of
the inheritance they receive from him, the principle remains
intact that these heirs succeed not only to the rights of
the deceased but also to his obligations. Articles 774 and
776 of the New Civil Code (and Articles 659 and 661 of the
preceding one) expressly so provide, thereby confirming Article
1311 already quoted.
"ART. 774. Succession is a mode of acquisition by
virtue of which the property, rights and obligations to
the extent of the value of the inheritance, of a person
are transmitted through his death to another or
others either by his will or by operation of law."
"ART. 776. The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death."[27] (Emphasis supplied)

The Court proceeded further to state the general rule:

Under our law, therefore, the general rule is that a
party's
contractual
rights
and
obligations
are
transmissible to the successors. The rule is a consequence of
the progressive "depersonalization" of patrimonial rights and
duties that, as observed by Victorio Polacco, has characterized
the history of these institutions. From the Roman concept of a
relation from person to person, the obligation has evolved into a
relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those rare
cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its performance
by a specific person and by no other. The transition is marked by
the disappearance of the imprisonment for debt.[28] (Emphasis
supplied)
The loan in this case was contracted by respondent. He died while the
case was pending before the Court of Appeals. While he may no longer be
compelled to pay the loan, the debt subsists against his estate. No property
or portion of the inheritance may be transmitted to his heirs unless the debt
has first been satisfied. Notably, throughout the appellate stage of this case,
the estate has been amply represented by the heirs of the deceased, who
are also his co-parties in Civil Case No. Q-90-7012.
The procedure in vindicating monetary claims involving a defendant
who dies before final judgment is governed by Rule 3, Section 20 of the Rules
of Civil Procedure, to wit:
When the action is for recovery of money arising from contract,
express or implied, and the defendant dies before entry of final
judgment in the court in which the action was pending at the
time of such death, it shall not be dismissed but shall instead be
allowed to continue until entry of final judgment. A favorable
judgment obtained by the plaintiff therein shall be enforced in
the manner especially provided in these Rules for prosecuting
claims against the estate of a deceased person.
Pursuant to this provision, petitioners remedy lies in filing a claim against the
estate of the deceased respondent.

We now go to the interest awarded by the trial court. We note that the
interest has been pegged at 5% per month, or 60% per annum. This is
unconscionable, hence cannot be enforced. [29] In light of this, the rate of
interest for this kind of loan transaction has been fixed in the case
of Eastern Shipping Lines v. Court of Appeals,[30] at 12% per annum,
calculated from October 3, 1989, the date of extrajudicial demand.[31]
Following this formula, the total amount of the obligation of the estate
of Benjamin Bayhon is as follows:
Principal Php 1,000,000.00
Less: Partial Payments 27,870.00
55,000.00
20,000.00
897,130.00
Plus: Interest
(12% per annum x
20 years) 2,153,552.00
TOTAL: Php 3,050,682.00
IN VIEW WHEREOF, the decision of the Court of Appeals dated
September 16, 2005 is AFFIRMED with the MODIFICATION that the obligation
to pay the principal loan and interest contracted by the deceased Benjamin
Bayhon subsists against his estate and is computed at PhP 3,050,682.00.
No costs.
SO ORDERED.

REYNATO S. PUNO
Chief Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

RENATO C. CORONA TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

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

REYNATO S. PUNO
Chief Justice

[1]

CA G.R.-CV No. 63626, Benjamin M. Bayhon, Melanie Bayhon, Benjamin

Bayhon, Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene Bayhon-Tolosa, and
the minor Gino Bayhon, represented herein by his natural mother as
guardian-ad-litem, Jesusita M. Bayhon v. William Ong Genato; penned by
Associate Justice Vicente Q. Roxas and concurred in by Associate Justices
Portia Alio-Hormachuelos and Juan Q. Enriquez, Jr.
[2]
Original Records, pp. 1-9.
[3]
Id., pp. 3-4.
[4]
Id., p. 4.
[5]
Designated as LRC Case No. Q-1957.
[6]
Original Records, p. 4.
[7]
Id., p. 5.
[8]
Id., p. 166.
[9]
Id., p. 169.
[10]
Id., p. 170.
[11]
Id., pp. 353-354.
[12]
Id.
[13]
Id., p. 650.
[14]
Id., p. 657.
[15]
Id., pp. 656-657.
[16]
Id., p. 658.
[17]
Id., p. 659.
[18]
CA rollo, p. 148.
[19]
Rollo, pp. 47- 48.
[20]
Article 1409 provides that:
The following contracts are inexistent and void from the beginning:
(1)
Those whose cause, object or purpose is contrary to law, morals,
good customs, public order or public policy;
(2)
Those which are absolutely simulated or fictitious;
(3)
Those whose cause or object did not exist at the time of the
transaction;
(4)
Those whose object is outside the commerce of men;
(5)
Those which contemplate an impossible service;
(6)
Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained;
(7)
Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.

[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]

Rollo, p. 46.
Id.
Id., pp. 37-39.
Id., p. 18.
Id., p. 20.
No. L-8437, 100 Phil. 388 (1958).
Id., p. 393.
Id., p. 394.
Imperial v. Jaucian, G.R. No. 149004, 14 April 2004, 427 SCRA 517, 525.
G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95.
Rollo, p. 28.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-41715 June 18, 1976

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

MARTIN, J:
This is a petition for review 1 of the Order of the Court of First Instance of
Abra in Civil Case No. 856, entitled Fortunata Barcena vs. Leon Barcena, et
al., denying the motions for reconsideration of its order dismissing the
complaint in the aforementioned case.
On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and
Salvacion Bonilla and wife of Ponciano Bonilla, instituted a civil action in the
Court of First Instance of Abra, to quiet title over certain parcels of land
located in Abra.

On May 9, 1975, defendants filed a written motion to dismiss the complaint,

but before the hearing of the motion to dismiss, the counsel for the plaintiff
moved to amend the complaint in order to include certain allegations
therein. The motion to amend the complaint was granted and on July 17,
1975, plaintiffs filed their amended complaint.
On August 4, 1975, the defendants filed another motion to dismiss the
complaint on the ground that Fortunata Barcena is dead and, therefore, has
no legal capacity to sue. Said motion to dismiss was heard on August 14,
1975. In said hearing, counsel for the plaintiff confirmed the death of
Fortunata Barcena, and asked for substitution by her minor children and her
husband, the petitioners herein; but the court after the hearing immediately
dismissed the case on the ground that a dead person cannot be a real party
in interest and has no legal personality to sue.
On August 19, 1975, counsel for the plaintiff received a copy of the order
dismissing the complaint and on August 23, 1975, he moved to set aside the
order of the dismissal pursuant to Sections 16 and 17 of Rule 3 of the Rules
of Court. 2
On August 28, 1975, the court denied the motion for reconsideration filed by
counsel for the plaintiff for lack of merit. On September 1, 1975, counsel for
deceased plaintiff filed a written manifestation praying that the minors
Rosalio Bonilla and Salvacion Bonilla be allowed to substitute their deceased
mother, but the court denied the counsel's prayer for lack of merit. From the
order, counsel for the deceased plaintiff filed a second motion for
reconsideration of the order dismissing the complaint claiming that the same
is in violation of Sections 16 and 17 of Rule 3 of the Rules of Court but the
same was denied.
Hence, this petition for review.
The Court reverses the respondent Court and sets aside its order dismissing
the complaint in Civil Case No. 856 and its orders denying the motion for
reconsideration of said order of dismissal. While it is true that a person who
is dead cannot sue in court, yet he can be substituted by his heirs in
pursuing the case up to its completion. The records of this case show that
the death of Fortunata Barcena took place on July 9, 1975 while the
complaint was filed on March 31, 1975. This means that when the complaint
was filed on March 31, 1975, Fortunata Barcena was still alive, and therefore,
the court had acquired jurisdiction over her person. If thereafter she died, the
Rules of Court prescribes the procedure whereby a party who died during the
pendency of the proceeding can be substituted. Under Section 16, Rule 3 of
the Rules of Court "whenever a party to a pending case dies ... it shall be the
duty of his attorney to inform the court promptly of such death ... and to give
the name and residence of his executor, administrator, guardian or other

legal representatives." This duty was complied with by the counsel for the
deceased plaintiff when he manifested before the respondent Court that
Fortunata Barcena died on July 9, 1975 and asked for the proper substitution
of parties in the case. The respondent Court, however, instead of allowing
the substitution, dismissed the complaint on the ground that a dead person
has no legal personality to sue. This is a grave error. Article 777 of the Civil
Code provides "that the rights to the succession are transmitted from the
moment of the death of the decedent." From the moment of the death of the
decedent, the heirs become the absolute owners of his property, subject to
the rights and obligations of the decedent, and they cannot be deprived of
their rights thereto except by the methods provided for by law. 3 The moment
of death is the determining factor when the heirs acquire a definite right to
the inheritance whether such right be pure or contingent. 4 The right of the
heirs to the property of the deceased vests in them even before judicial
declaration of their being heirs in the testate or intestate
proceedings. 5 When Fortunata Barcena, therefore, died her claim or right to
the parcels of land in litigation in Civil Case No. 856, was not extinguished by
her death but was transmitted to her heirs upon her death. Her heirs have
thus acquired interest in the properties in litigation and became parties in
interest in the case. There is, therefore, no reason for the respondent Court
not to allow their substitution as parties in interest for the deceased plaintiff.
Under Section 17, Rule 3 of the Rules of Court "after a party dies and the
claim is not thereby extinguished, the court shall order, upon proper notice,
the legal representative of the deceased to appear and be substituted for the
deceased, within such time as may be granted ... ." The question as to
whether an action survives or not depends on the nature of the action and
the damage sued for. 6 In the causes of action which survive the wrong
complained affects primarily and principally property and property rights, the
injuries to the person being merely incidental, while in the causes of action
which do not survive the injury complained of is to the person, the property
and rights of property affected being incidental. 7 Following the foregoing
criterion the claim of the deceased plaintiff which is an action to quiet title
over the parcels of land in litigation affects primarily and principally property
and property rights and therefore is one that survives even after her death. It
is, therefore, the duty of the respondent Court to order the legal
representative of the deceased plaintiff to appear and to be substituted for
her. But what the respondent Court did, upon being informed by the counsel
for the deceased plaintiff that the latter was dead, was to dismiss the
complaint. This should not have been done for under the same Section 17,
Rule 3 of the Rules of Court, it is even the duty of the court, if the legal
representative fails to appear, to order the opposing party to procure the
appointment of a legal representative of the deceased. In the instant case
the respondent Court did not have to bother ordering the opposing party to
procure the appointment of a legal representative of the deceased because
her counsel has not only asked that the minor children be substituted for her

but also suggested that their uncle be appointed as guardian ad litem for
them because their father is busy in Manila earning a living for the family.
But the respondent Court refused the request for substitution on the ground
that the children were still minors and cannot sue in court. This is another
grave error because the respondent Court ought to have known that under
the same Section 17, Rule 3 of the Rules of Court, the court is directed to
appoint a guardian ad litem for the minor heirs. Precisely in the instant case,
the counsel for the deceased plaintiff has suggested to the respondent Court
that the uncle of the minors be appointed to act as guardian ad litem for
them. Unquestionably, the respondent Court has gravely abused its
discretion in not complying with the clear provision of the Rules of Court in
dismissing the complaint of the plaintiff in Civil Case No. 856 and refusing
the substitution of parties in the case.
IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing
the complaint in Civil Case No. 856 of the Court of First Instance of Abra and
the motions for reconsideration of the order of dismissal of said complaint
are set aside and the respondent Court is hereby directed to allow the
substitution of the minor children, who are the petitioners therein for the
deceased plaintiff and to appoint a qualified person as guardianad litem for
them. Without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Esguerra and Muoz Palma, JJ., concur.
Footnotes
1 Which this Court treats as special civil action as per its
Resolution dated February 11, 1976.
2 Section 16. Duty of Attorney upon which death, incapacity or
incompetency of party. - Whenever a party to a pending case
dies, becomes incapacitated or incompetent, it shall be the duty
of his attorney to inform the court promptly of such death,
incapacity or incompetency, and to give the name and residence
of his executor, administrator, guardian or other legal
representative.
Section 17. Death of party.After a party dies and the claim is
not thereby extinguished, the court shall order, upon proper
notice, the legal representative of the deceased to appear and to
be substituted for deceased, within a period of thirty (30) days,
or within such time as may be granted. If the legal representative
fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal

representative of the within a time to be specified by the court,

and the representative shall immediately appear for and on
behalf of the interest of the deceased. The court charges
involved in procuring such appointment, if defrayed by the
opposing party, may be recovered as costs. The heirs of the
deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or
administrator and the court may appoint guardian ad litem for
the minor heirs.
3 Buan vs. Heirs of Buan, 53 Phil. 654.
4 Ibarle vs. Po, 92 Phil. 721.
5 Morales, et al. vs. Ybanez, 98 Phil. 677.
6 Iron Gate Bank vs. Brady, 184 U.S. 665, 22 SCT 529, 46 L. ed.
739.
7 Wenber vs. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79.
EN BANC
[G. R. No. 4275. March 23, 1909.]
PAULA CONDE, Plaintif-Appellee, vs. ROMAN ABAYA, DefendantAppellant.
DECISION
ARELLANO, C.J.:
From the hearing of the appeal interposed by Roman Abaya in the special
proceedings brought in the Court of First Instance of La Laguna for the
settlement of the intestate estate and the distribution of the property of
Casiano Abaya it appears: chanrobles virtualawlibrary
I.
As antecedents: chanrobles virtualawlibrary that Casiano Abaya,
unmarried, the son of Romualdo Abaya and Sabina Labadia, died on the 6th
of April 1899; that Paula Conde, as the mother of the natural children Jose
and Teopista Conde, whom she states she had by Casiano Abaya, on the 6th
of November, 1905, moved the settlement of the said intestate succession;
that an administrator having been appointed for the said estate on the 25th
of November, 1905, Roman Abaya, a son of the said Romualdo Abaya and
Sabina Labadia, the parents of the late Casiano Abaya, came forward and
opposed said appointment and claimed it for himself as being the nearest
relative of the deceased; that this was granted by the court below on the 9th
of January, 1906; that on the 17th of November, 1906, Roman Abaya moved

that, after due process of law, the court declare him to be the sole heir of
Casiano Abaya, to the exclusion of all other persons, especially of Paula
Conde, and to be therefore entitled to take possession of all the property of
said estate, and that it be adjudicated to him; and that on November 22,
1906, the court ordered the publication of notices for the declaration of heirs
and distribution of the property of the estate.
II.
That on the 28th of November, 1906, Paula Conde, in reply to the
foregoing motion of Roman Abaya, filed a petition wherein she stated that
she acknowledged the relationship alleged by Roman Abaya, but that she
considered that her right was superior to his and moved for a hearing of the
matter, and, in consequence of the evidence that she intended to present
she prayed that she be declared to have preferential rights to the property
left by Casiano Abaya, and that the same be adjudicated to her together with
the corresponding products thereof.
III.
That the trial was held, both parties presenting documentary and
oral
evidence,
and
the
court
below
entered
the
following
judgment: chanrobles virtualawlibrary
That the administrator of the estate of Casiana Abaya should recognize
Teopista and Jose Conde as being natural children of Casiano Abaya; that
the Petitioner Paula Conde should succeed to the hereditary rights of her
children with respect to the inheritance of their deceased natural father
Casiano Abaya; and therefore, it is hereby declared that she is the only heir
to the property of the said intestate estate, to the exclusion of the
administrator, Roman Abaya.
IV.
That Roman Abaya excepted to the foregoing judgment, appealed to
this court, and presented the following statement of errors: chanrobles
virtualawlibrary
1.
The fact that the court below found that an ordinary action for the
acknowledgment of natural children under articles 135 and 137 of the Civil
Code, might be brought in special probate proceedings.
2.
The finding that after the death of a person claimed to be an
unacknowledged natural child, the mother of such presumed natural child, as
heir to the latter, may bring an action to enforce the acknowledgment of her
deceased child in accordance with articles 135 and 137 of the Civil Code.
3.
The finding in the judgment that the alleged continuous possession
of the deceased children of Paula Conde of the status of natural children of
the late Casiano Abaya, has been fully proven in these proceedings; and
4.
On the hypothesis that it was proper to adjudicate the property of
this intestate estate to Paula Conde, as improperly found by the court below,
the court erred in not having declared that said property should be reserved
in favor of relatives of Casiano Abaya to the third degree, and in not having

previously demanded securities from Paula Conde to guarantee the

transmission of the property to those who might fall within the reservation.
As to the first error assigned, the question is set up as to whether in special
proceedings for the administration and distribution of an intestate estate, an
action might be brought to enforce the acknowledgment of the natural child
of the person from whom the inheritance is derived, that is to say, whether
one might appear as heir on the ground that he is a recognized natural child
of the deceased, not having been so recognized by the deceased either
voluntarily or compulsory by reason of a preexisting judicial decision, but
asking at the same time that, in the special proceeding itself, he be
recognized by the presumed legitimate heirs of the deceased who claim to
be entitled to the succession opened in the special proceeding.
According to section 782 of the Code of Civil Procedure
If there shall be a controversy before the Court of First Instance as to who
the lawful heirs of the deceased person are, or as to the distributive share to
which each person is entitled under the law, the testimony as to such
controversy shall be taken in writing by the judge, under oath and signed by
witness. Any party in interest whose distributive share is affected by the
determination of such controversy, may appeal from the judgment of the
Court of First Instance determining such controversy to the Supreme Court,
within the time and in the manner provided in the last preceding section.
This court has decided the present question in the manner shown in the case
of Juana Pimental vs. Engracio Palanca (5 Phil. Rep. 436.) cralaw
The main question with regard to the second error assigned, is whether or
not the mother of a natural child now deceased, but who survived the person
who, it is claimed, was his natural father, also deceased, may bring an action
for the acknowledgment of the natural filiation in favor of such child in order
to appear in his behalf to receive the inheritance from the person who is
supposed to be his natural father.
In order to decide in the affirmative the court below has assigned the
following as the only foundation: chanrobles virtualawlibrary
In resolving a similar question Manresa says: chanrobles virtualawlibrary An
acknowledgment can only be demanded by the natural child and his
descendants whom it shall benefit, and should they be minors or otherwise
incapacitated, such person as legally represents them; the mother may ask it
in behalf of her child so long as he is under her authority. On this point no
positive declaration has been made, undoubtedly because it was not
considered necessary. A private action is in question and the general rule
must be followed. Elsewhere the same author adds: chanrobles
virtualawlibrary It may so happen that the child dies before four years have
expired after attaining majority, or that the document supporting his petition
for acknowledgment is discovered after his death, such death perhaps
occurring after his parents had died, as is supposed by article 137, or during

their lifetime. In any case such right of action shall pertain to the
descendants of the child whom the acknowledgment may interest. (See
Commentaries to arts. 135 and 137, Civil Code. Vol. I.) cralaw
The above doctrine, advanced by one of the most eminent commentators of
the Civil Code, lacks legal and doctrinal foundation. The power to transmit
the right of such action by the natural child to his descendants cannot be
sustained under the law, and still less to his mother.
It is without any support in law because the rule laid down in the code is
most positive, limiting in form, when establishing the exception for the
exercise of such right of action after the death of the presumed parents, as is
shown hereafter. It is not supported by any doctrine, because up to the
present time no argument has been presented, upon which even an
approximate conclusion could be based.
Although the Civil Code considerably improved the condition of recognized
natural children, granting them rights and actions that they did not possess
under the former laws, they were not, however, placed upon the same plane
as legitimate ones. The difference that separates these two classes of
children is still great, as proven by so many articles dealing with the rights of
the family and with succession in relation to the members thereof. It may be
laid down as a legal maxim, that whatever the code does not grant to the
legitimate children, or in connection with their rights, must still less be
understood as granted to recognized natural children or in connection with
their rights. There is not a single exception in its provisions.
If legitimacy is the attribute that constitutes the basis of the absolute family
rights of the child, the acknowledgment of the natural child is, among
illegitimate ones, that which unites him to the family of the father or the
mother who recognizes him, and affords him a participation in the rights of
the family, relatively advantageous according to whether they are alone or
whether they concur with other individuals of the family of his purely natural
father or mother.
Thus, in order to consider the spirit of the Civil Code nothing is more logical
than to establish a comparison between an action to claim the legitimacy,
and one to enforce acknowledgment.
Art. 118.
The action to claim its legitimacy may be brought by the
child at any time of its lifetime and shall be transmitted to its heirs, should it
die during minority or in a state of insanity. In such cases the heirs shall be
allowed a period of five years in which to institute the action.
The action already instituted by the child is transmitted by its death to the
heirs, if it has not lapsed before then.
Art. 137.
The actions for the acknowledgment of natural children can
be instituted only during the life of the presumed parents, except in the
following cases: chanrobles virtualawlibrary

1.
If the father or mother died during the minority of the child, in
which case the latter may institute the action before the expiration of the
first four years of its majority.
2.
If, after the death of the father or mother, some instrument, before
unknown, should be discovered in which the child is expressly acknowledged.
In this case the action must be instituted within the six months following the
discovery of such instrument.
On this supposition the first difference that results between one action and
the other consists in that the right of action for legitimacy lasts during the
whole lifetime of the child, that is, it can always be brought against the
presumed parents or their heirs by the child itself, while the right of action
for the acknowledgment of a natural child does not last his whole lifetime,
and, as a general rule, it cannot be instituted against the heirs of the
presumed parents, inasmuch as it can be exercised only during the life of the
presumed parents.
With regard to the question at issue, that is, the transmission to the heirs of
the presumed parents of the obligation to admit the legitimate filiation, or to
recognize the natural filiation, there exists the most radical difference in that
the former continues during the life of the child who claims to be legitimate,
and he may demand it either directly and primarily from the said presumed
parents, or indirectly and secondarily from the heirs of the latter; while the
second does not endure for life; as a general rule, it only lasts during the life
of the presumed parents. Hence the other difference, derived as a
consequence, that an action for legitimacy is always brought against the
heirs of the presumed parents in case of the death of the latter, while the
action for acknowledgment is not brought against the heirs of such parents,
with the exception of the two cases prescribed by article 137 transcribed
above.
So much for the passive transmission of the obligation to admit the
legitimate filiation, or to acknowledge the natural filiation.
As to the transmission to the heirs of the child of the latters action to claim
his legitimacy, or to obtain the acknowledgment of his natural filiation, it is
seen that the code grants it in the first case, but not the second. It contains
provisions for the transmission of the right of action which, for the purpose of
claiming his legitimacy inheres in the child, but it does not say a word with
regard to the transmission of the right to obtain the acknowledgment of the
natural filiation.
Therefore, the respective corollary of each of the two above-cited articles
is: chanrobles virtualawlibrary (1) That the right of action which devolves
upon the child to claim his legitimacy under article 118, may be transmitted
to his heirs in certain cases designated in the said article; (2) That the right
of action for the acknowledgment of natural children to which article 137

refers, can never be transmitted, for the reason that the code makes no
mention of it in any case, not even as an exception.
It is most illogical and contrary to every rule of correct interpretation, that
the right of action to secure acknowledgment by the natural child should be
presumed to be transmitted, independently, as a rule, to his heirs, while the
right of action to claim legitimacy from his predecessor is not expressly,
independently, or, as a general rule, conceded to the heirs of the legitimate
child, but only relatively and as an exception. Consequently, the pretension
that the right of action on the part of the child to obtain the acknowledgment
of his natural filiation is transmitted to his descendants is altogether
unfounded. No legal provision exists to sustain such pretension, nor can an
argument of presumption be based on the lesser claim when there is no
basis for the greater one, and when it is only given as an exception in welldefined cases. It is placing the heirs of the natural child on a better footing
than the heirs of the legitimate one, when, as a matter of fact, the position of
a natural child is no better than, nor even equal to, that of a legitimate child.
From the express and precise precepts of the code the following conclusions
are derived: chanrobles virtualawlibrary
The right of action that devolves upon the child to claim his legitimacy lasts
during his whole life, while the right to claim the acknowledgment of a
natural child lasts only during the life of his presumed parents.
Inasmuch as the right of action accruing to the child to claim his legitimacy
lasts during his whole life, he may exercise it either against the presumed
parents, or their heirs; while the right of action to secure the
acknowledgment of a natural child, since it does not last during his whole
life, but depends on that of the presumed parents, as a general rule can only
be exercised against the latter.
Usually the right of action for legitimacy devolving upon the child is of a
personal character and pertains exclusively to him, only the child may
exercise it at any time during his lifetime. As an exception, and in three
cases only, it may be transmitted to the heirs of the child, to wit, if he died
during his minority, or while insane, or after action had been already
instituted.
An action for the acknowledgment of a natural child may, as an exception, be
exercised against the heirs of the presumed parents in two cases: chanrobles
virtualawlibrary first, in the event of the death of the latter during the
minority of the child, and second, upon the discovery of some instrument of
express acknowledgment of the child, executed by the father or mother, the
existence of which was unknown during the life of the latter.
But as such action for the acknowledgment of a natural child can only be
exercised by him. It cannot be transmitted to his descendants, or to his
ascendants.

In support of the foregoing the following authorities may be cited: chanrobles

virtualawlibrary
Sanchez Roman, in his Treatise on Civil Law, propounds the question as to
whether said action should be considered transmissive to the heirs or
descendants of the natural child, whether he had or had not exercised it up
to the time of his death, and decides it as follows;
There is an entire absence of legal provisions, and at most, it might be
deemed admissible as a solution, that the right of action to claim the
acknowledgment of a natural child is transmitted by analogy to his heirs on
the same conditions and terms that it is transmitted to the descendants of a
legitimate child, to claim his legitimacy, under article 118, but nothing more;
because on this point nothing warrants placing the heirs of a natural child on
a better footing than those of the legitimate child, and even to compare
them would not fail to be a strained and questionable matter, and one of
great difficulty for decision by the courts, for the simple reason that for the
heirs of the legitimate child, the said article 118 exists, while for those of the
natural child, as we have said, there is no provision in the code authorizing
the same, although on the other hand there is none that prohibits it. (Vol.
V.) cralaw
Diaz Guijarro and Martinez Ruiz in their work on The Civil Code as construed
by the supreme court of Spain, commenting upon article 137,
say: chanrobles virtualawlibrary
Article 118, taking into account the privileges due to the legitimacy of
children, grants them the right to claim said legitimacy during their lifetime,
and even authorizes the transmission of said right for the space of five years
to the heirs thereof, if the child die during his minority or in a state of
insanity. But as article 137 is based on the consideration that in the case of a
natural child, ties are less strong and sacred in the eyes of the law, it does
not fix such a long and indefinite period for the exercise of the action; it
limits it to the life of the parents, excepting in the two cases mentioned in
said article; and it does not allow, as does article 118, the action to pass on
to the heirs, inasmuch as, although it does not prohibit it, and for that reason
it might be deemed on general principles of law to consent to it, such a
supposition is inadmissible for the reason that a comparison of both articles
shows that the silence of the law in the latter case is not, nor can it be, an
omission, but a deliberate intent to establish a wide difference between the
advantages granted to a legitimate child and to a natural one.
(Ibid., Vol. II, 171.) cralaw
Navarro
Amandi
(Cuestionario
del
Codigo
Civil)
raises
the
question: chanrobles virtualawlibrary Can the heirs of a natural child claim
the acknowledgment in those cases wherein the father or mother are under
obligation to acknowledge? And says: chanrobles virtualawlibrary

Opinions are widely divergent. The court of Rennes held (on April 13, 1844)
that the right of investigation forms a part of the estate of the child, and
along with his patrimony is transmitted to his heirs. The affirmation is
altogether too categorical to be admissible. If it were correct the same thing
would happen as when the legitimacy of a child is claimed, and as already
seen, the right of action to demand the legitimacy is not transmitted to the
heirs in every case and as an absolute right, but under certain limitations
and circumstances. Now, were we to admit the doctrine of the court of
Rennes, the result would be that the claim for natural filiation would be more
favored than one for legitimate filiation. This would be absurd, because it
cannot be conceived that the legislator should have granted a right of action
to the heirs of the natural child, which is only granted under great limitations
and in very few cases to those of a legitimate one. Some persons insist that
the same rules that govern legitimate filiation apply by analogy to natural
filiation, and that in this conception the heirs of the natural child are entitled
to claim it in the cases prescribed by article 118. The majority, however, are
inclined to consider the right to claim acknowledgment as a personal right,
and consequently, not transmissive to the heirs. Really there are not legal
grounds to warrant the transmission. (Vol. 2, 229.) cralaw
In a decision like the present one it is impossible to bring forward the
argument of analogy for the purpose of considering that the heirs of the
natural child are entitled to the right of action which article 118 concedes to
the heirs of the legitimate child. The existence of a provision for the one case
and the absence thereof for the other is a conclusive argument that inclusio
unius est exclusio alterius, and it cannot be understood that the provision of
law should be the same when the same reason does not hold in the one case
as in the other.
The theory of the law of transmission is also entirely inapplicable in this case.
This theory, which in the Roman Law expressed the general rule that an heir
who did not accept an inheritance during his lifetime was incapacitated from
transmitting it to his own heirs, included at the same time the idea that if the
inheritance was not transmitted because the heir did not possess it, there
were, however, certain things which the heir held and could transmit. Such
was the law and the right to accept the inheritance, for the existing reason
that all rights, both real and personal, shall pass to the heir; quia haeres
representat defunctum in omnibus et per omnia. According to article 659 of
the Civil Code, the inheritance includes all the property, rights, and
obligations of a person, which are not extinguished by his death. If the
mother is the heir of her natural child, and the latter, among other rights
during his lifetime was entitled to exercise an action for his acknowledgment
against his father, during the life of the latter, or after his death in some of
the excepting cases of article 137, such right, which is a portion of his
inheritance, is transmitted to his mother as being his heir, and it was so
understood by the court of Rennes when it considered the right in question,
not as a personal and exclusive right of the child which is extinguished by his

death, but as any other right which might be transmitted after his death. This
right of supposed transmission is even less tenable than that sought to be
sustained by the argument of analogy.
The right of action pertaining to the child to claim his legitimacy is in all
respects superior to that of the child who claims acknowledgment as a
natural child. And it is evident that the right of action to claim his legitimacy
is not one of those rights which the legitimate child may transmit by
inheritance to his heirs; it forms no part of the component rights of his
inheritance. If it were so, there would have been no necessity to establish its
transmissibility to heirs as an exception in the terms and conditions of article
118 of the code. So that, in order that it may constitute a portion of the
childs inheritance, it is necessary that the conditions and the terms
contained in article 118 shall be present, since without them, the right that
the child held during his lifetime, being personal and exclusive in principle,
and therefore, as a general rule not susceptible of transmission, would and
should have been extinguished by his death. Therefore, where no express
provision like that of article 118 exists, the right of action for the
acknowledgment of a natural child is, in principle and without exception,
extinguished by his death, and cannot be transmitted as a portion of the
inheritance of the deceased child.
On the other hand, it said right of action formed a part of the childs
inheritance, it would be necessary to establish the doctrine that the right to
claim such an acknowledgment from the presumed natural father and from
his heirs is an absolute right of the heirs of the child, not limited by certain
circumstances as in the case of the heirs of a legitimate child; and if it is
unreasonable to compare a natural child with a legitimate one to place the
heirs of a natural child and his inheritance on a better footing than those of a
legitimate child would not only be unreasonable, but, as stated in one of the
above citations, most absurd and illegal in the present state of the law and in
accordance with the general principles thereof.
For all of the foregoing reasons we hereby reverse the judgment appealed
from in all its parts, without any special ruling as to the costs of this instance.
Mapa, Johnson, Carson and Willard, JJ., concur.
Separate Opinions
TORRES, J., dissenting: chanrobles virtualawlibrary
The questions arising from the facts and points of law discussed in this
litigation between the parties thereto, decided in the judgment appealed
from, and set up and discussed in this instance by the said parties in their
respective briefs, are subordinate in the first place to the main point,
submitted among others to the decision of this court, that is, whether the
right of action brought to demand from the natural father, or from his heirs,

the acknowledgment of the natural child which the former left at his death
was, by operation of the law, transmitted to the natural mother by reason of
the death of the said child acknowledged by her.
The second error assigned by the Appellant in his brief refers exclusively to
this important point of law.
Article 846 of the Civil Code prescribes: chanrobles virtualawlibrary
The right of succession which the law grants natural children extends
reciprocally in similar cases to the natural father or mother.
Article 944 reads: chanrobles virtualawlibrary
If the acknowledged natural or legitimized child should die without issue,
either legitimate or acknowledged by it, the father or mother who
acknowledged it shall succeed to its entire estate, and if both acknowledged
it and are alive, they shall inherit from it share and share alike.
It cannot be inferred from the above legal provisions that from the right of
succession which the law grants the natural father or mother upon the death
of their natural child, the right of the heirs of any of the said parents to claim
the acknowledgment of the natural child is excluded. No article is to be found
in the Civil Code that expressly provides for such exclusion or elimination of
the right of the heirs of the deceased child to claim his acknowledgment.
If under article 659 of said code, the inheritance includes all the property,
rights, and obligations of a person, which are not extinguished by his death,
it is unquestionable that among such rights stands that which the natural
child had, while alive, to claim his acknowledgment as such from his natural
father, or from the heirs of the latter. There is no reason or legal provision
whatever to prevent the consideration that the right to claim
acknowledgment of the filiation of a deceased child from his natural father,
or from the heirs of the latter, is included in the hereditary succession of the
deceased child in favor of his natural mother.
It is to be regretted that such an eminent writer as Manresa is silent on this
special point; or that he is not very explicit in his comments on article 137 of
the Civil Code. Among the various noted writers on law, Professor Sanchez
Roman is the only one who has given his opinion in a categorical manner as
to whether or not the right of action for the acknowledgment of a deceased
natural child shall be considered transmissive to his heirs, as may be seen
from the following: chanrobles virtualawlibrary
In order to complete the explanation of this article 137 of the Civil Code,
three points must be decided: chanrobles virtualawlibrary (1) Against whom
shall an action for acknowledgment be brought under the cases and terms to
which the two exceptions indicated in paragraphs 1 and 2 of article 137
refer? (2) Who is to represent the miner in bringing this action when neither
the father nor the mother has acknowledged him? (3) Should this right of

action be considered as transmitted to the heirs or descendants of the

natural child whether or not it was exercised at the time of his death?
With respect to the third, there is an entire absence of legal provisions, and
at most, it might be deemed admissible as a solution, that the right of action
to claim the acknowledgment of a natural child is transmitted by analogy to
his heirs on the same conditions and terms that it is transmitted to the
descendants of the legitimate child, to claim his legitimacy, under article
118, but no more; because on this point nothing warrants placing the heirs of
a natural child on a better footing than those of the legitimate child, and
even to compare them would not fail to be a strained and questionable
matter, and one of great difficulty for decision by the courts, for the simple
reason that for the heirs of the legitimate child the said article 118 exists,
while for those of the natural child, as we have said, there is no provision in
the code authorizing the same, although on the other hand there is none that
prohibits it.
Certainly there is no article in the Civil Code, or any special law that bars the
transmission to the heirs of a natural child, particularly to his natural mother,
of the right of action to claim the acknowledgment of said natural child from
the heirs of his deceased natural father.
According to the above-cited article 944 of the Civil Code, the only persons
designated to succeed to the intestate estate of a natural child who died
during minority or without issue are its natural father or mother who
acknowledged it; consequently if by operation of the law his parents are his
legal successors or heirs, it is unquestionable that by reason of the childs
death the property, rights, and obligations of the deceased minor were, as a
matter of fact, transmitted to them, among which was the right to demand
the acknowledgment of the said deceased natural child from the heirs of the
deceased natural father or mother, respectively, on account of having
enjoyed uninterruptedly the status of natural child of the said deceased
parents. (Arts. 135 and 136, Civil Code.) cralaw
At the death of the children, Teopista in 1902, and Jose in 1903, during their
minority, and after the death of their natural father which took place in 1899,
the natural mother of the said minors, Paula Conde, succeeded them in all of
their property and rights, among which must necessarily appear and be
included the right of action to claim the acknowledgment of said two children
from the heirs of Icasiano Abaya, their deceased natural father. There is no
legal provision or precept whatever excluding such right from those which,
by operation of the law, were transmitted to the mother, Paula Conde, or
expressly declaring that the said right to claim such acknowledgment is
extinguished by the death of the natural children.
It is true that, as a general rule, an action for acknowledgment cannot be
brought by a surviving natural child after the death of his parents, except in
the event that he was a minor at the time of the death of either of his
parents, as was the case with the minors Teopista and Jose Conde, who, if

living, would unquestionably be entitled to institute an action for

acknowledgment against the presumed heirs of their natural father; and as
there is no law that provides that said right is extinguished by the death of
the same, and that the mother did not inherit it from the said minors, it is
also unquestionable that Paula Conde, the natural mother and successor to
the rights of said minors, is entitled to exercise the corresponding action for
acknowledgment.
If the natural mother had no right of action against the heirs of the natural
father, for the acknowledgment of her natural child, the unlimited and
unconditional reciprocity established by article 846 of the code would neither
be true nor correct. It should be noticed that the relation of paternity and
that of filiation between the above-mentioned father and children are both
natural in character; therefore, the intestate succession of the said children
of Paula Conde is governed exclusively by articles 944 and 945 of the said
code.
It is true that nothing is provided by article 137 with reference to the
transmission to the natural mother of the right to claim the acknowledgment
of her natural children, but, as Sanchez Roman says, it does not expressly
prohibit it; and as opposed to the silence of the said article, we find the
provisions of articles 846 and 944 of the Civil code, which expressly
recognized the right of the natural mother to succeed her natural child, a
right which is transmitted to her by operation of law from the moment that
the child ceases to exist.
The question herein does not bear upon the right of a child to claim his
legitimacy, as provided in article 118 of the code, nor is it claimed that the
rights of natural children and of their mother are equal to those of legitimate
ones, even by analogy.
The foundations of this opinion are based solely on the provisions of the
above-mentioned articles of the code, and I consider that they are
sustainable so long as it is not positively proven that the so often-mentioned
right of action for acknowledgment is extinguished by the death of the minor
natural child, and is not transmitted to the natural mother by express
declaration or prohibition of the law, together with the property and other
rights in the intestate succession.
In view of the considerations above set forth it is my opinion that it should be
held: chanrobles virtualawlibrary That Paula Conde, as the natural mother
and sole heir of her children Teopista and Jose, was and is entitled to the
right to institute proceedings to obtain the acknowledgment of the latter as
natural children of the late Icasiano Abaya, from Roman Abaya, as heir and
administrator of the estate of the said Icasiano Abaya; and that the said
Teopista and Jose who died during their minority, three years after the death
of their father, should be considered and acknowledged as such natural
children of the latter, for the reason that while living they uninterruptedly

enjoyed the status of his natural children. The judgment appealed from
should be affirmed without any special ruling as to costs.
With regard to the declaration that the property of the late Icasiano, which
Paula Conde might take, are of a reservable character, together with the
other matter contained in the third error assigned by the Appellant to the
said judgment, the writer withholds his opinion until such time as the
question may be raised between the parties in proper form.

SECOND DIVISION

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

- versus -

G.R. No. 173292

Present:
CARPIO, J.,
Chairperson,NACHURA,
BERSAMIN,*
ABAD, and MENDOZA, JJ.

OSWALDO Z. CRUZ,
Promulgated:
Respondent.
September 1, 2010
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the Court of Appeals (CA)
Decision[2] dated 20 December 2005 and Resolution dated 21 June 2006 in
CA-G.R. CV No. 80355. The CA affirmed with modification the Order [3] dated 2
June 1997 of the Regional Trial Court of the National Capital Judicial Region,
Branch 30, Manila (RTC).

The Antecedent Facts

The undisputed facts, as summarized by the Court of Appeals, are as follows:
On October 18, 1993, Memoracion Z. Cruz filed with the Regional
Trial Court in Manila a Complaint against her son, defendantappellee Oswaldo Z. Cruz, for Annulment of Sale, Reconveyance
and Damages.
Memoracion claimed that during her union with her common-law
husband (deceased) Architect Guido M. Cruz, she acquired a
parcel of land located at Tabora corner Limay Streets, Bo. Obrero,
Tondo Manila; that the said lot was registered in her name under
TCT No. 63467 at the Register of Deeds of Manila; that sometime
in July 1992, she discovered that the title to the said property
was transferred by appellee and the latters wife in their names in
August 1991 under TCT No. 0-199377 by virtue of a Deed of Sale
dated February 12, 1973; that the said deed was executed
through fraud, forgery, misrepresentation and simulation, hence,
null and void; that she, with the help of her husbands relatives,
asked appellee to settle the problem; that despite repeated pleas
and demands, appellee refused to reconvey to her the said
property; that she filed a complaint against appellee before the
office of the Barangay having jurisdiction over the subject
property; and that since the matter was unsettled, the barangay
x x x issued x x x a certification to file [an] action in court, now
the subject of controversy.
After Memoracion x x x finished presenting her
she died on October 30, 1996. Through
Memoracions counsel, Atty. Roberto T. Neri,
court on January 13, 1997 of the fact of such
by a certificate thereof.

evidence in chief,
a Manifestation,
notified the trial
death, evidenced

For his part, appellee filed a Motion to Dismiss on the grounds

that (1) the plaintiffs reconveyance action is a personal action
which does not survive a partys death, pursuant to Section 21,
Rule 3 of the Revised Rules of Court, and (2) to allow the case to
continue would result in legal absurdity whereby one heir is
representing the defendant [and is a] co-plaintiff in this case.
On June 2, 1997, the trial court issued the appealed Order in a
disposition that reads:

Wherefore, in view of the foregoing, this case is

ordered dismissed without prejudice to the
prosecution thereof in the proper estate proceedings.

On October 17, 1997, Memoracions son-heir, Edgardo Z. Cruz,

manifested to the trial court that he is retaining the services of
Atty. Neri for the plaintiff. Simultaneously, Atty. Neri filed a
Motion for Reconsideration of the June 2, 1997 Order. However,
the said motion was subsequently denied by Acting Presiding
Judge Cielito N. Mindaro-Grulla [on October 31, 2000].
Thereafter, Edgardo Cruz, as an heir of Memoracion Cruz, filed a
notice of appeal in behalf of the deceased plaintiff, signed by
Atty. Neri, but the appeal was dismissed by Judge Mindaro-Grulla,
[stating that] the proper remedy being certiorari under Rule 65 of
the Rules of Court. On appellants motion for reconsideration,
Judge Lucia Pena Purugganan granted the same, stating that the
remedy under the circumstances is ordinary appeal.[4]

The Court of Appeals Ruling

Petitioner Memoracion Z. Cruz, represented by Edgardo Z. Cruz, filed with the
Court of Appeals a Petition for Review under Rule 45 of the 1997 Revised
Rules of Civil Procedure. On 20 December 2005, the CA rendered judgment
affirming with modification the RTC decision. We quote the dispositive portion
of the CAs decision below.
WHEREFORE,
the
appealed
Order
is AFFIRMED, with MODIFICATION. The trial courts directive as
to the prosecution of the action in the proper estate proceedings
is DELETED.
SO ORDERED.[5]

Petitioners Motion for Reconsideration was denied by the CA in its Resolution

of 21 June 2006.[6]

Hence, this appeal.

The Issues
The issues for resolution in this case are:
1.
Whether the Court of Appeals erred in ruling that Memoracion
Z. Cruzs Petition for Annulment of Deed of Sale, Reconveyance
and Damages is a purely personal action which did not survive
her death; and
2.

Whether the Court of Appeals erred in affirming with

modification the RTC Order dismissing the Petition for Annulment
of Deed of Sale, Reconveyance and Damages.

The Courts Ruling

We find the appeal meritorious.
The Petition for Annulment of Sale, Reconveyance
and Damages survived the death of petitioner

The criterion for determining whether an action survives the death of a

petitioner was elucidated in Bonilla v. Barcena,[7] to wit:
The question as to whether an action survives or not
depends on the nature of the action and the damage sued for. In
the causes of action which survive, the wrong complained [of]
affects primarily and principally property and property rights, the
injuries to the person being merely incidental, while in the causes
of action which do not survive, the injury complained of is to the
person, the property and rights of property affected being
incidental.[8]

If the case affects primarily and principally property and property rights, then
it survives the death of the plaintiff or petitioner. In Sumaljag v. Literato,[9] we

held that a Petition for Declaration of Nullity of Deed of Sale of Real Property
is one relating to property and property rights, and therefore, survives the
death of the petitioner. Accordingly, the instant case for annulment of sale of
real property merits survival despite the death of petitioner Memoracion Z.
Cruz.
The CA erred in affirming RTCs dismissal of the
Petition for Annulment of Deed of Sale,
Reconveyance and Damages

When a party dies during the pendency of a case, Section 16, Rule 3 of the
1997 Revised Rules of Civil Procedure necessarily applies, viz:
Sec. 16. Death of party; duty of counsel. - Whenever a party to a
pending action dies, and the claim is not thereby extinguished,
it shall be the duty of his counsel to inform the court within
thirty (30) days after such death of the fact thereof, and to give
the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall
be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an executor
or administrator and the court may appoint a guardian ad
litemfor
the
minor
heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of
thirty (30) days from notice.
If no legal representative is named by the counsel for the
deceased party, or if the one so named shall fail to appear
within the specified period, the court may order the opposing
party, within a specified time, to procure the appointment of an
executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the
deceased. The court charges in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.

The foregoing section is a revision of Section 17, Rule 3 of the old Rules of
Court:
SEC. 17. Death of party. - After a party dies and the claim is not
thereby extinguished, the court shall order, upon proper notice, the
legal representative of the deceased to appear and to be
substituted for the deceased, within a period of thirty (30) days, or
within such time as may be granted. If the legal representative fails
to appear within said time, the court may order the opposing party
to procure the appointment of a legal representative of the
deceased within a time to be specified by the court, and the
representative shall immediately appear for and on behalf of the
interest of the deceased. The court charges involved in procuring
such appointment, if defrayed by the opposing party, may be
recovered as costs. The heirs of the deceased may be allowed to be
substituted for the deceased, without requiring the appointment of
an executor or administrator and the court may appoint
guardian ad litem for the minor heirs.

If the action survives despite death of a party, it is the duty of the deceaseds
counsel to inform the court of such death, and to give the names and
addresses of the deceaseds legal representatives. The deceased may be
substituted by his heirs in the pending action. As explained in Bonilla:
x x x Article 777 of the Civil Code provides that the rights to the
succession are transmitted from the moment of the death of the
decedent. From the moment of the death of the decedent, the heirs
become the absolute owners of his property, subject to the rights
and obligations of the decedent, and they cannot be deprived of
their rights thereto except by the methods provided for by law. The
moment of death is the determining factor when the heirs acquire a
definite right to the inheritance whether such right be pure or
contingent. The right of the heirs to the property of the deceased
vests in them even before judicial declaration of their being heirs in
the testate or intestate proceedings. When [plaintiff], therefore,
died[,] her claim or right to the parcels of land x x x was not
extinguished by her death but was transmitted to her heirs upon
her death. Her heirs have thus acquired interest in the properties in
litigation and became parties in interest in the case. There is,
therefore, no reason for the respondent Court not to allow their
substitution as parties in interest for the deceased plaintiff.[10]

If no legal representative is named by the counsel of the deceased, or the

legal representative fails to appear within a specified period, it is the duty of
the court where the case is pending to order the opposing party to procure
the appointment of an executor or administrator for the estate of the
deceased. The reason for this rule is to protect all concerned who may be
affected by the intervening death, particularly the deceased and his estate.
[11]

In the instant case, petitioner (plaintiff) Memoracion Z. Cruz died on 30

October 1996. Her counsel, Atty. Roberto T. Neri, notified the trial court of
such death on 13 January 1997, through a Manifestation stating thus:
COMES NOW the undersigned counsel and to this Honorable
Court respectfully gives notice that the plaintiff, Memoracion Z.
Cruz, died on October 30, 1996, in Manila as shown by a
Certificate of Death, a certified true copy of which is hereto
attached as Annex A hereof.
The legal representative of the deceased plaintiff is her son
EDGARDO CRUZ whose address is at No. 3231-E Tabora St., Bo.
Obrero, Tondo, Manila.
x x x x[12]

On 24 January 1997, respondent (defendant) Oswaldo Z. Cruz moved to

dismiss the case alleging that it did not survive Memoracions death. The RTC
granted the motion to dismiss in the assailed Order dated 2 June 1997.
We rule that it was error for the RTC to dismiss the case. As mentioned
earlier, the petition for annulment of deed of sale involves property and
property rights, and hence, survives the death of petitioner Memoracion. The
RTC was informed, albeit belatedly,[13] of the death of Memoracion, and was
supplied with the name and address of her legal representative, Edgardo
Cruz. What the RTC could have done was to require Edgardo Cruz to appear
in court and substitute Memoracion as party to the pending case, pursuant
to Section 16, Rule 3 of the 1997 Revised Rules of Civil Procedure, and
established jurisprudence.

We note that on 17 October 1997, Edgardo Cruz filed with the RTC a
Manifestation, stating that he is retaining the services of Atty. Roberto T.
Neri. We quote:[14]
UNDERSIGNED HEIR of the late Memoracion Z. Cruz
respectfully manifests that he is retaining the services
of ATTY. ROBERTO T. NERI as counsel for the plaintiff.
(Sgd.) EDGARDO Z. CRUZ
Plaintiff
Consistent with our ruling in Heirs of Haberer v. Court of Appeals,[15] we
consider such Manifestation, signed by Memoracions heir, Edgardo Cruz, and
retaining Atty. Neris services as counsel, a formal substitution of deceased
Memoracion by her heir, Edgardo Cruz. It also needs mention that Oswaldo
Cruz, although also an heir of Memoracion, should be excluded as a legal
representative in the case for being an adverse party therein.[16]
WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals
Decision dated 20 December 2005 and Resolution dated 21 June 2006 in CAG.R. CV No. 80355. We REMAND this case to the Regional Trial Court of the
National Capital Judicial Region, Branch 30, Manila, for further proceedings.
SO ORDERED.

ANTONIO T. CARPIO
Associate Justice
WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

LUCAS P. BERSAMIN ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant

to

Section

13,

Article

VIII

of

the

Constitution,

and

the

Division Chairpersons Attestation, I certify that the conclusions in the above

Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

Designated additional member per Special Order No. 882 dated 31 August
2010.
[1]
Under Rule 45 of the 1997 Revised Rules of Civil Procedure.
[2]
Penned by Associate Justice Magdangal M. De Leon, with Associate Justices
Portia Alio- Hormachuelos and Mariano Del Castillo (now a member of the
Supreme Court), concurring.
[3]
Issued by RTC Judge Senecio O. Ortile.
[4]
Rollo, pp. 32-33. Citations omitted.
[5]
Id. at 39.
[6]
Id. at 43-44.
[7]
163 Phil. 516 (1976). See also Torres v. Rodellas, G.R. No. 177836, 4
September 2009, 598 SCRA 390.
[8]
Id. at 521, citing Iron Gate Bank v. Brady, 184 U.S. 665, 22 SCT 529, 46
L.ed. 739 and Wenber v. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79.
[9]
G.R. No. 149787, 18 June 2008, 555 SCRA 53, 60.
[10]
Bonilla v. Barcena, supra note 7 at 520-521. Citations omitted.

[11]

Sumaljag v. Literato, supra note 9 at 62.

Records, pp. 172-173.
[13]
The counsels late filing of the Notice of Death of Memoracion Z. Cruz was
not questioned by defendant Oswaldo Cruz.
[14]
Records, p. 196.
[15]
192 Phil. 62, 73 (1981).
[16]
In Sumaljag v. Literato, supra note 9, the deceaseds sister, although a
legal heir, was excluded as a legal representative for being one of the
adverse parties in the pending cases.
[12]

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162784

June 22, 2007

NATIONAL HOUSING AUTHORITY, petitioner,

vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO,
LAGUNA, BR. 31, respondents.
DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by the National
Housing Authority (NHA) against the Court of Appeals, the Regional Trial
Court of San Pedro Laguna, Branch 31, and private respondent Segunda
Almeida.
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita
Herrera several portions of land which are part of the Tunasan Estate in San
Pedro, Laguna. The award is evidenced by an Agreement to Sell No.
3787.1 By virtue of Republic Act No. 3488, the LTA was succeeded by the
Department of Agrarian Reform (DAR). On July 31, 1975, the DAR was
succeeded by the NHA by virtue of Presidential Decree No. 757. 2 NHA as the
successor agency of LTA is the petitioner in this case.

The records show that Margarita Herrera had two children: Beatriz HerreraMercado (the mother of private respondent) and Francisca Herrera. Beatriz
Herrera-Mercado predeceased her mother and left heirs.
Margarita Herrera passed away on October 27, 1971.3
On August 22, 1974, Francisca Herrera, the remaining child of the late
Margarita Herrera executed a Deed of Self-Adjudication claiming that she is
the only remaining relative, being the sole surviving daughter of the
deceased. She also claimed to be the exclusive legal heir of the late
Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated
October 7, 1960, allegedly executed by Margarita Herrera. The pertinent
portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo,
kasalukuyang naninirahan at tumatanggap ng sulat sa Nayon ng San
Vicente, San Pedro Laguna, sa ilalim ng panunumpa ay malaya at
kusang loob kong isinasaysay at pinagtitibay itong mga sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan
(SOLAR), tumatayo sa Nayon ng San Vicente, San Pedro, Laguna,
mayroong PITONG DAAN AT PITUMPU'T ISANG (771) METRONG
PARISUKAT ang laki, humigit kumulang, at makikilala sa tawag na Lote
17, Bloke 55, at pag-aari ng Land Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng
paghuhulog sa Land Tenure Administration, at noong ika 30 ng Julio,
1959, ang Kasunduang sa Pagbibile (AGREEMENT TO SELL No. 3787) ay
ginawa at pinagtibay sa Lungsod ng Maynila, sa harap ng Notario
Publico na si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial
bilang Documento No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay,
ako ay nakatira at pinagsisilbihan nang aking anak na si Francisca
Herrera, at ang tinitirikan o solar na nasasabi sa unahan ay

binabayaran ng kaniyang sariling cuarta sa Land Tenure

Administration;
4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian
na ng Dios ng aking buhay, ang lupang nasasabi sa unahan ay aking
ipinagkakaloob sa nasabi kong anak na FRANCISCA HERRERA, Filipina,
nasa katamtamang gulang, kasal kay Macario Berroya, kasalukuyang
naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San
Pedro Laguna, o sa kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay
bawian na ng Dios ng aking buhay ay KILALANIN, IGALANG at
PAGTIBAYIN ang nilalaman sa pangalan ng aking anak na si Francisca
Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong
kamay sa ibaba nito at sa kaliwang gilid ng unang dahon, dito sa
Lungsod ng Maynila, ngayong ika 7 ng Octubre, 1960.4
The said document was signed by two witnesses and notarized. The
witnesses signed at the left-hand side of both pages of the document with
the said document having 2 pages in total. Margarita Herrera placed her
thumbmark5 above her name in the second page and at the left-hand margin
of the first page of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of
the Deed of Self-Adjudication before the then Court of First Instance of
Laguna, Branch 1 in Binan, Laguna (now, Regional Trial Court Branch 25). The
case for annulment was docketed as Civil Case No. B-1263.6
On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the
Deed of Self-Adjudication) was rendered and the deed was declared null and
void.7
During trial on the merits of the case assailing the Deed of Self-Adjudication,
Francisca Herrera filed an application with the NHA to purchase the same lots
submitting therewith a copy of the "Sinumpaang Salaysay" executed by her
mother. Private respondent Almeida, as heir of Beatriz Herrera-Mercado,
protested the application.

In a Resolution8 dated February 5, 1986, the NHA granted the application

made by Francisca Herrera, holding that:
From the evidence of the parties and the records of the lots in
question, we gathered the following facts: the lots in question are
portions of the lot awarded and sold to the late Margarita Herrera on
July 28, 1959 by the defunct Land Tenure Administration; protestant is
the daughter of the late Beatriz Herrera Mercado who was the sister of
the protestee; protestee and Beatriz are children of the late Margarita
Herrera; Beatriz was the transferee from Margarita of Lot Nos. 45, 46,
47, 48 and 49, Block 50; one of the lots transferred to Beatriz, e.g. Lot
47, with an area of 148 square meters is in the name of the protestant;
protestant occupied the lots in question with the permission of the
protestee; protestee is a resident of the Tunasan Homesite since birth;
protestee was born on the lots in question; protestee left the place only
after marriage but resided in a lot situated in the same Tunasan
Homesite; her (protestee) son Roberto Herrera has been occupying the
lots in question; he has been there even before the death of the late
Margarita Herrera; on October 7, 1960, Margarita Herrera
executed a "Sinumpaang Salaysay" whereby she waived or
transferred all her rights and interest over the lots in question
in favor of the protestee; and protestee had paid the lots in
question in full on March 8, 1966 with the defunct Land Tenure
Administration.
This Office finds that protestee has a better preferential right to purchase the
lots in question.9
Private respondent Almeida appealed to the Office of the President. 10 The
NHA Resolution was affirmed by the Office of the President in a Decision
dated January 23, 1987.11
On February 1, 1987, Francisca Herrera died. Her heirs executed an
extrajudicial settlement of her estate which they submitted to the NHA. Said
transfer of rights was approved by the NHA.12 The NHA executed several
deeds of sale in favor of the heirs of Francisca Herrera and titles were issued
in their favor.13 Thereafter, the heirs of Francisca Herrera directed Segunda
Mercado-Almeida to leave the premises that she was occupying.
Feeling aggrieved by the decision of the Office of the President and the
resolution of the NHA, private respondent Segunda Mercado-Almeida sought

the cancellation of the titles issued in favor of the heirs of Francisca. She filed
a Complaint on February 8, 1988, for "Nullification of Government Lot's
Award," with the Regional Trial Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year
occupation of the disputed properties, and re-raised the fact that Francisca
Herrera's declaration of self-adjudication has been adjudged as a nullity
because the other heirs were disregarded. The defendant heirs of Francisca
Herrera alleged that the complaint was barred by laches and that the
decision of the Office of the President was already final and executory.14 They
also contended that the transfer of purchase of the subject lots is perfectly
valid as the same was supported by a consideration and that Francisca
Herrera paid for the property with the use of her own money.15 Further, they
argued that plaintiff's occupation of the property was by mere tolerance and
that they had been paying taxes thereon.16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the
case for lack of jurisdiction.17 The Court of Appeals in a Decision dated June
26, 1989 reversed and held that the Regional Trial Court had jurisdiction to
hear and decide the case involving "title and possession to real property
within its jurisdiction."18The case was then remanded for further proceedings
on the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a Decision setting aside
the resolution of the NHA and the decision of the Office of the President
awarding the subject lots in favor of Francisca Herrera. It declared the deeds
of sale executed by NHA in favor of Herrera's heirs null and void. The
Register of Deeds of Laguna, Calamba Branch was ordered to cancel the
Transfer Certificate of Title issued. Attorney's fees were also awarded to
private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an
assignment of rights but a disposition of property which shall take effect
upon death. It then held that the said document must first be submitted to
probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective
motions for reconsideration which were both denied on July 21, 1998 for lack
of merit. They both appealed to the Court of Appeals. The brief for the heirs

of Francisca Herrera was denied admission by the appellate court in a

Resolution dated June 14, 2002 for being a "carbon copy" of the brief
submitted by the NHA and for being filed seventy-nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision of the
Regional Trial Court, viz:
There is no dispute that the right to repurchase the subject lots was
awarded to Margarita Herrera in 1959. There is also no dispute that
Margarita executed a "Sinumpaang Salaysay" on October 7, 1960.
Defendant NHA claims that the "Sinumpaang Salaysay" is, in effect, a
waiver or transfer of rights and interest over the subject lots in favor of
Francisca Herrera. This Court is disposed to believe otherwise. After a
perusal of the "Sinumpaang Salaysay" of Margarita Herrera, it can be
ascertained from its wordings taken in their ordinary and grammatical
sense that the document is a simple disposition of her estate to take
effect after her death. Clearly the Court finds that the "Sinumpaang
Salaysay" is a will of Margarita Herrera. Evidently, if the intention of
Margarita Herrera was to merely assign her right over the lots to her
daughter Francisca Herrera, she should have given her "Sinumpaang
Salaysay" to the defendant NHA or to Francisca Herrera for submission
to the defendant NHA after the full payment of the purchase price of
the lots or even prior thereto but she did not. Hence it is apparent that
she intended the "Sinumpaang Salaysay" to be her last will and not an
assignment of rights as what the NHA in its resolution would want to
make it appear. The intention of Margarita Herrera was shared no less
by Francisca Herrera who after the former's demise executed on
August 22, 1974 a Deed of Self-Adjudication claiming that she is her
sole and legal heir. It was only when said deed was questioned in court
by the surviving heirs of Margarita Herrera's other daughter, Beatriz
Mercado, that Francisca Herrera filed an application to purchase the
subject lots and presented the "Sinumpaang Salaysay" stating that it is
a deed of assignment of rights.19
The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots
to the heirs of Francisca Herrera. It upheld the trial court ruling that the
"Sinumpaang Salaysay" was not an assignment of rights but one that
involved disposition of property which shall take effect upon death. The issue
of whether it was a valid will must first be determined by probate.

Petitioner NHA elevated the case to this Court.

Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE
DECISION OF THE OFFICE OF THE PRESIDENT HAVE ATTAINED FINALITY,
AND IF SO, WHETHER OR NOT THE PRINCIPLE OF ADMINISTRATIVE RES
JUDICATA BARS THE COURT FROM FURTHER DETERMINING WHO
BETWEEN THE PARTIES HAS PREFERENTIAL RIGHTS FOR AWARD OVER
THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE
AWARD ON THE SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE NHA
IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court decisions in
accordance with the hierarchy of courts. But jurisprudence has also
recognized the rule of administrative res judicata: "the rule which forbids the
reopening of a matter once judicially determined by competent authority
applies as well to the judicial and quasi-judicial facts of public, executive or
administrative officers and boards acting within their jurisdiction as to the
judgments of courts having general judicial powers . . . It has been declared
that whenever final adjudication of persons invested with power to decide on
the property and rights of the citizen is examinable by the Supreme Court,
upon a writ of error or a certiorari, such final adjudication may be pleaded
as res judicata."20 To be sure, early jurisprudence were already mindful that
the doctrine of res judicata cannot be said to apply exclusively to decisions
rendered by what are usually understood as courts without unreasonably
circumscribing the scope thereof and that the more equitable attitude is to
allow extension of the defense to decisions of bodies upon whom judicial
powers have been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,21 the
Court held that the rule prescribing that "administrative orders cannot be
enforced in the courts in the absence of an express statutory provision for
that purpose" was relaxed in favor of quasi-judicial agencies.

In fine, it should be remembered that quasi-judicial powers will always be

subject to true judicial powerthat which is held by the courts. Quasi-judicial
power is defined as that power of adjudication of an administrative agency
for the "formulation of a final order."22 This function applies to the actions,
discretion and similar acts of public administrative officers or bodies who are
required to investigate facts, or ascertain the existence of facts, hold
hearings, and draw conclusions from them, as a basis for their official action
and to exercise discretion of a judicial nature.23 However, administrative
agencies are not considered courts, in their strict sense. The doctrine of
separation of powers reposes the three great powers into its three (3)
branchesthe legislative, the executive, and the judiciary. Each department
is co-equal and coordinate, and supreme in its own sphere. Accordingly, the
executive department may not, by its own fiat, impose the judgment of one
of its agencies, upon the judiciary. Indeed, under the expanded jurisdiction of
the Supreme Court, it is empowered to "determine whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government."24 Courts have
an expanded role under the 1987 Constitution in the resolution of societal
conflicts under the grave abuse clause of Article VIII which includes that duty
to check whether the other branches of government committed an act that
falls under the category of grave abuse of discretion amounting to lack or
excess of jurisdiction.25
Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary
Reorganization Act of 198026 where it is therein provided that the
Intermediate Appellate Court (now, Court of Appeals) shall exercise the
"exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards, of the Regional Trial Courts and Quasi-Judicial
agencies, instrumentalities, boards or commissions, except those falling
within the jurisdiction of the Supreme Court in accordance with the
Constitution"27 and contends that the Regional Trial Court has no
jurisdiction to rule over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its decision of August 28,
2003, already ruled that the issue of the trial court's authority to hear and
decide the instant case has already been settled in the decision of the Court
of Appeals dated June 26, 1989 (which has become final and executory on
August 20, 1989 as per entry of judgment dated October 10, 1989).28 We find
no reason to disturb this ruling. Courts are duty-bound to put an end to
controversies. The system of judicial review should not be misused and

abused to evade the operation of a final and executory judgment.29 The

appellate court's decision becomes the law of the case which must be
adhered to by the parties by reason of policy.30
Next, petitioner NHA contends that its resolution was grounded on
meritorious grounds when it considered the application for the purchase of
lots. Petitioner argues that it was the daughter Francisca Herrera who filed
her application on the subject lot; that it considered the respective
application and inquired whether she had all the qualifications and none of
the disqualifications of a possible awardee. It is the position of the petitioner
that private respondent possessed all the qualifications and none of the
disqualifications for lot award and hence the award was not done arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang Salaysay"
was a will, it could not bind the NHA.31 That, "insofar as [the] NHA is
concerned, it is an evidence that the subject lots were indeed transferred by
Margarita Herrera, the original awardee, to Francisca Herrera was then
applying to purchase the same before it."32
We are not impressed. When the petitioner received the "Sinumpaang
Salaysay," it should have noted that the effectivity of the said document
commences at the time of death of the author of the instrument; in her
words "sakaling ako'y bawian na ng Dios ng aking buhay" Hence, in such
period, all the interests of the person should cease to be hers and shall be in
the possession of her estate until they are transferred to her heirs by virtue
of Article 774 of the Civil Code which provides that:
Art. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to
another or others either by his will or by operation of law.33
By considering the document, petitioner NHA should have noted that the
original applicant has already passed away. Margarita Herrera passed away
on October 27, 1971.34 The NHA issued its resolution35 on February 5, 1986.
The NHA gave due course to the application made by Francisca Herrera
without considering that the initial applicant's death would transfer all her
property, rights and obligations to the estate including whatever interest she
has or may have had over the disputed properties. To the extent of the
interest that the original owner had over the property, the same should go to
her estate. Margarita Herrera had an interest in the property and that

interest should go to her estate upon her demise so as to be able to properly

distribute them later to her heirsin accordance with a will or by operation
of law.
The death of Margarita Herrera does not extinguish her interest over the
property. Margarita Herrera had an existing Contract to Sell36 with NHA as the
seller. Upon Margarita Herrera's demise, this Contract to Sell was neither
nullified nor revoked. This Contract to Sell was an obligation on both parties
Margarita Herrera and NHA. Obligations are transmissible.37 Margarita
Herrera's obligation to pay became transmissible at the time of her death
either by will or by operation of law.
If we sustain the position of the NHA that this document is not a will, then the
interests of the decedent should transfer by virtue of an operation of law and
not by virtue of a resolution by the NHA. For as it stands, NHA cannot make
another contract to sell to other parties of a property already initially paid for
by the decedent. Such would be an act contrary to the law on succession and
the law on sales and obligations.38
When the original buyer died, the NHA should have considered the estate of
the decedent as the next "person"39likely to stand in to fulfill the obligation to
pay the rest of the purchase price. The opposition of other heirs to the
repurchase by Francisca Herrera should have put the NHA on guard as to the
award of the lots. Further, the Decision in the said Civil Case No. B-1263
(questioning the Deed of Self-Adjudication) which rendered the deed therein
null and void40 should have alerted the NHA that there are other heirs to the
interests and properties of the decedent who may claim the property after a
testate or intestate proceeding is concluded. The NHA therefore acted
arbitrarily in the award of the lots.
We need not delve into the validity of the will. The issue is for the probate
court to determine. We affirm the Court of Appeals and the Regional Trial
Court which noted that it has an element of testamentary disposition where
(1) it devolved and transferred property; (2) the effect of which shall
transpire upon the death of the instrument maker.41
IN VIEW WHEREOF, the petition of the National Housing Authority is
DENIED. The decision of the Court of Appeals in CA-G.R. No. 68370 dated
August 28, 2003, affirming the decision of the Regional Trial Court of San
Pedro, Laguna in Civil Case No. B-2780 dated March 9, 1998, is hereby
AFFIRMED.

No cost.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, JJ., concur.
Footnotes
1

Rollo, at 8.

A Decree Creating the National Housing Authority and Dissolving the

Existing Housing Agencies, Defining Its Powers and Functions, Providing
Funds Therefor, and for Other Purposes, Presidential Decree No. 757,
promulgated July 31, 1975.
3

Rollo, at 70.

Id.

It should be noted that a thumbmark is considered a valid signature.

As held in Payad v. Tolentino, 62 Phil. 848 (1936): "The testator's
thumbprint is always valid and sufficient signature for the purpose of
complying with the requirement of the article. While in most of these
cases, the testator was suffering from some infirmity which made the
writing of the testator's name difficult or impossible, there seems to be
no basis for limiting the validity of thumbprints only to cases of illness
or infirmity."
6

Rollo, at 49.

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

Rollo, at 39-43.

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

10

Id., at 9.

11

Id., at 9, 44-47.

12

Id., at 9.

13

Id., at 25-26. Francisca Herrera left behind her husband, Macario

Berroya, and children: Ramon, Antonio, Alberto, Rosita, Pacita,
Bernabe, Gregorio, Josefina and Rustica. In the extra judicial settlement
made by the said heirs, Rosita, Pacita, Bernabe, Gregorio, Josefina and
Rustica waived all their rights, interest and participation therein in
favor of their siblings Macario, Alberto, Ramon and Antonio. Deeds of
sale involving the subject lots were executed by the NHA in favor of
Alberto, Antonio and Macario. Hence, TCT Nos. T-173557, T-173579, T173578 and T-183166 were issued to Macario, Alberto and Antonio,
respectively.
14

Id., at 27.

15

Id., at 27-28.

16

Id., at 28.

17

Id., at 5.

18

Id., at 6; see Annex "F."

19

Id., at 71-72.

20

Brillantes v. Castro, 99 Phil. 497, 503 (1956).

21

G.R. No. L-14791, September 30, 1963, 9 SCRA 75.

22

Administrative Code of 1987, Executive Order No. 292, Bk. VIII, ch. 1,
2(9).
23

Midland Insurance Corp. v. IAC, G.R. No. L-71905, August 13, 1986,
143 SCRA 458, 462.
24

1987 Phil. Const., art. VIII, 1 as explained in United Residents of

Dominical Hills, Inc. v. Commission on Settlement of Land
Problems, G.R. No. 135945, March 7, 2001, 353 SCRA 783, 797-798.
25

26

1987 Phil. Const., art. VIII, 1 2.

An Act Reorganizing the Judiciary, Appropriating Funds Therefor and

for Other Purposes, Batas Pambansa Blg. 129, promulgated August 14,
1981.

27

Id. 9 (3).

28

Records, vol.1, at 80.

29

Buaya v. Stronghold Insurance, Corp., 396 Phil. 739 (2000).

30

Ayala Corp. v. Rosa-Diana Realty and Dev't. Corp., 400 Phil. 511
(2000).
31

Rollo, at 17.

32

Id.

33

Civil Code, art. 774 (emphasis supplied).

34

Rollo, at 70.

35

Id., at 39-43.

36

Id., at 24; C.A. G.R. No. 68370 citing Agreement No. 3787, dated July
28, 1959.
37

Araneta v. Montelibano, 14 Phil. 117 (1909).

38

Civil Code, arts. 1544 (which prohibit double sales) and 1165 (which
established the obligation of the seller to the buyer respecting a thing
which is determinate in nature).
39

Because the estate acquires juridical personality to continue the

transmissible obligations and rights of the decedent.
40

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

41

Rollo, at 34.