G.R. No.

149926 February 23, 2005

UNION BANK OF THE PHILIPPINES, petitioner,

vs.
EDMUND SANTIBAÑEZ and FLORENCE SANTIBAÑEZ 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 Decision1 of the Court of Appeals dated May 30, 2001 in CA-G.R. CV No.
48831 affirming the dismissal2 of the petitioner’s 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. Santibañez
entered into a loan agreement3 in the amount of ₱128,000.00. 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 ₱43,745.96 due on May 31, 1981 and
every May 31st 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 ₱123,156.00. 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 Agreement5 for the loan dated December 13, 1980.

Sometime in February 1981, Efraim died, leaving a holographic will.6 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 Santibañez Ariola, executed a Joint
Agreement8 dated July 22, 1981, wherein they agreed to divide between themselves and take
possession of the three (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 Liabilities9 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 letters10 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 Complaint11 for sum of money against the heirs of Efraim
Santibañez, 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 Answer13 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 Santibañez 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 decedent’s account. Ruling that the joint agreement executed by the heirs was null and
void, the trial court held that the petitioner’s 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 SANTIBAÑEZ 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 SANTIBAÑEZ 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 ₱128,000.00 AND
DECEMBER 13, 1980 IN THE AMOUNT OF ₱123,000.00 CATEGORICALLY ESTABLISHED THE
FACT THAT THE RESPONDENTS BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE
WITH THE LATE DEBTOR EFRAIM SANTIBAÑEZ 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 petitioner’s
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 jurisor the legal bond between the late Efraim Santibañez
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 Santibañez, 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 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 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. 1a\^ /phi1.net

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. 1awphi 1.nét

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 Santibañez, left a holographic will24 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 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 agreement25 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.

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 court’s 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
l^vvphi 1.net

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, 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 decedent’s 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
wpossible, 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 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, 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 evidence35 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 petitioner’s 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 petitioner’s 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.
 [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; and to pay, reimburse and
chan roble svirtualawlibrary

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 attorney’s 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 Hemady’s estate, the lower court, by
order of September 23, 1953, dismissed the claims of Luzon Surety Co., on two grounds: (1) that the chanroble svirtuallawlibrary

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; and (2) that “whatever losses may occur after Hemady’s death, are
chan roblesvirtualawlibrary

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: chanroble svirtuallawlibrary

“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: integrity. As correctly pointed out by the Administratrix,
chanroble svirtuallawlibrary

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 Hemady’s
death, are not chargeable to his estate because upon his death he ceased to be a guarantor.
Another clear and strong indication that the surety company has exclusively relied on the personality,
character, honesty and integrity of the now deceased K. H. Hemady, was the fact that in the printed form
of the indemnity agreement there is a paragraph entitled ‘Security by way of first mortgage, which was
expressly waived and renounced by the security company. The security company has not demanded from
K. H. Hemady to comply with this requirement of giving security by way of first mortgage. In the supporting
papers of the claim presented by Luzon Surety Company, no real property was mentioned in the list of
properties mortgaged which appears at the back of the indemnity agreement.” (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present Civil Code (Article 1311), as well as under the Civil
Code of 1889 (Article 1257), the rule is that —
“Contracts take effect only as between the parties, their assigns and heirs, except in the case where the
rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or
by provision of law.”
While in our successional system the responsibility of the heirs for the debts of their decedent cannot
exceed the value of the inheritance they receive from him, the principle remains intact that these heirs
succeed not only to the rights of the deceased but also to his obligations. Articles 774 and 776 of the New
Civil Code (and Articles 659 and 661 of the preceding one) expressly so provide, thereby confirming Article
1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by virtue of which the property, rights and obligations
to the extent of the value of the inheritance, of a person are transmitted through his death to another or
others either by his will or by operation of law.”
“ART. 776. — The inheritance includes all the property, rights and obligations of a person which are not
extinguished by his death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled: chanroblesvirtuallawlibrary

“Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all the rights and
obligations of the deceased (Article 661) and cannot be regarded as third parties with respect to a contract
to which the deceased was a party, touching the estate of the deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected by the provisions of the new Code of Civil
Procedure, and, in accordance with that principle, the heirs of a deceased person cannot be held to be
“third persons” in relation to any contracts touching the real estate of their decedent which comes in to
their hands by right of inheritance; they take such property subject to all the obligations resting thereon
chan roblesvirtualawlibrary

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 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.
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; and to the Luzon chan roblesvirtualawlibrary

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; le chan roblesvirtualawlibrary

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 más allá de las personas que les dieron vida, y a
ejercer presion sobre los sucesores de esa persona; cuando no se quiera esto, se impone una
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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

hence, his failure to do so is no sign that he intended his bargain to terminate upon his death. Similarly,
roblesvirtualawlibrary

that the Luzon Surety Co., did not require bondsman Hemady to execute a mortgage indicates nothing
more than the company’s 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; and if that chan roblesvirtualawlibrary

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: chanroblesv irtuallawlibrary

“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: it is his right, not his duty; he may waive it if he chooses, and hold the guarantor to
chanroblesvirtuallawlibrary chan roblesvirtualawlibrary

his bargain. Hence Article 2057 of the present Civil Code is incompatible with the trial court’s stand that
the requirement of integrity in the guarantor or surety makes the latter’s 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; Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).
chan roblesvirtualawlibrary

“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; Gibson vs. chan roblesvirtualawlibrary

Mithell, 16 Pla., 519; Maxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119;
chan roblesvirtualawlibrary chan

Ernst vs. Nou, 63 Wis., 134.)”

roblesvirtualawlibrary

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; and it is urged that the rule does not apply to the case
chan roblesvirtualawlibrary

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 guarantor’s 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 estate’s liability for premiums and stamp taxes, because
irrespective of the solution to this question, the Luzon Surety’s claim did state a cause of action, and its
dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the records are ordered remanded to the court of
origin, with instructions to proceed in accordance with law. Costs against the Administratrix- Appellee. SO
ORDERED.
G.R. No. L-4963 January 29, 1953

MARIA USON, plaintiff-appellee,

vs.
MARIA DEL ROSARIO, CONCEPCION NEBREDA, CONRADO NEBREDA, DOMINADOR
NEBREDA, AND FAUSTINO NEBREDA, Jr., defendants-appellants.

Priscilo Evangelista for appellee.

Brigido G. Estrada for appellant.

BAUTISTA ANGELO, J.:

This is an action for recovery of the ownership and possession of five (5) parcels of land situated in
the Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario
and her four children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda,
who are all of minor age, before the Court of First Instance of Pangasinan.

Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands
involved in this litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However,
plaintiff claims that when Faustino Nebreda died in 1945, his common-law wife Maria del Rosario
took possession illegally of said lands thus depriving her of their possession and enjoyment.

Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson and
her husband, the late Faustino Nebreda, executed a public document whereby they agreed to
separate as husband and wife and, in consideration of their separation, Maria Uson was given a
parcel of land by way of alimony and in return she renounced her right to inherit any other property
that may be left by her husband upon his death (Exhibit 1).

After trial, at which both parties presented their respective evidence, the court rendered decision
ordering the defendants to restore to the plaintiff the ownership and possession of the lands in
dispute without special pronouncement as to costs. Defendants interposed the present appeal.

There is no dispute that Maria Uson, plaintiff-appellee, 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, one of the defendants-appellants, was merely a common-law wife of the late
Faustino Nebreda with whom she had four illegitimate children, her now co-defendants. 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 (Article 657, old Civil Code).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" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). 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 they had entered into on February 21, 1931, cannot
be entertained for the simple reason that future inheritance cannot be the subject of a contract nor
can it be renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p. 12; Osorio vs. Osorio
and Ynchausti Steamship Co., 41 Phil., 531).
But defendants contend that, while it is true that the four minor defendants are illegitimate children of
the late Faustino Nebreda and under the old Civil Code are not entitled to any successional rights,
however, under the new Civil Code which became in force in June, 1950, they are given the status
and rights of natural children and are entitled to the successional rights which the law accords to the
latter (article 2264 and article 287, new Civil Code), and because these successional rights were
declared for the first time in the new code, they shall be given retroactive effect even though the
event which gave rise to them may have occurred under the prior legislation (Article 2253, new Civil
Code).

There is no merit in this claim. Article 2253 above referred to provides indeed that rights which are
declared for the first time shall have retroactive effect even though the event which gave rise to them
may have occurred under the former legislation, but this is so only when the new rights do not
prejudice any vested or acquired right of the same origin. Thus, said article provides that "if a right
should be declared for the first time in this Code, it shall be effective at once, even though the act or
event which gives rise thereto may have been done or may have occurred under the prior legislation,
provided said new right does not prejudice or impair any vested or acquired right, of the same
origin." As already stated in the early part of this decision, the right of ownership of Maria Uson over
the lands in question became vested in 1945 upon the death of her late husband and this is so
because of the imperative provision of the law which commands that the rights to succession are
transmitted from the moment of death (Article 657, old Civil Code). 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.

As regards the claim that Maria Uson, while her deceased husband was lying in state, in a gesture of
pity or compassion, agreed to assign the lands in question to the minor children for the reason that
they were acquired while the deceased was living with their mother and Maria Uson wanted to
assuage somewhat the wrong she has done to them, this much can be said; apart from the fact that
this claim is disputed, we are of the opinion that said assignment, if any, partakes of the nature of a
donation of real property, inasmuch as it involves no material consideration, and in order that it may
be valid it shall be made in a public document and must be accepted either in the same document or
in a separate one (Article 633, old Civil Code). Inasmuch as this essential formality has not been
followed, it results that the alleged assignment or donation has no valid effect.

WHEREFORE, the decision appealed from is affirmed, without costs.

G.R. No. 169129 March 28, 2007

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.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure seeking to annul and set aside the Decision1 and Resolution2 of the Court of Appeals
in CA-G.R. CV No. 60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v. Spouses
Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos, Ernesto
F. Santos and Tadeo F. Santos, dated 8 June 2005 and 29 July 2005, respectively, which granted
the appeal filed by herein respondents Spouses Jose Lumbao and Proserfina Lumbao (Spouses
Lumbao) and ordered herein petitioners Spouses Virgilio F. Santos and Esperanza Lati, Spouses
Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos to reconvey to
respondents Spouses Lumbao the subject property and to pay the latter attorney’s fees and litigation
expenses, thus, reversing the Decision3 of the Regional Trial Court (RTC) of Pasig City, dated 17
June 1998 which dismissed the Complaint for Reconveyance with Damages filed by respondents
Spouses Lumbao for lack of merit.

Herein 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. The other
petitioners Esperanza Lati and Lagrimas Santos are the daughters-in-law of Rita.

Herein 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.

The facts of the present case are as follows:

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. On 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 1979.4 Respondents Spouses Lumbao claimed the execution of the
aforesaid document was witnessed by petitioners Virgilio and Tadeo, as shown by their signatures
affixed therein. On the second occasion, an additional seven square meters was added to the land
as evidenced by a document also denominated as "Bilihan ng Lupa," dated 9 January 1981.5

After acquiring the subject property, respondents Spouses Lumbao took actual possession thereof
and erected thereon a house which they have been occupying as exclusive owners up to the
present. As the exclusive owners of the subject property, respondents Spouses Lumbao made
several verbal demands upon Rita, during her lifetime, and thereafter upon herein petitioners, for
them to execute the necessary documents to effect the issuance of a separate title in favor of
respondents Spouses Lumbao insofar as the subject property is concerned. 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.
On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently and in conspiracy
with one another, executed a Deed of Extrajudicial Settlement,6 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 and now covered by TCT No. 817297 of the Registry of Deeds
of Pasig City.

On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal demand letter8 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 Damages9 before the RTC of Pasig City.

Petitioners filed their Answer denying the allegations that the subject property had been sold to the
respondents Spouses Lumbao. They likewise denied that the Deed of Extrajudicial Settlement had
been fraudulently executed because the same was duly published as required by law. On the
contrary, they prayed for the dismissal of the Complaint for lack of cause of action because
respondents Spouses Lumbao failed to comply with the Revised Katarungang Pambarangay Law
under Republic Act No. 7160, otherwise known as the Local Government Code of 1991, which
repealed Presidential Decree No. 150810 requiring first resort to barangay conciliation.

Respondents Spouses Lumbao, with leave of court, amended their Complaint because they
discovered that on 16 February 1990, without their knowledge, petitioners executed a Deed of Real
Estate Mortgage in favor of Julieta S. Esplana for the sum of ₱30,000.00. The said Deed of Real
Estate Mortgage was annotated at the back of TCT No. PT-81729 on 26 April 1991. Also, in answer
to the allegation of the petitioners that they failed to comply with the mandate of the Revised
Katarungang Pambarangay Law, respondents Spouses Lumbao said that the Complaint was filed
directly in court in order that prescription or the Statute of Limitations may not set in.

During the trial, respondents Spouses Lumbao presented Proserfina Lumbao and Carolina Morales
as their witnesses, while the petitioners presented only the testimony of petitioner Virgilio.

The trial court rendered a Decision on 17 June 1998, the dispositive portion of which reads as
follows:

Premises considered, the instant complaint is hereby denied for lack of merit.

Considering that [petitioners] have incurred expenses in order to protect their interest, [respondents
spouses Lumbao] are hereby directed to pay [petitioners], to wit: 1) the amount of ₱30,000.00 as
attorney’s fees and litigation expenses, and 2) costs of the suit.11

Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8 June 2005, the
appellate court rendered a Decision, thus:

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed
Decision dated June 17, 1998 of the Regional Trial Court of Pasig City, Branch 69 in Civil Case No.
62175 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered ordering
[petitioners] to reconvey 107 square meters of the subject [property] covered by TCT No. PT-81729
of the Registry of Deeds of Pasig City, Metro Manila, and to pay to [respondents spouses Lumbao]
the sum of ₱30,000.00 for attorney’s fees and litigation expenses.

No pronouncement as to costs.12
Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid Decision but it was denied
in the Resolution of the appellate court dated 29 July 2005 for lack of merit.

Hence, this Petition.

The grounds relied upon by the petitioners are the following:

I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN REVERSING THE

DECISION OF THE TRIAL COURT, THEREBY CREATING A VARIANCE ON THE FINDINGS OF
FACTS OF TWO COURTS.

II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN ORDERING THE

PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY] TO THE RESPONDENTS
[SPOUSES LUMBAO] AND IN NOT RULING THAT THEY ARE GUILTY OF LACHES, HENCE
THEY CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM.

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING HEREIN
PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING THE "DEED OF EXTRAJUDICIAL
SETTLEMENT" DATED [2 MAY 1986].

IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT
PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY WITH THE SUPPOSED BILIHAN NG
LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981] THAT WERE SUPPOSEDLY
EXECUTED BY THE LATE RITA CATOC.

V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT

RESPONDENTS [SPOUSES LUMBAO’S] ACTION FOR RECONVEYANCE WITH DAMAGES
CANNOT BE SUPPORTED WITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN
NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981].

VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAO’S] COMPLAINT FOR RECONVEYANCE IS DISMISSABLE
(SIC) FOR NON COMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS AMENDED BY
Republic Act No. 7160.

VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD LIABLE FOR PETITIONERS’ CLAIM
FOR DAMAGES AND ATTORNEY[‘]S FEES.

Petitioners ask this Court to scrutinize the evidence presented in this case, because they claim that
the factual findings of the trial court and the appellate court are conflicting. They allege that the
findings of fact by the trial court revealed that petitioners Virgilio and Tadeo did not witness the
execution of the documents known as "Bilihan ng Lupa"; hence, this finding runs counter to the
conclusion made by the appellate court. And even assuming that they were witnesses to the
aforesaid documents, still, respondents Spouses Lumbao were not entitled to the reconveyance of
the subject property because they were guilty of laches for their failure to assert their rights for an
unreasonable length of time. Since respondents Spouses Lumbao had slept on their rights for a
period of more than 12 years reckoned from the date of execution of the second "Bilihan ng Lupa," it
would be unjust and unfair to the petitioners if the respondents will be allowed to recover the subject
property.
Petitioners allege they are in good faith in executing the Deed of Extrajudicial Settlement because
even respondents Spouses Lumbao’s witness, Carolina Morales, testified that neither petitioner
Virgilio nor petitioner Tadeo was present during the execution of the "Bilihan ng Lupa," dated 17
August 1979 and 9 January 1981. Petitioners affirm that the Deed of Extrajudicial Settlement was
published in a newspaper of general circulation to give notice to all creditors of the estate subject of
partition to contest the same within the period prescribed by law. Since no claimant appeared to
interpose a claim within the period allowed by law, a title to the subject property was then issued in
favor of the petitioners; hence, they are considered as holders in good faith and therefore cannot be
barred from entering into any subsequent transactions involving the subject property.

Petitioners also contend that they are not bound by the documents denominated as "Bilihan ng
Lupa" because the same were null and void for the following reasons: 1) for being falsified
documents because 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; 2) the identities of the properties in the "Bilihan ng Lupa," dated 17 August
1979 and 9 January 1981 in relation to the subject property in litigation were not established by the
evidence presented by the respondents Spouses Lumbao; 3) the right of the respondents Spouses
Lumbao to lay their claim over the subject property had already been barred through estoppel by
laches; and 4) the respondents Spouses Lumbao’s claim over the subject property had already
prescribed.

Finally, petitioners claim that the Complaint for Reconveyance with Damages filed by respondents
Spouses Lumbao was dismissible because they failed to comply with the mandate of Presidential
Decree No. 1508, as amended by Republic Act No. 7160, particularly Section 412 of Republic Act
No. 7160.

Given the foregoing, the issues presented by the petitioners may be restated as follows:

I. Whether or not the Complaint for Reconveyance with Damages filed by respondents
spouses Lumbao is dismissible for their failure to comply with the mandate of the Revised
Katarungang Pambarangay Law under R.A. No. 7160.

II. Whether or not the documents known as "Bilihan ng Lupa" are valid and enforceable,
thus, they can be the bases of the respondents spouses Lumbao’s action for reconveyance
with damages.

III. Whether or not 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.

It is well-settled that in the exercise of the Supreme Court’s power of review, the court is not a trier of
facts and does not normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of fact of the Court of
Appeals are conclusive and binding on the Court.13 But, the rule is not without exceptions. There are
several recognized exceptions14 in which factual issues may be resolved by this Court. One of these
exceptions is when the findings of the appellate court are contrary to those of the trial court. This
exception is present in the case at bar.

Going to the first issue presented in this case, it is the argument of the petitioners that the Complaint
for Reconveyance with Damages filed by respondents Spouses Lumbao should be dismissed for
failure to comply with the barangay conciliation proceedings as mandated by the Revised
Katarungang Pambarangay Law under Republic Act No. 7160. This argument cannot be sustained.
Section 408 of the aforesaid law and Administrative Circular No. 14-9315 provide that all disputes
between parties actually residing in the same city or municipality are subject to barangay
conciliation. A prior recourse thereto is a pre-condition before filing a complaint in court or any
government offices. Non-compliance with the said condition precedent could affect the sufficiency of
the plaintiff’s cause of action and make his complaint vulnerable to dismissal on ground of lack of
cause of action or prematurity; but the same would not prevent a court of competent jurisdiction from
exercising its power of adjudication over the case before it, where the defendants failed to object to
such exercise of jurisdiction.16

While it is true that the present case should first be referred to the Barangay Lupon for conciliation
because the parties involved herein actually reside in the same city (Pasig City) and the dispute
between them involves a real property, hence, the said dispute should have been brought in the city
in which the real property, subject matter of the controversy, is located, which happens to be the
same city where the contending parties reside. In the event that respondents Spouses Lumbao
failed to comply with the said condition precedent, their Complaint for Reconveyance with Damages
can be dismissed. In this case, however, respondents Spouses Lumbao’s non-compliance with the
aforesaid condition precedent cannot be considered fatal. Although petitioners alleged in their
answer that the Complaint for Reconveyance with Damages filed by respondents spouses Lumbao
should be dismissed for their failure to comply with the condition precedent, which in effect, made
the complaint prematurely instituted and the trial court acquired no jurisdiction to hear the case, yet,
they did not file a Motion to Dismiss the said complaint.

Emphasis must be given to the fact that the petitioners could have prevented the trial court from
exercising jurisdiction over the case had they filed a Motion to Dismiss. However, instead of doing
so, they invoked the very same jurisdiction by filing an answer seeking an affirmative relief from it.
Worse, petitioners actively participated in the trial of the case by presenting their own witness and by
cross-examining the witnesses presented by the respondents Spouses Lumbao. It is elementary that
the active participation of a party in a case pending against him before a court is tantamount to
recognition of that court’s jurisdiction and a willingness to abide by the resolution of the case which
will bar said party from later on impugning the court’s jurisdiction.17 It is also well-settled that the non-
referral of a case for barangay conciliation when so required under the law is not jurisdictional in
nature and may therefore be deemed waived if not raised seasonably in a motion to
dismiss.18 Hence, herein petitioners can no longer raise the defense of non-compliance with the
barangay conciliation proceedings to seek the dismissal of the complaint filed by the respondents
Spouses Lumbao, because they already waived the said defense when they failed to file a Motion to
Dismiss.

As regards the second issue, petitioners maintain that the "Bilihan ng Lupa," dated 17 August 1979
and 9 January 1981 are null and void for being falsified documents as it is made to appear that
petitioners Virgilio and Tadeo were present in the execution of the said documents and that the
identities of the properties in those documents in relation to the subject property has not been
established by the evidence of the respondents Spouses Lumbao. Petitioners also claim that the
enforceability of those documents is barred by prescription of action and laches.

It is the petitioners’ incessant barking that the "Bilihan ng Lupa" documents dated 17 August 1979
and 9 January 1981 were falsified because it was made to appear that petitioners Virgilio and Tadeo
were present in the executions thereof, and their allegation that even respondents Spouses
Lumbao’s witness Carolina Morales proved that said petitioners were not present during the
execution of the aforementioned documents. This is specious.

Upon examination of the aforesaid documents, this Court finds that in the "Bilihan ng Lupa," dated
17 August 1979, the signatures of petitioners Virgilio and Tadeo appeared thereon. Moreover, in
petitioners’ Answer and Amended Answer to the Complaint for Reconveyance with Damages, both
petitioners Virgilio and Tadeo made an admission that indeed they acted as witnesses in the
execution of the "Bilihan ng Lupa," dated 17 August 1979.19 However, in order to avoid their
obligations in the said "Bilihan ng Lupa," petitioner Virgilio, in his cross-examination, denied having
knowledge of the sale transaction and claimed that he could not remember the same as well as his
appearance before the notary public due to the length of time that had passed. Noticeably, petitioner
Virgilio did not categorically deny having signed the "Bilihan ng Lupa," dated 17 August 1979 and in
support thereof, his testimony in the cross-examination propounded by the counsel of the
respondents Spouses Lumbao is quoted hereunder:

ATTY. CHIU:

Q. Now, you said, Mr. Witness…Virgilio Santos, that you don’t know about this document which was
marked as Exhibit "A" for the [respondents spouses Lumbao]?

ATTY. BUGARING:

The question is misleading, your Honor. Counsel premised the question that he does not have any
knowledge but not that he does not know.

ATTY. CHIU:

Q. Being… you are one of the witnesses of this document? [I]s it not?

WITNESS:

A. No, sir.

Q. I am showing to you this document, there is a signature at the left hand margin of this document
Virgilio Santos, will you please go over the same and tell the court whose signature is this?

A. I don’t remember, sir, because of the length of time that had passed.

Q. But that is your signature?

A. I don’t have eyeglasses… My signature is different.

Q. You never appeared before this notary public Apolinario Mangahas?

A. I don’t remember.20

As a general rule, facts alleged in a party’s pleading are deemed admissions of that party and are
binding upon him, but this is not an absolute and inflexible rule. An answer is a mere statement of
fact which the party filing it expects to prove, but it is not evidence.21 And in spite of the presence of
judicial admissions in a party’s pleading, the trial court is still given leeway to consider other
evidence presented.22 However, in the case at bar, as the Court of Appeals mentioned in its
Decision, "[herein petitioners] had not adduced any other evidence to override the admission made
in their [A]nswer that [petitioners Virgilio and Tadeo] actually signed the [Bilihan ng Lupa dated 17
August 1979] except that they were just misled as to the purpose of the document, x x x."23 Virgilio’s
answers were unsure and quibbled. Hence, the general rule that the admissions made by a party in
a pleading are binding and conclusive upon him applies in this case.
On the testimony of respondents Spouses Lumbao’s witness Carolina Morales, this Court adopts the
findings made by the appellate court. Thus -

[T]he trial court gave singular focus on her reply to a question during cross-examination if the
[petitioners Virgilio and Tadeo] were not with her and the vendor [Rita] during the transaction. It must
be pointed out that earlier in the direct examination of said witness, she confirmed that [respondents
spouses Lumbao] actually bought the lot from [Rita] ("nagkabilihan"). Said witness positively
identified and confirmed the two (2) documents evidencing the sale in favor of [respondents spouse
Lumbao]. Thus, her subsequent statement that the [petitioners Virgilio and Tadeo] were not with
them during the transaction does not automatically imply that [petitioners Virgilio and Tadeo] did not
at any time sign as witnesses as to the deed of sale attesting to their mother’s voluntary act of selling
a portion of her share in her deceased mother’s property. The rule is that testimony of a witness
must be considered and calibrated in its entirety and not by truncated portions thereof or isolated
passages therein.24

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 were
duly notarized before a notary public. It is well-settled that a document acknowledged before a
notary public is a public document25that enjoys the presumption of regularity. It is a prima facie
evidence of the truth of the facts stated therein and a conclusive presumption of its existence and
due execution.26 To overcome this presumption, there must be presented evidence that is clear and
convincing. Absent such evidence, the presumption must be upheld.27 In addition, one who denies
the due execution of a deed where one’s signature appears has the burden of proving that contrary
to the recital in the jurat, one never appeared before the notary public and acknowledged the deed to
be a voluntary act. Nonetheless, in the present case petitioners’ denials without clear and convincing
evidence to support their claim of fraud and falsity were not sufficient to overthrow the above-
mentioned presumption; hence, the authenticity, due execution and the truth of the facts stated in
the aforesaid "Bilihan ng Lupa" are upheld.

The defense of petitioners that the identities of the properties described in the "Bilihan ng Lupa,"
dated 17 August 1979 and 9 January 1981 in relation to the subject property were not established by
respondents Spouses Lumbao’s evidence is likewise not acceptable.

It is noteworthy that at the 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 and so the description of the entire estate is the only description that can be placed in the
"Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981" because the exact metes and bounds
of the subject property sold to respondents Spouses Lumbao could not be possibly determined at
that time. Nevertheless, that does not make the contract of sale between Rita and respondents
Spouses Lumbao invalid because both the law and jurisprudence have categorically held that even
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.28 The co-owner, however,
has no right to sell or alienate a specific or determinate part of the thing owned in common, because
such right over the thing is represented by an aliquot or ideal portion without any physical division. In
any case, the mere fact that the deed purports to transfer a concrete portion does not per se render
the sale void. The sale is valid, but only with respect to the aliquot share of the selling co-owner.
Furthermore, the sale is subject to the results of the partition upon the termination of the co-
ownership.29

In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986 by virtue of a
Deed of Extrajudicial Settlement, 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.

Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa" documents was described
as "a portion of a parcel of land covered in Tax Declarations No. A-018-01674," while the subject
matter of the Deed of Extrajudicial Settlement was the property described in Transfer Certificate of
Title (TCT) No. 3216 of the Registry of Deeds of the Province of Rizal in the name of Maria is of no
moment because in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981, it is clear that
there was only one estate left by Maria upon her death. And this fact was not refuted by the
petitioners. Besides, the property described in Tax Declaration No. A-018-01674 and the property
mentioned in TCT No. 3216 are both located in Barrio Rosario, Municipality of Pasig, Province of
Rizal, and almost have the same boundaries. It is, thus, safe to state that the property mentioned in
Tax Declaration No. A-018-01674 and in TCT No. 3216 are one and the same.

The defense of prescription of action and laches is likewise unjustifiable. In an action for
reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is
the transfer of the property or its title which has been wrongfully or erroneously registered in another
person’s name to its rightful or legal owner, or to the one with a better right. It is, indeed, true that the
right to seek reconveyance of registered property is not absolute because it is subject to extinctive
prescription. However, when the plaintiff is in possession of the land to be reconveyed, prescription
cannot set in. Such an exception is based on the theory that registration proceedings could not be
used as a shield for fraud or for enriching a person at the expense of another.30

In the case at bar, the right of the respondents Spouses Lumbao to seek reconveyance does not
prescribe because the latter have been and are still in actual possession and occupation as owners
of the property sought to be reconveyed, which fact has not been refuted nor denied by the
petitioners. Furthermore, respondents Spouses Lumbao cannot be held guilty of laches because
from the very start that they bought the 107-square meter lot from the mother of the petitioners, they
have constantly asked for the transfer of the certificate of title into their names but Rita, during her
lifetime, and the petitioners, after the death of Rita, failed to do so on the flimsy excuse that the lot
had not been partitioned yet. Inexplicably, after the partition of the entire estate of Maria, petitioners
still included the 107-square meter lot in their inheritance which they divided among themselves
despite their knowledge of the contracts of sale between their mother and the respondents Spouses
Lumbao.

Under the above premises, this Court holds that the "Bilihan ng Lupa" documents dated 17 August
1979 and 9 January 1981 are valid and enforceable and can be made the basis of the respondents
Spouses Lumbao’s action for reconveyance. The failure of respondents Spouses Lumbao to have
the said documents registered does not affect its validity and enforceability. It must be remembered
that registration is not a requirement for validity of the contract as between the parties, for the effect
of registration serves chiefly to bind third persons. The principal purpose of registration is merely to
notify other persons not parties to a contract that a transaction involving the property had been
entered into. Where the party has knowledge of a prior existing interest which is unregistered at the
time he acquired a right to the same land, his knowledge of that prior unregistered interest has the
effect of registration as to him.31 Hence, the "Bilihan ng Lupa" documents dated 17 August 1979 and
9 January 1981, being valid and enforceable, herein petitioners are bound to comply with their
provisions. In short, such documents are absolutely valid between and among the parties thereto.

Finally, the general rule that heirs are bound by contracts entered into by their predecessors-in-
interest applies in the present case. Article 131132 of the NCC is the basis of this rule. It is clear from
the said provision that 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.33 Thus, 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.34

In the end, despite the death of the petitioners’ mother, they are still bound to comply with the
provisions of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981. Consequently, they
must reconvey to herein respondents Spouses Lumbao the 107-square meter lot which they bought
from Rita, petitioners’ mother. And as correctly ruled by the appellate court, 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.35 On this matter, we do not find reasons to
reverse the said findings.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and
Resolution of the Court of Appeals dated 8 June 2005 and 29 July 2005, respectively, are hereby
AFFIRMED. Herein petitioners are ordered to reconvey to respondents Spouses Lumbao the subject
property and to pay the latter attorney’s fees and litigation expenses. Costs against petitioners.

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

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,

vs.
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA
YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, respondents.

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 773-B were respectively issued to Rosendo Alvarez. 10

Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely,
Estelita, Iluminado and Jesus, filed in the Court of First Instance of Negros Occidental a complaint
against Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of
Negros Occidental for the "return" of the ownership and possession of Lots 773 and 823. They also
prayed that an accounting of the produce of the land from 1944 up to the filing of the complaint be
made by the defendants, that after court approval of said accounting, the share or money equivalent
due the plaintiffs be delivered to them, and that defendants be ordered to pay plaintiffs P500.00 as
damages in the form of attorney's fees. 11

During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B
and another lot for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920
were issued to Siason, 13 who thereafter, declared the two lots in his name for assessment
purposes. 14

Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other
plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No. 5022 stating that the
therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim, monetary or otherwise, against the
defendant Arsenia Vda. de Fuentebella in connection with the above-entitled case." 15

On October 11, 1963, a decision was rendered by the Court of First Instance of Negros Occidental in
Civil Case No. 5022, the dispositive portion of which reads:

WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to

reconvey to the plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia,
Negros Occidental, now covered by Transfer Certificates of Title Nos. T-23165 and
T-23166 in the name of said defendant, and thereafter to deliver the possession of
said lots to the plaintiffs. No special pronouncement as to costs.

SO ORDERED. 16

It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in the
aforesaid decision.

However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of
service dated October 20, 1965, the sheriff stated that he discovered that Lot 773 had been
subdivided into Lots 773-A and 773-B; that they were "in the name" of Rodolfo Siason who had
purchased them from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as Siason was
"not a party per writ of execution." 17

The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private
respondents (the Yaneses) filed on July 31, 1965, in the Court of First Instance of Negros Occidental
a petition for the issuance of a new certificate of title and for a declaration of nullity of TCT Nos. T-
23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo Siason to
produce the certificates of title covering Lots 773 and 823.

Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not
Lots 773 and 823, "in good faith and for a valuable consideration without any knowledge of any lien
or encumbrances against said properties"; that the decision in the cadastral proceeding 19 could not
be enforced against him as he was not a party thereto; and that the decision in Civil Case No. 5022
could neither be enforced against him not only because he was not a party-litigant therein but also
because it had long become final and executory. 20 Finding said manifestation to be well-founded, the
cadastral court, in its order of September 4, 1965, nullified its previous order requiring Siason to
surrender the certificates of title mentioned therein. 21

In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in Civil
Case No. 5022. Siason opposed it. 22 In its order of September 28, 1968 in Civil Case No. 5022, the
lower court, noting that the Yaneses had instituted another action for the recovery of the land in
question, ruled that at the judgment therein could not be enforced against Siason as he was not a
party in the case. 23

The action filed by the Yaneses on February 21, 1968 was for recovery of real property with
damages. 24 Named defendants therein were Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez,
Raymundo Alvarez and the Register of Deeds of Negros Occidental. The Yaneses prayed for the
cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for being null and void; the
issuance of a new certificate of title in the name of the Yaneses "in accordance with the sheriffs
return of service dated October 20, 1965;" Siason's delivery of possession of Lot 773 to the
Yaneses; and if, delivery thereof could not be effected, or, if the issuance of a new title could not be
made, that the Alvarez and Siason jointly and severally pay the Yaneses the sum of P45,000.00.
They also prayed that Siason render an accounting of the fruits of Lot 773 from November 13, 1961
until the filing of the complaint; and that the defendants jointly and severally pay the Yaneses moral
damages of P20,000.00 and exemplary damages of P10,000.00 plus attorney's fees of P4, 000.00. 25

In his answer to the complaint, Siason alleged that the validity of his titles to Lots 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 plaintiffs-appellees the sum of P20,000.00 representing the actual value of Lots
Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar
as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages
and attorney's fees, respectively." 31 The dispositive portion of said decision reads:

WHEREFORE, the decision appealed from is affirmed insofar as it ordered

defendants-appellants to pay jointly and severally the plaintiffs- appellees the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the
cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded
the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral
damages and attorney's fees, respectively. No costs.

SO ORDERED. 32

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.

G.R. No. L-28040 August 18, 1972

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee; JOSE DE

BORJA, as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and CRISANTO DE
BORJA (deceased) as Children of Josefa Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco de
Borja, appellant. .

G.R. No L-28568 August 18, 1972

TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O. VDA. DE DE BORJA,

special Administratrix appellee,
vs.
JOSE DE BORJA, oppositor-appellant.

G.R. No. L-28611 August 18, 1972

TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate Estate of the late Francisco de
Borja, plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the Testate Estate of the late Josefa Tangco, defendant-
appellant.

L-28040

Pelaez, Jalandoni & Jamir for administrator-appellee.

Quiogue & Quiogue for appellee Matilde de Borja.

Andres Matias for appellee Cayetano de Borja.

Sevilla & Aquino for appellant.

L-28568

Sevilla & Aquino for special administratrix-appellee.

Pelaez, Jalandoni & Jamir for oppositor-appellant.

L-28611

Sevilla & Aquino for plaintiff-appellee.

Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.

REYES, J.B.L., J.:p

Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco Vda. de de Borja, special administratrix of the testate estate
of Francisco de Borja,1 from the approval of a compromise agreement by the Court of First Instance of Rizal, Branch I, in its Special
Proceeding No. R-7866, entitled, "Testate Estate of Josefa Tangco, Jose de Borja, Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the same
compromise agreement by the Court of First Instance of Nueva Ecija, Branch II, in its Special
Proceeding No. 832, entitled, "Testate Estate of Francisco de Borja, Tasiana O. Vda. de de Borja,
Special Administratrix".

And Case No. L-28611 is an appeal by administrator Jose de Borja from the decision of the Court of
First Instance of Rizal, Branch X, in its Civil Case No. 7452, declaring the Hacienda Jalajala
Poblacion, which is the main object of the aforesaid compromise agreement, as the separate and
exclusive property of the late Francisco de Borja and not a conjugal asset of the community with his
first wife, Josefa Tangco, and that said hacienda pertains exclusively to his testate estate, which is
under administrator in Special Proceeding No. 832 of the Court of First Instance of Nueva Ecija,
Branch II.

It is uncontested that Francisco de Borja, upon the death of his wife Josefa Tangco on 6 October
1940, filed a petition for the probate of her will which was docketed as Special Proceeding No. R-
7866 of the Court of First Instance of Rizal, Branch I. The will was probated on 2 April 1941. In 1946,
Francisco de Borja was appointed executor and administrator: in 1952, their son, Jose de Borja, was
appointed co-administrator. When Francisco died, on 14 April 1954, Jose became the sole
administrator of the testate estate of his mother, Josefa Tangco. While a widower Francisco de Borja
allegedly took unto himself a second wife, Tasiana Ongsingco. Upon Francisco's death, Tasiana
instituted testate proceedings in the Court of First Instance of Nueva Ecija, where, in 1955, she was
appointed special administratrix. The validity of Tasiana's marriage to Francisco was questioned in
said proceeding.

The relationship between the children of the first marriage and Tasiana Ongsingco has been
plagued with several court suits and counter-suits; including the three cases at bar, some eighteen
(18) cases remain pending determination in the courts. The testate estate of Josefa Tangco alone
has been unsettled for more than a quarter of a century. In order to put an end to all these litigations,
a compromise agreement was entered into on 12 October 1963,2 by and between "[T]he heir and
son of Francisco de Borja by his first marriage, namely, Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco," and "[T]he heir and surviving spouse of
Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de Borja, assisted by her
lawyer, Atty. Luis Panaguiton Jr." The terms and conditions of the compromise agreement are as
follows:

AGREEMENT

THIS AGREEMENT made and entered into by and between

The heir and son of Francisco de Borja by his first marriage, namely, Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco,

AND

The heir and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr.

WITNESSETH
THAT it is the mutual desire of all the parties herein terminate and settle, with finality,
the various court litigations, controversies, claims, counterclaims, etc., between them
in connection with the administration, settlement, partition, adjudication and
distribution of the assets as well as liabilities of the estates of Francisco de Borja and
Josefa Tangco, first spouse of Francisco de Borja.

THAT with this end in view, the parties herein have agreed voluntarily and without
any reservations to enter into and execute this agreement under the following terms
and conditions:

1. That the parties agree to sell the Poblacion portion of the Jalajala properties
situated in Jalajala, Rizal, presently under administration in the Testate Estate of
Josefa Tangco (Sp. Proc. No. 7866, Rizal), more specifically described as follows:

Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del

Municipio de Pililla de la Provincia de Rizal, y con el pico del Monte
Zambrano; al Oeste con Laguna de Bay; por el Sur con los herederos
de Marcelo de Borja; y por el Este con los terrenos de la Familia
Maronilla

with a segregated area of approximately 1,313 hectares at the amount of P0.30 per
square meter.

2. That Jose de Borja agrees and obligates himself to pay Tasiana Ongsingco Vda.
de de Borja the total amount of Eight Hundred Thousand Pesos (P800,000)
Philippine Currency, in cash, which represent P200,000 as his share in the payment
and P600,000 as pro-rata shares of the heirs Crisanto, Cayetano and Matilde, all
surnamed de Borja and this shall be considered as full and complete payment and
settlement of her hereditary share in the estate of the late Francisco de Borja as well
as the estate of Josefa Tangco, Sp. Proc. No. 832-Nueva Ecija and Sp. Proc. No.
7866-Rizal, respectively, and to any properties bequeathed or devised in her favor by
the late Francisco de Borja by Last Will and Testament or by Donation Inter Vivos or
Mortis Causa or purportedly conveyed to her for consideration or otherwise. The
funds for this payment shall be taken from and shall depend upon the receipt of full
payment of the proceeds of the sale of Jalajala, "Poblacion."

3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment of that

particular obligation incurred by the late Francisco de Borja in favor of the
Rehabilitation Finance Corporation, now Development Bank of the Philippines,
amounting to approximately P30,000.00 and also assumes payment of her 1/5 share
of the Estate and Inheritance taxes on the Estate of the late Francisco de Borja or
the sum of P3,500.00, more or less, which shall be deducted by the buyer of Jalajala,
"Poblacion" from the payment to be made to Tasiana Ongsingco Vda. de Borja under
paragraph 2 of this Agreement and paid directly to the Development Bank of the
Philippines and the heirs-children of Francisco de Borja.

4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay directly to

Tasiana Ongsingco Vda. de de Borja the balance of the payment due her under
paragraph 2 of this Agreement (approximately P766,500.00) and issue in the name
of Tasiana Ongsingco Vda. de de Borja, corresponding certified checks/treasury
warrants, who, in turn, will issue the corresponding receipt to Jose de Borja.
 5. In consideration of above payment to Tasiana Ongsingco Vda. de de Borja, Jose
de Borja personally and as administrator of the Testate Estate of Josefa Tangco, and
Tasiana Ongsingco Vda. de de Borja, for themselves and for their heirs, successors,
executors, administrators, and assigns, hereby forever mutually renounce, withdraw,
waive, remise, release and discharge any and all manner of action or actions, cause
or causes of action, suits, debts, sum or sums of money, accounts, damages, claims
and demands whatsoever, in law or in equity, which they ever had, or now have or
may have against each other, more specifically Sp. Proceedings Nos. 7866 and
1955, CFI-Rizal, and Sp. Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI
Nueva Ecija and Civil Case No. 7452-CFI, Rizal, as well as the case filed against
Manuel Quijal for perjury with the Provincial Fiscal of Rizal, the intention being to
completely, absolutely and finally release each other, their heirs, successors, and
assigns, from any and all liability, arising wholly or partially, directly or indirectly, from
the administration, settlement, and distribution of the assets as well as liabilities of
the estates of Francisco de Borja and Josefa Tangco, first spouse of Francisco de
Borja, and lastly, Tasiana Ongsingco Vda. de de Borja expressly and specifically
renounce absolutely her rights as heir over any hereditary share in the estate of
Francisco de Borja.

6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the payment under
paragraph 4 hereof, shall deliver to the heir Jose de Borja all the papers, titles and
documents belonging to Francisco de Borja which are in her possession and said
heir Jose de Borja shall issue in turn the corresponding receive thereof.

7. That this agreement shall take effect only upon the fulfillment of the sale of the
properties mentioned under paragraph 1 of this agreement and upon receipt of the
total and full payment of the proceeds of the sale of the Jalajala property "Poblacion",
otherwise, the non-fulfillment of the said sale will render this instrument NULL AND
VOID AND WITHOUT EFFECT THEREAFTER.

IN WITNESS WHEREOF, the parties hereto have her unto set their hands in the City
of Manila, Philippines, the 12th of October, 1963.

On 16 May 1966, Jose de Borja submitted for Court approval the agreement of 12 October 1963 to
the Court of First Instance of Rizal, in Special Proceeding No. R-7866; and again, on 8 August 1966,
to the Court of First Instance of Nueva Ecija, in Special Proceeding No. 832. Tasiana Ongsingco
Vda. de de Borja opposed in both instances. The Rizal court approved the compromise agreement,
but the Nueva Ecija court declared it void and unenforceable. Special administratrix Tasiana
Ongsingco Vda. de de Borja appealed the Rizal Court's order of approval (now Supreme Court G.R.
case No. L-28040), while administrator Jose de Borja appealed the order of disapproval (G.R. case
No. L-28568) by the Court of First Instance of Nueva Ecija.

The genuineness and due execution of the compromised agreement of 12 October 1963 is not
disputed, but its validity is, nevertheless, attacked by Tasiana Ongsingco on the ground that: (1) the
heirs cannot enter into such kind of agreement without first probating the will of Francisco de Borja;
(2) that the same involves a compromise on the validity of the marriage between Francisco de Borja
and Tasiana Ongsingco; and (3) that even if it were valid, it has ceased to have force and effect.

In assailing the validity of the agreement of 12 October 1963, Tasiana Ongsingco and the Probate
Court of Nueva Ecija rely on this Court's decision in Guevara vs. Guevara. 74 Phil. 479, wherein the
Court's majority held the view that the presentation of a will for probate is mandatory and that the
settlement and distribution of an estate on the basis of intestacy when the decedent left a will, is
against the law and public policy. It is likewise pointed out by appellant Tasiana Ongsingco that
Section 1 of Rule 74 of the Revised Rules explicitly conditions the validity of an extrajudicial
settlement of a decedent's estate by agreement between heirs, upon the facts that "(if) the
decedent left no will and no debts, and the heirs are all of age, or the minors are represented by their
judicial and legal representatives ..." The will of Francisco de Borja having been submitted to the
Nueva Ecija Court and still pending probate when the 1963 agreement was made, those
circumstances, it is argued, bar the validity of the agreement.

Upon the other hand, in claiming the validity of the compromise agreement, Jose de Borja stresses
that at the time it was entered into, on 12 October 1963, the governing provision was Section 1, Rule
74 of the original Rules of Court of 1940, which allowed the extrajudicial settlement of the estate of a
deceased person regardless of whether he left a will or not. He also relies on the dissenting opinion
of Justice Moran, in Guevara vs. Guevara, 74 Phil. 479, wherein was expressed the view that if the
parties have already divided the estate in accordance with a decedent's will, the probate of the will is
a useless ceremony; and if they have divided the estate in a different manner, the probate of the will
is worse than useless.

The doctrine of Guevara vs. Guevara, ante, is not applicable to the case at bar. This is apparent
from an examination of the terms of the agreement between Jose de Borja and Tasiana Ongsingco.
Paragraph 2 of said agreement specifically stipulates that the sum of P800,000 payable to Tasiana
Ongsingco —

shall be considered as full — complete payment — settlement of her hereditary

share in the estate of the late Francisco de Borja as well as the estate of Josefa
Tangco, ... and to any properties bequeathed or devised in her favor by the late
Francisco de Borja by Last Will and Testament or by Donation Inter Vivos or Mortis
Causa or purportedly conveyed to her for consideration or otherwise.

This provision evidences beyond doubt that the ruling in the Guevara case is not applicable to the
cases at bar. 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)3 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.4 Of course, the
effect of such alienation is to be deemed limited to what is ultimately adjudicated to the vendor heir.
However, the aleatory character of the contract does not affect the validity of the transaction; neither
does the coetaneous agreement that the numerous litigations between the parties (the approving
order of the Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82) are to be considered
settled and should be dismissed, although such stipulation, as noted by the Rizal Court, gives the
contract the character of a compromise that the law favors, for obvious reasons, if only because it
serves to avoid a multiplicity of suits.

It is likewise worthy of note in this connection that as the surviving spouse of Francisco de Borja,
Tasiana Ongsingco was his compulsory heir under article 995 et seq. of the present Civil Code.
Wherefore, barring unworthiness or valid disinheritance, her successional interest existed
independent of Francisco de Borja's last will and testament and would exist even if such will were
not probated at all. Thus, the prerequisite of a previous probate of the will, as established in the
Guevara and analogous cases, can not apply to the case of Tasiana Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered into by and between "Jose de Borja personally
and as administrator of the Testate Estate of Josefa Tangco" on the one hand, and on the other, "the
heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco Vda.
de de Borja", it is clear that the transaction was binding on both in their individual capacities, upon
the perfection of the contract, even without previous authority of the Court to enter into the same.
The only difference between an extrajudicial compromise and one that is submitted and approved by
the Court, is that the latter can be enforced by execution proceedings. Art. 2037 of the Civil Code is
explicit on the point:

8. Art. 2037. A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise.

It is argued by Tasiana Ongsingco that while the agreement Annex A expressed no

definite period for its performance, the same was intended to have a resolutory
period of 60 days for its effectiveness. In support of such contention, it is averred that
such a limit was expressly stipulated in an agreement in similar terms entered into by
said Ongsingco with the brothers and sister of Jose de Borja, to wit, Crisanto, Matilde
and Cayetano, all surnamed de Borja, except that the consideration was fixed at
P600,000 (Opposition, Annex/Rec. of Appeal, L-28040, pp. 39- 46) and which
contained the following clause:

III. That this agreement shall take effect only upon the consummation of the sale of
the property mentioned herein and upon receipt of the total and full payment of the
proceeds of the sale by the herein owner heirs-children of Francisco de Borja,
namely, Crisanto, Cayetano and Matilde, all surnamed de Borja; Provided that if no
sale of the said property mentioned herein is consummated, or the non-receipt of the
purchase price thereof by the said owners within the period of sixty (60) days from
the date hereof, this agreement will become null and void and of no further effect.

Ongsingco's argument loses validity when it is considered that Jose de Borja was not a party to this
particular contract (Annex 1), and that the same appears not to have been finalized, since it bears no
date, the day being left blank "this — day of October 1963"; and while signed by the parties, it was
not notarized, although plainly intended to be so done, since it carries a proposed notarial ratification
clause. Furthermore, the compromise contract with Jose de Borja (Annex A), provides in its par. 2
heretofore transcribed that of the total consideration of P800, 000 to be paid to Ongsingco, P600,000
represent the "prorata share of the heirs Crisanto, Cayetano and Matilde all surnamed de Borja"
which corresponds to the consideration of P600,000 recited in Annex 1, and that circumstance is
proof that the duly notarized contract entered into wit Jose de Borja under date 12 October 1963
(Annex A), was designed to absorb and supersede the separate unformalize agreement with the
other three Borja heirs. Hence, the 60 days resolutory term in the contract with the latter (Annex 1)
not being repeated in Annex A, can not apply to the formal compromise with Jose de Borja. It is
moreover manifest that the stipulation that the sale of the Hacienda de Jalajala was to be made
within sixty days from the date of the agreement with Jose de Borja's co-heirs (Annex 1) was plainly
omitted in Annex A as improper and ineffective, since the Hacienda de Jalajala (Poblacion) that was
to be sold to raise the P800,000 to be paid to Ongsingco for her share formed part of the estate of
Francisco de Borja and could not be sold until authorized by the Probate Court. The Court of First
Instance of Rizal so understood it, and in approving the compromise it fixed a term of 120 days
counted from the finality of the order now under appeal, for the carrying out by the parties for the
terms of the contract.
This brings us to the plea that the Court of First Instance of Rizal had no jurisdiction to approve the
compromise with Jose de Borja (Annex A) because Tasiana Ongsingco was not an heir in the estate
of Josefa Tangco pending settlement in the Rizal Court, but she was an heir of Francisco de Borja,
whose estate was the object of Special Proceeding No. 832 of the Court of First Instance of Nueva
Ecija. This circumstance is irrelevant, since what was sold by Tasiana Ongsingco was only her
eventual share in the estate of her late husband, not the estate itself; and as already shown, that
eventual share she owned from the time of Francisco's death and the Court of Nueva Ecija could not
bar her selling it. As owner of her undivided hereditary share, Tasiana could dispose of it in favor of
whomsoever she chose. Such alienation is expressly recognized and provided for by article 1088 of
the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the
partition, any or all of the co-heirs may be subrogated to the rights of the purchaser
by reimbursing him for the price of the sale, provided they do so within the period of
one month from the time they were notified in writing of the sale of the vendor.

If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a coheir could
not be forbidden.

Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex "A") is void because it
amounts to a compromise as to her status and marriage with the late Francisco de Borja. The point
is without merit, for the very opening paragraph of the agreement with Jose de Borja (Annex "A")
describes her as "the heir and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", which is in itself definite admission of her civil status. There is
nothing in the text of the agreement that would show that this recognition of Ongsingco's status as
the surviving spouse of Francisco de Borja was only made in consideration of the cession of her
hereditary rights.

It is finally charged by appellant Ongsingco, as well as by the Court of First Instance of Nueva Ecija
in its order of 21 September 1964, in Special Proceedings No. 832 (Amended Record on Appeal in
L-28568, page 157), that the compromise agreement of 13 October 1963 (Annex "A") had been
abandoned, as shown by the fact that, after its execution, the Court of First Instance of Nueva Ecija,
in its order of 21 September 1964, had declared that "no amicable settlement had been arrived at by
the parties", and that Jose de Borja himself, in a motion of 17 June 1964, had stated that the
proposed amicable settlement "had failed to materialize".

It is difficult to believe, however, that the amicable settlement referred to in the order and motion
above-mentioned was the compromise agreement of 13 October 1963, which already had been
formally signed and executed by the parties and duly notarized. What the record discloses is that
some time after its formalization, Ongsingco had unilaterally attempted to back out from the
compromise agreement, pleading various reasons restated in the opposition to the Court's approval
of Annex "A" (Record on Appeal, L-20840, page 23): that the same was invalid because of the lapse
of the allegedly intended resolutory period of 60 days and because the contract was not preceded by
the probate of Francisco de Borja's will, as required by this Court's Guevarra vs. Guevara ruling; that
Annex "A" involved a compromise affecting Ongsingco's status as wife and widow of Francisco de
Borja, etc., all of which objections have been already discussed. It was natural that in view of the
widow's attitude, Jose de Borja should attempt to reach a new settlement or novatory agreement
before seeking judicial sanction and enforcement of Annex "A", since the latter step might ultimately
entail a longer delay in attaining final remedy. That the attempt to reach another settlement failed is
apparent from the letter of Ongsingco's counsel to Jose de Borja quoted in pages 35-36 of the brief
for appellant Ongsingco in G.R. No. 28040; and it is more than probable that the order of 21
September 1964 and the motion of 17 June 1964 referred to the failure of the parties' quest for a
more satisfactory compromise. But the inability to reach a novatory accord can not invalidate the
original compromise (Annex "A") and justifies the act of Jose de Borja in finally seeking a court order
for its approval and enforcement from the Court of First Instance of Rizal, which, as heretofore
described, decreed that the agreement be ultimately performed within 120 days from the finality of
the order, now under appeal.

We conclude that in so doing, the Rizal court acted in accordance with law, and, therefore, its order
should be upheld, while the contrary resolution of the Court of First Instance of Nueva Ecija should
be, and is, reversed.

In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal has affected her
unfavorably, in that while the purchasing power of the agreed price of P800,000 has diminished, the
value of the Jalajala property has increased. But the fact is that her delay in receiving the payment of
the agreed price for her hereditary interest was primarily due to her attempts to nullify the agreement
(Annex "A") she had formally entered into with the advice of her counsel, Attorney Panaguiton. And
as to the devaluation de facto of our currency, what We said in Dizon Rivera vs. Dizon, L-24561, 30
June 1970, 33 SCRA 554, that "estates would never be settled if there were to be a revaluation with
every subsequent fluctuation in the values of currency and properties of the estate", is particularly
opposite in the present case.

Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de Jalajala (Poblacion),
concededly acquired by Francisco de Borja during his marriage to his first wife, Josefa Tangco, is
the husband's private property (as contended by his second spouse, Tasiana Ongsingco), or
whether it forms part of the conjugal (ganancial) partnership with Josefa Tangco. The Court of First
Instance of Rizal (Judge Herminio Mariano, presiding) declared that there was adequate evidence to
overcome the presumption in favor of its conjugal character established by Article 160 of the Civil
Code.

We are of the opinion that this question as between Tasiana Ongsingco and Jose de Borja has
become moot and academic, in view of the conclusion reached by this Court in the two preceding
cases (G.R. No. L-28568), upholding as valid the cession of Tasiana Ongsingco's eventual share in
the estate of her late husband, Francisco de Borja, for the sum of P800,000 with the accompanying
reciprocal quit-claims between the parties. But as the question may affect the rights of possible
creditors and legatees, its resolution is still imperative.

It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been originally acquired
jointly by Francisco de Borja, Bernardo de Borja and Marcelo de Borja and their title thereto was duly
registered in their names as co-owners in Land Registration Case No. 528 of the province of Rizal,
G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil. 465). Subsequently, in 1931, the Hacienda
was partitioned among the co-owners: the Punta section went to Marcelo de Borja; the Bagombong
section to Bernardo de Borja, and the part in Jalajala proper (Poblacion) corresponded to Francisco
de Borja (V. De Borja vs. De Borja 101 Phil. 911, 932).

The lot allotted to Francisco was described as —

Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena

Romero; S. Heirs of Marcelo de Borja O. Laguna de Bay; containing an area of
13,488,870 sq. m. more or less, assessed at P297,410. (Record on Appeal, pages 7
and 105)

On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the Testate Estate of

Francisco de Borja, instituted a complaint in the Court of First Instance of Rizal (Civil Case No. 7452)
against Jose de Borja, in his capacity as Administrator of Josefa Tangco (Francisco de Borja's first
wife), seeking to have the Hacienda above described declared exclusive private property of
Francisco, while in his answer defendant (now appellant) Jose de Borja claimed that it was conjugal
property of his parents (Francisco de Borja and Josefa Tangco), conformably to the presumption
established by Article 160 of the Philippine Civil Code (reproducing Article 1407 of the Civil Code of
1889), to the effect that:

Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the
wife.

Defendant Jose de Borja further counterclaimed for damages, compensatory, moral and exemplary,
as well as for attorney's fees.

After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held that the plaintiff had
adduced sufficient evidence to rebut the presumption, and declared the Hacienda de Jalajala
(Poblacion) to be the exclusive private property of the late Francisco de Borja, and his Administratrix,
Tasiana Ongsingco Vda. de Borja, to be entitled to its possession. Defendant Jose de Borja then
appealed to this Court.

The evidence reveals, and the appealed order admits, that the character of the Hacienda in question
as owned by the conjugal partnership De Borja-Tangco was solemnly admitted by the late Francisco
de Borja no less than two times: first, in the Reamended Inventory that, as executor of the estate of
his deceased wife Josefa Tangco, he filed in the Special Proceedings No. 7866 of the Court of First
Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the Reamended Accounting of the
same date, also filed in the proceedings aforesaid (Exhibit "7"). Similarly, the plaintiff Tasiana O.
Vda. de Borja, herself, as oppositor in the Estate of Josefa Tangco, submitted therein an inventory
dated 7 September 1954 (Exhibit "3") listing the Jalajala property among the "Conjugal Properties of
the Spouses Francisco de Borja and Josefa Tangco". And once more, Tasiana Ongsingco, as
administratrix of the Estate of Francisco de Borja, in Special Proceedings No. 832 of the Court of
First Instance of Nueva Ecija, submitted therein in December, 1955, an inventory wherein she listed
the Jalajala Hacienda under the heading "Conjugal Property of the Deceased Spouses Francisco de
Borja and Josefa Tangco, which are in the possession of the Administrator of the Testate Estate of
the Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court of First Instance of
Rizal" (Exhibit "4").

Notwithstanding the four statements aforesaid, and the fact that they are plain admissions against
interest made by both Francisco de Borja and the Administratrix of his estate, in the course of
judicial proceedings in the Rizal and Nueva Ecija Courts, supporting the legal presumption in favor of
the conjugal community, the Court below declared that the Hacienda de Jalajala (Poblacion) was not
conjugal property, but the private exclusive property of the late Francisco de Borja. It did so on the
strength of the following evidences: (a) the sworn statement by Francis de Borja on 6 August 1951
(Exhibit "F") that —

He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4 parte,

337 hectareas) adjunto a mi terreno personal y exclusivo (Poblacion de Jalajala,
Rizal).

and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the entire Hacienda had
been bought at a foreclosure sale for P40,100.00, of which amount P25,100 was contributed by
Bernardo de Borja and P15,000. by Marcelo de Borja; that upon receipt of a subsequent demand
from the provincial treasurer for realty taxes the sum of P17,000, Marcelo told his brother Bernardo
that Francisco (son of Marcelo) wanted also to be a co-owner, and upon Bernardo's assent to the
proposal, Marcelo issue a check for P17,000.00 to pay the back taxes and said that the amount
would represent Francisco's contribution in the purchase of the Hacienda. The witness further
testified that —

Marcelo de Borja said that that money was entrusted to him by Francisco de
Borja when he was still a bachelor and which he derived from his business
transactions. (Hearing, 2 February 1965, t.s.n., pages 13-15) (Emphasis supplied)

The Court below, reasoning that not only Francisco's sworn statement overweighed the admissions
in the inventories relied upon by defendant-appellant Jose de Borja since probate courts can not
finally determine questions of ownership of inventoried property, but that the testimony of Gregorio
de Borja showed that Francisco de Borja acquired his share of the original Hacienda with his private
funds, for which reason that share can not be regarded as conjugal partnership property, but as
exclusive property of the buyer, pursuant to Article 1396(4) of Civil Code of 1889 and Article 148(4)
of the Civil Code of the Philippines.

The following shall be the exclusive property of each spouse:

xxx xxx xxx

(4) That which is purchased with exclusive money of the wife or of the husband.

We find the conclusions of the lower court to be untenable. In the first place, witness Gregorio de
Borja's testimony as to the source of the money paid by Francisco for his share was plain hearsay,
hence inadmissible and of no probative value, since he was merely repeating what Marcelo de Borja
had told him (Gregorio). There is no way of ascertaining the truth of the statement, since both
Marcelo and Francisco de Borja were already dead when Gregorio testified. In addition, the
statement itself is improbable, since there was no need or occasion for Marcelo de Borja to explain
to Gregorio how and when Francisco de Borja had earned the P17,000.00 entrusted to Marcelo. A
ring of artificiality is clearly discernible in this portion of Gregorio's testimony.

As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante, page 14) does not
clearly demonstrate that the "mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal) " refers
precisely to the Hacienda in question. The inventories (Exhibits 3 and 4) disclose that there were two
real properties in Jalajala owned by Francisco de Borja, one of 72.038 sq. m., assessed at P44,600,
and a much bigger one of 1,357.260.70 sq. m., which is evidently the Hacienda de Jalajala
(Poblacion). To which of these lands did the affidavit of Francisco de Borja (Exhibit "F") refer to? In
addition, Francisco's characterization of the land as "mi terreno personal y exclusivo" is plainly self-
serving, and not admissible in the absence of cross examination.

It may be true that the inventories relied upon by defendant-appellant (Exhibits "2", "3", "4" and "7")
are not conclusive on the conjugal character of the property in question; but as already noted, they
are clear admissions against the pecuniary interest of the declarants, Francisco de Borja and his
executor-widow, Tasiana Ongsingco, and as such of much greater probative weight than the self-
serving statement of Francisco (Exhibit "F"). Plainly, the legal presumption in favor of the conjugal
character of the Hacienda de Jalajala (Poblacion) now in dispute has not been rebutted but actually
confirmed by proof. Hence, the appealed order should be reversed and the Hacienda de Jalajala
(Poblacion) declared property of the conjugal partnership of Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the lower court that claims for damages should
be ventilated in the corresponding special proceedings for the settlement of the estates of the
deceased, the same requires no pro announcement from this Court.

IN VIEW OF THE FOREGOING, the appealed order of the Court of First Instance of Rizal in Case
No. L-28040 is hereby affirmed; while those involved in Cases Nos. L-28568 and L-28611 are
reversed and set aside. Costs against the appellant Tasiana Ongsingco Vda. de Borja in all three (3)
cases.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.

Fernando, J., took no part.

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 guardian ad litem for them. Without pronouncement as to costs.

SO ORDERED.
G.R. No. 126950 July 2, 1999

NELSON NUFABLE, SILMOR NUFABLE and AQUILINA NUFABLE, petitioners,

vs.
GENEROSA NUFABLE, VILFOR NUFABLE, MARCELO NUFABLE, and the COURT OF
APPEALS,respondents.

GONZAGA-REYES, J.:

This petition for review on certiorari seeks to reverse and set aside the Decision dated November 25,
1995 of the Fifth Division1 of the Court of Appeals for allegedly being contrary to law.

The following facts as found by the Court of Appeals are undisputed:

Edras Nufable owned 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 (Exhs. B, C and C-1).

On June 6, 1966 the same court issued an Order approving the Settlement of Estate
submitted by the heirs of the late ESdras Nufable, portions of which read:

KNOW ALL MEN BY THESE PRESENTS:

We, ANGEL CUSTODIO NUFABLE, GENEROSA NUFABLE,

VILFOR NUFABLE and MARCELO NUFABLE, all of legal ages (sic),
Filipinos, and with residence and postal address at Manjuyod, Negros
Oriental, Philippines,

— HEREBY DECLARE AND MAKE MANIFEST —

1. That on August 9, 1965, Rev. Fr. Esdras Nufable died leaving (a)
Last Will and Testament (marked Exh. G) disposing (of) his
properties or estate in favor of his four legitimate children, namely:
Angel Custodio Nufable, Generosa Nufable, Vilfor Nufable and
Marcelo Nufable;

2. That on March 30, 1966 the said Last Will and Testament was
probated by the Honorable Court, Court of First Instance of Negros
Oriental, and is embodied in the same order appointing an
Administratrix, Generosa Nufable, but to qualify only if she put up a
necessary bond of P1,000.00;
 3. That herein legitimate children prefer not to appoint an
Administratrix, as agreed upon (by) all the heirs, because they have
no objection as to the manner of disposition of their share made by
the testator, the expenses of the proceedings and that they have
already taken possession of their respective shares in accordance
with the will;

4. That the herein heirs agreed, as they hereby agree to settle the
estate in accordance with the terms and condition of the will in the
following manner, to wit:

a) That the parcel of land situated in Poblacion Manjuyod, Negros

Oriental remains undivided for community ownership but respecting
conditions imposed therein (sic) in the will;

xxx xxx xxx

(Exhs. "E" and "E-1")

Two months earlier, or on March 15, 1966, spouses Angel Custodio and Aquilina
Nufable mortgaged the entire property located at Manjuyod to the Development Bank
of the Philippines [DBP] (Pre-trial Order, dated January 7, 1992, p. 103, Original
Records). Said mortgagors became delinquent for which reason the mortgaged
property was foreclosed by DBP on February 26, 1973 (id.).

On January 11, 1980, Nelson Nufable, the son of Angel Custodio Nufable (who died
on August 29, 1978 [TSN, Testimony of Nelson Nufable, Hearing of August 18, 1992,
p. 17]), purchased said property from DBP (Exh. "1").

Generosa, Vilfor and Marcelo, all surnamed Nufable filed with the lower court a
complaint dated July 25, 1985 "To Annul Fraudulent Transactions, to Quiet Title and
To Recover Damages' against Nelson Nufable, and wife, Silmor Nufable and his
mother Aquilina Nufable. Plaintiffs pray:

WHEREFORE, plaintiffs pray this Honorable Court that after trial

judgment be rendered ordering:

(a) That the said Deed of Sale (Annex "C") executed by the
Development Bank of the Philippines in favor of the defendants be
declared null and void as far as the three fourths (3/4) rights which
belongs (sic) to the plaintiffs are concerned;

(b) That the said three fourths (3/4) rights over the above parcel in
question be declared as belonging to the plaintiffs at one fourth right
to each of them;

(c) To order the defendants to pay jointly and severally to the plaintiffs
by way of actual and moral damages the amount of P10,000.00 and
another P5,000.00 as Attorney's fees, and to pay the costs.
 (d) Plus any other amount which this Court may deem just and
equitable. (p. 6, Original Records)

In their Answer, defendants contend:

4. Paragraph 4 is denied, the truth being that the late Angel Nufable
was the exclusive owner of said property, that as such owner he
mortgaged the same to the Development Bank of the Philippines on
March 15, 1966, that said mortgage was foreclosed and the DBP
became the successful bidder at the auction sale, that ownership was
consolidated in the name of the DBP, and that defendant Nelson
Nufable bought said property from the DBP thereafter. During this
period, the plaintiffs never questioned the transactions which were
public, never filed any third party claim nor attempted to redeem said
property as redemptioners, and that said Deed of Sale, Annex "B" to
the complaint, is fictitious, not being supported by any consideration;
(pp. 20-21, id.)

The Deed of Sale (Annex "B"), referred to by the parties is a notarized Deed of Sale,
dated July 12, 1966 (marked as Exhibit "H") by virtue of which, spouses Angel and
Aquilina Nufable, as vendors, sold 3/4 portion of the subject property to herein
plaintiffs for and in consideration of P1,000.00 (Exh. "5").2

On November 29, 1995, the Court of Appeals rendered judgment, the dispositive portion3 of which
reads:

WHEREFORE, the appealed decision of the lower court is REVERSED and SET
ASIDE. A new judgment is hereby entered declaring plaintiffs-appellants as the
rightful co-owners of the subject property and entitled to possession of 3/4 southern
portion thereof; and defendant-appellee Nelson Nufable to 1/4 portion.

No award on damages.

No costs.

Defendants-appellees' Motion for Reconsideration was denied for lack of merit in the Resolution of
the Court of Appeals4 dated October 2, 1996.

Hence, the present petition. Petitioners raise the following grounds for the petition:

1. Honorable Court of Appeals erred in considering as controlling the probate of the

Last Will and Testament of Esdras Nufable, the probate thereof not being an issue in
this case;

2. The Honorable Court of Appeals erred in not considering the fact that the
Development Bank of the Philippines became absolute, exclusive, legal and rightful
owner of the land in question, from whom petitioner Nelson Nufable acquired the
same by purchase and that, therefore, no award can be made in favor of private
respondent unless and until the Development Bank of the Philippines' title thereto is
first declared null and void by the court.
The Court of Appeals, in its decision, stated that the trial court failed to take into consideration the
probated will of the late Esdras Nufable bequeathing the subject property to all his four children.5 In
the present petition, petitioner present the issue of 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 (DBP, for short). They contend that the probate
of the Last Will Testament and of Esdras Nufable did not determine the ownership of the land in
question as against third parties.1âwphi1.nêt

As a general rule, courts in probate proceedings are limited only to passing upon the extrinsic
validity of the will sought to be probated, the due execution thereof, the testator's testamentary
capacity and the compliance with the requisites or solemnities prescribes by law. Said court at this
stage of the proceedings is not called to rule on the rule on the intrinsic validity or efficacy of the
will.6 The question of the intrinsic validity of a will normally comes only after the court has declared
that the will has been duly authenticated.

The records show that upon petition for probate filed by the heirs of the late Esdras Nufable, an
Order dated March 30, 1966 was issued by then Court of First Instance of Negros Oriental, Branch
II, admitting to probate the last will and testament executed by the decedent.7 Thereafter, on June 6,
1966, the same court approved the Settlement of Estate submitted by the heirs of the late Esdras
Nufable wherein they agreed "(T)hat the parcel land situated in Poblacion Manjuyod, Negros
Oriental remains undivided for community ownership but respecting conditions imposed therein (sic)
in the will."8 In paragraph 3 thereof, they stated that "they have no objection as to the manner of
disposition of their share made by the testator, the expenses of the proceeding and that they have
already taken possession of their respective shares in accordance with the will." Verily, it was the
heirs of the late Esdras Nufable who agreed among themselves on the disposition of their shares.
The probate court simply approved the agreement among the heirs which approval was necessary
for the validity of any disposition of the decedent's estate.9

It should likewise be noted that the late Esdras Nufable died on August 9, 1965. When the entire
property located at Manjuyod was mortgaged on March 15, 1966 by his son Angel Custodio with
DBP, the other heirs of Esdras — namely: Generosa, Vilfor and Marcelo — had already acquired
successional rights over the said property. This is so because of the principle contained in Article
777 of the Civil Code to the effect that 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 on March 30, 1966 or
thereafter or that the Settlement of Estate was approved on June 6, 1966 or months later. 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."10 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 11 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. 12
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." 13 Article 493 of the Civil Code spells out the rights or co-
owners over a co-owned property. Pursuant to said Article, a co-owner shall have full ownership of
his part and of the fruits and benefits pertaining thereto. He has the right to alienate, assign or
mortgage it, and even substitute another person in its enjoyment. As a mere part owner, he cannot
alienate the shares of the other co-owners. The prohibition is premised on the elementary rule that
"no one can give what he does not have." 14

Moreover, respondents stipulated that they were not aware of the mortgage by petitioners of the
subject property. 15This being the case, a co-owner does not lose his part ownership of a co-owned
property when his share is mortgaged by another co-owner without the former's knowledge and
consent 16 as in the case at bar. It has likewise been ruled that the mortgage of the inherited property
is not binding against co-heirs who never benefitted. 17

Furthermore, the Deed of Sale dated June 17, 1966 marked as Exhibit "H" executed by spouses
Angel and Aquilina Nufable in favor of respondents Generosa, Vilfor and Marcelo wherein the former
sold, ceded and transferred back to the latter the 3/4 portion of the subject property bolsters
respondents' claim that there was co-ownership. Petitioner Nelson himself claimed that he was
aware of the aforesaid Deed of Sale. 18

Anent the second ground of the petition, petitioners allege that the Development Bank of the
Philippines acquired ownership of the land in question through foreclosure, purchase and
consolidation of ownership. Petitioners argue that if petitioner Nelson Nufable had not bought said
land from the DBP, private respondents, in order to acquire said property, must sue said bank for the
recovery thereof, and in so doing, must allege grounds for the annulment of documents evidencing
the bank's ownership thereof. Petitioners contend that since petitioner Nelson Nufable simply bought
the whole land from the bank, they cannot be deprived of the ownership of 3/4 without making any
pronouncement as to the legality or illegality of the bank's ownership of said land. It is argued that
there was no evidence to warrant declaration of nullity of the bank's acquisition of said land; and that
neither was there a finding by the court that the bank illegally acquired the said property.

As adverted to above, when the subject property was mortgaged by Angel Custodio, he had no right
to mortgage the entire property but only with respect to his 1/4 pro indiviso share as the property
was subject to the successional rights of the other heirs of the late Esdras. Moreover, in case of
foreclosure; a sale would result in the transmission of title to the buyer which is feasible only if the
seller can be in a position to convey ownership of the things sold. 19And in one case, 20 it was held
that a foreclosure would be ineffective unless the mortgagor has title to the property to be
foreclosed. Therefore, as regards the remaining 3/4 pro indiviso share, the same was held in trust for
the party rightfully entitled thereto, 21 who are the private respondents herein.

Pursuant to Article 1451 of the Civil Code, when land passes by succession to any person and he
causes the legal title to be put in the name of another, a trust is established by implication of law for
the benefit of the true owner. Likewise, under Article 1456 of the same Code, if property is acquired
through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes. In the case of Noel
vs. Court of Appeals, 22 this Court held that "a buyer of a parcel of land at a public auction to satisfy a
judgment against a widow acquired only one-half interest on the land corresponding to the share of
the widow and the other half belonging to the heirs of her husband became impressed with a
constructive trust in behalf of said heirs."
Neither does the fact that DBP succeeded in consolidating ownership over the subject property in its
name terminate the existing co-ownership. Registration of property is not a means of acquiring
ownership. 23 When the subject property was sold to and consolidated in the name of DBP, it being
the winning bidder in the public auction, DBP merely held the 3/4 portion in trust for the private
respondents. When petitioner Nelson purchased the said property, he merely stepped into the shoes
of DBP and acquired whatever rights and obligations appertain thereto.

This brings us to the issue of whether or not the DBP should have been impleaded as party-
defendant in the case at bar. Petitioners contend that DBP was never impleaded and that due
process requires that DBP be impleaded so that it can defend its sale to petitioner Nelson Nufable;
and that it was the duty of private respondents, and not of petitioner Nelson, to implead the bank and
ask for the annulment of documents evidencing the bank's ownership of the disputed land.

In the Rejoinder to the Reply, private respondents that the non-inclusion of DBP as a "necessary
party" was not questioned by petitioners from the time the Complaint was filed until the case was
"finished." It was only after the adverse decision by the respondent Court of Appeals that petitioners
raised the issue.

At the outset, it should be stated petitioners never raised this issue in their Answers and pursuant to
Section 2, Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived.

Nonetheless, the rule is that indispensable parties, i.e., parties in interest without whom no final
determination can be had of an action, shall be joined either as plaintiffs or defendants; the inclusion
as a party, i.e., persons who are not indispensable but ought to be parties if complete relief is to be
accorded as between those already parties, the court may, in its discretion, proceed in the action
without making such persons parties, and the judgment rendered therein shall be without prejudice
to the rights of such persons. 25 Proper parties, therefore, have been described as parties whose
presence in necessary in order to adjudicate the whole controversy, but whose interests are so far
separable that a final decree can be made in their absence without affecting them. 26 Any claim
against a party may be severed and proceeded with separately. 27

The pivotal issue to be determined is whether DBP is an indispensable party in this case.

Private respondents do not question the legality of the foreclosure of the mortgaged property and the
subsequent sale of the same to DBP. The subject property was already purchased by petitioner
Nelson from DBP and latter, by such sale, transferred its rights and obligations to the former.
Clearly, petitioners' interest in the controversy is distinct and separable from the interest of DBP and
a final determination can be had of the action despite the non-inclusion of DBP as party-defendant.
Hence, DBP, not being an indispensable party, did not have to be impleaded in this case.

WHEREFORE, there being no reversible error in the decision appealed from, the petition for review
on certiorari is hereby DENIED. 1âwphi1.nêt

SO ORDERED.

Vitug, Panganiban and Purisima, JJ., concur.

G.R. No. L-25049 August 30, 1968

FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE EGUARAS, plaintiffs-appellants,

vs.
ARTEMIO BALTAZAR, ET AL., defendants-appellees.

Eduardo M. Peralta for plaintiffs-appellants.

Tomas P. Anonuevo for defendants-appellees Artemio Baltazar and Susana Flores.
Tirso Caballero for defendant-appellee Artemio Diawan.

ANGELES, J.:

On appeal from an order dismissing the complaint, on motion to dismiss, in Civil Case No. SC-319 of
the Court of First Instance of Laguna.

It appears that on 6 January 1959, Victoriana Eguaras single, made and executed a real estate
mortgage over a parcel of land, owned by her in fee simple, as security for a loan of P2,170.00 in
favor of the spouses Artemio Baltazar and Susana Flores.

Upon the demise of the mortgagor, the mortgagees, as creditors of the deceased, on 16 September
1960 filed a petition for the intestate proceedings of her estate, in the Court of First Instance of
Laguna, docketed as Civil Case No. SC-99 wherein said mortgages, as petitioners, alleged that
Filemon Ramirez and Monica Ramirez are the heirs of the deceased. Filemon Ramirez was
appointed administrator of the estate; however, having failed to qualify, on 16 January 1961, the
court appointed Artemio Diawan, then a deputy clerk of court, administrator of the estate who, in due
time, qualified for the office.

On 19 April 1961, the mortgagees, Artemio Baltazar and Susana Flores, filed a complaint for
foreclosure of the aforesaid mortgage, against Artemio Diawan, in his capacity as administrator of
the estate, docketed as Civil Case No. SC-292 of the Court of First Instance of Laguna. The
defendant-administrator was duly served with summons but he failed to answer, whereupon, on
petition of the plaintiffs said defendant was declared in default. The case was referred to a
commissioner to receive the evidence for the plaintiffs, and defendant-administrator, as deputy clerk
of court, acted as such hearing commissioner. 1äwphï1.ñët

On 16 August 1961, decision was rendered decreeing the foreclosure of the mortgaged property and
the sale thereof, if, within ninety days from finality of the decision, the obligation was not fully paid.
The judgment not having been satisfied, a writ of execution was issued for the sale of the mortgaged
property, and after compliance with the requirements of the law regarding the sending, posting and
publication of the notice of sale, the Sheriff sold the property at public auction to the highest bidder,
who happened to be the plaintiffs themselves, for the sum of P2,888.50 covering the amount of the
judgment, plus the expenses of the sale and the Sheriff's fees. On petition of the plaintiffs, the sale
was confirmed by the court on 26 January 1962.
On 6 February 1962, Filemon Ramirez, Monica Ramirez and Jose Eguaras, the first two being the
heirs named in the petition for intestate proceedings, filed a complaint designated "For the
Annulment of all Proceedings in said Civil Case No. SC-292 for the Foreclosure of the Mortgage",
against the spouses Artemio Baltazar and Susana Flores, and Artemio Diawan, in his capacity as
administrator of the estate of Victoriana Eguaras, deceased, and Silverio Talabis, in his capacity as
deputy provincial sheriff of Laguna, docketed as Civil Case No. SC-319 of the Court of First Instance
of Laguna.

The facts hereinabove narrated are, succinctly, contained in the complaint in said Civil Case No. SC-
319, with the additional averments that the defendant Diawan, the deputy clerk of court appointed as
administrator of the intestate estate of the deceased, acted in collusion with the other defendants
Artemio Baltazar and Susana Flores, deliberately and in fraud of the plaintiffs: (a) in allowing the
reglementary period within which to file an answer to lapse without notifying and/or informing the
said plaintiffs of the complaint for foreclosure, as a result of which he was declared in default to the
prejudice of the estate which he represents; (b) that had the plaintiffs (Monica and Filemon) been
notified of the pendency of the case, the defendant administrator could have interposed a
counterclaim because payment in the sum of P1,548.52 had been made and received by the
mortgagees on account of the debt; (c) in presiding as hearing officer in the ex parte hearing in Civil
Case No. 292, to receive evidence for plaintiffs therein, notwithstanding the fact that there was
another deputy clerk of court available who could have acted in his stead, as a result of which an
anomalous situation was created whereby he was a defendant and at the same time a commissioner
receiving evidence against himself as administrator; (d) in allowing judgment to become final without
notifying the plaintiffs; (e) in deliberately, allowing the 90-day period within which to make payment to
expire without notifying the heirs, as a result of which the said heirs were not afforded an opportunity
to make payments ordered by the Court in its decision; and (f) in refusing to help the heirs seek
postponement of the auction sale. It is also alleged that it was only when the property foreclosed
was published for sale at public auction that the heirs came to know about the foreclosure
proceedings.

The defendants spouses, Artemio Baltazar and Susana Flores, filed a motion to dismiss the
complaint on the ground that the plaintiffs have no legal capacity to sue; defendant Diawan likewise
moved to dismiss on two grounds: that plaintiffs have no legal capacity to sue and that the complaint
states no cause of action. 1äwphï1.ñët

Despite vigorous opposition interposed by the plaintiffs against the aforesaid motions to dismiss, the
court, on 13 March 1962, dismissed the complaint with costs against the plaintiffs, reasoning thus:
that "upon consideration of the evidence, said defendant could not have offered any evidence to
avoid the foreclosure of the mortgage which the Court found to be in order. Under the circumstances
and with the apparent disinterestedness of Filemon and Rolando to qualify as administrator when
appointed, there could not have been any connivance and/or collusion between plaintiffs in this case
and Artemio Diawan as administrator"; and that plaintiffs have no legal capacity to sue since their
status as legal heirs of the deceased has yet to be determined precisely in Special Proceeding No.
SC-99, and until such status is so fixed by the Court, they have no cause of action against
defendants.

In that order of 13 March 1962, the court also denied plaintiffs' petition for the issuance of a writ of
preliminary injunction to enjoin defendants from entering and taking physical possession of the land
in question on the ground "that possession thereof was effected and delivered by the Provincial
Sheriff to Artemio Baltazar and Susana Flores on February, 1962."

Reconsideration of the aforesaid order having been denied, the plaintiffs took the present appeal
where they assigned the following errors: (1) in holding that plaintiffs-appellants have no legal
capacity to sue until their status as legal heirs of the deceased is determined in Special Proceeding
No. SC-99; (2) in ruling that there was no collusion or connivance among the defendants-appellees,
despite the fact that the issue in the motion to dismiss is purely legal, not factual; and (3) in denying
the petition for a writ of preliminary injunction.

At the outset, let it be remembered that the defendants-appellees, in availing themselves of the
defense that the plaintiffs-appellants had not been declared to be the heirs of the deceased
Victoriana Eguaras, have overlooked the fact that the (defendants-appellees) themselves in their
petition for intestate proceedings (Case SC-99) have alleged that Filemon Ramirez and Monica
Ramirez, two of herein plaintiffs-appellants, are the heirs of the deceased. Insofar as defendants-
appellees are concerned, it is our opinion that they are estopped from questioning the heirship of
these two named persons to the estate of the deceased.

There is no question that the rights to succession are automatically transmitted to the heirs from the
moment of the death of the decedent.1 While, as a rule, the formal declaration or recognition to such
successional rights needs judicial confirmation, this Court has, under special circumstances,
protected these rights from encroachments made or attempted before the judicial
declaration.2 In Pascual vs. Pascual,3 it was ruled that although heirs have no legal standing in court
upon the commencement of testate or intestate proceedings, this rule admits of an exception as
"when the administrator fails or refuses to act in which event the heirs may act in his place."

A similar situation obtains in the case at bar. The administrator is being charged to have been in
collusion and connivance with the mortgagees of a property of the deceased, allowing its foreclosure
without notifying the heirs, to the prejudice of the latter. Since the ground for the present action to
annul the aforesaid foreclosure proceedings is the fraud resulting from such insidious machinations
and collusion in which the administrator has allegedly participated, it would be farfetched to expect
the said administrator himself to file the action in behalf of the estate. And who else but the heirs,
who have an interest to assert and to protect, would bring the action? Inevitably, this case should fall
under the exception, rather than the general rule that pending proceedings for the settlement of the
estate, the heirs have no right to commence an action arising out of the rights belonging to the
deceased.

On the second point raised, We fully agree with the plaintiffs-appellants that the lower court had
gone too far in practically adjudicating the case on the merits when it made the observation that
"there could not have been any connivance and/or collusion between plaintiffs in this case and
Artemio Diawan as administrator." A thorough scrutiny of the allegations in the motions to dismiss
filed by defendants-appellees does not indicate that that question was ever put at issue therein. On
the other hand, the controversy — on the existence or inexistence of collusion between the parties
as a result of which judgment was rendered against the estate — is the very core of the complaint
that was dismissed. Undoubtedly, the cause of action is based on Section 30, Rule 132 of the Rules
of Court.

We are not, however, in accord with the third assigned error — the denial of the motion for the
issuance of preliminary injunction — for it puts at issue the factual finding made by the lower court
that the defendants had already been placed in possession of the property. At this stage of the
proceeding, and considering the nature of the case before Us, such a question is, at this time,
beyond the competence of the Court.

PREMISES CONSIDERED, the order appealed from is hereby set aside insofar as it dismissed the
complaint in Civil Case No. SC-319, and the records be remanded to the lower court for further
proceedings. Costs against defendants-appellees. The Clerk of Court is directed to furnish a copy of
this decision to the Department of Justice for its information.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Fernando, JJ.,
concur.

Footnotes

G.R. No. 75884 September 24, 1987

JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO

ONG, petitioners,
vs.
THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY SHERIFF
OF QUEZON CITY, respondents.

PARAS, J.:

This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of Appeals in AC-G.R. CV
No. 02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming, with modification, the January 5, 1984 Decision of the Regional Trial
Court of Quezon City in Civil Case No. Q-35230.

The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:

...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407, Psd
37326 with an area of 1960.6 sq. m. and Lot No. 1, Psd 15021, with an area of
3,660.8 sq. m. are covered by Transfer Certificate of Title No. 188705 in the name of
"Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D). Alfredo Ong Bio Hong
died on January 18, 1975 and Julita Go Ong was appointed administratrix of her
husband's estate in Civil Case No. 107089. The letters of administration was
registered on TCT No. 188705 on October 23, 1979. Thereafter, Julita Go Ong sold
Lot No. 12 to Lim Che Boon, and TCT No. 188705 was partially cancelled and TCT
No. 262852 was issued in favor of Lim Che Boon covering Lot No. 12 (Exh. D-4). On
June 8, 1981 Julita Go Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1)
mortgaged Lot No. 1 to the Allied Banking Corporation to secure a loan of
P900,000.00 obtained by JK Exports, Inc. The mortgage was registered on TCT No.
188705 on the same date with the following notation: "... mortgagee's consent
necessary in case of subsequent alienation or encumbrance of the property other
conditions set forth in Doc. No. 340, Page No. 69, Book No. XIX, of the Not. Public of
Felixberto Abad". On the loan there was due the sum of P828,000.00 and Allied
Banking Corporation tried to collect it from Julita Go Ong, (Exh. E). 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 plaintiff Julita Go Ong who promised to secure the court's
approval, adding that Julita Go Ong informed the defendant that she was processed
the sum of P300,000.00 by the JK Exports, Inc. which will also take charge of the
interest of the loan.

Concluding, the trial court ruled:

 Absent (of) any evidence that the property in question is the capital of
the deceased husband brought into the marriage, said property
should be presumed as acquired during the marriage and, therefore,
conjugal property,

After the dissolution of the marriage with the death of plaintiff's

husband, the plaintiff acquired, by law, her conjugal share, together
with the hereditary rights thereon. (Margate vs. Rabacal, L-14302,
April 30, 1963). Consequently, the mortgage constituted on said
property, upon express authority of plaintiff, notwithstanding the lack
of judicial approval, is valid, with respect to her conjugal share
thereon, together with her hereditary rights.

On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed
decision (Record, pp. 19-22). The dispositive portion of the appellate court's decision reads:

WHEREFORE, with the modification that the extrajudicial foreclosure proceedings

instituted by defendant against plaintiff shall be held in abeyance to await the final
result of Civil Case No. 107089 of the Court of First Instance of Manila, 6th Judicial
District Branch XXXII, entitled "IN THE MATTER OF THE INTESTATE ESTATE OF
THE LATE ALFREDO ONG BIO: JULITA GO ONG, ADMINISTRATRIX". In
pursuance with which the restraining order of the lower court in this case restraining
the sale of the properties levied upon is hereby ordered to continue in full force and
effect coterminous with the final result of Civil Case No. 107089, the decision
appealed from is hereby affirmed. Costs against plaintiff-appellant.

SO ORDERED.

On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29), but
in a Resolution dated September 11, 1986, respondent court denied the motion for lack of merit
(Ibid., p. 23). Hence, the instant petition (Ibid., pp. 6-17).

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30), without
giving due course to the petition, resolved to require private respondent to comment thereon and it
did on February 19, 1987 (Ibid., pp. 37-42). Thereafter, in a Resolution dated April 6, 1987, the
petition was given due course and the parties were required to file their respective memoranda
(Ibid., p. 43).

Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent filed
its Memorandum on May 20, 1987 (Ibid., pp. 62-68).

The sole issue in this case is —

WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND UNDER
PETITIONER'S ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL APPROVAL.

The instant petition is devoid of merit.

The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries
even more weight when affirmed by the Court of Appeals as in the case at bar.
In brief, the lower court found: (1) that the property under the administration of petitioner — the wife
of the deceased, is a community property and not the separate property of the latter; (2) that the
mortgage was constituted in the wife's personal capacity and not in her capacity as administratrix;
and (3) that the mortgage affects the wife's share in the community property and her inheritance in
the estate of her husband.

Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule
89 of the Rules of Court and cited several cases wherein this Court ruled that the regulations
provided in the said section are mandatory.

While petitioner's assertion may have merit insofar as the rest of the estate of her husband is
concerned the same is not true as regards her conjugal share and her hereditary rights in the estate.
The records show that petitioner willingly and voluntarily mortgaged the property in question
because she was processed by JK Exports, Inc. the sum of P300,000.00 from the proceeds of the
loan; and that at the time she executed the real estate mortgage, there was no court order
authorizing the mortgage, so she took it upon herself, to secure an order.

Thus, in confirming the findings of the lower court, as supported by law and the evidence, the Court
of Appeals 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.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483)
and Fernandez, et al. vs. Maravilla (10 SCRA 589), further argues 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. An opposite view would
result in an injustice. 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 (Philippine
National Bank vs. Court of Appeals, 98 SCRA 207 [1980]).

Consequently, in the case at bar, the trial court and the Court of Appeals 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. The fact that what had been mortgaged was in custodia legis is
immaterial, insofar as her conjugal share and hereditary share in the property is concerned for after
all, she was the ABSOLUTE OWNER thereof. This ownership by hers is not disputed, nor is there
any claim that the rights of the government (with reference to taxes) nor the rights of any heir or
anybody else have been prejudiced for impaired. As stated by Associate Justice (later Chief Justice)
Manuel Moran in Jakosalem vs. Rafols, et al., 73 Phil. 618 —

The land in question, described in the appealed decision, originally belonged to Juan
Melgar. The latter died and the judicial administration of his estate was commenced
in 1915 and came to a close on December 2, 1924, only. During the pendency of the
said administration, that is, on July 5, 1917, Susana Melgar, daughter of the
deceased Juan Melgar, sold the land with the right of repurchase to Pedro Cui,
subject to the stipulation that during the period for the repurchase she would continue
in possession of the land as lessee of the purchase. On December 12, 1920, the
partition of the estate left by the deceased Juan Melgar was made, and the land in
 question was adjudicated to Susana Melgar. In 1921, she conveyed, in payment of
professional fees, one-half of the land in favor of the defendant-appellee Nicolas
Rafols, who entered upon the portion thus conveyed and has been in possession
thereof up to the present. On July 23, 1921, Pedro Cui brought an action to recover
said half of the land from Nicolas Rafols and the other half from the other defendants,
and while that case was pending, or about August 4, 1925, Pedro Cui donated the
whole land in question to Generosa Teves, the herein plaintiff-appellant, after trial,
the lower court rendered a decision absolving Nicolas Rafols as to the one-half of the
land conveyed to him by Susana Melgar, and declaring the plaintiff owner of the
other half by express acknowledgment of the other defendants. The plaintiff
appealed from that part of the judgment which is favorable to Nicolas Rafols.

The lower court absolved Nicolas Rafols upon the theory that Susana Melgar could
not have sold anything to Pedro Cui because the land was then in custodia legis, that
is, under judicial administration. This is error. That the land could not ordinary be
levied upon while in custodia legis, does not mean that one of the heirs may not sell
the right, interest or participation which he has or might have in the lands under
administration. The ordinary execution of property in custodia legis is prohibited in
order to avoid interference with the possession by the court. But the sale made by an
heir of his share in an inheritance, subject to the result of the pending administration,
in no wise stands in the way of such administration.

The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect
the substantiverights 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.). 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.

Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise from
the making of a promise even though without consideration, if it was intended that the promise
should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to
sanction the perpetration of fraud or would result in other injustice (Gonzalo Sy Trading vs. Central
Bank, 70 SCRA 570).

PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of the
Court of Appeals is hereby AFFIRMED.

SO ORDERED.
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-in-
fact, 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
other-co-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 donation inter 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 co-owner of the whole.
Wherefore, any one of the Ramirez heirs, as such co-owner, 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 co-owners 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 co-owner 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 part.
G.R. No. L-14070 March 29, 1961

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

Teofilo Sison and Nicanor Sison for plaintiffs-appellants.

De los Santos, Caluag, Pascal and Felizardo for defendants-appellees.

LABRADOR, J.:

This action was instituted by plaintiffs against the administration of the estate of Maxima Santos, to
secure a judicial declaration that one-half of the properties left by Maxima Santos Vda. de Blas, the
greater bulk of which are set forth and described in the project of partition presented in the
proceedings for the administration of the estate of the deceased Simeon Blas, had been promised
by the deceased Maxima Santos to be delivered upon her death and in her will to the plaintiffs, and
requesting that the said properties so promised be adjudicated to the plaintiffs. The complaint also
prays for actual damages in the amount of P50,000. (Record on Appeal, pp. 1-65.) The alleged
promise of the deceased Maxima Santos is contained in a document executed by Maxima Santos on
December 26, 1936 attached to the complaint as Annex "H" and introduced at the trial as Exhibit "A".
(Ibid., pp. 258-259.) The complaint also alleges that the plaintiffs are entitled to inherit certain
properties enumerated in paragraph 3 thereof, situated in Malabon, Rizal and Obando, Bulacan, but
which properties have already been in included in the inventory of the estate of the deceased
Simeon Blas and evidently partitioned and conveyed to his heirs in the proceedings for the
administration of his (Simeon Blas) estate.

Defendant, who is the administratrix of the estate of the deceased Maxima Santos Vda. de Blas,
filed an answer with a counterclaim, and later, an amended answer and a counterclaim. The said
amended answer admits the allegations of the complaint as to her capacity as administratrix the
death of Simeon Blas on January 3, 1937; the fact that Simeon Blas and Marta Cruz begot three
children only one of whom, namely, Eulalio Blas, left legitimate descendants; that Simeon Blas
contracted a second marriage with Maxima Santos on June 28, 1898. She denies for lack of
sufficient information and belief, knowledge edge of the first marriage of Simeon Blas to Marta Cruz,
the averment that Simeon Blas and Marta Cruz acquired properties situated in Obando, Bulacan,
that said properties were utilized as capital, etc. As special defenses, she alleges that the properties
of the spouses Blas and Santos had been settled and liquidated in the project of partition of the
estate of said Simeon Blas; that pursuant to the project of partition, plaintiffs and some defendants
had already received the respective properties adjudicated to them; that the plaintiffs and the
defendants Marta Geracio and Jose Chivi are estopped from impugning the validity of the project of
partition of the estate of the deceased Simeon Blas and from questioning the ownership in the
properties conveyed in the project of partition to Maxima Santos as her own exclusive property; that
the testament executed by Maxima Santos is valid, the plain plaintiffs having no right to recover any
portion of Maxima Santos' estate now under administration by the court. A counterclaim for the
amount of P50,000 as damages is also included in the complaint, as also a cross-claim against
Marta Gervacio Blas and Jose Chivi.

Trial of the case was Conducted and, thereafter, the court, Hon. Gustave Victoriano, presiding,
rendered judgment dismissing the complaint, with costs against plaintiff, and dismissing also the
counterclaim and cross-claim decision ,the plaintiffs filed by the defendants. From this district have
appealed to this Court.

The facts essential to an understanding of the issues involved in the case may be briefly
summarized as follows: Simeon Blas contracted a first marriage with Marta Cruz sometime before
1898. They had three children, only one of whom, Eulalio, left children, namely, Maria Gervacio Blas,
one of the plaintiffs, Marta Gervacio Blas, one of the defendants, and Lazaro Gervacio Blas. Lazaro
died in 1950, and is survived by three legitimate children who are plaintiffs herein, namely, Manuel
Gervacio Blas, Leoncio Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in 1898, and the
following year, Simeon Blas contracted a second marriage with Maxima Santos. At the time of this
second marriage, no liquidation of the properties required by Simeon Blas and Marta Cruz was
made. Three of the properties left are fishponds located in Obando, Bulacan. Maxima Santos does
not appear to have apported properties to her marriage with Simeon Blas.

On December 26, 1936, only over a week before over a week before his death on January 9, 1937,
Simeon Blas executed a last will and testament. In the said testament Simeon Blas makes the
following declarations:

2. Sa panahon ng aking pangalawang asawa, MAXIMA SANTOS DE BLAS, ay nagkaroon

ako at nakatipon ng mga kayamanan (bienes) at pag-aari (propriedades) na ang lahat ng
lupa, palaisdaan at iba pang pag-aari ay umaabot sa halagang ANIM NA RAAN PITONG
PU'T WALONG DAAN LIBO WALONG DAAN WALONG PUNG PISO (678,880-00) sang-
ayon sa mga halaga sa amillarimento (valor Amillarado.)

II

1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang lahat ng aking o aming
pag-kakautang na mag-asawa, kung mayroon man, yayamang ang lahat ng ito ay kita sa
loob ng matrimonio (bienes ganaciales) ay bahagi ng para sa aking asawa, MAXIMA
SANTOS DE BLAS, sang-ayon sa batas. (Record on Appeal, pp. 250-251.)

The above testamentary provisions may be translated as follows:

2. During my second marriage with Maxima Santos de Blas, I possessed and acquired
wealth and properties, consisting of lands, fishponds and other kinds of properties, the total
assessed value of which reached the amount P678,880.00.

II
 1. One-half of our properties, after the payment of my and our indebtedness, all these
properties having been acquired during marriage (conjugal properties), constitutes the share
of my wife Maxima Santos de Blas, according to the law.

At the time of the execution of said will, Andres Pascual a son-in-law of the testator, and Avelina
Pascual and others, were present. Andres Pascual had married a descendant by the first marriage.
The will was prepared by Andres Pascual, with the help of his nephew Avelino Pascual. The testator
asked Andres Pascual to prepare a document which was presented in court as Exhibit "A", thus:

Q — Was there anybody who asked you to prepare this document?

A — Don Simeon Blas asked me to prepare this document (referring to Exhibit "A"), (t.s.n.,
Sarmiento to, P. 24).

The reason why the testator ordered the preparation of Exhibit "A" was because the properties that
the testator had acquired during his first marriage with Marta Cruz had not been liquidated and were
not separated from those acquired during the second marriage. Pascual's testimony is as follows:

Q — To whom do you refer with the word "they"?

A — Simeon Blas and his first wife, Marta Cruz. When Marta Cruz died they had not made a
liquidation of their conjugal properties and so all those properties were included all in the
assets of the second marriage, and that is the reason why this document was prepared.
(t.s.n., Sarmiento, p. 36.)

The above testimony is fully corroborated by that of Leoncio Gervacio, son-in-law of Simeon Blas.

Q — Please state to the Court?

A — My children were claiming from their grandfather Simeon Blas the properties left by their
grandmother Marta Cruz in the year 1936.

Q — And what happened with that claim of your children against Simeon Blas regarding the
assets or properties of the first marriage that were left after the death of Marta Cruz in 1936?

A — The claim was not pushed through because they reached into an agreement whereby
the parties Simeon Blas Maxima Santos, Maria Gervacio Bias, Marta Gervacio Blas and
Lazaro Gervacio Blas agreed that Simeon Blas and Maxima Blas will give one-half of the
estate of Simeon Blas. (t.s.n., Sarmiento, pp. 143-144).

The document which was thus prepared and which is marked as Exhibit "A" reads in Tagalog, thus:

MAUNAWA NG SINO MANG MAKABABASA:

Na akong si MAXIMA SANTOS DE BLAS, nasa hustong gulang, kasal kay SIMEON BLAS,
taga bayan ng Malabon, Rizal, Philippines, sa pamamagitan ng kasulatang ito ay malaya
kong ipinahahayag:

Na aking nabasa at naunawa ang testamento at huling kalooban na nilagdaan ng aking

asawa, SIMEON BLAS, at ipinahahayag ko sa ilalim ng aking karangalan at sa harap ng
aking asawa na igagalang at pagpipitaganan ang lahat at bawa't isang bahagi ng nabanggit
 na testamento at ipinangangako ko pa sa pamamagitan ng kasulatang ito na ang lahat ng
maiiwang pag-aari at kayamanan naming mag-asawa, na nauukol at bahaging para sa akin
sa paggawa ko naman ng aking testamento ay ipagkakaloob ko ang kalahati (½) sa mga
herederos at legatarios o pinamamanahan ng aking nabanggit na asawa, SIMEON BLAS, sa
kaniyang testamento, na ako'y makapipili o makahihirang na kahit kangino sa kanila ng
aking pagbibigyan at pamamanahan sang-ayon sa paggalang, paglilingkod, at pakikisama
ng gagawin sa akin.

SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko ang kasulatang ito ngayon ika 26 ng

Diciembre ng taong 1936, dito sa San Francisco del Monte, San Juan, Rizal, Philippines.
(Exh. "A", pp. 29-30 — Appellant's brief).

(Fdo.) MAXIMA SANTOS DE BLAS

and which, translated into English, reads as follows:

KNOW ALL MEN BY THESE PRESENTS:

That I MAXIMA SANTOS DE BLAS, of legal age, married to SIMEON BLAS, resident of
Malabon, Rizal, Philippines, voluntarily state:

That I have read and knew the contents of the will signed by my husband, SIMEON BLAS,
(2) and I promise on my word of honor in the presence of my husband that I will respect and
obey all and every disposition of said will (3) and furthermore, I promise in this document that
all the properties my husband and I will leave, the portion and share corresponding to me
when I make my will, I will give one-half (½) to the heirs and legatees or the beneficiaries
named in the will of my husband, (4) and that I can select or choose any of them, to whom I
will give depending upon the respect, service and treatment accorded to me.

IN WITNESS WHEREOF, I signed this document this 26th day of December, 1936 at San
Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 30-31, Appellant's brief).

(Sgd.) MAXIMA SANTOS DE BLAS

The court below held that said Exhibit "A" has not created any right in favor of plaintiffs which can
serve as basis for the complaint; that neither can it be considered as a valid and enforceable
contract for lack of consideration and because it deals with future inheritance. The court also
declared that Exhibit "A" is not a will because it does not comply with the requisites for the execution
of a will; nor could it be considered as a donation, etc.

Both the court below in its decision and the appellees in their brief before us, argue vehemently that
the heirs of Simeon Blas and his wife Marta Cruz can no longer make any claim for the unliquidated
conjugal properties acquired during said first marriage, because the same were already included in
the mass of properties constituting the estate of the deceased Simeon Blas and in the adjudications
made by virtue of his will, and that the action to recover the same has prescribed. This contention is
correct. The descendants of Marta Cruz can no longer claim the conjugal properties that she and her
husband may have required during their marriage although no liquidation of such properties and
delivery thereof to the heirs of Marta Cruz have been made, no action to recover said propertied
having been presented in the proceedings for the settlement of the estate of Simeon Blas.
But the principal basis for the plaintiffs' action in the case at bar is the document Exhibit "A". It is not
disputed that this document was prepared at the instance of Simeon Blas for the reason that the
conjugal properties of me on Blas for the reason his first marriage had not been liquidated; that it
was prepared at the same time as the will of Simeon Blas on December 26, 1936, at the instance of
the latter himself. It is also not disputed that the document was signed by Maxima Santos and one
copy thereof, which was presented in court as Exhibit "A", was kept by plaintiffs' witness Andres
Pascual.

Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement and a contract in the
nature of a compromise to avoid litigation. Defendants-appellees, in answer, claim that it is neither a
trust agreement nor a compromise a agreement. Considering that the properties of the first marriage
of Simeon Blas had not been liquidated when Simeon Blas executed his will on December 26, 1936',
and the further fact such properties where actually , and the further fact that included as conjugal
properties acquired during the second marriage, we find, as contended by plaintiffs-appellants that
the preparation and execution of Exhibit "A" was ordered by Simeon Blas evidently to prevent his
heirs by his first marriage from contesting his will and demanding liquidation of the conjugal
properties acquired during the first marriage, and an accounting of the fruits and proceeds thereof
from the time of the death of his first wife.

Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the Civil Code of
Spain, in force at the time of the execution of Exhibit "A", which provides as follows:

Compromise is a contract by which each of the parties in interest, by giving, promising, or

retaining something avoids the provocation of a suitor terminates one which has already the
provocation been instituted. (Emphasis supplied.)

Exhibit "A" states that the maker (Maxima Santos) had read and knew the contents of the will of her
husband read and knew the contents of the will Simeon Blas — she was evidently referring to the
declaration in the will(of Simeon Blas) that his properties are conjugal properties and one-half
thereof belongs to her (Maxima Santos) as her share of the conjugal assets under the law. The
agreement or promise that Maxima Santos makes in Exhibit "A" is to hold one-half of her said share
in the conjugal assets in trust for the heirs and legatees of her husband in his will, with the obligation
of conveying the same to such of his heirs or legatees as she may choose in her last will and
testament. It is to be noted that the conjugal properties referred to are those that were actually
existing at that time, December 26, 1936. Simeon Blas died on January 9, 1937. On June 2, 1937,
an inventory of the properties left by him, all considered conjugal, was submitted by Maxima Santos
herself as administratrix of his estate. A list of said properties is found in Annex "E", the complete
inventory submitted by Maxima Santos Vda. de Blas, is administratrix of the estate of her husband,
dated March 10, 1939. The properties which were given to Maxima Santos as her share in the
conjugal properties are also specified in the project of partition submitted by said Maxima Santos
herself on March 14, 1939. (Record on Appeal, pp. 195-241.) Under Exhibit "A", therefore, Maxima
Santos contracted the obligation and promised to give one-half of the above indicated properties to
the heirs and legatees of Simeon Blas.

Counsel for the defendant-appellee claims Exhibit "A" is a worthless piece of paper because it is not
a will nor a donation mortis causa nor a contract. As we have in indicated above, it is a compromise
and at the same time a contract with a sufficient cause or consideration. It is also contended that it
deals with future inheritance. We do not think that Exhibit "A" is a contract on future inheritance. it is
an obligation or promise made by the maker to transmit one-half of her share in the conjugal
properties acquired with her husband, which properties are stated or declared to be conjugal
properties in the will of the husband. The conjugal properties were in existence at the time of the
execution of Exhibit "A" on December 26, 1936. As a matter of fact, Maxima Santos included these
properties in her inventory of her husband's estate of June 2, 1937. The promise does not refer to
any properties that the maker would inherit upon the death of her husband, because it is her share in
the conjugal assets. That the kind of agreement or promise contained in Exhibit "A" is not void under
Article 1271 of the old Civil Code, has been decided by the Supreme Court of Spain in its decision of
October 8, 19154, thus:

Que si bien el art. 1271 del Codigo civil dispone que sobre la herenciafutura no se podra
celebrar otros contratos que aquellos cuyo objecto seapracticar entre vivos la division de un
caudal, conforme al articulo 1056, esta prohibicion noes aplicable al caso, porque la
obligacion que contrajoel recurr en contrato privado de otorgar testamento e instituir
heredera a su subrina de los bienes que adquirio en virtud de herencia, procedentes desu
finada consorte que le quedasen sobrantes despues de pagar las deudas, y del ganacial
que se expresa, asi como de reconocer, ademas, con alguna cosaa otros sobrinos, se
refiere a bienes conocidos y determinados existentes cuando tal compromisi se otorgo, y no
a la universalidad de una herencia que, sequn el art. 659 del citado Codigo civil, as
determina a muerte, constituyendola todos los bienes, derechos y obligaciones que por ella
no sehayan extinguido: ..." (Emphasis supplied.)

It will be noted that what is prohibited to be the subject matter of a contract under Article 1271 of the
Civil Code is "future inheritance." To us future inheritance is any property or right not in existence or
capable of determination at the time of the contract, that a person may in the future acquire by
succession. The properties subject of the contract Exhibit "A" are well defined properties, existing at
the time of the agreement, which Simeon Blas declares in his statement as belonging to his wife as
her share in the conjugal partnership. Certainly his wife's actual share in the conjugal properties may
not be considered as future inheritance because they were actually in existence at the time Exhibit
"A" was executed.

The trial court held that the plaintiffs-appellants in the case at bar are concluded by the judgement
rendered in the proceedings for the settlement of the estate of Simeon Blas for the reason that the
properties left by him belonged to himself and his wife Maxima Santos; that the project of partition in
the said case, adjudicating to Maxima Santos one-half as her share in the conjugal properties, is a
bar to another action on the same subject matter, Maxima Santos having become absolute owner of
the said properties adjudicated in her favor. As already adverted to above, these contentions would
be correct if applied to the claim of the plaintiffs-appellants that said properties were acquired with
the first wife of Simeon Blas, Marta Cruz. But the main ground upon which plaintiffs base their
present action is the document Exhibit "A", already fully considered above. As this private document
contains the express promise made by Maxima Santos to convey in her testament, upon her death,
one-half of the conjugal properties she would receive as her share in the conjugal properties, the
action to enforce the said promise did not arise until and after her death when it was found that she
did not comply with her above-mentioned promise. (Art. 1969, old Civil Code.) The argument that the
failure of the plaintiffs-appellants herein to oppose the project of partition in the settlement of the
estate of Simeon Blas, especially that portion of the project which assigned to Maxima Santos one-
half of all the conjugal properties bars their present action, is, therefore, devoid of merit. It may be
added that plaintiffs-appellants did not question the validity of the project of partition precisely
because of the promise made by Maxima Santos in the compromise Exhibit "A"; they acquised in the
approval of said project of partition because they were relying on the promise made by Maxima
Santos in Exhibit "A", that she would transmit one-half of the conjugal properties that she was going
to receive as her share in the conjugal partnership upon her death and in her will, to the heirs and
legatees of her husband Simeon Blas.

Neither can the claim of prescription be considered in favor of the defendants. The right of action
arose at the time of the death of Maxima Santos on October 5,1956, when she failed to comply with
the promise made by her in Exhibit "A". The plaintiffs-appellants immediately presented this action
on December 27, 1956, upon learning of such failure on the part of Maxima Santos to comply with
said promise. This defense is, therefore, also without merit.

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

31. Paco, Obando, Bulacan 5.8396 has.

32. Pangjolo, Obando 3.5857 "
34. Batang Pirasuan, Lubao, Pampanga 11.9515 "
35. Calangian, Lubao, Pampanga 30.2059 "
38. Bakuling, Lubao, Pampanga 215.4325 "
39. Bakuling, Lubao, Pampanga 8.3763 "
40. Bangkal, Sinubli 23.0730 "
41. Tagulod, 6.8692 "
44. Bangkal Pugad (a) 34.2779 "
(b) 51.7919 "
(c) 2.5202 "
45. Magtapat Bangkal, Lubao, Pampanga (a) 18.0024 "
(b) 7.3265 "
(c) 53.5180 "
46. Pinanganakan, Lubao, Pampanga 159.0078 "
47. Emigdio Lingid, Lubao, Pampanga 34.5229 "
48. Propios, Lubao, Pampanga 80.5382 "
49. Batang Mabuanbuan, Sexmoan,
Pampanga 43.3350 "
50. Binatang Mabuanbuan, Sexmoan,
Pampanga 3.5069 "
51. Sapang Magtua, Sexmoan, Pampanga 56,8242 "
52. Kay Limpin, Sexmoan, Pampanga 5.0130 "
53. Calise Mabalumbum, Sexmoan,
Pampanga 23.8935 "
54. Messapinit Kineke, Sexmoan,
Pampanga (a) 5.2972 "
(b) 5.9230 "
(c) 1.4638 "
(d) 1.4638 "
(e) 2.8316 "
 (f) 10.4412 "
(g) 3.9033 "
(h) 11.9263 "
(i) 6.0574 "
55. Dalang, Banga, Sexmoan, Pampanga 23.3989 "
62. Alaminos, Pangasinan 147.1242 "
80. Mangasu Sexmoan, Pampanga 10.000 "
81. Don Tomas, Sexmoan, Pampanga 21.6435 "
82. Matikling, Lubao, Pampanga 16.0000 "
Total area ............................... 1045.7863 "
(See Record on Record, pp.
195-241.)

In her will, Maxima Santos devised to Marta Gervacio Blas the 80-hectare fishpond situated in
Lubao, Pampanga. The fishpond devised is evidently that designated as "Propios" in Lubao,
Pampanga, item No. 8 in the list of properties adjudicated to her in the project of partition. (Record
on Appeal, p. 215.) Considering that the total area of the fishponds amount to 1045.7863 hectares,
the 80 hectares devised to Marta Gervacio Blas is not even one-tenth of the total area of the
fishponds. Add to this the fact that in the will she imposed upon Marta Gervacio Blas de Chivi an
existing obligation on said fishponds, namely, its lease in 1957 and the duty to pay out of the rentals
thereof an obligation to the Rehabilitation Finance Corporation RFC (Ibid., pp. 262-263.) Angelina
Blas was given only a lot of 150 square meters in Hulong Duhat, Malabon, Rizal, and Leony Blas,
the sum of P300.00 (Ibid., p. 264.)

It is evident from a consideration of the above figures and facts that Maxima Santos did not comply
with her obligation to devise one-half of her conjugal properties to the heirs and legatees of her
husband. She does not state that she had complied with such obligation in her will. If she intended to
comply therewith by giving some of the heirs of Simeon Blas the properties mentioned above, the
most that can be considered in her favor is to deduct the value of said properties from the total
amount of properties which she had undertaken to convey upon her death.

All the issues in the pleadings of the parties and in their respective briefs, have now been fully
discussed and considered. Reiterating what we have stated above, we declare that by Exhibit "A", a
compromise to avoid litigation, Maxima Santos promised to devise to the heirs and legatees of her
husband Simeon Blas, one-half of the properties she received as her share in the conjugal
partnership of herself and her husband, which share is specified in the project of partition submitted
by herself on March 14, 1939 in the settlement of the estate of her husband, and which is found on
pages 195 to 240 of the record on appeal and on pages 27 to 46 of the project of partition, submitted
by Maxima Santos herself before the Court of First Instance of Rizal in Civil Case No. 6707, entitled
"Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Bias, Administradora"; and
that she failed to comply with her aforementioned obligation. (Exhibit "A")

WHEREFORE, the judgment appealed from is hereby reversed and the defendant-appellee,
administratrix of the estate of Maxima Santos, is ordered to convey and deliver one-half of the
properties adjudicated o Maxima Santos as her share in the conjugal properties in said Civil Case
No. 6707, entitled "Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Blas,
Administradora", to the heirs and the legatees of her husband Simeon Blas. Considering that all said
heirs and legatees, designated in the will of Simeon Blas as the persons for whose benefit Exhibit
"A" had been executed, have not appeared in these proceedings, the record is hereby remanded to
the court below, with instructions that, after the conveyance of the properties hereinabove ordered
had been effected, the said heirs and legatees (of Simeon Blas) file adversary pleadings to
determine the participation of each and every one of them in said properties. Costs against the
defendant- appellee Rosalina Santos.

Padilla, Parades and Dizon, JJ., concur.

Reyes, J.B.L. and Barrera, JJ., concur in a separate opinion.
Bengzon, C.J., reserves his vote.
Concepcion, J., took no part.

Separate Opinions

REYES, J.B.L., J., concurring:

I concur in the opinion of Mr. Justice Labrador, and would only add that the doctrine in the decision
of 8 October 1915 of the Supreme Court of Spain, applied in the main opinion, is not a mere
accident nor an isolated instance, but one of a series of decisions reaffirming the legal proposition
therein laid down. Thus, the Presiding Justice Castan of the Spanish Tribunal Supremo, in volume 3
of his Treaties on Civil Law (1951 Edition, page 344, footnote 2), observes that:

(2) IA sentencia de 16 de mayo de 1940 declare que segun la doctrina sentada por el
Tribunal Supremo en sua fallos de 8 de Octubre de 1915 y 26 de Octubre de 1926 y por la
Direction de los Registros en au resolution de 19 de mayo de 1917, la prohibition contenida
en el art. 1271 se refiere unica y exclusivamente a los paetos sobre la universalidad de una
heren cia que, segun el art. 659, se determine a la muerte del cau sante constituyendola
todos los bienes, derechos y obligaciones que por ella no se hayan extinguido y no al pacto
sobre bienes conocidos y determinados, existentes cuando tal compromiso se otorgo, en el
dominio del cedente.

And in a later decision of 25 April 1951, the Supreme Court of Spain once ore insisted on the rule
that a successional agreement concerning property already owned by the grantor at the time the
contract was perfected is not banned by, Article 1271 of the Spanish Civil Code according to Article
1847 of the Civil Code of the Philippines):

CONSIDERANDO: Que el tercer motive del recurso de doña M. G. G., y el sexto del
formulado por doña D. G. G., hacen roferencia a la ultima de las tres cuestiones que son ob
jato del debate en ambos recurso interpuestos esto es la dis cutida cesion que las hermanas
senoras G. G., hoy recurrentes, hicieron a doña C. A. de la mitad de los bienes muebles e
innuebles que recibiesen por herencia de doña M. P., procedentes de la de doña M. A. P.,
antes N., consignada en documents privado de fecha 2 de noviembre de 1929, firmado y
reconocida su autenticidad por las tres senoras interesa das, cuya validez y eficacia es
objeto de la cuarta pieza de los presentee autos acumulados y si se examination con
determiento el documento aludido y el acto que en el se consigna habra de advertirse de
modo notorio que se halla afectado de vicio de nulidadporque su objeto son unos bienes que
clara mente se petpresa que han de entrar en el patrimonio de las cendentes mediantes una
transmission hereditaria, lo que conatituye el pacto sobre herencia futura prohibido por el
parrafo segundo del articulo 1271 del Codigo Civil, ya que no se concreta sobre bienes
conocido y determinados, existentes en el del cedents cuando el compromiso de otorgo,
 sino que se refiem a la universalidad de que habrian de adra la muerte del causante sentido
en el que conforme a la jurisprudencia de esta Sala es de plena aplicacion la norma a tiva
antes citada, y al no haberio asi entendido la Sala de instancia, ha incurrido en la infmccion
de interpreter erro to y por ello ha hecho aplicacion de indebida de dicho precepto y precede
la estimacion de los motivo que aprincipio se citan y que denuncian la estimada infraccion,
produciendo la casacion de la sentencia recurrida en el extremo a que los dichos motives se
refieren. (Sentencia 25 abril 1951) (Emphasis Supplied)

It can thus be seen that the constant authoritative in interpretation of the prohibition against
agreements involving future inheritance requires not only that a future succession be contemplated
but also that the subject matter of the bargain should be either the universality or complex or mass of
property owned by the grantor at the time of his death, or else an aliquot portion thereof. Castan, in
his Treaties already mentioned, sums up the rulings in this wise:

Por otra parte, se ha de entender: 1. Que la cesion oenajenacion de los derechos

hereditarios puede bacerse una vez falle cido el causante, aunque no se haya entrado en
possession matetrial de los bienes 2. Que la prohibition legal se refiere solo a los contratos
concluidos sobre la herencia misma o alguna de sus cuotas, no sobre objetos aislados que,
eventualmente, hayan de adquirirse a virtud de la herencia.

It has been contended that the doctrine thus stated confuses future inheritance (herencia futura) with
future property (bienes futuros). This is a misapprehension. In construing the term "future
inheritance" as the contingent universality or complex of property rights and obligations that are
passed to the heirs upon the death of the grantor, the rule advocated merely correlates the
prohibition against contracts over "future inheritance" with the definition of "inheritance" given in
Article 659 of the Spanish Civil Code, which is now Article 776 of the Civil Code of the Philippines:

ART. 776. The inheritance includes all the property, rights and obligations of a person which
are not extinguished by his death.

The inheritance of a person may, and usually does, include not only property that he already owns at
a given time, but also his future property, that is to say, the property that he may subsequently
acquire. But it may include only future property whenever he should dispose of the present property
before he dies. And future inheritance may include only property he already owns at any given
moment, if he should thereafter acquire no other property until his death. In any case, the inheritance
or estate cons of the totality of and liabilities he holds at the time of his demise, and not what he at
any other time. If the questioned contract envisages all or a fraction of that contingent mass, then it
is a contract over herencia futurall otherwise it is not. The statutory prohibition, in other words, is not
so much concerned with the process of transfer as with the subject matter of the bargain. It is
addressed to "future inheritance", not "future succession".

Of course, it can be said that every single item of property that a man should hold at any given
instant of his life may become a part of his inheritance if he keeps it long enough. But is that mere
possibility (or even probability) sufficient to do upon a contract over an individual item of existing
property the outlaw brand of "contract over future inheritance"? If it should ever be, then no
agreement concerning present property can escape the legal ban. No donation inter vivos, no
reversionary clause, no borrowing of money, and no alienation, not even a contract of sale (or other
contract in praisenti for that matter), with or without deferred delivery, will avoid the reproach that it
concerns or affects the grantor's "future inheritance". It is permissible to doubt whether the law ever
contemplated the sweeping away of the entire contractual system so carefully regulated in the Code.
The restrictive interpretation given by the Spanish Supreme Court to the codal prohibition of
agreements involving future inheritance is justified not only by the fact that the prohibition limits
contractual freedom (and therefore, should not be given extensive interpretation), but also because
there is no real or substantial difference between (1) an agreement whereby a person, for a valuable
consideration, agrees to bequeath some of the property he already owns, and (2) a contract
whereby he dispose of that property, subject to the condition that he will be entitled to its usufruct
until the time he dies. The court has repeatedly sanctioned even donations inter vivos wherein the
donor has reserved to elf the right to enjoy the donated property for the remainder of his days, and
riders the actual transfer of on to the time of his death (Guzman vs. Ibea 67 Phil. 633; Balagui vs
Dongso, 53 Phil. 673; Laureta vs. Mata, 44 Phil. 668). Whatever objection is raised against the
effects of the first kind of contracts can be made to apply to the second.

Mature reflection will show that where present (existing) property is the object of the bargain, all
arguments brandished against Conventions over future succession (post mortem) are just as
applicable to other contracts de praesenti with deferred execution, the validity of which has never
been questioned. Thus, the loss of the power to bequeath the bargained property to persons of the
grantor's choice, and the awakening of the grantee's desire for the early death of the grantor (the
Roman "votum mortis captandae") in order to obtain prompt control of the contracted goods, occur in
both cases. In truth, the latter ground would bar even a contract of life insurance in favor of a stated
beneficiary. It may also be noted that since the later part of the nineteenth century, the civilists have
recognized that the progress in social relations has rendered such objections obsolete (Puig Peña,
Derecho Civil, Vol. V, part I, 613 et seq.).

But where the contract involves the universality of the estate that will be left at a person's death (the
"herencia future" as understood by the Spanish Tribunal Supreno), there is another reason which I
believe to be the true justification for the legal interdiction, and it is this: that if a man were to be
allowed to bargain away all the property he expects to leave behind (i.e., his estate as a whole), he
would practically remain without any incentive to practice thrift and frugality or to conserve and invest
his earnings and property. He would then be irresistibly drawn to be a wasteful spend-thrift, a social
parasite, without any regard for his future, because whatever he leaves belong to another by virtue
of his contract. The disastrous effects upon family and society if such agreements were to be held
binding can be readily imagined. Hence, the interpretation given to Article 1271 (now Art. 1347) by
the Supreme Court of Spain appears amply supported by practical reasons, and there is no ground
to deny its application.

Much emphasis has been placed on the provisions of the contract Exhibit "A" that the widow,
Maxima Santos de Blas, would execute a testament in favor of the appellees. To me this is purely
secondary, since it is merely the method selected by the parties for carrying out the widow's
agreement to convey to the appellees the property in question without her losing its enjoyment
during her natural life, and does not affect the substance or the validity of the transaction. To ensure
the widow's possession of the property and the perception of its fruits while she was alive the means
logically selected was to return it by will, since such a conveyance could only be operative after
death. There might be a doubt as to the validity of this arrangement if the widows promise had been
purely gratuitous, because then it could be argued that the promise involved a hybrid donation mortis
causa yet irrevocable;1 but here the obligation to return is concededly irrevocable and supported by
adequate consideration duly received in advance.

Since the agreement in the instant case did not refer to the future estate of the widow of Blas, but
only to part of her present property at the time the contract was made; since the promise to
retransfer one-half of her conjugal share was supported by adequate consideration as shown in the
main decision; since the contract obviated protracted litigation and complicated accounting in settling
the conjugal partnership of Blas and his first (deceased) wife; and since the testament that the
widow promised to make was merely the mode chosen to perform the contract and carry out the
promised devolution of the property, being thus of secondary importance, I can see no reason for
declaring the entire arrangement violative of the legal interdiction of contracts over future
inheritance, and disappoint the legitimate expectation held by the heirs of the first wife during all
these years.

BARRERA, J., concurring:

It seems to me clear that the document Exhibit "A", basis of the action of the plaintiffs-appellants,
refers specifically to and affects solely the share of the grantor Maxima Santos in the conjugal
properties as determined and specified in the will of her husband Simeon Blas, whose provisions,
which she expressly acknowledged to have read and understood, constitute the raison d'etre of her
promise to deliver or convey, by will, one-half of that specific share to the heirs and legatees named
in her husband's will (who are his heirs by his first marriage). Nowhere in the document Exhibit "A" is
there reference, to hereditary estate that she herself would leave behind at the time of her own
demise which legally would be her "future inheritance." For this reason, I believe the contractual
obligation assumed by Maxima Santos in virtue of Exhibit "A" does not come within the prohibition of
Article 1271 of the Spanish Civil Code, now Article 1347 of the Civil Code of the Philippines.

I, therefore, concur in the opinions of Justices Labrador and Reyes.

BAUTISTA ANGELO, J., dissenting:

While I agree with the theory that the document Exhibit "A" does not involve a contract on future
inheritance but a promise made by Maxima Santos to transmit one-half of her share in the conjugal
property acquired during her marriage to Simeon Blas to the heirs and legatees of the latter, I am
however of the opinion that herein appellants have no cause of action because Maxima Santos has
Substantially complied with her promise.

It should be noted that Maxima Santos' promise to transmit is predicated on the condition that she
can freely choose and select from among the heirs and legatees of her husband those to whom she
would like to give and bequeath depending on the respect, service and companionship that they may
render to her. Her commitment is not an absolute promise to give to all but only to whom she may
choose and select. And here this promise has been substantially complied with.

Thus, it appears that Maxima Santos selected eight such heirs and legatees instituted in the will of
her husband. Note that appellant Marta Gervacio Bias, who has given a legacy of only P38,000.00 in
the will of Simeon Blas, who was given by her a legacy worth around P400,000.00, appellants Loida
Gervacio Blas (or Luding Blas) and Leoncio (Leony) Gervacio Blas were given a legacy of P300.00
each every year to last during their lifetime; And Lorenzo Santos was given a legacy of two
fishponds and one-tenth of the whole residuary estate. It may be stated that although appellant
Maria Gervacio Blas was not given any legacy in Maxima Santos' will, yet her son Simeon Dungao
was given a legacy of a residential land in Tonsuya, Malabon.

I, therefore, consider not in keeping with the nature of the pledge made by Maxima Santos the
decision of the majority in ordering her administratrix to convey and deliver one-half of her share in
the conjugal property to all the heirs and legatees of her husband Simeon Blas, because only such
heirs and legatees are entitled to share in the property as may be selected by Maxima Santos, and
this she has already done. For these reasons, I dissent.

G.R. No. 168970 January 15, 2010

CELESTINO BALUS, Petitioner,

vs.
SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents.

DECISION

PERALTA, J.:

Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the
Decision1 of the Court of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which set
aside the February 7, 1997 Decision of the Regional Trial Court (RTC) of Lanao del Norte, Branch 4
in Civil Case No. 3263.

The facts of the case are as follows:

Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus.
Sebastiana died on September 6, 1978, while Rufo died on July 6, 1984.

On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan he
obtained from the Rural Bank of Maigo, Lanao del Norte (Bank). The said property was originally
covered by Original Certificate of Title No. P-439(788) and more particularly described as follows:

A parcel of land with all the improvements thereon, containing an area of 3.0740 hectares, more or
less, situated in the Barrio of Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded
on the NE., along line 1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along line 12-
13 by Lot 4649, Csd-292; and along line 12-1, by Lot 4661, Csd-292. x x x 2

Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and was
subsequently sold to the Bank as the sole bidder at a public auction held for that purpose. On
November 20, 1981, a Certificate of Sale3 was executed by the sheriff in favor of the Bank. The
property was not redeemed within the period allowed by law. More than two years after the auction,
or on January 25, 1984, the sheriff executed a Definite Deed of Sale4 in the Bank's favor. Thereafter,
a new title was issued in the name of the Bank.

On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of
Estate5adjudicating to each of them a specific one-third portion of the subject property consisting of
10,246 square meters. The Extrajudicial Settlement also contained provisions wherein the parties
admitted knowledge of the fact that their father mortgaged the subject property to the Bank and that
they intended to redeem the same at the soonest possible time.
Three years after the execution of the Extrajudicial Settlement, herein respondents bought the
subject property from the Bank. On October 12, 1992, a Deed of Sale of Registered Land6 was
executed by the Bank in favor of respondents. Subsequently, Transfer Certificate of Title (TCT) No.
T-39,484(a.f.)7 was issued in the name of respondents. Meanwhile, petitioner continued possession
of the subject lot.

On June 27, 1995, respondents filed a Complaint8 for Recovery of Possession and Damages against
petitioner, contending that they had already informed petitioner of the fact that they were the new
owners of the disputed property, but the petitioner still refused to surrender possession of the same
to them. Respondents claimed that they had exhausted all remedies for the amicable settlement of
the case, but to no avail.

On February 7, 1997, the RTC rendered a Decision9 disposing as follows:

WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in
favor of the defendant, the one-third share of the property in question, presently possessed by him,
and described in the deed of partition, as follows:

A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate of
Title No. P-788, now in the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated at
Lagundang, Bunawan, Iligan City, bounded on the North by Lot 5122; East by shares of Saturnino
Balus and Leonarda Balus-Calunod; South by Lot 4649, Dodiongan River; West by Lot 4661,
consisting of 10,246 square meters, including improvements thereon.

and dismissing all other claims of the parties.

The amount of ₱6,733.33 consigned by the defendant with the Clerk of Court is hereby ordered
delivered to the plaintiffs, as purchase price of the one-third portion of the land in question.

Plaintiffs are ordered to pay the costs.

SO ORDERED.10

The RTC held that the right of petitioner to purchase from the respondents his share in the disputed
property was recognized by the provisions of the Extrajudicial Settlement of Estate, which the parties
had executed before the respondents bought the subject lot from the Bank.

Aggrieved by the Decision of the RTC, herein respondents filed an appeal with the CA.

On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting aside
the Decision of the RTC and ordering petitioner to immediately surrender possession of the subject
property to the respondents. The CA ruled that when petitioner and respondents did not redeem the
subject property within the redemption period and allowed the consolidation of ownership and the
issuance of a new title in the name of the Bank, their co-ownership was extinguished.

Hence, the instant petition raising a sole issue, to wit:

WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS

OVER THE PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OF
TITLE TO THE BANK) BY VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE
REPURCHASE THEREOF BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S
ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS
(PETITIONER'S) JUST SHARE OF THE REPURCHASE PRICE.11

The main issue raised by petitioner is whether co-ownership by him and respondents over the
subject property persisted even after the lot was purchased by the Bank and title thereto transferred
to its name, and even after it was eventually bought back by the respondents from the Bank.

Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputed
property was already in the name of the Bank, they still proceeded to execute the subject
Extrajudicial Settlement, having in mind the intention of purchasing back the property together with
petitioner and of continuing their co-ownership thereof.

Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him
and respondents, because it contains a provision whereby the parties agreed to continue their co-
ownership of the subject property by "redeeming" or "repurchasing" the same from the Bank. This
agreement, petitioner contends, is the law between the parties and, as such, binds the respondents.
As a result, petitioner asserts that respondents' act of buying the disputed property from the Bank
without notifying him inures to his benefit as to give him the right to claim his rightful portion of the
property, comprising 1/3 thereof, by reimbursing respondents the equivalent 1/3 of the sum they paid
to the Bank.

The Court is not persuaded.

Petitioner and respondents are arguing on the wrong premise that, at the time of the execution of the
Extrajudicial Settlement, the subject property formed part of the estate of their deceased father to
which they may lay claim as his heirs.

At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subject
property was exclusively owned by petitioner and respondents' father, Rufo, at the time that it was
mortgaged in 1979. This was stipulated by the parties during the hearing conducted by the trial court
on October 28, 1996.12 Evidence shows that a Definite Deed of Sale13 was issued in favor of the
Bank on January 25, 1984, after the period of redemption expired. There is neither any dispute that
a new title was issued in the Bank's name before Rufo died on July 6, 1984. Hence, there is no
question that the Bank acquired exclusive ownership of the contested lot during the lifetime of Rufo.

The rights to a person's succession are transmitted from the moment of his death.14 In addition, the
inheritance of a person consists of the property and transmissible rights and obligations existing at
the time of his death, as well as those which have accrued thereto since the opening of the
succession.15 In the present case, since Rufo lost ownership of the subject property during his
lifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed part
of his estate to which his heirs may lay claim. Stated differently, petitioner and respondents never
inherited the subject lot from their father.

Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of the
subject lot. Thus, any issue arising from the supposed right of petitioner as co-owner of the
contested parcel of land is negated by the fact that, in the eyes of the law, the disputed lot did not
pass into the hands of petitioner and respondents as compulsory heirs of Rufo at any given point in
time.

The foregoing notwithstanding, the Court finds a necessity for a complete determination of the
issues raised in the instant case to look into petitioner's argument that the Extrajudicial Settlement is
an independent contract which gives him the right to enforce his right to claim a portion of the
disputed lot bought by respondents. 1avv phi 1

It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mere
consent; and from that moment, the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.

Article 1306 of the same Code also provides that the contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided these are not
contrary to law, morals, good customs, public order or public policy.

In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any
express stipulation for petitioner and respondents to continue with their supposed co-ownership of
the contested lot.

On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any
way, support petitioner's contention that it was his and his sibling's intention to buy the subject
property from the Bank and continue what they believed to be co-ownership thereof. It is a cardinal
rule in the interpretation of contracts that the intention of the parties shall be accorded primordial
consideration.16 It is the duty of the courts to place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and the purpose which it is intended
to serve.17 Such intention is determined from the express terms of their agreement, as well as their
contemporaneous and subsequent acts.18 Absurd and illogical interpretations should also be
avoided.19

For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblings
to continue what they thought was their ownership of the subject property, even after the same had
been bought by the Bank, is stretching the interpretation of the said Extrajudicial Settlement too far.

In the first place, as earlier discussed, there is no co-ownership to talk about and no property to
partition, as the disputed lot never formed part of the estate of their deceased father.

Moreover, petitioner's asseveration of his and respondents' intention of continuing with their
supposed co-ownership is negated by no less than his assertions in the present petition that on
several occasions he had the chance to purchase the subject property back, but he refused to do so.
In fact, he claims that after the Bank acquired the disputed lot, it offered to re-sell the same to him
but he ignored such offer. How then can petitioner now claim that it was also his intention to
purchase the subject property from the Bank, when he admitted that he refused the Bank's offer to
re-sell the subject property to him?

In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of the
execution thereof, the parties were not yet aware that the subject property was already exclusively
owned by the Bank. Nonetheless, the lack of knowledge on the part of petitioner and respondents
that the mortgage was already foreclosed and title to the property was already transferred to the
Bank does not give them the right or the authority to unilaterally declare themselves as co-owners of
the disputed property; otherwise, the disposition of the case would be made to depend on the belief
and conviction of the party-litigants and not on the evidence adduced and the law and jurisprudence
applicable thereto.

Furthermore, petitioner's contention that he and his siblings intended to continue their supposed co-
ownership of the subject property contradicts the provisions of the subject Extrajudicial Settlement
where they clearly manifested their intention of having the subject property divided or partitioned by
assigning to each of the petitioner and respondents a specific 1/3 portion of the same. Partition calls
for the segregation and conveyance of a determinate portion of the property owned in common. It
seeks a severance of the individual interests of each co-owner, vesting in each of them a sole estate
in a specific property and giving each one a right to enjoy his estate without supervision or
interference from the other.20 In other words, the purpose of partition is to put an end to co-
ownership,21 an objective which negates petitioner's claims in the present case.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, dated
May 31, 2005 in CA-G.R. CV No. 58041, is AFFIRMED.

SO ORDERED
G.R. No. 177066 September 11, 2009

JOSELITO MUSNI PUNO (as heir of the late Carlos Puno), Petitioner,
vs.
PUNO ENTERPRISES, INC., represented by JESUSA PUNO, Respondent.

DECISION

NACHURA, J.:

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. This,
we declare in this petition for review on certiorari of the Court of Appeals (CA) Decision1 dated
October 11, 2006 and Resolution dated March 6, 2007 in CA-G.R. CV No. 86137.

The facts of the case follow:

Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno 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.2

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.3

On October 11, 2005, the court rendered a Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering Jesusa Puno and/or Felicidad Fermin to allow
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.

The costs of copying shall be shouldered by the plaintiff. Any expenses to be incurred by the
defendant to be able to comply with this order shall be the subject of a bill of costs.

SO ORDERED.4

On appeal, the CA ordered the dismissal of the complaint in its Decision dated October 11, 2006.
According to the CA, 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. His action for specific performance therefore appeared to be
premature; the proper action to be taken was to prove the paternity of and his filiation to Carlos L.
Puno in a petition for the settlement of the estate of the latter.5

Petitioner’s motion for reconsideration was denied by the CA in its Resolution6 dated March 6, 2007.

In this petition, petitioner raises the following issues:

I. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE JOSELITO
PUNO IS ENTITLED TO THE RELIEFS DEMANDED HE BEING THE HEIR OF THE LATE
CARLOS PUNO, ONE OF THE INCORPORATORS [OF] RESPONDENT CORPORATION.

II. HONORABLE COURT OF APPEALS ERRED IN RULING THAT FILIATION OF JOSELITO

PUNO, THE PETITIONER[,] IS NOT DULY PROVEN OR ESTABLISHED.

III. THE HONORABLE COURT ERRED IN NOT RULING THAT JOSELITO MUNO AND JOSELITO
PUNO REFERS TO THE ONE AND THE SAME PERSON.

IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT
RESPONDENT MERELY DISPUTES IS THE SURNAME OF THE PETITIONER WHICH WAS
MISSPELLED AND THE FACTUAL ALLEGATION E.G. RIGHTS OF PETITIONER AS HEIR OF
CARLOS PUNO ARE DEEMED ADMITTED HYPOTHETICALLY IN THE RESPONDENT[’S]
MOTION TO DISMISS.

V. THE HONORABLE COURT OF APPEALS THEREFORE ERRED I[N] DECREEING THAT

PETITIONER IS NOT ENTITLED TO INSPECT THE CORPORATE BOOKS OF DEFENDANT
CORPORATION.7

The petition is without merit. 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.

Incessantly, we have declared that factual findings of the CA supported by substantial evidence, are
conclusive and binding.8 In an appeal via certiorari, the Court may not review the factual findings of
the CA. It is not the Court’s function under Rule 45 of the Rules of Court to review, examine, and
evaluate or weigh the probative value of the evidence presented.9

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.10 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.

As for the baptismal certificate, we have already decreed that it can only serve as evidence of the
administration of the sacrament on the date specified but not of the veracity of the entries with
respect to the child’s paternity.11

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. — x x x.

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.

xxxx

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.12

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.13 Such right rests upon the
stockholder’s underlying ownership of the corporation’s assets and property.14

Similarly, only stockholders of record are entitled to receive dividends declared by the corporation, a
right inherent in the ownership of the shares.15 1avvphi1

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.16 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.17 Until a settlement and division of the estate is effected, the stocks of the decedent are held
by the administrator or executor.18 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.

Corollary to this is the doctrine that a determination of whether a person, claiming proprietary rights
over the estate of a deceased person, is an heir of the deceased must be ventilated in a special
proceeding instituted precisely for the purpose of settling the estate of the latter. The status of an
illegitimate child who claims to be an heir to a decedent’s estate cannot be adjudicated in an
ordinary civil action, as in a case for the recovery of property.19 The doctrine applies to the instant
case, which is one for specific performance — to direct respondent corporation to allow petitioner to
exercise rights that pertain only to the deceased and his representatives.

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated
October 11, 2006 and Resolution dated March 6, 2007 are AFFIRMED.

SO ORDERED.
G.R. No. 198680 July 8, 2013

HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON, ERUDITA Y. BARON, CICERO

YPON, WILSON YPON, VICTOR YPON, AND HINIDINO Y. PEÑALOSA, PETITIONERS,
vs.
GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E. YPON," AND THE REGISTER OF
DEEDS OF TOLEDO CITY, RESPONDENTS.

RESOLUTION

PERLAS-BERNABE, J.:

This is a direct recourse to the Court from the Regional Trial Court of Toledo City, Branch 59 (RTC),
through a petition for review on certiorari1 under Rule 45 of the Rules of Court, raising a pure
question of law. In particular, petitioners assail the July 27, 20112 and August 31, 20113 Orders of
the RTC, dismissing Civil Case No. T-2246 for lack of cause of action.

The Facts

On July 29, 2010, petitioners, together with some of their cousins,4 filed a complaint for Cancellation
of Title and Reconveyance with Damages (subject complaint) against respondent Gaudioso
Ponteras Ricaforte a.k.a. "Gaudioso E. Ypon" (Gaudioso), docketed as Civil Case No. T-2246.5 In
their complaint, they alleged that Magdaleno Ypon (Magdaleno) died intestate and childless on June
28, 1968, leaving behind Lot Nos. 2-AA, 2-C, 2-F, and 2-J which were then covered by Transfer
Certificates of Title (TCT) Nos. T-44 and T-77-A.6 Claiming to be the sole heir of Magdaleno,
Gaudioso executed an Affidavit of Self-Adjudication and caused the cancellation of the
aforementioned certificates of title, leading to their subsequent transfer in his name under TCT Nos.
T-2637 and T-2638,7 to the prejudice of petitioners who are Magdaleno’s collateral relatives and
successors-in-interest.8

In his Answer, Gaudioso alleged that he is the lawful son of Magdaleno as evidenced by: (a) his
certificate of Live Birth; (b) two (2) letters from Polytechnic School; and (c) a certified true copy of his
passport.9 Further, by way of affirmative defense, he claimed that: (a) petitioners have no cause of
action against him; (b) the complaint fails to state a cause of action; and (c) the case is not
prosecuted by the real parties-in-interest, as there is no showing that the petitioners have been
judicially declared as Magdaleno’s lawful heirs.10

The RTC Ruling

On July 27, 2011, the RTC issued the assailed July 27, 2011 Order,11 finding that the subject
complaint failed to state a cause of action against Gaudioso. It observed that while the plaintiffs
therein had established their relationship with Magdaleno in a previous special proceeding for the
issuance of letters of administration,12 this did not mean that they could already be considered as the
decedent’s compulsory heirs. Quite the contrary, Gaudioso satisfactorily established the fact that he
is Magdaleno’s son – and hence, his compulsory heir – through the documentary evidence he
submitted which consisted of: (a) a marriage contract between Magdaleno and Epegenia
Evangelista; (b) a Certificate of Live Birth; (c) a Letter dated February 19, 1960; and (d) a passport.13

The plaintiffs therein filed a motion for reconsideration which was, however, denied on August 31,
2011 due to the counsel’s failure to state the date on which his Mandatory Continuing Legal
Education Certificate of Compliance was issued.14

Aggrieved, petitioners, who were among the plaintiffs in Civil Case No. T-2246,15 sought direct
recourse to the Court through the instant petition.

The Issue Before the Court

The core of the present controversy revolves around the issue of whether or not the RTC’s dismissal
of the case on the ground that the subject complaint failed to state a cause of action was proper.

The Court’s Ruling

The petition has no merit.

Cause of action is defined as the act or omission by which a party violates a right of another.16 It is
well-settled that the existence of a cause of action is determined by the allegations in the
complaint.17 In this relation, a complaint is said to assert a sufficient cause of action if, admitting what
appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed
for.18Accordingly, if the allegations furnish sufficient basis by which the complaint can be maintained,
the same should not be dismissed, regardless of the defenses that may be averred by the
defendants.19

As stated in the subject complaint, petitioners, who were among the plaintiffs therein, alleged that
they are the lawful heirs of Magdaleno and based on the same, prayed that the Affidavit of Self-
Adjudication executed by Gaudioso be declared null and void and that the transfer certificates of title
issued in the latter’s favor be cancelled. While the foregoing allegations, if admitted to be true, would
consequently warrant the reliefs sought for in the said complaint, the rule that the determination of a
decedent’s lawful heirs should be made in the corresponding special proceeding20 precludes the
RTC, in an ordinary action for cancellation of title and reconveyance, from granting the same. In the
case of Heirs of Teofilo Gabatan v. CA,21 the Court, citing several other precedents, held that the
determination of who are the decedent’s lawful heirs must be made in the proper special proceeding
for such purpose, and not in an ordinary suit for recovery of ownership and/or possession, as in this
case:

Jurisprudence dictates that the determination of who are the legal heirs of the deceased must be
made in the proper special proceedings in court, and not in an ordinary suit for recovery of
ownership and possession of property. This must take precedence over the action for recovery of
1âw phi 1

possession and ownership. The Court has consistently ruled that the trial court cannot make a
declaration of heirship in the civil action for the reason that such a declaration can only be made in a
special proceeding. Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is
defined as one by which a party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong while a special proceeding is a remedy by which a party seeks to
establish a status, a right, or a particular fact. It is then decisively clear that the declaration of
heirship can be made only in a special proceeding inasmuch as the petitioners here are seeking the
establishment of a status or right.

In the early case of Litam, et al. v. Rivera, this Court ruled that the declaration of heirship must be
made in a special proceeding, and not in an independent civil action. This doctrine was reiterated in
Solivio v. Court of Appeals x x x:

In the more recent case of Milagros Joaquino v. Lourdes Reyes, the Court reiterated its ruling that
matters relating to the rights of filiation and heirship must be ventilated in the proper probate court in
a special proceeding instituted precisely for the purpose of determining such rights. Citing the case
of Agapay v. Palang, this Court held that the status of an illegitimate child who claimed to be an heir
to a decedent's estate could not be adjudicated in an ordinary civil action which, as in this case, was
for the recovery of property.22 (Emphasis and underscoring supplied; citations omitted)

By way of exception, the need to institute a separate special proceeding for the determination of
heirship may be dispensed with for the sake of practicality, as when the parties in the civil case had
voluntarily submitted the issue to the trial court and already presented their evidence regarding the
issue of heirship, and the RTC had consequently rendered judgment thereon,23 or when a special
proceeding had been instituted but had been finally closed and terminated, and hence, cannot be re-
opened.24

In this case, none of the foregoing exceptions, or those of similar nature, appear to exist. Hence,
there lies the need to institute the proper special proceeding in order to determine the heirship of the
parties involved, ultimately resulting to the dismissal of Civil Case No. T-2246.

Verily, while a court usually focuses on the complaint in determining whether the same fails to state
a cause of action, a court cannot disregard decisions material to the proper appreciation of the
questions before it.25 Thus, concordant with applicable jurisprudence, since a determination of
heirship cannot be made in an ordinary action for recovery of ownership and/or possession, the
dismissal of Civil Case No. T-2246 was altogether proper. In this light, it must be pointed out that the
RTC erred in ruling on Gaudioso’s heirship which should, as herein discussed, be threshed out and
determined in the proper special proceeding. As such, the foregoing pronouncement should
therefore be devoid of any legal effect.

WHEREFORE, the petition is DENIED. The dismissal of Civil Case No. T-2246 is hereby
AFFIRMED, without prejudice to any subsequent proceeding to determine the lawful heirs of the late
Magdaleno Ypon and the rights concomitant therewith.

SO ORDERED.
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 Herrera-Mercado (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 thumbmark5above 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. T

he 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."18 The 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
power—that 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) branches—the 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.31That, "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 heirs—in
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.
G.R. No. 146006 February 23, 2004

JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and Corporate
Secretary, respectively, of Philippines International 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
decision1 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. Ortañez incorporated the Philippine International Life Insurance Company, Inc. on
July 6, 1956. At the time of the company’s incorporation, Dr. Ortañez owned ninety percent (90%) of
the subscribed capital stock.
On July 21, 1980, Dr. Ortañez died. He left behind a wife (Juliana Salgado Ortañez), three legitimate
children (Rafael, Jose and Antonio Ortañez) and five illegitimate children by Ligaya Novicio (herein
private respondent Ma. Divina Ortañez-Enderes and her siblings Jose, Romeo, Enrico Manuel and
Cesar, all surnamed Ortañez).2

On September 24, 1980, Rafael Ortañez 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. Ortañez, docketed as SP Proc. Q-30884 (which petition to date remains
pending at Branch 85 thereof).

Private respondent Ma. Divina Ortañez-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 Paño, then presiding judge of Branch 85, appointed Rafael
and Jose Ortañez joint special administrators of their father’s 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 Ortañez submitted an
inventory of the estate of their father which included, among other properties, 2,0293 shares of stock
in Philippine International Life Insurance Company (hereafter Philinterlife), representing 50.725% of
the company’s outstanding capital stock.

On April 15, 1989, the decedent’s wife, Juliana S. Ortañez, claiming that she owned
1,0144 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 Ortañez 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 Ortañez, acting in his personal capacity and
claiming that he owned the remaining 1,0115 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 Ortañez 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 Ortañez and her two children, Special
Administrators Rafael and Jose Ortañez, entered into a memorandum of agreement dated March 4,
1982 for the extrajudicial settlement of the estate of Dr. Juvencio Ortañez, partitioning the estate
(including the Philinterlife shares of stock) among themselves. This was the basis of the number of
shares separately sold by Juliana Ortañez on April 15, 1989 (1,014 shares) and by Jose Ortañez on
October 30, 1991 (1,011 shares) in favor of herein petitioner FLAG.

On July 12, 1995, herein private respondent Ma. Divina Ortañez–Enderes 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
Ortañez.

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 decedent’s estate. These motions
were opposed by Special Administrator Jose Ortañez.

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 Ortañez.

On February 4, 1997, Jose Ortañez 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 Ortañez-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
Ortañez 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. Ortañez and Jose S. Ortañez 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 Ortañez-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 Ortañez-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. Ortañez, Rafael S. Ortañez and Jose S. Ortañez 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 Ortañez 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 Ortañez, his brother Rafael Ortañez and mother Juliana Ortañez during the pendency
of the settlement of the estate of Dr. Ortañez, 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 Ortañez and his mother Juliana Ortañez to FLAG of the
shares of stock they invalidly appropriated for themselves, without approval of the intestate court,
was void.8

Special Administrator Jose Ortañez 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 Ortañez 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 Ortañez, 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 Ortañez 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. Ortañez’s 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 Ortañez 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. Ortañez 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.
Ortañez 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 Ortañez-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. Ortañez 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 Ortañez and Jose Ortañez. 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 court’s 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 FLAG’s 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. Ortañez and petitioner FLAG because of
settled law and jurisprudence, i.e., that an heir has the right to dispose of the decedent’s
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 Ortañez and Jose Ortañez, 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
Ortañez and Jose Ortañez 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 Ortañez and his mother Juliana Ortañez of the Philinterlife shares of stock read:

Petitioner’s 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 property’s 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 petitioner’s 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
Ortañez 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. Ortañez. 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. Ortañez with Ligaya Novicio. . . This claim by the acknowledged
natural children of Dr. Juvencio P. Ortañez is admittedly known to the parties to the Memorandum of
Agreement before they executed the same. This much was admitted by petitioner’s 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 Ortañez] and his mother [Juliana
Ortañez] of the Philinterlife shares belonging to the Estate of Dr. Juvencio P. Ortañez." (pages 3-4 of
Private Respondent’s 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 Ortañez, and her three sons, Jose, Rafael and
Antonio, all surnamed Ortañez, 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 Ortañez and her children (Jose, Rafael and
Antonio Ortañez) 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 Ortañez and Jose Ortañez 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 Ortañez and Jose Ortañez 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 decedent’s
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.

xxx xxx xxx

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 petitioner’s 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 court’s 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 Ortañez from the very start as in
fact these shares were included in the inventory of the properties of the estate submitted by Rafael
Ortañez after he and his brother, Jose Ortañez, 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. Ortañez, his wife Juliana Ortañez sold the 1,014 Philinterlife shares of stock in favor petitioner
FLAG without the approval of the intestate court. Her son Jose Ortañez 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 Ortañez. Rather, we are concerned here with the effect of
the sale made by the decedent’s heirs, Juliana Ortañez and Jose Ortañez, 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 andin 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 Philinterlife’s authorized capital stock, approved on the
vote of petitioners’ non-existent shareholdings and obviously calculated to make it difficult for Dr.
Ortañez’s 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 Ortañez,
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 Ortañez-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 Ortañez and Juliana Ortañez:

Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortañez 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.
Ortañez 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.

xxx xxx xxx

With respect to the alleged extrajudicial partition of the shares of stock owned by the late Dr.
Juvencio Ortañez, 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. Ortañez 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?
Furthermore, 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 Ortañez; that on March 4, 1982, the surviving spouse Juliana Ortañez,
on her behalf and for her minor son Antonio, executed a Memorandum of Agreement with her other
sons Rafael and Jose, both surnamed Ortañez, 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.
Ortañez 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. Ortañez,
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 Aggabao 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 Ortañez and Jose Ortañez) 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
respondent’s 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 Ortañez’s 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
Ortañez-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 decedent’s 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 court’s) August 11 and 29, 1997
orders, is hereby AFFIRMED.

SO ORDERED.