ESTATE OF HEMADY v. LUZON SURETY The contracts of suretyship in favor of Luzon Surety Co.

not being rendered

intransmissible due to the nature of the undertaking, nor by stipulations of
Luzon Surety filed a claim against the estate of K.H. Hemady based on
the contracts themselves, nor by provision of law, his eventual liability
indemnity agreements (counterbonds) subscribed by distinct principals and
therefrom necessarily passed upon his death to his heirs. The contracts,
by the deceased K.H. Hemady as surety (solidary guarantor). As a contingent
therefore, give rise to contingent claims provable against his estate. A
claim, Luzon Surety prayed for the allowance of the value of the indemnity
contingent liability of a deceased person is part and parcel of the mass of
agreements it had executed. The lower court dismissed the claim of Luzon
obligations that must be paid if and when the contingent liability is converted
Surety on the ground that “whatever losses may occur after Hemady’s death,
into a real liability. Therefore, the settlement or final liquidation of the estate
are not chargeable to his estate, because upon his death he ceased to be a
must be deferred until such time as the bonded indebtedness is paid.
guarantor.”
Laura Alvarez v. Intermediate Appellate Court, Jesus Yanes, et
ISSUES: What obligations are transmissible upon the death of the decedent?
al.(grandchildren of the deadz sila) G.R. No. L-68053; May 7, 1990
Are contingent claims chargeable against the estate?
FACTS: Aniceto Yanes owned 2 parcels of land Lot 773-A and Lot 773-B.
HELD: Under the present Civil Code (Article 1311), the rule is that “Contracts
take effect only as between the parties, their assigns and heirs, except in case Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora.
where the rights and obligations arising from the contract are not Herein private respondents, Estelita, Iluminado and Jesus, are the children of
transmissible by their nature, or by stipulation or by provision of law.” While Rufino who died in 1962 while the other private respondents, Antonio and
in our successional system the responsibility of the heirs for the debts of their Rosario Yanes, are children of Felipe. Teodora was survived by her child,
decedent cannot exceed the value of the inheritance they receive from him, Jovita (Jovito) Albib.
the principle remains intact that these heirs succeed not only to the rights of
It is established that Rufino and his children left the province to settle in other
the deceased but also to his obligations. Articles 774 and 776 of the New Civil
places as a result of the outbreak of World War II. According to Estelita, from
Code expressly so provide, thereby confirming Article 1311.
the “Japanese time up to peace time”, they did not visit the parcels of land in
In Mojica v. Fernandez, the Supreme Court ruled — “Under the Civil Code the question but “after liberation”, when her brother went there to get their
heirs, by virtue of the rights of succession are subrogated to all the rights and share of the sugar produced therein, he was informed that Fortunato
obligations of the deceased (Article 661) and can not be regarded as third Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot
parties with respect to a contract to which the deceased was a party, touching 773.
the estate of the deceased x x x which comes in to their hands by right of
After Fuentebella’s death, Arsenia Vda. de Fuentebella sold said lots for
inheritance; they take such property subject to all the obligations resting
P6,000.00 to Rosendo Alvarez. On May 26, 1960, Teodora Yanes and the
thereon in the hands of him from whom they derive their rights.” The third
children of her brother Rufino filed a complaint against Fortunato Santiago,
exception to the transmissibility of obligations under Article 1311 exists when
Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros
they are ‘not transmissible by operation of law.’ The provision makes
Occidental for the “return” of the ownership and possession of Lots 773 and
reference to those cases where the law expresses that the rights or
823.
obligations are extinguished by death, as is the case in legal support,
parental authority, usufruct, contracts for a piece of work, partnership and During the pendency of said case, Alvarez sold the Lots for P25,000.00 to Dr.
agency. By contrast, the articles of the Civil Code that regulate guaranty or Rodolfo Siason. CFI rendered judgment ordering defendant Rosendo Alvarez
suretyship contain no provision that the guaranty is extinguished upon the to reconvey to plaintiffs the lots.
death of the guarantor or the surety.
ISSUE: W/N the liability of Rosendo Alvarez arising from the sale of Lots Nos.
773-A and 773-B could be legally passed or transmitted by operation of law to
the petitioners without violation of law and due process.
RULING: The doctrine obtaining in this jurisdiction is on the general
transmissibility of the rights and obligations of the deceased to his legitimate
children and heirs.
The binding effect of contracts upon the heirs of the deceased party is not
altered by the provision of our Rules of Court that money debts of a deceased
must be liquidated and paid from his estate before the residue is distributed
among said heirs (Rule 89). The reason is that whatever payment is thus made
from the estate 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.
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, in consideration of its performance by a specific
person and by no other. . . .”
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.
Union Bank v. Santibanez, 452 SCRA 228 | Abu
FACTS: On May 31, 1980, the First Countryside Credit Corporation (FCCC) and
Efraim Santibañez entered into a loan agreement in the amount of
P128,000.00.
The amount was intended for the payment of one (1) unit Ford 6600
Agricultural 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.
On Dec. 1980, FCCC and Efraim entered into another loan agreement for the
payment of another unit of Ford 6600 and one unit of a Rotamotor. Again,
Efraim and Edmund executed a promissory note and a Continuing Guaranty
Agreement for the later loan. In 1981, Efraim died, leaving a holographic will.
Testate proceedings commenced before the RTC of Iloilo City. Edmund was
appointed as the special administrator of the estate. During the pendency of
the testate proceedings, the surviving heirs, Edmund and his sister Florence,
executed a Joint Agreement, wherein they agreed to divide between
themselves and take possession of the three (3) tractors: (2) tractors for
Edmund and (1) for Florence. Each of them was to assume the indebtedness
of their late father to FCCC, corresponding to the tractor respectively taken
by them. In the meantime, a Deed of Assignment with Assumption of
Liabilities was executed by and between FCCC and Union Bank, wherein the
FCCC assigned all its assets and liabilities to Union Bank.
Demand letters were sent by Union Bank to Edmund, but the latter refused
to pay. Thus, on February 5, 1988, Union Bank filed a Complaint for sum of
money against the heirs of Efraim Santibañez, Edmund and Florence, before
the RTC of Makati City. 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. Florence filed her Answer 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 Union Bank
under the joint agreement.
Union Bank asserts that the obligation of the deceased had passed to his
legitimate heirs (Edmund and Florence) as provided in Article 774 of the Civil
Code; and that the unconditional signing of the joint agreement estopped
Florence, and that she cannot deny her liability under the said document.
In her comment to the petition, Florence maintains that Union Bank is trying
to recover a sum of money from the deceased Efraim Santibañez; 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. 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.
ISSUE: W/N the claim of Union Bank should have been filed with the probate
court before which the testate estate of the late Efraim Santibañez was
pending. W/N the agreement between Edmund and Florence (which was in
effect, a partition of hte estate) was void considering that it had not been
approved by the probate court. W/N there can be a valid partition among the
heirs before the will is probated.
HELD: 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. The said court is primarily concerned with the administration,
liquidation and distribution of the estate.
In our jurisdiction, the rule is that there can be no valid partition among the
heirs until after the will has been probated. In the present case, Efraim left a
holographic will which contained 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.
The above-quoted is an all-encompassing provision embracing all the
properties left by the decedent which might have escaped his mind at that
time he was making his will, and other properties he may acquire thereafter.
Included therein are the three (3) subject tractors. This being so, any partition
involving the said tractors among the heirs is not valid. The joint agreement
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 father’s
holographic will covering the said tractors.
The Court notes that the loan was contracted by the decedent. The bank,
purportedly a creditor of the late Efraim Santibañez, should have thus filed
its money claim with the probate court in accordance with Section 5, Rule 86
of the Revised Rules of Court.
The filing of a money claim against the decedent’s estate in the probate court
is mandatory. 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.
Perusing the records of the case, nothing therein could hold Florence
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
Santibañez 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.
21. SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS,
SPS.VICTORINO F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F.
SANTOS, and TADEO F. SANTOS, Petitioners, vs. SPS. JOSE LUMBAO
and PROSERFINA LUMBAO, Respondents.
[G.R. No. 169129 March 28, 2007 CHICO-NAZARIO, J.:]
TOPIC: II. General Provisions
DOCTRINE: Whatever rights and obligations the decedent have over the
property were transmitted to the heirs by way of succession, a mode of
acquiring the property, rights and obligations of the decedent to the extent of
the value of the inheritance of the heirs.
FACTS:
1. Petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed
Santos, are the legitimate and surviving heirs of the late Rita Catoc
Santos (Rita), who died on 20 October 1985. Petitioners Esperanza
Lati and Lagrimas Santos are the daughters-in-law of Rita.
2. Respondents Spouses Jose Lumbao and Proserfina Lumbao are the
alleged owners of the 107-square meter lot (subject property), which
they purportedly bought from Rita during her lifetime.
3. Rita sold to respondents Spouses Lumbao the subject property
which is a part of her share in the estate of her deceased mother,
Maria Catoc (Maria), who died intestate.
a. It was evidence by documents entitled, “Bilihan ng Lupa”
4. Respondents Lumbao later on took actual possession thereof and
built a house which they have been occupying as exclusive owners up
to the present.
 5. Lumbaos made several demands from Rita and the heirs for them to
execute the necessary documents to effect the issuance of a separate
title in their favor.
a. Lumbaos alleged that prior to her death, Rita informed
respondent Proserfina Lumbao she could not deliver the title
to the subject property because the entire property inherited
by her and her co-heirs from Maria had not yet been
partitioned
6. Lumbaos alleged that the petitioners acted fraudulently and are
conspiring with another by executing a Deed of Extrajudicial
Settlement portioning among themselves the properties of Maria,
including the subject property.
7. Lumbaos then sent a formal demand to petitioners but the latter
refused to reconvey the subject property. So the Lumbaos filed a
Complaint for Reconveyance before RTC of Pasig City.
8. Petitioners denied the alleged sale to Lumbaos and that the
Extrajudicial Settlement was duly published as required by law.
9. Lumbaos then amended their complaint, discovering that the
petitioners executed a Deed of Real Estate Mortgage in favour of
Julieta S. Esplana for P30,000.
10. The RTC ruled in favor of the petitioners and ordered the Lumbaos to
pay them P30,000 for expenses incurred.
11. The CA ruled in favor of the respondent spouses Lumbao.
12. Hence the petition:
a. Petitioners contend that they are not bound by the “Bilihan ng
Lupa” because it is null and void for being falsified because of
the following:
i. one of those documents made it appear that
petitioners Virgilio and Tadeo were witnesses to its
execution and that they appeared personally before
the notary public, when in truth and in fact they did
not.
ii. Identity of the properties were not established by the
evidence presented
iii. Respondents are estopped by laches from claimining
iv. Claim on the properties had already prescribed.
ISSUE: Are the petitioner heirs bound to the “Bilihan ng Lupa” executed by
the Rita, their mother, in favor of the respondent spouses Lumbao?
HELD: Yes. Petition denied.
1. General Rule: heirs are bound by contracts entered into by their
predecessors-in-interest
2. whatever rights and obligations the decedent have over the property
were transmitted to the heirs by way of succession, a mode of
acquiring the property, rights and obligations of the decedent to the
extent of the value of the inheritance of the heirs
3. In the present case the heirs cannot escape the obligation of the
deceased since they only inherited the property.
4. Being heirs, there is privity of interest between them and their
deceased mother. They only succeed to what rights their mother
had and what is valid and binding against her is also valid and
binding as against them.
5. Death of a party does not excuse non-performance of a contract
which involves a property right and the rights and obligations
thereunder pass to the personal representatives of the deceased.
6. Heirs must reconvey to the respondent Lumbaos the 107sq. m. lot.
OTHER ISSUE: the documents “Bilihan ng Lupa” is presumed valid being
notarized, a public instrument, unless the contrary has been proved. In the
case, petitioners failed to prove the falsity of the documents.
Borja v. Borja, 46 SCRA 577 | Ang
FACTS: Francisco de Borja filed a petition for probate of the will of his wife
who died, Josefa Tangco, with the CFI of Rizal.
He was appointed executor and administrator, until he died; his son Jose
became the sole administrator. Francisco had taken a 2nd wife Tasiana before
he died; she instituted testate proceedings with the CFI of Nueva Ecija upon
his death and was appointed special administatrix.
Jose and Tasiana entered upon a compromise agreement, but Tasiana
opposed the approval of the compromise agreement.
She argues that it was no valid, because the heirs cannot enter into such kind
of agreement without first probating the will of Francisco, and at the time the
agreement was made, the will was still being probated with the CFI of Nueva
Ecija.
ISSUE: W/N the compromise agreement is valid, even if the will of Francisco
has not yet been probated.
HELD: YES, the compromise agreement is valid.
The agreement stipulated that Tasiana will receive P800,000 as full payment
for her hereditary share in the estate of Francisco and Josefa.
There was here no attempt to settle or distribute the estate of Francisco
de Borja among the heirs thereto before the probate of his will. The clear
object of the contract was merely the conveyance by Tasiana Ongsingco of
any and all her individual share and interest, actual or eventual, in the estate
of Francisco de Borja and Josefa Tangco. There is no stipulation as to any
other claimant, creditor or legatee.
And as a hereditary share in a decedent’s estate is transmitted or vested
immediately from the moment of the death of such causante or predecessor
in interest (Civil Code of the Philippines, Art. 777)there is no legal bar to a
successor (with requisite contracting capacity) disposing of her or his
hereditary share immediately after such death, even if the actual extent of
such share is not determined until the subsequent liquidation of the estate.
Bonilla v. Barcena, 71 SCRA 491 | Angliongto
FACTS: 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 CFI of Abra, to quiet title over certain parcels of land located in
Abra.
The defendants filed a motion to dismiss the complaint on the ground that
Fortunata Barcena is dead and, therefore, has no legal capacity to sue. In the
hearing for the motion to dismiss, counsel for the plaintiff confirmed the
death of Fortunata Barcena, and asked for substitution by her minor children
and her husband; 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.
ISSUE: W/N the CFI erred in dismissing the complaint.
HELD: 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.
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. 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 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.
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 well as accrued property, and transmissible rights and obligations at the time
complaint. of death of the decedent. Thus, since Rufo lost ownership over the subject
property during his lifetime, the same no longer forms part of his estate to
This should not have been done for under Section 17, Rule 3 of the Rules of
which his heirs may lay claim at the time of his death. Consequently, his
Court, it is even the duty of the court, if the legal representative fails to
children never inherited the property. The Court further ruled that petitioner
appear, to order the opposing party to procure the appointment of a legal
and respondents are not co-owners of the subject property and there is no
representative of the deceased.
property to partition, as the disputed lot never formed part of the estate of
Unquestionably, the respondent Court has gravely abused its discretion in not their deceased father.
complying with the clear provision of the Rules of Court in dismissing the
Uson v. Del Rosario, 92:530| Andres
complaint of the plaintiff in Civil Case No. 856 and refusing the substitution
of parties in the case. FACTS: This is an action for recovery of the ownership and possession of five
(5) parcels of land in Pangasinan, filed by Maria Uson against Maria del
Balus v. Balus
Rosario and her four illegit children.
G.R. No. 168970, January 15, 2010
Maria Uson was the lawful wife of Faustino Nebreda who upon his death in
Petitioner Celestino and respondents Saturnino and Leonarda are the 1945 left the lands involved in this litigation. Faustino Nebreda left no other
children of the spouses Rufo and Sebastiana Balus. Sebastiana died on 6 heir except his widow Maria Uson. However, plaintiff claims that when
September 1978. In 1979, Rufo mortgaged a parcel of land as security for a Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took
loan obtained from a bank. When Rufo failed to pay the loan, the property possession illegally of said lands thus depriving her of their possession and
was foreclosed and was subsequently sold to the Bank as the sole bidder at a enjoyment.
public auction held for that purpose. The same was not redeemed within the
Defendants in their answer set up as special defense that Uson and her
period allowed by law. Hence, a new title was issued in the name of the Bank.
husband, executed a public document whereby they agreed to separate as
Rufo died on 6 July 1984. On 10 October, 1989, petitioner and respondents
husband and wife and, in consideration of which Uson was given a parcel of
executed an Extrajudicial Settlement of Estate adjudicating to each of the a
land and in return she renounced her right to inherit any other property that
specific one-third portion of the subject property. Three years thereafter,
may be left by her husband upon his death. CFI found for Uson. Defendants
respondents bought the subject property from the Bank and a new title was
appealed.
issued in their name. Meanwhile, petitioner continued possession of the
subject lot. The respondents thus filed a complaint for recovery of possession. ISSUE:
However, petitioner alleged that respondents’ act of buying back the
1. W/N Uson has a right over the lands from the moment of death of her
property without notifying him inures to his benefit as co-owner and that he
husband.
is entitled to a one-third share of the property.
2. W/N the illegit children of deceased and his common-law wife have
ISSUE: Whether or not the subject property forms part of the estate of
successional rights.
petitioner and respondents’ father
HELD:
No. The court ruled that the subject property does not form part of the estate
of Rufo considering that ownership over the same was transferred to the
bank prior to the death of Rufo. Inheritance consists of existing property, as
1. Yes. There is no dispute that Maria Uson, is the lawful wife of Faustino
Nebreda, former owner of the five parcels of lands litigated in the present
case.
There is likewise no dispute that Maria del Rosario, was merely a common-
law wife with whom she had four illegitimate children with the deceased. It
likewise appears that Faustino Nebreda died in 1945 much prior to the
effectivity of the new Civil Code. With this background, it is evident that when
Faustino Nebreda died in 1945 the five parcels of land he was seized of at the
time passed from the moment of his death to his only heir, his widow Maria
Uson (Art 777 NCC).
As this Court aptly said, “The property belongs to the heirs at the moment of
the death of the ancestor as completely as if the ancestor had executed and
delivered to them a deed for the same before his death”. From that moment,
therefore, the rights of inheritance of Maria Uson over the lands in question
became vested.
The claim of the defendants that Maria Uson had relinquished her right over
the lands in question because she expressly renounced to inherit any future
property that her husband may acquire and leave upon his death in the deed
of separation, cannot be entertained for the simple reason that future
inheritance cannot be the subject of a contract nor can it be renounced.
2. No. The provisions of the NCC shall be given retroactive effect even though
the event which gave rise to them may have occurred under the prior
legislation only if no vested rights are impaired.
Hence, since the right of ownership of Maria Uson over the lands in question
became vested in 1945 upon the death of her late husband, the new right
recognized by the new Civil Code in favor of the illegitimate children of the
deceased cannot, therefore, be asserted to the impairment of the vested
right of Maria Uson over the lands in dispute.
GO ONG VS. CA
G.R. No. 75884
September 24, 1987
FACTS: 2 parcels of land under 1 TCT are owned by alfredo and when he died,
his wife julita go ong was appointed administratrix of his estate. Julita
thereafter mortgaged 1 lot to Allied Banking Corp. to secure a loan obtained
by JK Exports, annotated as a lien on the original TCT, with the following
notation: “mortgagee’s consent necessary in case of subsequent alienation
or encumbrance of the property…”
On the loan there was due a sum and Allied tried to collect it from
Julita. Hence, the complaint alleging nullity of the contract for lack of judicial
approval which the bank had allegedly promised to secure from the court. In
response thereto, the bank averred that it was Julita who promised to secure
the court’s approval.
Trial court ruled for Julita, stating that the contract is valid. CA affirmed with
modification the lower court’s decision
ISSUE: WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL
OF LAND UNDER PETITIONER’S ADMINISTRATION IS NULL AND VOID FOR
WANT OF JUDICIAL APPROVAL.
HELD: contract is valid
Petitioner, asserting that the mortgage is void for want of judicial approval,
quoted Section 7 of Rule 89 of the Rules of Court . The CA aptly ruled that
Section 7 of Rule 89 of the Rules of Court is not applicable, since the mortgage
was constituted in her personal capacity and not in her capacity as
administratrix of the estate of her husband. Sec. 7, Art. 89 of the Civil Code
applies in a case where judicial approval has to be sought in connection with,
for instance, the sale or mortgage of property under administration for the
payment, say of a conjugal debt, and even here, the conjugal and hereditary
shares of the wife are excluded from the requisite judicial approval for the
reason already adverted to hereinabove, provided of course no prejudice is
caused others, including the government.
Consequently, in the case at bar, the trial court and the CA cannot be faulted
in ruling that the questioned mortgage constituted on the property under
administration, by authority of the petitioner, is valid, notwithstanding the
lack of judicial approval, with respect to her conjugal share and to her
hereditary rights.
Petitioner cited cases arguing that in the settlement proceedings of the estate
of the deceased spouse, the entire conjugal partnership property of the
marriage is under administration. While such may be in a sense true, that fact
alone is not sufficient to invalidate the whole mortgage, willingly and
voluntarily entered into by the petitioner.. Under similar circumstances, this
Court applied the provisions of Article 493 of the Civil Code, where the heirs
as co-owners shall each have the full ownership of his part and the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even effect of the alienation or mortgage, with respect to
the co-owners, shall be limited to the portion which may be allotted to him
in the division upon the termination of the co-ownership
The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court
cannot adversely affect the substantive rights of private respondent to
dispose of her Ideal [not inchoate, for the conjugal partnership ended with
her husband’s death, and her hereditary rights accrued from the moment of
the death of the decedent (Art. 777, Civil Code) share in the co-heirship
and/or co-ownership formed between her and the other heirs/co-owners
(See Art. 493, Civil Code, supra.).
HEIRS OF REGANON vs. RUFINO IMPERIAL
FACTS: The Heirs of Pedro Reganon filed a complaint for recovery of ownership and
possession of about 1 hectare portion of a parcel of land in Zamboanga Del Norte against Rufino
Imperial. Trial court rendered a decision declaring the heirs of Reganon as lawful owners of the
land and entitled to its peaceful possession, ordering Imperial to immediately vacate the portion
occupied by him. The court sentenced him to pay. A writ of execution was granted & the deputy
provincial sheriff submitted a sheriff’s return reporting the garnishment of a carabao and goat of
Imperial for P153.00 and attachment & sale of defendant’s land for P500.00. (In short, ang
properties ni Imperial were not enough to satisfy the judgment). However, on March 13, 1964,
PNB deposited with PNB-Dipolog Branch the residuary estate of its former ward, EULOGIO
IMPERIAL (predecessor of defendant) in the amount of P10,303.80. The heirs of Eulogio
Imperial (including the defendant) executed a Deed of Extrajudicial Partition of the Residuary
Estate wherein defendant was apportioned with P1,471.97. When petitioners learned about this
development, they filed an ex parte motion for issuance of an alias writ of execution and of an
order directing the manager of PNB Dipolog to hold the share of defendant and deliver the same
to the provincial sheriff to be applied to the satisfaction of the balance of the money judgment.
RTC granted the motion and the deputy provincial sheriff notified the defendant of the
garnishment of the rights, interests, shares and participation that defendant may have over the
residuary estate of the late Eulogio Imperial consisting of the money deposited in PNB Dipolog.
Defendants argue that the property of an incompetent under guardianship is in custodia legis
and therefore cannot be attached.
ISSUE: Was there transmission of rights from the death the ward, Eulogio Imperial in favor of
his heirs?
YES. When Eulogio Imperial died on Sept. 13, 1962, the rights to his succession from the
moment of his death were transmitted to his heirs and one of whom is his son Rufino. For, the
rights to the succession of a person are transmitted from the moment of death, and where, as
in this case, the heir is of legal age and the estate is not burdened with any debts, said heir
immediately succeeds, by force of law, to the dominion, ownership, and possession of the
properties of his predecessor and consequently stands legally in the shoes of the latter. That
the INTEREST OF AN HEIR IN THE ESTATE of a deceased person MAY BE ATTACHED for
purposes of execution, even if the estate is in the process of settlement before courts, is
already a settled matter in this jurisdiction. The heirs of Eulogio Imperial, including defendant,
executed a Deed of Extrajudicial Partition which suffices to settle the entire estate of the
deceased. Therefore, the estate for all practical purposes have been settled. The heirs are at
full liberty to withdraw the residuary estate from the bank and divide it among themselves. The
residuary estate of Eulogio Imperial is NOT EXEMPT from execution.
Blas vs Santos
Facts: Sometime before 1898, Simeon Blas married Marta Cruz with
whom he had three children. He also had grandchildren from his children
with Marta Cruz. In 1898, Marta Cruz died. In 1899, Blas married Maxima
Santos (they had no children) but the properties he and his former wife
acquired during the first marriage were not liquidated.
In 1936, Simeon Blas executed a will disposing half of his properties in
favor of Maxima the other half for payment of debts, Blas also named a
few devisees and legatees therein. In lieu of this, Maxima executed a
document whereby she intimated that she understands the will of her
husband; that she promises that she’ll be giving, upon her death, one-half
of the properties she’ll be acquiring to the heirs and legatees named in
the will of his husband; that she can select or choose any of them
depending upon the respect, service, and treatment accorded to her by
said legatees/heirs/devisees.
In 1937, Simeon Blas died. In 1956, Maxima died and Rosalina Santos
became administratrix of her estate. In the same year, Maria Gervacio
Blas, child of Simeon Blas in his first marriage, together with three other
grandchildren of Simeon Blas (heirs of Simeon Blas), learned that
Maxima did not fulfill her promise as it was learned that Maxima only
disposed not even one-tenth of the properties she acquired from Simeon
Blas.
The heirs are now contending that they did not partition Simeon Blas’
property precisely because Maxima promised that they’ll be receiving
properties upon her death.
ISSUE: Whether or not the heirs should receive properties based on the
promise of Maxima.
HELD: Yes. The promise is valid and enforceable upon her death. Though
it is not a will (it lacks the formality) nor a donation, it is still enforceable
because said promise was actually executed to avoid litigation (partition
of Simeon Blas’ estate) hence it is a compromise.
It is not disputed that this document was prepared at the instance of
Simeon Blas for the reason that the conjugal properties of his first
marriage had not been liquidated. It is an obligation or promise made by
the maker to transmit one-half of her share in the conjugal properties
acquired with her husband, which properties are stated or declared to be
conjugal properties in the will of the husband.
Nufable vs. Nufable
Facts: Edras Nufable owned an untitled parcel of land located at Poblacion,
Manjuyod, Negros Oriental, consisting of 948 square meters, more or less. He
died on August 9, 1965 and was survived by his children, namely: Angel
Custodio, Generosa, Vilfor and Marcelo, all surnamed Nufable. Upon petition
for probate filed by said heirs and after due publication and hearing, the then
Court of First Instance of Negros Oriental (Branch II) issued an Order dated
March 30, 1966 admitting to probate the last will and testament executed by
the deceased Edras Nufable. However, one of the heirs, Angel actually
mortgaged the entire property to DBP two months prior to the settlement
which property was eventually foreclosed. Thereafter, Nelson, son of the
mortgagors, purchased said property from DBP. The other heirs now filed for
the annulment of sale in favor of Nelson. The Court of Appeals rendered the
assailed decision granting one-fourth of the property to Nelson and the other
three-fourths to the other heirs. Petitioners filed this present petition
contending that the probate of the Last Will and Testament of Edras Nufable
did not determine the ownership of the land in question as against third
parties.
Issue: Whether or not the Last Will and Testament of Esdras Nufable and its
subsequent probate are pertinent and material to the question of the right of
ownership of petitioner Nelson Nufable who purchased the land in question
from, and as acquired property of, the Development Bank of the Philippines.
Ruling: No, the Last Will and Testament of Edras and its subsequent probate
do not affect the title of Nelson. At the time when the entire property was
mortgaged, the other heirs of Edras had already acquired successional rights
over the said property. This is so because the rights to the succession are
transmitted from the moment of death of the decedent. Accordingly, for the
purpose of transmission of rights, it does not matter whether the Last Will and
Testament of the late Esdras Nufable was admitted or that the Settlement of
Estate was approved. It is to be noted that the probated will of the late Esdras
Nufable specifically referred to the subject property in stating that "the land
situated in the Poblacion, Manjuyod, Negros Oriental, should not be divided
because this must remain in common for them, but it is necessary to allow
anyone of them brothers and sisters to construct a house therein." It was
therefor the will of the decedent that the subject property should undivided,
although the restriction should not exceed twenty (20) years pursuant to
Article 870 of the Civil Code. Thus, when Angel Nufable and his spouses
mortgaged the subject property to DBP on March 15, 1966, they had no right
to mortgage the entire property. Angel's right over the subject property was
limited only to 1/4 pro indivisoshare. As co-owner of the subject property,
Angel's right to sell, assign or mortgage is limited to that portion that may be
allotted to him upon termination of the co-ownership. Well-entrenched is the
rule that a co-owner can only alienate his pro indiviso share in the co-owned
property. Hence, The Court of Appeals did not err in ruling that Angel Custodio
Nufable "had no right to mortgage the subject property in its entirety. His right
to encumber said property was limited only to 1/4 pro indiviso share of the
property in question."
Austria v. Reyes
31 SCRA 754
FACTS: Basilia Austria vda. de Cruz filed with the CFI of Rizal a
petition for probate, ante mortem, of her last will and testament.
The probate was opposed by the present petitioners, who are
nephews and nieces of Basilia. The will was subsequently allowed
with the bulk of her estate designated for respondents, all of
whom were Basilia’s legally adopted children. The petitioners,
claiming to be the nearest of kin of Basilia, assert that the
respondents had not in fact been adopted by the decedent
in accordance with law, thereby making them mere strangers to
the decedent and without any right to succeed as heirs.
Petitioners argue that this circumstance should have left the
whole estate of Basilia open to intestacy with petitioners being the
compulsory heirs.
It is alleged by petitioners that the language used imply that
Basilia was deceived into believing that she was legally bound to
bequeath one-half of her entire estate to the respondents as the
latter’s legitime, with the inference that respondents would not
have instituted the respondents as heirs had the fact of spurious
adoption been known to her. The petitioners inferred that from
the use of the terms, “sapilitang tagapagmana” (compulsory
heirs) and “sapilitang mana” (legitime), the impelling reason or
cause for the institution of the respondents was the testatrix’s
belief that under the law she could not do otherwise.
Thus Article 850 of the Civil Code applies whereby, “the
statement of a false cause for the institution of an heir shall be
considered as not written, unless it appears from the will that the
testator would not have made such institution if he had known
the falsity of such cause.”
ISSUE: W/N the lower court committed grave abuse of
discretion in barring the petitioners nephews and niece
from registering their claim even to properties adjudicated by the
decedent in her will.
HELD: No. Before the institution of heirs may be annulled
under article 850 of the CivilCode, the following requisites must
concur: First, the cause for the institution of heirs must be stated
in the will; second, the cause must be shown to be false; and third,
it must appear from the face of the will that the testator would not
have made such institution if he had known the falsity of the
cause. The decedent’s will does not state in a specific or
unequivocal manner the cause for such institution of heirs.
Absent such we look at other considerations. The decedent’s
disposition of the free portion of her estate, which largely favored
the respondents, compared with the relatively small devise of
land which the decedent left for her blood relatives, shows a
perceptible inclination on her part to give the respondents more
than what she thought the law enjoined her to give to them.
Excluding the respondents from the inheritance, considering that
petitioner nephews and nieces would succeed to the bulk of the
testate by virtue of intestacy, would subvert the clear wishes of
the decedent. Testacy is favored and doubts are resolved on its
side, especially where the will evinces an intention on the part of
the testator to dispose of practically his whole estate, as was done
in this case. Intestacy should be avoided and the wishes of the
testator should be allowed to prevail. Granted that a probate
court has found, by final judgment, that the decedent possessed
testamentary capacity and her last will was executed free from
falsification, fraud, trickery or undue influence, it follows that
giving full expression to her will must be in order.
BALANAY vs. MARTINEZ
FACTS: Leodegaria Julian died and was survived by Felix Balanay Sr. and their 6 children.
Felix Balanay Jr, one of the 6 children, filed a petition for the probate of their mother’s notarial
will. Their mother’s will declared that:
a. She owned the “southern half” of the conjugal lots.
b. Her paraphernal lands and all the conjugal lands be divided and distributed in
the manner set forth in the will.
Avelina Antonio and Felix Balanay Sr. opposed Balanay Jr’s petition, but an affidavit was filed
where Felix Balanay Sr. withdrew his opposition and renounced his hereditary rights over the
estate of his wife. Avelina contended that the affidavit of renunciation was void. A new lawyer,
Atty. Montana, appeared in behalf of Felix Balanay Jr, withdrawing the petition for probate of
will and requesting for an intestate proceeding instead. Such was granted by the probate court.
Felix Balanay Jr. with a new lawyer filed a motion for reconsideration on the ground that Atty.
Montana had no authority to withdraw the petition. The probate court denied the motion and the
will was declared void because of the disposition where the mother declared that she owned
the “southern half” of the properties. The disposition was declared illegal because she cannot
declare ownership over the undivided conjugal properties, as her right as a co-owner was
inchoate and pro-indiviso. The court then ordered for intestate proceedings to commence
instead of testate.
ISSUE: WON mixed succession may occur in this case? YES
HELD: For mixed succession to occur, the invalid disposition must be separable from the valid
dispositions. The invalid disposition must not be a condition to the valid disposition. The probate
court acted correctly in passing upon the intrinsic validity of the will before establishing its formal
validity. Where practical considerations demand that the intrinsic validity of the will be passed
upon, even before it is probated, the court should meet the issues. But the probate court erred
in declaring that the will was void and in converting the testate proceeding into an intestate
proceeding.The rule is that the invalidity of one of several dispositions contained in a will does
not result in the invalidity of the other disposition, unless it is presumed that the testator would
not have made such other dispositions if the first invalid disposition had not been made. Hence,
if there are certain dispositions in a will that are not valid, it will not render the whole will invalid.
The will remains valid, and the valid dispositions should be followed. The rule is testacy is
favored over intestacy. The policy of the State is to give effect to the wishes of the testator as
much as possible. The illegal disposition of Leodegaria declaring that she owned the “southern
half” of the properties can be rendered invalid, but the entire will is not nullified. Where some of
the provisions of a will are valid and others invalid, the valid parts will be upheld if they can be
separated from the invalid without defeating the intention of the testator or interfering with the
general testamentary scheme, or doing injustice to the beneficiaries. The statement of the
testatrix that she owned the "southern half of the conjugal lands is contrary to law because,
although she was a co-owner thereof, her share was inchoate and pro-indiviso. But That illegal
declaration does not nullify the entire will. It may be disregarded. Hence, testacy should be
favored over intestacy. The valid dispositions of Leodegaria in her will should be followed, while
the invalid ones shall be effected by operation of law. (mixed succession)
Fernandez/Reyes vs Dimagiba
G.R. Nos. L-23638 and L-23662 October 12, 1967
Facts: On October 22, 1930, Ismaela Dimagiba submitted a petition for the
probate of the purported will of the late Benedicta de los Reyes. The will
instituted the petitioner as the sole heir of the estate of the deceased. The
petition was set for hearing, and in due time, Dionisio Fernandez, Eusebio
Reyes and Luisa Reyes and one month later, Mariano, Cesar, Leonor and
Paciencia, all surnamed Reyes, all claiming to be heirs intestate of the
decedent, filed oppositions to the probate asked. Grounds advanced for the
opposition were forgery, vices of consent of the testatrix, estoppel by laches
of the proponent and revocation of the will by two deeds of conveyance of
the major portion of the estate made by the testatrix in favor of the proponent
in 1943 and 1944. After trial, it was found that the will was genuine and
properly executed. Oppositors Fernandez and Reyes petitioned for
reconsideration, and/or new trial, insisting that the issues of estoppel and
revocation be considered and resolved which was latter overruled.
On February 27, 1962, after receiving further evidence on the issue whether
the execution by the testatrix of deeds of sale of the larger portion of her estate
in favor of the testamentary heir, made in 1943 and 1944, subsequent to the
execution of her 1930 testament, had revoked the latter under Article 957(2)
of the 1950 Civil Code (Art. 869 of the Civil Code of 1889), the trial Court
resolved against the oppositors and held the will of the late Benedicta de los
Reyes "unaffected and unrevoked by the deeds of sale." Whereupon, the
oppositors elevated the case to the Court of Appeals.
Issue: Whether or not the 1930 will of Benedicta de los Reyes had been
impliedly revoked by her execution of deeds of conveyance in favor of the
proponent on March 26, 1943 and April 3, 1944.
Held: No, the alleged revocation implied from the execution of the deeds of
conveyance in favor of the testamentary heir is plainly irrelevant to and
separate from the question of whether the testament was duly executed. For
one, if the will is not entitled to probate, or its probate is denied, all questions
of revocation become superfluous in law, there is no such will and hence
there would be nothing to revoke. Then, again, the revocation invoked by the
oppositors-appellants is not an express one, but merely implied from
subsequent acts of the testatrix allegedly evidencing an abandonment of the
original intention to bequeath or devise the properties concerned. As such,
the revocation would not affect the will itself, but merely the particular
devise or legacy. Only the total and absolute revocation can preclude probate
of the revoked testament
Nazareno v. CA
Facts: Maximino Nazareno, Sr. and Aurea Poblete were husband and wife.
Aurea died on April 15, 1970, while Maximino, Sr. died on December 18,
1980. They had five children, namely, Natividad, Romeo, Jose, Pacifico, and
Maximino, Jr. Natividad and Maximino, Jr. are petitioners in this case, while
the estate of Maximino, Sr., Romeo, and his wife Eliza Nazareno are the
respondents. After the death of Maximino, Sr., Romeo filed an intestate case
and was appointed administrator of his father's estate. In the course of the
intestate proceedings, Romeo discovered that his parents had executed
several deeds of sale conveying a number of real properties in favor of his
sister, Natividad. One of the deeds involved six lots in Quezon City which
were allegedly sold by Maximino, Sr., with the consent of Aurea, to Natividad
on January 29, 1970. By virtue of these deeds, TCTs were issued to
Natividad for lots 3-B, 3, 10, 11, 13 & 14. Unknown to Romeo, Natividad sold
Lot 3-B, w/c had been occupied by Romeo, his wife, & Maximino, Jr., to
Maximino, Jr. Romeo filed the present case for annulment of sale w/
damages against Natividad & Maximino Jr. on the ground that both sales
were void for lack of consideration. Romeo presented the Deed of Partition &
Distribution executed by Maximino Sr. & Aurea in 1962 & duly signed by all
of their children, except Jose, who was then abroad. However, this deed
was not carried out. In 1969, their parents instead offered to sell to them the
lots. He testified that, although the deeds of sale executed by his parents in
their favor stated that the sale was for a consideration, they never really paid
any amount for the supposed sale. The transfer was made in this manner in
order to avoid the payment of inheritance taxes. Allegedly, it was only
Natividad who bought the lots in question because she was the only one
financially able to do so. The trial court rendered a decision declaring the
nullity of the Deed of Sale dated January 29, 1970, except as to Lots 3, 3-B,
13 and 14 which had passed on to third persons. On appeal to the Court of
Appeals, the decision of the trial court was modified in the sense that titles to
Lot 3 (in the name of Romeo Nazareno) and Lot 3-B (in the name of
Maximino Nazareno, Jr.), as well as to Lots 10 and 11 were cancelled and
ordered restored to the estate of Maximino Nazareno, Sr. Hence, the present
petition.
Issue:
1) Whether the restoration of the titles to the lots in question to the estate of
Maximino Sr. was proper
2) Whether it was the intention of Maximino, Sr. to give the subject lots to
Natividad
Held:
1) Yes. The Nazareno spouses transferred their properties to their children
by fictitious sales in order to avoid the payment of inheritance taxes.
Facts & circumstances indicate badges of a simulated sale w/c make the
Jan 29, 1970 sale void & of no effect. Natividad never acquired
ownership over the property because the Deed of Sale in her favor is
also void for being w/o consideration.
2) Yes. It cannot be denied that Maximino, Sr. intended to give the six
Quezon City lots to Natividad. As Romeo testified, their parents executed
the Deed of Sale in favor of Natividad because the latter was the only
"female and the only unmarried member of the family." She was thus
entrusted with the real properties in behalf of her siblings. As she herself
admitted, she intended to convey Lots 10 and 11 to Jose in the event the
latter returned from abroad. There was thus an implied trust constituted
in her favor. Art. 1449 of the Civil Code states: There is also an implied
trust when a donation is made to a person but it appears that although
the legal estate is transmitted to the donee, he nevertheless is either to
have no beneficial interest or only a part thereof. There being an implied
trust, the lots in question are therefore subject to collation in accordance
with Art. 1061 which states:
Every compulsory heir, who succeeds with other compulsory heirs, must
bring into the mass of the estate any property or right which he may have
received from the decedent, during the lifetime of the latter, by way of
donation, or any other gratuitous title, in order that it may be computed in the
determination of the legitime of each heir, and in the account of the partition.
As held by the trial court, the sale of Lots 13 and 14 to Ros-Alva Marketing,
Corp. will have to be upheld for it is an innocent purchaser for value which
relied on the title of Natividad. (calo)
HEIRS OF POLICRONIO M. URETA vs. HEIRS OF LIBERATO M. URETA
Facts: Alfonso was financially well-off during his lifetime. He has 14
children. He owned several fishpens, a fishpond, a sari-sari store, a
passenger jeep, and was engaged in the buying and selling of copra.
In order to reduce inheritance tax Alfonso made it appear that he sold
some of his lands to his children. Accordingly, Alfonso executed four
(4) Deeds of Sale covering several parcels of land in favor of Policronio,
Liberato, Prudencia, and his common-law wife, Valeriana Dela Cruz.
The Deed of Sale executed on October 25, 1969, in favor of Policronio,
covered six parcels of land, which are the properties in dispute in this
case. Since the sales were only made for taxation purposes and no
monetary consideration was given, Alfonso continued to own, possess
and enjoy the lands and their produce. On April 19, 1989, Alfonso's
heirs executed a Deed of Extra-Judicial Partition, which included all the
lands that were covered by the four (4) deeds of sale that were
previously executed by Alfonso for taxation purposes. Conrado,
Policronio's eldest son, representing the Heirs of Policronio, signed the
Deed of Extra-Judicial Partition in behalf of his co-heirs. After their
father's death, the Heirs of Policronio found tax declarations in his name
covering the six parcels of land. On June 15, 1995, they obtained a
copy of the Deed of Sale executed on October 25, 1969 by Alfonso in
favor of Policronio. Believing that the six parcels of land belonged to
their late father, and as such, excluded from the Deed of Extra-Judicial
Partition, the Heirs of Policronio sought to amicably settle the matter
with the Heirs of Alfonso. Earnest efforts proving futile, the Heirs of
Policronio filed a Complaint for Declaration of Ownership, Recovery of
Possession, Annulment of Documents, Partition, and Damages against
the Heirs of Alfonso before the RTC on November 17, 1995
Issue: Whether or not the Deed of Sale was valid; 2. Whether or not
the Deed of Extra-Judicial Partition was valid
Ruling: The Deed of Sale was void because it is simulated as the
parties did not intend to be legally bound by it. As such, it produced no
legal effects and did not alter the juridical situation of the parties. It is
only made to avoid tax purposes. The CA also noted that Alfonso
continued to exercise all the rights of an owner even after the execution
of the Deed of Sale, as it was undisputed that he remained in
possession of the subject parcels of land and enjoyed their produce
until his death.
Two veritable legal presumptions bear on the validity of the Deed of
Sale: (1) that there was sufficient consideration for the contract; and (2)
that it was the result of a fair and regular private transaction. If shown
to hold, these presumptions infer prima facie the transaction's validity,
except that it must yield to the evidence adduced.
2) It has been held in several cases that partition among heirs is not
legally deemed a conveyance of real property resulting in change of
ownership. It is not a transfer of property from one to the other, but
rather, it is a confirmation or ratification of title or right of property that
an heir is renouncing in favor of another heir who accepts and receives
the inheritance. It is merely a designation and segregation of that part
which belongs to each heir. The Deed of Extra-Judicial Partition cannot,
therefore, be considered as an act of strict dominion. Hence, a special
power of attorney is not necessary.
In fact, as between the parties, even an oral partition by the heirs is
valid if no creditors are affected. The requirement of a written
memorandum under the statute of frauds does not apply to partitions
effected by the heirs where no creditors are involved considering that
such transaction is not a conveyance of property resulting in change of
ownership but merely a designation and segregation of that part which
belongs to each heir.
Natividad vs Natividad
Facts: Sps Leandro and Juliana Natividad alleged that sometime in 1974, Sergio
Natividad (Sergio), husband of respondent Juana Mauricio-Natividad (Juana) and
father of respondent Jean Natividad-Cruz (Jean), obtained a loan from the
Development Bank of the Philippines (DBP). As security for the loan, Sergio mortgaged
two parcels of land, one of which is co-owned and registered in his name and that of
his siblings namely, Leandro, Domingo and Adoracion. This property is covered by
Original Certificate of Title (OCT) No. 5980. Sergio's siblings executed a Special Power of
Attorney authorizing him to mortgage the said property. The other mortgaged parcel of
land, covered by OCT No. 10271, was registered in the name of Sergio and Juana.
Subsequently, Sergio died without being able to pay his obligations with DBP. Since the
loan was nearing its maturity and the mortgaged properties were in danger of being
foreclosed, Leandro paid Sergio's loan obligations. Considering that respondents were
unable to reimburse Leandro for the advances he made in Sergio's favor, respondents
agreed that Sergio's share in the lot which he co-owned with his siblings and the other
parcel of land in the name of Sergio and Juana, shall be assigned in favor of Leandro
and Juliana. Leandro's and Sergio's brother, Domingo, was tasked to facilitate the
transfer of ownership of the subject properties in favor of Leandro and Juliana. However,
Domingo died without being able to cause such transfer. Subsequently, despite
demands and several follow-ups made by petitioners, respondents failed and refused to
honor their undertaking.
Ruling: There is nothing in the said document which would indicate that respondents
agreed to the effect that the subject properties shall be transferred in the name of
Leandro as reimbursement for his payment of Sergio's loan obligations with the DBP. On
the contrary, the second to the last paragraph of the said Settlement clearly shows that
herein respondents, as heirs of Sergio, have divided the subject properties exclusively
among themselves. Neither can respondents evade liability by arguing that they were
not parties to the contract between Sergio and the DBP. As earlier stated, the fact
remains that, in the Extrajudicial Settlement Among Heirs, respondents clearly
acknowledged Sergio's loan obligations with the DBP. Being Sergio's heirs, they succeed
not only to the rights of Sergio but also to his obligations.
The following provisions of the Civil Code are clear on this matter, to wit:
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 will or by operation of law.

Respondents filed their Answer denying the allegations in the complaint and raising that:
(1) respondents are not parties to the contract between Sergio and DBP; (2) there is Art. 776. The inheritance includes all the property, rights and obligations of a person
neither verbal nor written agreement between petitioners and respondents that the which are not extinguished by his death.
latter shall reimburse whatever payment was made by the former or their predecessor-
in-interest; (3) Jean was only a minor during the execution of the alleged agreement
and is not a party thereto; (4) that whatever liability or obligation of respondents is Art. 781. The inheritance of a person includes not only the property and the transmissible
already barred by prescription, laches and estoppel; (5) that the complaint states no rights and obligations existing at the time of his death, but also those which have
cause of action as respondents are not duty-bound to reimburse whatever alleged accrued thereto since the opening of the succession.
payments were made by petitioners; and (6) there is no contract between the parties to
the effect that respondents are under obligation to transfer ownership in petitioners'
favor as reimbursement for the alleged payments made by petitioners to DBP.
In the present case, respondents, being heirs of Sergio, are now liable to settle his
transmissible obligations, which include the amount due to petitioners, prior to the
distribution of the remainder of Sergio's estate to them, in accordance with Section I,10
During pendency' of the trial, Leandro died and was substituted by his heirs, herein Rule 90 of the Rules of Court.
petitioners. RTC in favor of petitioners. Filed an appeal with the CA. Appeal was partly
granted in that sps Natividad are ordered instead to reimburse plaintiffs-appellees
Juliana Natividad and the heirs of the late Leandro Natividad the amount of
P162,514.88 representing the amount of the loan obligation paid to the Development
Bank of the Philippines, plus legal interest of 12% per annum computed from June 23,
2001 until finality of the judgment, the total amount of which shall be to the extent only
of defendants-appellants' successional rights in the mortgaged properties and Juana1 s
conjugal share in [the] property covered by OCT No. 10271. Puno vs Puno - Upon the death of a stockholder, the heirs do not automatically become
stockholders of the corporation; neither are they mandatorily entitled to the rights and
privileges of a stockholder.
Issue: Whether there was a verbal agreement in the Deed of Extrajudicial Settlement
Facts: Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno
among heirs to the effect that the subject properties shall be transferred in the name of
Leandro as reimbursement for his payment of Sergio's loan obligations with the DBP Enterprises, Inc. On March 14, 2003, petitioner Joselito Musni Puno, claiming to be an heir of
Carlos L. Puno, initiated a complaint for specific performance against respondent. Petitioner
averred that he is the son of the deceased with the latter’s common-law wife, Amelia Puno. As
surviving heir, he claimed entitlement to the rights and privileges of his late father as
stockholder of respondent. The complaint thus prayed that respondent allow petitioner to
inspect its corporate book, render an accounting of all the transactions it entered into from
1962, and give petitioner all the profits, earnings, dividends, or income pertaining to the
shares of Carlos L. Puno.
Respondent filed a motion to dismiss on the ground that petitioner did not have the legal
personality to sue because his birth certificate names him as “Joselito Musni Muno.” Apropos,
there was yet a need for a judicial declaration that “Joselito Musni Puno” and “Joselito Musni
Muno” were one and the same. The court ordered that the proceedings be held in abeyance,
ratiocinating that petitioner’s certificate of live birth was no proof of his paternity and relation to
Carlos L. Puno. Petitioner submitted the corrected birth certificate with the name “Joselito M.
Puno,” certified by the Civil Registrar of the City of Manila, and the Certificate of Finality
thereof. To hasten the disposition of the case, the court conditionally admitted the corrected
birth certificate as genuine and authentic and ordered respondent to file its answer within
fifteen days from the order and set the case for pretrial. The court rendered a decision
ordering the plaintiff to inspect the corporate books and records of the company from 1962 up
to the present including the financial statements of the corporation. CA ordered the dismissal
as petitioner was not able to establish the paternity of and his filiation to Carlos L.Puno since
his birth certificate was prepared without the intervention of and the participatory
acknowledgment of paternity by Carlos L. Puno. Accordingly, the CA said that petitioner had
no right to demand that he be allowed to examine respondent’s books. Moreover, petitioner
was not a stockholder of the corporation but was merely claiming rights as an heir of Carlos L.
Puno, an incorporator of the corporation. MR denied.
Issue: Whether or not petitioner is entitled to inspect the corporate books of herein defendant
corporation?
Ruling: Petitioner failed to establish the right to inspect respondent corporation’s books and
receive dividends on the stocks owned by Carlos L. Puno. Petitioner anchors his claim on his
being an heir of the deceased stockholder. However, we agree with the appellate court that
petitioner was not able to prove satisfactorily his filiation to the deceased stockholder; thus,
the former cannot claim to be an heir of the latter. A certificate of live birth purportedly
identifying the putative father is not competent evidence of paternity when there is no showing
that the putative father had a hand in the preparation of the certificate. The local civil registrar
has no authority to record the paternity of an illegitimate child on the information of a third
person. As correctly observed by the CA, only petitioner’s mother supplied the data in the birth
certificate and signed the same. There was no evidence that Carlos L. Puno acknowledged
petitioner as his son.
In any case, Sections 74 and 75 of the Corporation Code enumerate the persons who are
entitled to the inspection of corporate books, thus —
Sec. 74. Books to be kept; stock transfer agent. — The records of all business transactions
of the corporation and the minutes of any meeting shall be open to the inspection of any
director, trustee, stockholder or member of the corporation at reasonable hours on business
days and he may demand, in writing, for a copy of excerpts from said records or minutes, at
his expense.
Sec. 75. Right to financial statements. — Within ten (10) days from receipt of a written request
of any stockholder or member, the corporation shall furnish to him its most recent financial
statement, which shall include a balance sheet as of the end of the last taxable year and a
profit or loss of statement for said taxable year, showing in reasonable detail its assets and
liabilities and the result of its operations.
The stockholder’s right of inspection of the corporation’s books and records is based upon his
ownership of shares in the corporation and the necessity for self-protection. After all, a
shareholder has the right to be intelligently informed about corporate affairs. Such right rests
upon the stockholder’s underlying ownership of the corporation’s assets and property.
Similarly, only stockholders of record are entitled to receive dividends declared by the
corporation, a right inherent in the ownership of the shares.
Upon the death of a shareholder, the heirs do not automatically become stockholders of the
corporation and acquire the rights and privileges of the deceased as shareholder of the
corporation. The stocks must be distributed first to the heirs in estate proceedings, and the
transfer of the stocks must be recorded in the books of the corporation. Section 63 of the
Corporation Code provides that no transfer shall be valid, except as between the parties, until
the transfer is recorded in the books of the corporation. During such interim period, the heirs
stand as the equitable owners of the stocks, the executor or administrator duly appointed by
the court being vested with the legal title to the stock. Until a settlement and division of the
estate is effected, the stocks of the decedent are held by the administrator or executor.
Consequently, during such time, it is the administrator or executor who is entitled to exercise
the rights of the deceased as stockholder. Thus, even if petitioner presents sufficient evidence
in this case to establish that he is the son of Carlos L. Puno, he would still not be allowed to
inspect respondent’s books and be entitled to receive dividends from respondent, absent any
showing in its transfer book that some of the shares owned by Carlos L. Puno were
transferred to him. This would only be possible if petitioner has been recognized as an heir
and has participated in the settlement of the estate of the deceased.
Oscar Reyes vs RTC of Makati, Zenith Insurance Corp and Rodrigo Reyes
Facts: Oscar and private respondent are two of the four children of Pedro and Anastacia
Reyes. All four own shares of stocks on Zenith Insurance Corporation, a company that the
family established. Pedro died in 1973 and his estate has been judicially partitioned among his
heirs. When Anastacia died, there appears to be no similar partition done with her estate
including her shares in Zenith. On May 2009 Rodrigo filed a derivative suite against Oscar
with the SEC for an accounting of the share of stocks which he alleged was acquired by Oscar
aribitrarily and fraudulently. Oscar moved to have the complaint dismissed as a form of
harassment and not in accordance with the Interim Rules for Intra- corporate controversies.
The RTC of Makati in its designation as a commercial court denied Rodrigo's motion ruling
that it is a valid derivative suit. Oscar went to to the CA but the CA approved the RTC ruling.
Now Oscar went to the SC for a petition for review on certiorari under rule 45.
Issue: WON it is a valid derivative suit
Held:
The following are the requirements for a valid derivative suit:
a. the party bringing suit
should be a shareholder during the time of the act or transaction complained of, the number of
shares not being material;
b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the
board of directors for the appropriate relief, but the latter has failed or refused to heed his
plea; and
c. the cause of action actually devolves on the corporation; the wrongdoing or harm having
been or being caused to the corporation and not to the particular stockholder bringing the suit.
Based on these standards, we hold that the allegations of the present complaint do not
amount to a derivative suit.
First, as already discussed above, Rodrigo is not a shareholder with respect to the
shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose
rights to the share are inchoate and unrecorded. With respect to his own individually-held
shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder on
record to proceed against Oscar.
Second, in order that a stockholder may show a right to sue on behalf of the corporation, he
must allege with some particularity in his complaint that he has exhausted his remedies within
the corporation by making a sufficient demand upon the directors or other officers for
35
appropriate relief with the expressed intent to sue if relief is denied. Paragraph 8 of the
complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion
of remedies within the corporate setting:
8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and We disagree. Petitioners admit that the agreement between the

exhausted all legal means of resolving the dispute with the end view of amicably settling the deceased Eliodoro Sandejas Sr. and respondent was a contract to sell. Not exactly. In a

case, but the dispute between them ensued. contract to sell, the payment of the purchase price is a positive suspensive condition. The
vendor’s obligation to convey the title does not become effective in case of failure to pay.
On the other hand, the agreement between Eliodoro Sr. and respondent is subject to
a suspensivecondition — the procurement of a court approval, not full payment. There
Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation
was no reservation of ownership in the agreement. In accordance with paragraph 1 of the
due to Oscar’s acts. If indeed he illegally and fraudulently transferred Anastacia’s shares in his
Receipt, petitioners were supposed to deed the disputed lots over to respondent. This
own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer
they could do upon the court’s approval, even before full payment. Hence, their contract
did not affect the capital stock or the assets of Zenith. As already mentioned, neither has
was a conditional sale, rather than a contract to sell as determined by the CA.
Rodrigo alleged any particular cause or wrongdoing against the corporation that he can
When a contract is subject to a suspensive condition, its birth or effectivity can take place
champion in his capacity as a shareholder on record.
only if and when the condition happens or is fulfilled. Thus, the intestate court’s grant of the
Motion for Approval of the sale filed by respondent resulted in petitioners’ obligation to
Heirs of Spouses Sandejas Sr. vs. Lina
execute the Deed of Sale of the disputed lots in his favor. The condition having been
A contract of sale is not invalidated by the fact that it is subject to probate court
satisfied, the contract was perfected. Henceforth, the parties were bound to fulfill what
approval. The transaction remains binding on the seller-heir, but not on the other heirs
they had expressly agreed upon.
who have not given their consent to it. In settling the estate of the deceased, a probate
The CA computed Eliodoro’s share as an heir based on one tenth of the entire disputed
court has jurisdiction over matters incidental and collateral to the exercise of its recognized
property. It should be based only on the remaining half, after deducting the conjugal
powers. Such matters include selling, mortgaging or otherwise encumbering realty
share. Succession laws and jurisprudence require that when a marriage is dissolved by
belonging to the estate. Rule 89, Section 8 of the Rules of Court, deals with the
the death of the husband or the wife, the decedent’s entire estate – under the concept of
conveyance of real property contracted by the decedent while still alive. In contrast with
conjugal properties of gains — must be divided equally, with one half going to the surviving
Sections 2 and 4 of the same Rule, the said provision does not limit to the executor or
spouse and the other half to the heirs of the deceased. After the settlement of the debts
administrator the right to file the application for authority to sell, mortgage or otherwise
and obligations, the remaining half of the estate is then distributed to the legal heirs,
encumber realty under administration. The standing to pursue such course of action
legatees and devices.
before the probate court inures to any person who stands to be benefited or injured by the
judgment or to be entitled to the avails of the suit.
Petitioners argue that the CA erred in ordering the conveyance of the disputed 3/5 of the Santos vs LUMBAO
parcels of land, despite the nonfulfillment of the suspensive condition — court approval of
the sale — as contained in the “Receipt of Earnest Money with Promise to Sell and to Buy” FACTS: Petitioners Virgilio, Victorino, Ernesto and Tadeo, all
(also referred to as the “Receipt”). Instead, they assert that because this condition had not surnamed Santos, are the legitimate and surviving heirs of the
been satisfied, their obligation to deliver the disputed parcels of land was converted into a
late Rita Catoc Santos (Rita), who died on 20 October 1985.
Petitioners Esperanza Lati and Lagrimas Santos are the
money claim.
daughters-in-law of Rita. Respondents Spouses Jose Lumbao and
Proserfina Lumbao are the alleged owners of the 107-square
meter lot (subject property), which they purportedly bought from
Rita during her lifetime. On two separate occasions during her
lifetime, Rita sold to respondents Spouses Lumbao the subject
property which is a part of her share in the estate of her deceased
mother, Maria Catoc (Maria), who died intestate on 19
September 1978. The first occasion: Rita sold 100 square meters
of her inchoate share in her mother’s estate through a document
denominated as "Bilihan ng Lupa," dated 17 August 1979.
Respondents Spouses Lumbao claimed the execution of the
aforesaid document was witnessed by Spouses Lumbao took
actual possession thereof and erected thereon a house which they
have been occupying as exclusive owners up to the present.
Respondents Spouses Lumbao alleged that prior to her death,
Rita informed respondent Proserfina Lumbao she could not
deliver the title to the subject property because the entire
property inherited by her and her co-heirs from Maria had not yet
been partitioned.
Spouses Lumbao claimed that petitioners executed a Deed of
Extrajudicial Settlement, adjudicating and partitioning among
themselves and the other heirs, the estate left by Maria, which
included the subject property already sold to respondents
Spouses Lumbao Spouses Lumbao sent a formal demand letter to
petitioners but despite receipt of such demand letter, petitioners
still failed and refused to reconvey the subject property to the
respondents Spouses Lumbao. Consequently, the latter filed a
Complaint for Reconveyance with Damages. The trial court
denied the petition
 bound to comply with their provisions. In short, such documents
ISSUE: Whether herein petitioners are legally bound to comply
with the "Bilihan ng Lupa" dated 17 August 1979 and 9 January
1981 and consequently, reconvey the subject property to herein
respondents spouses Lumbao? YES
HELD: At time of the execution of the documents denominated
as "Bilihan ng Lupa," the entire property owned by Maria, the
mother of Rita, was not yet divided among her and her co-heirs.
The exact metes and bounds of the subject property sold to
respondents Spouses Lumbao could not be possibly determined
at that time. It does not make the contract of sale between Rita
and respondents Spouses Lumbao invalid while an estate remains
undivided, co-owners have each full ownership of their
respective aliquots or undivided shares and may therefore
alienate, assign or mortgage them
o The sale is valid, but only with respect to the aliquot share of
the selling co-owner.
o Furthermore, the sale is subject to the results of the partition
upon the termination of the co-ownership.
When the estate left by Maria had been partitioned, the 107-
square meter lot sold by the mother of the petitioners to
respondents Spouses Lumbao should be deducted from the total
lot, inherited by them in representation of their deceased mother,
which in this case measures 467 square meters. The 107-square
meter lot already sold to respondents Spouses Lumbao can no
longer be inherited by the petitioners because the same was no
longer part of their inheritance as it was already sold during the
lifetime of their mother.
The "Bilihan ng Lupa" documents dated 17 August 1979 and 9
January 1981, being valid and enforceable, herein petitioners are
are absolutely valid between and among the parties thereto. The
general rule that heirs are bound by contracts entered into by their
predecessors-in-interest applies in the present case. Article 1311
of the NCC is the basis of this rule: whatever rights and
obligations the decedent have over the property were transmitted
to the heirs by way of succession, a mode of acquiring the
property, rights and obligations of the decedent to the extent of
the value of the inheritance of the heirs. The heirs cannot escape
the legal consequence of a transaction entered into by their
predecessor-in-interest because they have inherited the property
subject to the liability affecting their common ancestor. Being
heirs, there is privity of interest between them and their deceased
mother. They only succeed to what rights their mother had and
what is valid and binding against her is also valid and binding as
against them. The death of a party does not excuse
nonperformance of a contract which involves a property right and
the rights and obligations thereunder pass to the personal
representatives of the deceased. Similarly, nonperformance is not
excused by the death of the party when the other party has a
property interest in the subject matter of the contract. Despite the
death of the petitioners’ mother, they are still bound to comply
with the provisions of the "Bilihan ng Lupa". They must
reconvey to herein respondents Spouses Lumbao the 107- square
meter lot which they bought from Rita, petitioners’ mother.
Petitioners must pay respondents Spouses Lumbao attorney’s
fees and litigation expenses for having been compelled to litigate
and incur expenses to protect their interest.