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SECOND DIVISION

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


UNION BANK OF THE PHILIPPINES, petitioner, vs.
EDMUND SANTIBAEZ and FLORENCE SANTIBAEZ ARIOLA,
respondents.
Macalino & Associates for petitioner.
Roberto Cal Catolico for respondents.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION; JURISDICTION
OF A PROBATE COURT. [W]ell-settled is the rule that a probate court has
the jurisdiction to determine all the properties of the deceased, to determine
whether they should or should not be included in the inventory or list of
properties to be administered. The said court is primarily concerned with the
administration, liquidation and distribution of the estate.
2.
CIVIL LAW; WILLS AND SUCCESSION; TESTATE SUCCESSION; IN
TESTATE SUCCESSION, THERE CAN BE NO VALID PARTITION AMONG
THE HEIRS UNTIL 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."
3.
REMEDIAL LAW; SPECIAL PROCEEDINGS; CLAIMS AGAINST ESTATE;
FILING OF A MONEY CLAIM AGAINST THE DECEDENT'S ESTATE IN THE
PROBATE COURT IS MANDATORY IN CASE AT BAR. 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."
The assumption of liability was conditioned upon the happening of an event, that
is, that each heir shall take possession and use of their respective share under
the agreement. It was made dependent on the validity of the partition, and that
they were to assume the indebtedness corresponding to the chattel that they
were each to receive. The partition being invalid as earlier discussed, the heirs
in effect did not receive any such tractor. It follows then that the assumption of
liability cannot be given any force and effect. The Court notes that the loan was
contracted by the decedent. The petitioner, purportedly a creditor of the late

Efraim Santibaez, should have thus filed its money claim with the probate court
in accordance with Section 5, Rule 86 of the Revised Rules of Court . . . . The
filing of a money claim against the decedent's estate in the probate court is
mandatory.
DECISION
CALLEJO, SR., J p:\
Before us is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court which seeks the reversal of the Decision 1 of the Court of
Appeals dated May 30, 2001 in CA-G.R. CV No. 48831 affirming the dismissal 2
of the 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. Santibaez entered into a loan agreement 3 in the amount of P128,000.00.
The amount was intended for the payment of the purchase price of one (1) unit
Ford 6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim and his
son, Edmund, executed a promissory note in favor of the FCCC, the principal
sum payable in five equal annual amortizations of P43,745.96 due on May 31,
1981 and every May 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 P123,156.00. It was intended to pay the
balance of the purchase price of another unit of Ford 6600 Agricultural AllPurpose Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor
Model AR 60K. Again, Efraim and his son, Edmund, executed a promissory note
for the said amount in favor of the FCCC.
Aside from such promissory note, they also signed a Continuing Guaranty
Agreement 5 for the loan dated December 13, 1980.

CONTINUING GUARANTY OR SURETYSHIP


Art. 2053. A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim
against the guarantor until the debt is liquidated. A conditional obligation may also be secured. (1825a)
>
One which isnt limited to a single transaction but which contemplates a future course of dealings, covering a series of transactions
generally for an indefinite time or until revoked
> Prospective in its operations and is generally intended to provide security with respect to future transactions
>
Future debts, even if the amount is not yet known, may be guaranteed but there can be no claim against the guarantor until the
amount of the debt is ascertained or fixed and demandable
>
Take note however that the abovementioned provision may be misleading in sanctioning guarantees for future debts. What
should be bore in mind is that there is already an existing obligation that is being guaranteed. The guaranty would be void if there
is no existing obligation.
HOW ABOUT GUARANTY OF CONDITIONAL OBLIGATIONS
> If the principal obligation is subject to a suspensive condition, the guarantor is liable only after the fulfillment of the condition
> If it is subject to a resolutory condition, the happening of the condition extinguishes both the principal obligation and the guaranty
A continuing guaranty is a recognized exception to the rule that an action to foreclose a mortgage must be limited to the amount mentioned
in the mortgage contract.[23] Under Article 2053 of the Civil Code, a guaranty may be given to secure even future debts, the amount of which
may not be known at the time the guaranty is executed. This is the basis for contracts denominated as a continuing guaranty or suretyship. A
continuing guaranty is not limited to a single transaction, but contemplates a future course of dealing, covering a series of transactions,
generally for an indefinite time or until revoked. It is prospective in its operation and is generally intended to provide security with respect to
future transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue, the guarantor becomes liable.
In other words, a continuing guaranty is one that covers all transactions, including those arising in the future, which are within the description
or contemplation of the contract of guaranty, until the expiration or termination thereof.[24]
A guaranty shall be construed as continuing when, by the terms thereof, it is evident that the object is to give a standing credit to the principal
debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is expressly
reserved. In other jurisdictions, it has been held that the use of particular words and expressions, such as payment of "any debt," "any
indebtedness," "any deficiency," or "any sum," or the guaranty of "any transaction" or money to be furnished the principal debtor "at any time"
or "on such time" that the principal debtor may require, has been construed to indicate a continuing guaranty.[25]
In the instant case, the language of the real estate mortgage unambiguously reveals that the security provided in the real estate mortgage is
continuing in nature. Thus, it was intended as security for the payment of the loans annotated at the back of CCT No. 2130, and as security
for all amounts that respondents may owe petitioner bank. It is well settled that mortgages given to secure future advance or loans are valid
and legal contracts, and that the amounts named as consideration in said contracts do not limit the amount for which the mortgage may
stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gathered.[26]
A mortgage given to secure advancements is a continuing security and is not discharged by repayment of the amount named in the
mortgage until the full amounts of the advancements are paid.[27] Respondents full payment of the loans annotated on the title of the
property shall not effect the release of the mortgage because, by the express terms of the mortgage, it was meant to secure all future debts
of the spouses and such debts had been obtained and remain unpaid. Unless full payment is made by the spouses of all the amounts that
they have incurred from petitioner bank, the property is burdened by the mortgage.

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 Santibaez Ariola, executed a Joint Agreement 8 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 Liabilities 9 was
executed by and between FCCC and Union Savings and Mortgage Bank,

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

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

respondent Florence S. Ariola in the ordinary civil action against the 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 juris or
the legal bond between the late Efraim Santibaez and his heirs to be in the
nature of a solidary obligation.
When there is solidarity in an obligation
The Undertaking or contract to secure a loan agreement uses the word sureties althroughout the document in describing the parties. It is
further contended that the principal objective of the parties in executing the Undertaking cannot be attained unless they are solidarily liable
because the total loan obligation can not be paid or settled to free or release the Obligors if one or any of the Sureties default from their
obligation in the Undertaking.
The contention is not correct. In case there is a concurrence of two or more creditors or of two or more debtors in one and the same
obligation, Article 1207 of the Civil Code states that among them, there is a solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity. Article 1210 supplies further caution against the broad interpretation of
solidarity by providing: The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply
indivisibility.
These Civil Code provisions establish that in case of concurrence of two or more creditors or of two or more debtors in one and the same
obligation, and in the absence of express and indubitable terms characterizing the obligation as solidary, the presumption is that the
obligation is only joint. It thus becomes incumbent upon the party alleging that the obligation is indeed solidary in character to prove such fact
with a preponderance of evidence.
The Undertaking does not contain any express stipulation that the parties agreed to bind themselves jointly and severally in their
obligations, or any such terms to that effect. hence, such obligation established in the Undertaking is presumed only to be joint. (Escao, et
al. v. Ortigas, Jr., G.R. No. 151953, June 29, 2007, Tinga, J).

Furthermore, the Promissory Notes dated May 31, 1980 and December 13,
1980 executed by the late Efraim Santibaez, together with his heirs, Edmund
and respondent Florence, made the obligation solidary as far as the said heirs
are concerned. The petitioner also proffers that, considering the express
provisions of the continuing guaranty agreement and the promissory notes
executed by the named respondents, the latter must be held liable jointly and
severally liable thereon. Thus, there was no need for the petitioner to file its
money claim before the probate court. Finally, the petitioner stresses that both
surviving heirs are being sued in their respective personal capacities, not as
heirs of the deceased. cSITDa
In her comment to the petition, respondent Florence S. Ariola maintains that the
petitioner is trying to recover a sum of money from the deceased Efraim
Santibaez; thus the claim should have been filed with the probate court. She

points out that at the time of the execution of the joint agreement there was
already an existing probate proceedings of which the petitioner knew about.
However, to avoid a claim in the probate court which might delay payment of the
obligation, the petitioner opted to require them to execute the said agreement.
According to the respondent, the trial court and the CA did not err in declaring
that the agreement was null and void. She asserts that even if the agreement
was voluntarily executed by her and her brother Edmund, it should still have
been subjected to the approval of the court as it may prejudice the estate, the
heirs or third parties. Furthermore, she had not waived any rights, as she even
stated in her answer in the court a quo that the claim should be filed with the
probate court. Thus, the petitioner could not invoke or claim that she is in
estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as
evidence to show that she had caused herself to be bound by the obligation of
her late father.
The petition is bereft of merit.
The Court is posed to resolve the following issues: a) whether or not the
partition in the Agreement executed by the heirs is valid; b) whether or not the
heirs' assumption of the indebtedness of the deceased is valid; and c) whether
the petitioner can hold the heirs liable on the obligation of the deceased.
TaISDA
At the outset, well-settled is the rule that a probate court has the jurisdiction to
determine all the properties of the deceased, to determine whether they should
or should not be included in the inventory or list of properties to be administered.
20 The said court is primarily concerned with the administration, liquidation and
distribution of the estate. 21
In our jurisdiction, the rule is that there can be no valid partition among the heirs
until after the will has been probated.
In testate succession, there can be no valid partition among the heirs until after
the will has been probated. The law enjoins the probate of a will and the public
requires it, because unless a will is probated and notice thereof given to the
whole world, the right of a person to dispose of his property by will may be
rendered nugatory. The authentication of a will decides no other question than
such as touch upon the capacity of the testator and the compliance with those
requirements or solemnities which the law prescribes for the validity of a will. 22
This, of course, presupposes that the properties to be partitioned are the same
properties embraced in the will. 23 In the present case, the deceased, Efraim
Santibaez, left a holographic will 24 which contained, inter alia, the provision
which reads as follows:
(e) All other properties, real or personal, which I own and may be discovered
later after my demise, shall be distributed in the proportion indicated in the

immediately preceding paragraph in favor of Edmund and Florence, my children.


We agree with the appellate court that the above-quoted is an all-encompassing
provision embracing all the properties left by the decedent which might have
escaped his mind at that time he was making his will, and other properties he
may acquire thereafter. Included therein are the three (3) subject tractors. This
being so, any partition involving the said tractors among the heirs is not valid.
The joint agreement 25 executed by Edmund and Florence, partitioning the
tractors among themselves, is invalid, specially so since at the time of its
execution, there was already a pending proceeding for the probate of their late
father's holographic will covering the said tractors. aSCHcA
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. ITHADC
The Court notes that the loan was contracted by the decedent. The petitioner,

purportedly a creditor of the late Efraim Santibaez, should have thus filed its
money claim with the probate court in accordance with Section 5, Rule 86 of the
Revised Rules of Court, which provides:
Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. All claims for money against the decedent, arising from contract,
express or implied, whether the same be due, not due, or contingent, all claims
for funeral expenses for the last sickness of the decedent, and judgment for
money against the decedent, must be filed within the time limited in the notice;
otherwise they are barred forever, except that they may be set forth as
counterclaims in any action that the executor or administrator may bring against
the claimants. Where an executor or administrator commences an action, or
prosecutes an action already commenced by the deceased in his lifetime, the
debtor may set forth by answer the claims he has against the decedent, instead
of presenting them independently to the court as herein provided, and mutual
claims may be set off against each other in such action; and if final judgment is
rendered in favor of the defendant, the amount so determined shall be
considered the true balance against the estate, as though the claim had been
presented directly before the court in the administration proceedings. Claims not
yet due, or contingent, may be approved at their present value.
The filing of a money claim against the 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 possible, pay off its debts and
distribute the residue. 32
Perusing the records of the case, nothing therein could hold private respondent
Florence S. Ariola accountable for any liability incurred by her late father. The
documentary evidence presented, particularly the promissory notes and the
continuing guaranty agreement, were executed and signed only by the late
Efraim Santibaez and his son Edmund. As the petitioner failed to file its money
claim with the probate court, at most, it may only go after Edmund as co-maker
of the decedent under the said promissory notes and continuing guaranty, of
course, subject to any defenses Edmund may have as against the petitioner. As
the court had not acquired jurisdiction over the person of Edmund, we find it
unnecessary to delve into the matter further. DSTCIa
We agree with the finding of the trial court that the petitioner had not sufficiently
shown that it is the successor-in-interest of the Union Savings and Mortgage

Bank to which the FCCC assigned its assets and liabilities. 33 The petitioner in
its complaint alleged that "by virtue of the Deed of Assignment dated August 20,
1981 executed by and between First Countryside Credit Corporation and Union
Bank of the Philippines . . ." 34 However, the documentary evidence 35 clearly
reflects that the parties in the deed of assignment with assumption of liabilities
were the FCCC, and the Union Savings and Mortgage Bank, with the conformity
of Bancom Philippine Holdings, Inc. Nowhere can the 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. HEDSCc
SO ORDERED.
Puno, Austria-Martinez, Tinga and Chico-Nazario, JJ., concur.
Footnotes
1. Penned by Associate Justice Bienvenido L. Reyes with Associate Justices
Eubulo G. Verzola (deceased), and Marina L. Buzon, concurring.
2. Penned by Presiding Judge Julio R. Logarta.
3. Records, pp. 8-12.
4. Id. at 13-18.
5. Id. at 19-20.
6. Exhibit 7.
7. Annex A of the Answer, Records, p. 48.
8. Exhibit A.
9. Exhibit G.
10. Exhibits E and F.
11. Records, p. 1.
12. See Sheriff's Return of Service, Id. at 39.
13. Records, p. 42.
14. Id. at 83.
15. Id. at 522.

16. CA Rollo, p. 43.


17. Id. at 76.
18. Rollo, p. 30.
19. Id. at 7-8.
20. See Ortega v. Court of Appeals, 153 SCRA 96 (1987); See also Morales v.
CFI of Cavite, Br. V, 146 SCRA 373 (1986).
21. See De la Cruz v. Camon, 16 SCRA 886 (1966).
22. Vda. de Kilayko v. Tengco, 207 SCRA 600 (1992).
23. Ralla v. Untalan, 172 SCRA 858 (1989).
24. Exhibit 7.
25. Exhibit A.
26. See Sandoval v. Santiago, 83 Phil 784 (1949).
27. Article 1082, New Civil Code.
28. See Reyes v. Ysip, 97 Phil 11 (1955).
29. See Exhibit 7.
30. See De Bautista v. De Guzman, 125 SCRA 676 (1983).
31. 70 SCRA 130 (1976).
32. Ibid.
33. See Exhibit G.
34. Records, p. 4.
35. Exhibit G.
36. Records, p. 521
EN BANC
[G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,
claimant-appellant.
Claro M. Recto for appellee.
Tolentino & Garcia and D. R. Cruz for appellant.
SYLLABUS
1.
CONTRACTS; BINDING EFFECT OF CONTRACTS UPON HEIRS OF
DECEASED PARTY. The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision in the 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 39). The reason is that whatever
payment is thus made from the estate is ultimately a payment is thus made from
the estate is ultimately a payment by the heirs and distributes, since the amount
of the paid claim in fact diminishes or reduces the shares that the heirs would
have been entitled to receive. The general rule, therefore, is that a party's
contractual rights and obligations are transmissible to the successors.
2.
ID.; SURETYSHIP; NATURE OF OBLIGATION OF SURETY. 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. The creditor expects of the surety nothing but the
reimbursement of the moneys that said creditor 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
creditor, it was indifferent that the reimbursement should be made by the surety
himself or by some one else in his behalf, so long as the money was paid to it.
3.
ID.; ID.; QUALIFICATION OF GUARANTOR; SUPERVENING
INCAPACITY OF GUARANTOR, EFFECT ON CONTRACT. The qualification
of integrity in the guarantor or surety is required to be present only at the time of
the perfection of the contract of guaranty. Once the contract of guaranty has
become perfected and binding, 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
his bargain.
DECISION
REYES, J. B. L., J p:
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:
"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 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 accumulated 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.
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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.
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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. 98102.)
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 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 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:
"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, 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:
"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
can not 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).
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"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 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 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
derechos y obligaciones; le excepcion, la intransmisibilidad. Mientras nada se
diga en contrario impera el principio de la transmision, como elemento natural a
toda relacion juridica, salvo las personalisimas. Asi, para la no transmision, es
menester el pacto expreso, porque si no, lo convenido entre partes trasciende a
sus herederos.
Siendo estos los continuadores de la personalidad del causante, sobre ellos
recaen los efectos de los vinculos juridicos creados por sus antecesores, y para
evitarlo, si asi se quiere, es indespensable convension terminante en tal
sentido.
Por su esencia, el derecho y la obligacion tienden a ir ms all de las personas
que les dieron vida, y a ejercer presion sobre los sucesores de esa persona;
cuando no se quiera esto, se impone una estipulacion limitativa expresamente
de la transmisibilidad o de cuyos tirminos claramente se deduzca la concresion
del concreto a las mismas personas que lo otorgon." (Scaevola, Codigo Civil,
Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a contract is
deemed to have contracted for himself and his heirs and assigns, it is
unnecessary for him to expressly stipulate to that effect; hence, his failure to do
so is no sign that he intended his bargain to terminate upon his death. Similarly,
that the Luzon Surety Co., did not require bondsman Hemady to execute a
mortgage indicates nothing more than the 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
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:
"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 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).
"The most common example of the contingent 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. Mitchell, 16 Pla., 519; Maxey vs. Carter, 10 Yarg.
[Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; Ernst vs. Nou, 63 Wis.,
134.)"
For defendant administratrix it is averred that the above doctrine refers to a case
where the surety files claims against the estate of the principal debtor; and it is
urged that the rule does not apply to the case before us, where the late Hemady
was a surety, not a principal debtor. The argument evinces a superficial view of
the relations between parties. If under the Gaskell ruling, the Luzon Surety Co.,
as guarantor, could file a contingent claim against the estate of the principal
debtors if the latter should die, there is absolutely no reason why it could not file
such a claim against the estate of Hemady, since Hemady is a solidary codebtor 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.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador,
Concepcion, Endencia and Felix, JJ., concur.
EN BANC
[G.R. No. L-15499. February 28, 1962.]
ANGELA M. BUTTE, plaintiff-appellant, vs. MANUEL UY & SONS, INC.,
defendant-appellee.
Delgado, Flores & Macapagal for plaintiff-appellee.
Pelaez, Jalandoni & Jamir for defendant-appellant.
SYLLABUS
1.
SUCCESSION; WHEN RIGHTS TRANSMITTED TO HEIRS; SCOPE OF
RIGHT OF SUCCESSION. The rights to the succession of a deceased
person 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.

2.
ID.; CO-OWNERSHIP OVER UNDIVIDED ESTATE; RIGHT OF LEGAL
REDEMPTION; EACH CO-OWNER, REGARDLESS OF SIZE OF SHARE,
VESTED WITH RIGHT. A co-owner of an undivided share is necessarily a coowner of the whole. Therefore, any of the heirs of an undivided estate, as such
co-owner, becomes entitled to exercise the right of legal redemption as soon as
another co-owner has sold his undivided share to a stranger. The right of
redemption vests exclusively in consideration of the redemptioner's quality of coowner, independently of the size of the redemptioner's share which the law
nowhere takes into account.
3.
ID.; ID.; ID.; ID.; IMMATERIAL WHETHER OR NOT REDEMPTIONER
WILL REMAIN CO-OWNER AFTER EXERCISING RIGHT OF REDEMPTION.
All that the law requires is that the legal redemption 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
redemption is irrelevant for the purpose of the law.
4.
ID.; ID.; ID.; ID.; WHEN ADMINISTRATOR WITHOUT RIGHT OF LEGAL
REDEMPTION. While under Section 3, Rule 85, 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
expenses of administration, 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 a stranger by one of the coowners after the death of another, because in such case the right of legal
redemption only came into existence when the sale to the stranger was
perfected and formed no part of the estate of the deceased co-owner. Hence,
that right can not be transmitted to the heirs of the deceased co-owner.
5.
ID.; SALE OF HEREDITARY PROPERTY; TITLE DEEMED ACQUIRED
DIRECTLY FROM HEIRS IF HEIRSHIP NOT DISPUTED. Where the heirship
is undisputed, the purchaser of hereditary property is not deemed to have
acquired directly form the decedent, because a dead man cannot convey title, or
from the administrator who owns no part of the estate. He can only derive his
title from the heirs, represented by the administrator, as their trustee or legal
representative.
6.
ID.; ID.; ID.; PERIOD FOR MAKING LEGAL REDEMPTION COUNTED
FROM NOTICE IN WRITING BY VENDOR. The text of Article 1623 of the
Civil Code clearly and expressly prescribes that the thirty-day period for making
the redemption should be counted from notice in writing by the vendor. Under
Article 1524 of the Civil Code of 1989, it was immaterial who gave the notice; so
long as the redeeming co-owner learned of the alienation in favor of a stranger
the period began to run. It is thus apparent that a particular method of giving
notice was selected, and that method must be deemed exclusive (39 Am. Jur.,

237; Payne vs. State, 12 S. W. (2nd) 528).


7.
ID.; ID.; ID.; ID.; WHY VENDOR, NOT PURCHASER, IS REQUIRED TO
GIVE NOTICE. The law requires that notice of sale of an undivided portion of
property be given by the seller, not by the buyer because he is in the best
position to know who are his co-owners that under the law must be notified of
the sale, and because such notice by the seller serves as a reaffirmation of the
perfection and validity of the sale, so that the party notified need not entertain
doubt that the seller may later contest the alienation.
8.
LEGAL REDEMPTION; SALE OF UNDIVIDED INTEREST IN
PROPERTY; PURCHASER CHARGED WITH NOTICE THAT ACQUISITION IS
SUBJECT TO REDEMPTION BY ANY CO-OWNER. The purchaser of an
undivided interest in a property is charged with notice that its acquisition is
subject to redemption by any other co-owner within the statutory 30-day period.
The identity of the redemptioner is immaterial so far as the purchaser is
concerned.
9.
ID.; ID.; DAMAGES NOT PRESUMED. Damages are not presumed
specially where, as in the present case, there has been no showing that the
fruits of the undivided portion of the property purchased by the appellee would
exceed the interest and profits that could have been earned by the amount had
he should have paid over to effectuate the legal redemption.
DECISION
REYES, J.B.L., J p:
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; Belen T. 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 and Macapagal, Escolta, Manila, and having received
the same on December 10, 1958, said law office delivered them to plaintiffappellant's son, Mr. Miguel Papa, who in turn personally handed the letters to
his mother, Mrs. Butte, on December 11 or 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 proceeding; 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 preemption or redemption shall not be
exercised except within thirty days from the notice in writing by the prospective
vendor, or by the vendor, as the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless accompanied by an affidavit of the
vendor that he has given written notice thereof to 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 person 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 devises acquires a right to the pure and simple
legacies or devises 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
inofficiousness of the donations 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 coowner 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 (Marie 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 quality of
co-owner, independently of the size 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 the 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 life-time.
As co-owners of the property, the heirs of Jose V. Ramirez, or any one of them,
became personally vested with the 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 of the time the share that
originally belonged to Ramirez is in turn sold (if 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 redemption is irrelevant for the
purposes of the law.
Nor can it 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 notice 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 (aff'd. 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 fact of the sale,
its perfection, and its validity, the notice being a reaffirmation thereof; so that the

party notified 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 its refusal,
judicially consigned the price of P500,000 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 the 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 justification for appellant's claim that the P500,000 paid by Uy &
Sons, Inc. for the Garnier share is grossly excessive. Gross excess can not 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 attorneys' 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 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., did not take part.
C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.
FIRST DIVISION
[G.R. No. 131953. June 5, 2002.]
MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S.
CABATINGAN, petitioners, vs. THE HEIRS OF CORAZON CABATINGAN,
namely, LUZ M. BOQUIA, PERLA M. ABELLA, ESTRELLA M. CAETE,
LOURDES M. YUSON, and JULIA L. MAYOL, HEIRS OF GENOVIVA C.
NATIVIDAD namely, OSCAR C. NATIVIDAD, OLGA NATIVIDAD, ODETTE
NATIVIDAD, OPHELIA NATIVIDAD, RICHARD NATIVIDAD, RAYMUND
NATIVIDAD, RICHIE NATIVIDAD, SONIA NATIVIDAD and ENCARNACION
CABATINGAN VDA. DE TRINIDAD, ALFREDO CABATINGAN and JESUSA C.
NAVADA, respondents.
Bienvenido R. Saniel, Jr. for petitioners.
Senining Belcia & Atup for private respondents.
SYNOPSIS
Conchita Cabatingan, during her lifetime, executed four Deeds of Donation in
favor of petitioners. The Deeds provide, among others, that the donation will
become effective upon the death of the donor and the same shall be rescinded
in case the donee predeceased the donor. After Conchita's death, respondents,
heirs of Conchita, filed an action before the Regional Trial Court of Mandaue,
seeking the annulment of the said four Deeds of Donation. Respondents
alleged, inter alia, that the documents were void for failing to comply with the
provisions of the Civil Code regarding formalities of wills and testaments,
considering that the Deeds were donation mortis causa. The RTC favorably
ruled for the respondents. Hence, this petition.
Petitioners insisted that the Deeds were inter vivos donations as they were
made by the late Conchita "in consideration of the love and affection of the
donor" for the donee, and there was nothing in the Deeds which indicate that the
donations were made in consideration of Conchita's death. Petitioners further
alleged that the stipulation on rescission in case petitioners die ahead of
Conchita was a resolutory condition that confirmed the nature of the donations
as inter vivos.
The Supreme Court found petitioners' arguments bereft of merit. It held that in a
donation mortis causa, "the right of disposition is not transferred to the donee
while the donor is still alive." In the present case, the nature of the donations as

mortis causa was confirmed by the fact that the donations did not contain any
clear provision that intends to pass proprietary rights to petitioners prior to
Conchita's death. The phrase "to become effective upon the death of the
DONOR" admits of no other interpretation but that Conchita did not intend to
transfer the ownership of the properties to petitioners during her lifetime. That
the donations were made "in consideration of the love and affection of the
donor" did not qualify the donations as inter vivos because transfers mortis
causa may also be made for the same reason. Considering that the disputed
donations were donations mortis causa, and the same partakes of testamentary
provisions, the Court held that the trial court did not commit any reversible error
in declaring the subject Deeds null and void for failure to comply with the
requisites on solemnities of wills and testaments under Articles 805 and 806 of
the Civil Code. Petition denied.
SYLLABUS
1.
CIVIL
LAW;
DONATIONS;
DONATION
MORTIS
CAUSA;
CHARACTERISTICS; RIGHT OF DISPOSITION IS NOT TRANSFERRED TO
THE DONEE WHILE THE DONOR IS STILL ALIVE; CASE AT BAR. In a
donation mortis causa, "the right of disposition is not transferred to the donee
while the donor is still alive." In determining whether a donation is one of mortis
causa, the following characteristics must be taken into account: (1) It conveys
no title or ownership to the transferee before the death of the transferor; or what
amounts to the same thing, that the transferor should retain the ownership (full
or naked) and control of the property while alive; (2) That before his death, the
transfer should be revocable by the transferor at will, ad nutum; but revocability
may be provided for indirectly by means of a reserved power in the donor to
dispose of the properties conveyed; and (3) That the transfer should be void if
the transferor should survive the transferee. In the present case, the nature of
the donations as mortis causa is confirmed by the fact that the donations do not
contain any clear provision that intends to pass proprietary rights to petitioners
prior to Cabatingan's death. The phrase "to become effective upon the death of
the DONOR" admits of no other interpretation but that Cabatingan did not intend
to transfer the ownership of the properties to petitioners during her lifetime.
2.
ID.; ID.; ID.; MAY BE MADE IN CONSIDERATION OF THE LOVE AND
AFFECTION OF THE DONOR TO THE DONEE. That the donations were
made "in consideration of the love and affection of the donor" does not qualify
the donations as inter vivos because transfers mortis causa may also be made
for the same reason.
3.
ID.; ID.; ID.; TRANSFER SHALL BE CONSIDERED VOID IF DONOR
SHOULD SURVIVE THE DONEE. The herein subject deeds expressly
provide that the donation shall be rescinded in case petitioners predecease
Conchita Cabatingan. As stated in Reyes v. Mosqueda, one of the decisive
characteristics of a donation mortis causa is that the transfer should be

considered void if the donor should survive the donee. This is exactly what
Cabatingan provided for in her donations. If she really intended that the donation
should take effect during her lifetime and that the ownership of the properties
donated be transferred to the donee or independently of, and not by reason of
her death, she would have not expressed such proviso in the subject deeds.
ADaEIH
4.
ID.; ID.; ID.; MUST BE EXECUTED IN ACCORDANCE WITH
REQUISITES ON SOLEMNITIES OF WILLS AND TESTAMENTS; SUBJECT
DEEDS OF DONATION CONSIDERED NULL AND VOID IN CASE AT BAR.
Considering that the disputed donations are donations mortis causa, the same
partake of the nature of testamentary provisions and as such, said deeds must
be executed in accordance with the requisites on solemnities of wills and
testaments under Articles 805 and 806 of the Civil Code, to wit: . . . The deeds in
question although acknowledged before a notary public of the donor and the
donee, the documents were not executed in the manner provided for under the
above-quoted provisions of law. Thus, the trial court did not commit any
reversible error in declaring the subject deeds of donation null and void.
DECISION
AUSTRIA-MARTINEZ, J p:
Posed for resolution before the Court in this petition for review on certiorari filed
under Rule 45 of the Rules of Court is the sole issue of whether the donations
made by the late Conchita Cabatingan are donations inter vivos or mortis causa.
ISaCTE
The facts of the case are as follows: DSEIcT
On February 17, 1992, Conchita Cabatingan executed in favor of her brother,
petitioner Nicolas Cabatingan, a "Deed of Conditional of Donation (sic) Inter
Vivos for House and Lot" covering one-half (1/2) portion of the former's house
and lot located at Cot-cot, Liloan, Cebu. 1 Four (4) other deeds of donation were
subsequently executed by Conchita Cabatingan on January 14, 1995,
bestowing upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land
one located in Cogon, Cebu (307 sq. m.) and the other, a portion of a parcel of
land in Masbate (50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion of a
parcel of land located in Masbate (80,000 sq. m.); and (c) petitioner Merly S.
Cabatingan, a portion of the Masbate property (80,000 sq. m.). 2 These deeds
of donation contain similar provisions, to wit:
"That for and in consideration of the love and affection of the DONOR for the
DONEE, . . . the DONOR does hereby, by these presents, transfer, convey, by
way of donation, unto the DONEE the above-described property, together with
the buildings and all improvements existing thereon, to become effective upon
the death of the DONOR; PROVIDED, HOWEVER, that in the event that the
DONEE should die before the DONOR, the present donation shall be deemed
automatically rescinded and of no further force and effect; . . ." 3 (Emphasis

Ours)
On May 9, 1995, Conchita Cabatingan died.
Upon learning of the existence of the foregoing donations, respondents filed with
the Regional Trial Court of Mandaue, Branch 55, an action for Annulment
And/Or Declaration of Nullity of Deeds of Donations and Accounting, docketed
as Civil Case No. MAN-2599, seeking the annulment of said four (4) deeds of
donation executed on January 14, 1995. Respondents allege, inter alia, that
petitioners, through their sinister machinations and strategies and taking
advantage of Conchita Cabatingan's fragile condition, caused the execution of
the deeds of donation, and, that the documents are void for failing to comply
with the provisions of the Civil Code regarding formalities of wills and
testaments, considering that these are donations mortis causa. 4 Respondents
prayed that a receiver be appointed in order to preserve the disputed properties,
and, that they be declared as co-owners of the properties in equal shares,
together with petitioner Nicolas Cabatingan. 5
Petitioners in their Amended Answer, deny respondents' allegations contending
that Conchita Cabatingan freely, knowingly and voluntarily caused the
preparation of the instruments. 6
On respondents' motion, the court a quo rendered a partial judgment on the
pleadings on December 2, 1997 in favor of respondents, with the following
dispositive portion:
"WHEREFORE, and in consideration of all the foregoing, judgment is hereby
rendered in favor of the plaintiffs and against the defendant and unwilling coplaintiff with regards (sic) to the four Deeds of Donation Annexes "A", "A-1", "B"
and Annex "C" which is the subject of this partial decision by:
a)
Declaring the four Deeds of Donation as null and void ab initio for being a
donation Mortis Causa and for failure to comply with formal and solemn requisite
under Art. 806 of the New Civil Code;
b)
To declare the plaintiffs and defendants as well as unwilling co-plaintiff as
the heirs of the deceased Conchita Cabatingan and therefore hereditary coowners of the properties subject of this partial decision, as mandated under Art.
777 of the New Civil Code;
SO ORDERED." 7
The court a quo ruled that the donations are donations mortis causa and
therefore the four (4) deeds in question executed on January 14, 1995 are null
and void for failure to comply with the requisites of Article 806 of the Civil Code
on solemnities of wills and testaments. 8
Raising questions of law, petitioners elevated the court a quo's decision to this
Court, 9 alleging that:
"THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-WELLESTABLISHED RULINGS OF THIS HONORABLE SUPREME COURT ON THE
CHARACTERIZATION OF DONATIONS AS INTER VIVOS OR MORTIS

CAUSA AND, INSTEAD, PROCEEDED TO INTERPRET THE DONATIONS IN


QUESTION IN A MANNER CONTRARY THERETO." 10
Petitioners insist that the donations are inter vivos donations as these were
made by the late Conchita Cabatingan "in consideration of the love and affection
of the donor" for the donee, and there is nothing in the deeds which indicate that
the donations were made in consideration of Cabatingan's death. 11 In addition,
petitioners contend that the stipulation on rescission in case petitioners die
ahead of Cabatingan is a resolutory condition that confirms the nature of the
donation as inter vivos.
Petitioners' arguments are bereft of merit.
In a donation mortis causa, "the right of disposition is not transferred to the
donee while the donor is still alive." 12 In determining whether a donation is one
of mortis causa, the following characteristics must be taken into account:
(1) It conveys no title or ownership to the transferee before the death of the
transferor; or what amounts to the same thing, that the transferor should retain
the ownership (full or naked) and control of the property while alive;
(2) That before his death, the transfer should be revocable by the transferor at
will, ad nutum; but revocability may be provided for indirectly by means of a
reserved power in the donor to dispose of the properties conveyed;
and
(3) That the transfer should be void if the transferor should survive the
transferee. 13
In the present case, the nature of the donations as mortis causa is confirmed by
the fact that the donations do not contain any clear provision that intends to
pass proprietary rights to petitioners prior to Cabatingan's death. 14 The phrase
"to become effective upon the death of the DONOR" admits of no other
interpretation but that Cabatingan did not intend to transfer the ownership of the
properties to petitioners during her lifetime. Petitioners themselves expressly
confirmed the donations as mortis causa in the following Acceptance and
Attestation clauses, uniformly found in the subject deeds of donation, to wit:
"That the DONEE does hereby accept the foregoing donation mortis causa
under the terms and conditions set forth therein, and avail herself of this
occasion to express her profound gratitude for the kindness and generosity of
the DONOR."
xxx
xxx
xxx
"SIGNED by the above-named DONOR and DONEE at the foot of this Deed of
Donation mortis causa, which consists of two (2) pages . . . ." 15
That the donations were made "in consideration of the love and affection of the
donor" does not qualify the donations as inter vivos because transfers mortis
causa may also be made for the same reason. 16
Well in point is National Treasurer of the Phils. v. Vda. de Meimban. 17 In said
case, the questioned donation contained the provision:

"That for and in consideration of the love and affection which the DONOR has
for the DONEE, the said Donor by these presents does hereby give, transfer,
and convey unto the DONEE, her heirs and assigns a portion of ONE
HUNDRED THOUSAND (100,000) SQUARE METERS, on the southeastern
part Pro-indiviso of the above described property. (The portion herein donated is
within Lot 2-B of the proposed amendment Plan Subdivision of Lots Nos. 1 and
2, Psu-109393), with all the buildings and improvements thereon, to become
effective upon the death of the DONOR. (emphasis supplied)" 18
Notably, the foregoing provision is similar to that contained in the donation
executed by Cabatingan. We held in Meimban case that the donation is a mortis
causa donation, and that the above quoted provision establishes the donor's
intention to transfer the ownership and possession of the donated property to
the donee only after the former's death. Further:
"As the donation is in the nature of a mortis causa disposition, the formalities of
a will should have been complied with under Article 728 of the Civil Code,
otherwise, the donation is void and would produce no effect. As we have held in
Alejandro v. Geraldez (78 SCRA 245, 253), "If the donation is made in
contemplation of the donor's death, meaning that the full or naked ownership of
the donated properties will pass to the donee because of the donor's death, then
it is at that time that the donation takes effect, and it is a donation mortis causa
which should be embodied in a last will and testament. (Citing Bonsato v. Court
of Appeals, 95 Phil. 481)." 19
We apply the above rulings to the present case. The herein subject deeds
expressly provide that the donation shall be rescinded in case petitioners
predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda, 20 one of
the decisive characteristics of a donation mortis causa is that the transfer should
be considered void if the donor should survive the donee. This is exactly what
Cabatingan provided for in her donations. If she really intended that the donation
should take effect during her lifetime and that the ownership of the properties
donated be transferred to the donee or independently of, and not by reason of
her death, she would have not expressed such proviso in the subject deeds.
Considering that the disputed donations are donations mortis causa, the same
partake of the nature of testamentary provisions 21 and as such, said deeds
must be executed in accordance with the requisites on solemnities of wills and
testaments under Articles 805 and 806 of the Civil Code, to wit:
"ART. 805. Every will, other than a holographic will, must be subscribed at the
end thereof by the testator himself or by the testator's name written by some
other person in his presence, and by his express direction, and attested and
subscribed by three or more credible witnesses in the presence of the testator
and of one another.
The testator or the person requested by him to write his name and the
instrumental witnesses of the will, shall also sign, as aforesaid, each and every

page thereof, except the last, on the left margin, and all the pages shall be
numbered correlatively in letters placed on the upper part of each page.
The attestation shall state the number of pages used upon which the will is
written, and the fact that the testator signed the will and every page thereof, or
caused some other person to write his name, under his express direction, in the
presence of the instrumental witnesses, and that the latter witnessed and signed
the will and all the pages thereof in the presence of the testator and of one
another.
If the attestation clause is in a language not known to the witnesses, it shall be
interpreted to them. (n)
ART. 806. Every will must be acknowledged before a notary public by the
testator and the witnesses. The notary public shall not be required to retain a
copy of the will, or file another with the office of the Clerk of Court. (n)"
The deeds in question although acknowledged before a notary public of the
donor and the donee, the documents were not executed in the manner provided
for under the above-quoted provisions of law.
Thus, the trial court did not commit any reversible error in declaring the subject
deeds of donation null and void. ACSaHc
WHEREFORE, the petition is hereby DENIED for lack of merit. ECAaTS
SO ORDERED.
Vitug and Kapunan, JJ., concur.
Davide, Jr., C.J. and Ynares-Santiago, J., on official leave.
Footnotes
1. Original Records, See Annex "D", pp. 107-108.
2. Original Records, See Annexes "A" to "C", pp. 99-106.
3. Ibid.
4. Original Records, Amended Complaint, pp. 93-97.
5. Original Records, p. 97.
6. Amended Answer, pp. 2-3; Original Records, pp. 125-126.
7. Decision, p. 8; Original Records, p. 207.
8. Original Records, See Partial Decision dated December 2, 1997, p. 200.
9. The petition was given due course per S.C. Resolution dated April 24,
1998.
10. Petition, p. 5; Rollo, p. 17.
11. Petition, pp. 13-14; Rollo, pp. 25-26.
12. Sicad v. Court of Appeals, 294 SCRA 183 [1998], p. 193.
13. Reyes v. Mosqueda, 187 SCRA 661 [1990], at pp. 670-671, citing
Bonsato, et al. v. Court of Appeals, et al., 95 Phil. 481 [1954].
14. Rollo, See Annexes "B" to "E", pp. 45-51.
15. Rollo, Annexes "B" to "E", pp. 45-52.
16. Sicad v. Court of Appeals, supra, p. 194, citing Alejandro v. Geraldez, 78
SCRA 245 [1977].

17.
18.
19.
20.
21.

131 SCRA 264 [1984].


Ibid., p. 269.
Ibid., p. 270.
See Note 13.
Article 728, Civil Code.

C o p y r i g h t 2 0 0 2 C D T e c h n o l o g i e s A s i a, I n c.
THIRD DIVISION
[G.R. No. 146006. February 23, 2004.]
JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and
Corporate Secretary, respectively, of Philippines 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.
Acosta Aguirre & Fernandez Law Firm for petitioners.
Picazo Buyco Tan Fider and Santos for respondents.
SYNOPSIS
Dr. Juvencio P. Ortaez owned ninety percent (90%) of the subscribed capital
stock of Philippine International Life Insurance Company, Inc. (Philinterlife). After
his death, he was survived by his wife, Juliana Salgado Ortaez, three
legitimate children, namely: Rafael, Jose and Antonio and five illegitimate
children by Ligaya Novicio, namely: Ma. Divina Ortaez-Enderes, Jose Ortaez,
Romeo Ortaez, Enrico Manuel Ortaez and Cezar Ortaez. Rafael and Jose
Ortaez were appointed as special administrators of his estate. However, during
the pendency of the estate proceedings, Juliana Ortaez and her two sons,
Rafael and Jose, entered into a Memorandum of Agreement for the extrajudicial
settlement of the estate of Dr. Ortaez by partitioning the said estate among
themselves. By reason thereof, Juliana Ortaez sold the 1,014 Philinterlife
shares of stocks and Jose Ortaez also sold the 1,011 Philinterlife shares in
favor of Filipino Loan Assistance Group (FLAG). These transactions were
questioned by Ma. Divina Ortaez-Enderes and her siblings before the intestate
court. The intestate court declared the Memorandum of Agreement as partially
void ab initio in so far as the transfer/waiver/renunciation of the Philinterlife
shares of stocks was concerned. The said decision was affirmed by the Court of
Appeals and the Supreme Court. The decision became final. However, it was
not executed since on several occasions the sheriff was barred by the security
guard upon the instruction of the herein petitioners, President Jose Lee and

Corporate Secretary Alma Aggabao of Philinterlife. Thereafter, the intestate court


granted private respondent Enderes' motion to direct the branch clerk of court in
lieu of petitioners Lee and Aggabao to reinstate the name of Dr. Ortaez in the
stock and transfer book of Philinterlife and to issue the corresponding stock
certificate pursuant to Section 10, Rule 39 of the Rules of Court. The said Order
was later upheld by the Court of Appeals. Hence, this petition. SAHITC
In denying the petition, the Court ruled that 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.
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. This means that an heir may sell
only his ideal or undivided share in the estate, not any specific property therein.
In the present case, Juliana Ortaez and Jose Ortaez sold specific properties
of the estate in favor of petitioner FLAG. This they could not lawfully do pending
the final adjudication of the estate by the intestate court because of the undue
prejudice it would cause the other claimants to the estate, as what happened in
the present case. Juliana Ortaez and Jose Ortaez sold specific properties of
the estate without court approval.
Moreover, 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. SEDIaH
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; ISSUES THAT HAD
BEEN SETTLED A LONG TIME AGO SHOULD NOT BE REOPENED. 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. Our decision became final on February 23, 1999 and was accordingly
entered in the book of entry of judgments. For all intents and purposes
therefore, the nullity of the sale of the Philinterlife shares of stock made by
Juliana Ortaez and Jose Ortaez in favor of petitioner FLAG is already a

closed case. To reopen said issue would set a bad precedent, opening the door
wide open for dissatisfied parties to relitigate unfavorable decisions no end. This
is completely inimical to the orderly and efficient administration of justice.
2.
ID.; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATE OF
DECEASED PERSONS; EXTRAJUDICIALLY PARTITIONING THE INTESTATE
ESTATE AMONG HEIRS DESPITE THEIR KNOWLEDGE THAT THERE WERE
OTHER HEIRS OR CLAIMANTS TO THE ESTATE WAS INVALID. [I]t is clear
that Juliana Ortaez, and her three sons, Jose, Rafael and Antonio, all
surnamed Ortaez, invalidly entered into a memorandum of agreement
extrajudicially partitioning the intestate estate among themselves, despite their,
knowledge that there were other heirs or claimants to the estate and before final
settlement of the estate by the intestate court. Since the appropriation of the
estate properties by Juliana Ortaez and her children (Jose, Rafael and Antonio
Ortaez) was invalid, the subsequent sale thereof by Juliana and Jose to a third
party (FLAG), without court approval, was likewise void. EcTCAD
3.
CIVIL LAW; SUCCESSION; AN HEIR MAY ONLY SELL HIS IDEAL OR
UNDIVIDED SHARE IN THE ESTATE, NOT ANY SPECIFIC PROPERTY
THEREIN. 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. 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. This means that an heir may only sell his ideal or
undivided share in the estate, not any specific property therein.
4.
ID.; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATE OF
DECEASED PERSONS; COURT APPROVAL IS NECESSARY FOR THE
VALIDITY OF ANY DISPOSITION OF THE DECEDENT'S ESTATE. It is wellsettled that court approval is necessary for the validity of any disposition of the
decedent's estate. In the early case of Godoy vs. Orellano, 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.
5.
ID.; ID.; ID.; ANY UNAUTHORIZED DISPOSITION OF ESTATE
PROPERTY CAN BE ANNULLED BY THE PROBATE COURT. 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. IcTaAH
6.
ID.; ID.; ID.; ID.; INTESTATE COURT HAS THE POWER TO EXECUTE
ITS ORDER WITH REGARD TO THE NULLITY OF AN UNAUTHORIZED SALE

OF ESTATE PROPERTY. 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.
7.
POLITICAL LAW; CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE
PROCESS; NOT VIOLATED IN CASE AT BAR [W]e 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. In this case, petitioners knew
of the pending intestate proceedings for the settlement of Dr. Juvencio Ortaez'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.
DAaHET
DECISION
CORONA, J p:
This is a petition for review under Rule 45 of the Rules of Court seeking to
reverse and set aside the decision 1 of the Court of Appeals, First Division,
dated July 26, 2000, in CA G.R. 59736, which dismissed the petition for
certiorari filed by petitioners Jose C. Lee and Alma Aggabao (in their capacities
as president and secretary, respectively, of Philippine International Life
Insurance Company) and Filipino Loan Assistance Group. SDHacT
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance
Company, Inc. on July 6, 1956. At the time of the company's incorporation, Dr.
Ortaez owned ninety percent (90%) of the subscribed capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado
Ortaez), three legitimate children (Rafael, Jose and Antonio Ortaez) and five
illegitimate children by Ligaya Novicio (herein private respondent Ma. Divina
Ortaez-Enderes and her siblings Jose, Romeo, Enrico Manuel and Cesar, all

surnamed Ortaez). 2
On September 24, 1980, Rafael Ortaez filed before the Court of First Instance
of Rizal, Quezon City Branch (now Regional Trial Court of Quezon City) a
petition for letters of administration of the intestate estate of Dr. Ortaez,
docketed as SP. Proc. Q-30884 (which petition to date remains pending at
Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an
opposition to the petition for letters of administration and, in a subsequent urgent
motion, prayed that the intestate court appoint a special administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch
85, appointed Rafael and Jose Ortaez joint special administrators of their
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
Ortaez submitted an inventory of the estate of their father which included,
among other properties, 2,029 3 shares of stock in Philippine International Life
Insurance Company (hereafter Philinterlife), representing 50.725% of the
company's outstanding capital stock.
On April 15, 1989, the decedent's wife, Juliana S. Ortaez, claiming that she
owned 1,014 4 Philinterlife shares of stock as her conjugal share in the estate,
sold said shares with right to repurchase in favor of herein petitioner Filipino
Loan Assistance Group (FLAG), represented by its president, herein petitioner
Jose C. Lee. Juliana Ortaez failed to repurchase the shares of stock within the
stipulated period, thus ownership thereof was consolidated by petitioner FLAG
in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal
capacity and claiming that he owned the remaining 1,011 5 Philinterlife shares of
stocks as his inheritance share in the estate, sold said shares with right to
repurchase also in favor of herein petitioner FLAG, represented by its president,
herein petitioner Jose C. Lee. After one year, petitioner FLAG consolidated in its
name the ownership of the Philinterlife shares of stock when Jose Ortaez failed
to repurchase the same.
It appears that several years before (but already during the pendency of the
intestate proceedings at the Regional Trial Court of Quezon City, Branch 85),
Juliana Ortaez and her two children, Special Administrators Rafael and Jose
Ortaez, entered into a memorandum of agreement dated March 4, 1982 for the
extrajudicial settlement of the estate of Dr. Juvencio Ortaez, partitioning the
estate (including the Philinterlife shares of stock) among themselves. This was
the basis of the number of shares separately sold by Juliana Ortaez on April
15, 1989 (1,014 shares) and by Jose Ortaez on October 30, 1991 (1,011
shares) in favor of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina Ortaez-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 Ortaez.
On November 8, 1995, the intestate court granted the motion of private
respondents Enderes et al. and appointed private respondent Enderes special
administratrix of the Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the memorandum of agreement dated March 4, 1982. On
January 9, 1996, she filed a motion to declare the partial nullity of the
extrajudicial settlement of the decedent's estate. These motions were opposed
by Special Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the deeds of sale of Philinterlife shares of stock, which
move was again opposed by Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the approval
of the deeds of sale of the Philinterlife shares of stock and (2) the release of Ma.
Divina Ortaez-Enderes as special administratrix of the Philinterlife shares of
stock on the ground that there were no longer any shares of stock for her to
administer.
On August 11, 1997, the intestate court denied the omnibus motion of Special
Administrator Jose Ortaez for the approval of the deeds of sale for the reason
that:
Under the Godoy case, supra, it was held in substance that a sale of a property
of the estate without an Order of the probate court is void and passes no title to
the purchaser. Since the sales in question were entered into by Juliana S.
Ortaez and Jose S. Ortaez in their personal capacity without prior approval of
the Court, the same is not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of
Philinterlife shares of stock and release of Ma. Divina Ortaez-Enderes as
Special Administratrix is hereby denied. 6
On August 29, 1997, the intestate court issued another order granting the
motion of Special Administratrix Enderes for the annulment of the March 4, 1982
memorandum of agreement or extrajudicial partition of estate. The court
reasoned that: TCIEcH
In consonance with the Order of this Court dated August 11, 1997 DENYING the
approval of the sale of Philinterlife shares of stocks and release of Ma. Divina
Ortaez-Enderes as Special Administratrix, the "Urgent Motion to Declare Void
Ab Initio Memorandum of Agreement" dated December 19, 1995. . . is hereby
impliedly partially resolved insofar as the transfer/waiver/renunciation of the
Philinterlife shares of stock are concerned, in particular, No. 5, 9(c), 10(b) and
11(d)(ii) of the Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement

dated March 4, 1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and


Jose S. Ortaez as partially void ab initio insofar as the
transfer/waiver/renunciation of the Philinterlife shares of stocks are concerned. 7
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez filed,
on December 22, 1997, a petition for certiorari in the Court of Appeals. The
appellate court denied his petition, however, ruling that there was no legal
justification whatsoever for the extrajudicial partition of the estate by Jose
Ortaez, his brother Rafael Ortaez and mother Juliana Ortaez during the
pendency of the settlement of the estate of Dr. Ortaez, without the requisite
approval of the intestate court, when it was clear that there were other heirs to
the estate who stood to be prejudiced thereby. Consequently, the sale made by
Jose Ortaez and his mother Juliana Ortaez to FLAG of the shares of stock
they invalidly appropriated for themselves, without approval of the intestate
court, was void. 8
Special Administrator Jose Ortaez filed a motion for reconsideration of the
Court of Appeals decision but it was denied. He elevated the case to the
Supreme Court via petition for review under Rule 45 which the Supreme Court
dismissed on October 5, 1998, on a technicality. His motion for reconsideration
was denied with finality on January 13, 1999. On February 23, 1999, the
resolution of the Supreme Court dismissing the petition of Special Administrator
Jose Ortaez became final and was subsequently recorded in the book of
entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the
FLAG-controlled board of directors, increased the authorized capital stock of
Philinterlife, diluting in the process the 50.725% controlling interest of the
decedent, Dr. Juvencio Ortaez, in the insurance company. 9 This became the
subject of a separate action at the Securities and Exchange Commission filed by
private respondent-Special Administratrix Enderes against petitioner Jose Lee
and other members of the FLAG-controlled board of Philinterlife on November 7,
1994. Thereafter, various cases were filed by Jose Lee as president of
Philinterlife and Juliana Ortaez and her sons against private respondentSpecial 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. Ortaez'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 Ortaez to Filipino Loan Assistance Group
(FLAG);
2.
Commanding the President and the Corporate Secretary of Philinterlife to
reinstate in the stock and transfer book of Philinterlife the 2,029 Philinterlife
shares of stock in the name of the Estate of Dr. Juvencio P. Ortaez as the
owner thereof without prejudice to other claims for violation of pre-emptive rights
pertaining to the said 2,029 Philinterlife shares;
3.
Directing the President and the Corporate Secretary of Philinterlife to issue
stock certificates of Philinterlife for 2,029 shares in the name of the Estate of Dr.
Juvencio P. Ortaez as the owner thereof without prejudice to other claims for
violations of pre-emptive rights pertaining to the said 2,029 Philinterlife shares
and,
4.
Confirming that only the Special Administratrix, Ma. Divina OrtaezEnderes, 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. aDSTIC
Petition is DISMISSED.
SO ORDERED. 14
The motion for reconsideration filed by petitioners Lee and Aggabao of the
above decision was denied by the Court of Appeals on October 30, 2000:
This resolves the "urgent motion for reconsideration" filed by the petitioners of
our resolution of July 26, 2000 dismissing outrightly the above-entitled petition
for the reason, among others, that the assailed Order dated August 11, 1997 of
the respondent Judge had long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack
of merit.
SO ORDERED. 15
On December 4, 2000, petitioners elevated the case to the Supreme Court
through a petition for review under Rule 45 but on December 13, 2000, we
denied the petition because there was no showing that the Court of Appeals in
CA G.R. SP No. 59736 committed any reversible error to warrant the exercise
by the Supreme Court of its discretionary appellate jurisdiction. 16
However, upon motion for reconsideration filed by petitioners Lee and Aggabao,
the Supreme Court granted the motion and reinstated their petition on
September 5, 2001. The parties were then required to submit their respective
memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19,
2000, filed a motion to direct the branch clerk of court in lieu of herein petitioners
Lee and Aggabao to reinstate the name of Dr. Ortaez in the stock and transfer
book of Philinterlife and issue the corresponding stock certificate pursuant to
Section 10, Rule 39 of the Rules of Court which provides that "the court may
direct the act to be done at the cost of the disobedient party by some other

person appointed by the court and the act when so done shall have the effect as
if done by the party." Petitioners Lee and Aggabao opposed the motion on the
ground that the intestate court should refrain from acting on the motion because
the issues raised therein were directly related to the issues raised by them in
their petition for certiorari at the Court of Appeals docketed as CA-G.R. SP No.
59736. On October 30, 2000, the intestate court granted the motion, ruling that
there was no prohibition for the intestate court to execute its orders inasmuch as
the appellate court did not issue any TRO or writ of preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari
in the Court of Appeals, docketed as CA-G.R. SP No. 62461, questioning this
time the October 30, 2000 order of the intestate court directing the branch clerk
of court to issue the stock certificates. They also questioned in the Court of
Appeals the order of the intestate court nullifying the sale made in their favor by
Juliana Ortaez and Jose Ortaez. On November 20, 2002, the Court of
Appeals denied their petition and upheld the power of the intestate court to
execute its order. Petitioners Lee and Aggabao then filed motion for
reconsideration which at present is still pending resolution by the Court of
Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively,
of Philinterlife) and FLAG now raise the following errors for our consideration:
THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR:
A.
IN FAILING TO RECONSIDER ITS PREVIOUS RESOLUTION DENYING
THE PETITION DESPITE THE FACT THAT THE APPELLATE 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; DIcSHE
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. ORTAEZ 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 Ortaez and Jose Ortaez, in their personal capacities
and without court approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of the
Philinterlife shares of stock in their favor because this was already settled a long
time ago by the Court of Appeals in its decision dated June 23, 1998 in CA-G.R.
SP No. 46342. This decision was effectively upheld by us in our resolution dated
October 9, 1998 in G.R. No. 135177 dismissing the petition for review on a
technicality and thereafter denying the motion for reconsideration on January
13, 1999 on the ground that there was no compelling reason to reconsider said
denial. 18 Our decision became final on February 23, 1999 and was accordingly

entered in the book of entry of judgments. For all intents and purposes
therefore, the nullity of the sale of the Philinterlife shares of stock made by
Juliana Ortaez and Jose Ortaez in favor of petitioner FLAG is already a
closed case. To reopen said issue would set a bad precedent, opening the door
wide open for dissatisfied parties to relitigate unfavorable decisions no end. This
is completely inimical to the orderly and efficient administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the
nullity of the sale made by Jose Ortaez and his mother Juliana Ortaez of the
Philinterlife shares of stock read:
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.
acTDCI
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 . . .. 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 Ortaez in favor of the Filipino Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of Agreement dated
March 4, 1982 (see Annex 7 of the Comment) . . . are not the only heirs claiming
an interest in the estate left by Dr. Juvencio P. Ortaez. The records of this
case . . . clearly show that as early as March 3, 1981 an Opposition to the
Application for Issuance of Letters of Administration was filed by the
acknowledged natural children of Dr. Juvencio P. Ortaez with Ligaya
Novicio . . . This claim by the acknowledged natural children of Dr. Juvencio P.
Ortaez is admittedly known to the parties to the Memorandum of Agreement
before they executed the same. This much was admitted by petitioner's counsel
during the oral argument. . . .
Given the foregoing facts, and the applicable jurisprudence, public respondent
can never be faulted for not approving . . . the subsequent sale by the petitioner
[Jose Ortaez] and his mother [Juliana Ortaez] of the Philinterlife shares
belonging to the Estate of Dr. Juvencio P. Ortaez." (pages 3-4 of Private
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 Ortaez, and her three sons,
Jose, Rafael and Antonio, all surnamed Ortaez, invalidly entered into a
memorandum of agreement extrajudicially partitioning the intestate estate
among themselves, despite their, knowledge that there were other heirs or
claimants to the estate and before final settlement of the estate by the intestate
court. Since the appropriation of the estate properties by Juliana Ortaez and
her children (Jose, Rafael and Antonio Ortaez) was invalid, the subsequent
sale thereof by Juliana and Jose to a third party (FLAG), without court approval,
was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that possession
of hereditary property is deemed transmitted to the heir without interruption from

the moment of death of the decedent. 20 However, an heir can only alienate
such portion of the estate that may be allotted to him in the division of the estate
by the probate or intestate court after final adjudication, that is, after all debtors
shall have been paid or the devisees or legatees shall have been given their
shares. 21 This means that an heir may only sell his ideal or undivided share in
the estate, not any specific property therein. In the present case, Juliana
Ortaez and Jose Ortaez sold specific properties of the estate (1,014 and
1,011 shares of stock in Philinterlife) in favor of petitioner FLAG. This they could
not lawfully do pending the final adjudication of the estate by the intestate court
because of the undue prejudice it would cause the other claimants to the estate,
as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without
court approval. It is well-settled that court approval is necessary for the validity
of any disposition of the 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. . . .
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. TAIDHa
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 affected 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 Ortaez from the very start as in fact these shares were included in the
inventory of the properties of the estate submitted by Rafael Ortaez after he
and his brother, Jose Ortaez, were appointed special administrators by the
intestate court. 25
The controversy here actually started when, during the pendency of the
settlement of the estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014
Philinterlife shares of stock in favor petitioner FLAG without the approval of the
intestate court. Her son Jose Ortaez later sold the remaining 1,011 Philinterlife
shares also in favor of FLAG without the approval of the intestate court.
We are not dealing here with the issue of inclusion or exclusion of properties in
the inventory of the estate because there is no question that, from the very start,
the Philinterlife shares of stock were owned by the decedent, Dr. Juvencio
Ortaez. Rather, we are concerned here with the effect of the sale made by the
decedent's heirs, Juliana Ortaez and Jose Ortaez, without the required
approval of the intestate court. This being so, the contention of petitioners that
the determination of the intestate court was merely provisional and should have
been threshed out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of
execution should not be executed against them because they were not notified,
nor they were aware, of the proceedings nullifying the sale of the shares of
stock.
We are not persuaded. The title of the purchaser like herein petitioner FLAG can
be struck down by the intestate court after a clear showing of the nullity of the
alienation. This is the logical consequence of our ruling in Godoy and in several
subsequent cases. 26 The sale of any property of the estate by an administrator
or prospective heir without order of the probate or intestate court is void and
passes no title to the purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio
Geneto, G.R. No. 56451, June 19, 1985, we ordered the probate court to cancel
the transfer certificate of title issued to the vendees at the instance of the
administrator after finding that the sale of real property under probate
proceedings was made without the prior approval of the court. The dispositive
portion of our decision read:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated


February 18, 1981 of the respondent Judge approving the questioned Amicable
Settlement is declared NULL and VOID and hereby SET ASIDE. Consequently,
the sale in favor of Sotero Dioniosio III and by the latter to William Go is likewise
declared NULL and VOID. The Transfer Certificate of Title issued to the latter is
hereby ordered cancelled.
It goes without saying that the increase in Philinterlife's authorized capital stock,
approved on the vote of petitioners' non-existent shareholdings and obviously
calculated to make it difficult for Dr. Ortaez'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 Ortaez, appealed the case. A careful review of the
records shows that petitioners had actual knowledge of the estate settlement
proceedings and that they knew private respondent Enderes was questioning
therein the sale to them of the Philinterlife shares of stock. acAIES
It must be noted that private respondent-Special Administratrix Enderes filed
before the intestate court (RTC of Quezon City, Branch 85) a "Motion to Declare
Void Ab Initio Deeds of Sale of Philinterlife Shares of Stock" on March 22, 1996.
But as early as 1994, petitioners already knew of the pending settlement
proceedings and that the shares they bought were under the administration by
the intestate court because private respondent Ma. Divina Ortaez-Enderes and
her mother Ligaya Novicio had filed a case against them at the Securities and
Exchange Commission on November 7, 1994, docketed as SEC No. 11-944909, for annulment of transfer of shares of stock, annulment of sale of
corporate properties, annulment of subscriptions on increased capital stocks,
accounting, inspection of corporate books and records and damages with prayer
for a writ of preliminary injunction and/or temporary restraining order. 27 In said
case, Enderes and her mother questioned the sale of the aforesaid shares of
stock to petitioners. The SEC hearing officer in fact, in his resolution dated
March 24, 1995, deferred to the jurisdiction of the intestate court to rule on the
validity of the sale of shares of stock sold to petitioners by Jose Ortaez and
Juliana Ortaez:
Petitioners also averred that . . . the Philinterlife shares of Dr. Juvencio Ortaez
who died, in 1980, are part of his estate which is presently the subject matter of
an intestate proceeding of the RTC of Quezon City, Branch 85. Although, private
respondents [Jose Lee et al.] presented the documents of partition whereby the
foregoing share of stocks were allegedly partitioned and conveyed to Jose S.
Ortaez who allegedly assigned the same to the other private respondents,
approval of the Court was not presented. Thus, the assignments to the private

respondents [Jose Lee, et al.] of the subject shares of stocks are void.
xxx
xxx
xxx
With respect to the alleged extrajudicial partition of the shares of stock owned by
the late Dr. Juvencio Ortaez, we rule that the matter properly belongs to the
jurisdiction of the regular court where the intestate proceedings are currently
pending. 28
With this resolution of the SEC hearing officer dated as early as March 24, 1995
recognizing the jurisdiction of the intestate court to determine the validity of the
extrajudicial partition of the estate of Dr. Ortaez and the subsequent sale by the
heirs of the decedent of the Philinterlife shares of stock to petitioners, how can
petitioners claim that they were not aware of the intestate proceedings?
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
Ortaez; that on March 4, 1982, the surviving spouse Juliana Ortaez, on her
behalf and for her minor son Antonio, executed a Memorandum of Agreement
with her other sons Rafael and Jose, both surnamed Ortaez, dividing the
estate of the deceased composed of his one-half (1/2) share in the conjugal
properties; that in the said Memorandum of Agreement, Jose S. Ortaez
acquired as his share of the estate the 1,329 shares of stock in Philinterlife; that
on March 4, 1982, Juliana and Rafael assigned their respective shares of stock
in Philinterlife to Jose; that contrary to the contentions of petitioners, private
respondents Jose Lee, Carlos Lee, Benjamin Lee and Alma Aggabao became
stockholders of Philinterlife on March 23, 1983 when Jose S. Ortaez, the
principal stockholder at that time, executed a deed of sale of his shares of stock
to private respondents; and that the right of petitioners to question the
Memorandum of Agreement and the acquisition of shares of stock of private
respondent is barred by prescription. 29
Also, private respondent-Special Administratrix Enderes offered additional proof
of actual knowledge of the settlement proceedings by petitioners which
petitioners never denied: (1) that petitioners were represented by Atty. Ricardo
Calimag previously hired by the mother of private respondent Enderes to initiate
cases against petitioners Jose Lee and Alma 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
Ortaez and Jose Ortaez) were acknowledged before Atty. Ramon Carpio who,
during the pendency of the settlement proceedings, filed a motion for the

approval of the sale of Philinterlife shares of stock to the Knights of Columbus


Fraternal Association, Inc. (which motion was, however, later abandoned). 30 All
this sufficiently proves that petitioners, through their counsels, knew of the
pending settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal Case No.
97-7179-81), grave coercion (Criminal Case No. 84624) and robbery (Criminal
Case No. Q-96-67919) against private 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 intestate
proceedings for the settlement of Dr. Juvencio Ortaez'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 Ortaez-Enderes vs. Court of Appeals, dated December 17,
1999, where we allegedly ruled that the intestate court "may not pass upon the
title to a certain property for the purpose of determining whether the same
should or should not be included in the inventory but such determination is not
conclusive and is subject to final decision in a separate action regarding
ownership which may be constituted by the parties."
We are not unaware of our decision in G.R. No. 128525. The issue therein was
whether the Court of Appeals erred in affirming the resolution of the SEC that
Enderes et al. were no, 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. HAEDCT


SO ORDERED.
Vitug and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., took no part.
Footnotes
1. Penned by Associate Justice Martin S. Villarama, concurred in by
Associate Justices Salome A. Montoya (Chairman of the First Division) and
Romeo Callejo, Sr. (now Associate Justice of the Supreme Court).
2. Recognized by the decedent, Dr. Juvencio P. Ortaez and declared by the
intestate court as lawful heirs of Dr. Ortaez in its resolution dated September
22, 2000; Rollo, pp. 203-214.
3. Inventory and Accounting of Properties of the Estate; Rollo, p. 572.
4. Deed of Sale with Right to Repurchase; Rollo, pp. 55-56.
5. Deed of Sale of Shares of Stock; Rollo, pp. 57-58.
6. Rollo, pp. 39-41.
7. Cited in the decision of the Court of Appeals dated June 23, 1998 in CAG.R. SP No. 46842, p. 3; Rollo, p. 240.
8. Rollo, pp. 238-258.
9. Rollo, p. 709.
10. Rollo, pp. 524-526.
11. Rollo, p. 70.
12. Rollo, p. 47-48.
13. Rollo, pp. 266-268.
14. Rollo, pp. 34-35.
15. Rollo, p. 38.
16. Rollo, p. 115.
17. Rollo, pp. 15-17.
18. Rollo, pp. 260-262.
19. Rollo, pp. 254-256.
20. Acebedo vs. Abesamis, 217 SCRA 186 [1993], citing Vda. De Gil vs.
Cancio, 14 SCRA 796 [1965].
21. Based on the Civil Code provisions on co-ownership (Article 493).
Acebedo vs. Abesamis, 217 SCRA 186 [1993], citing Reyes vs. Concepcion,
190 SCRA 171 [1990], PNB vs. Court of Appeals, 98 SCRA 207 [1980],
Mercado vs. Liwanag, 5 SCRA 472 [1962].
22. 42 Phil 347 (1921].
23. 163 SCRA 631 (1988].
24. Rollo, pp. 603-604.
25. Inventory and Accounting of Properties of the Estate dated March 13,
1984, Rollo, pp. 571-754.
26. Dillena vs. Court of Appeals, 163 SCRA 630 [1988]; Manotok Realty vs.
Court of Appeals, 149 SCRA 174 [1987]; Leabres vs. Court of Appeals, 146

SCRA 158 [1986]; Estate of Olave vs. Reyes, 123 SCRA 767 [1983] and Vda.
De Gil vs. Cancio, 14 SCRA 797 [1965].
27. Cited in Ma. Divina Ortaez-Enderes et al. vs. Court of Appeals et al., 321
SCRA 178 (1999].
28. Rollo, pp. 147-149.
29. Rollo, p. 136.
30. Rollo, pp. 728-729.
31. Rollo, pp. 524-526.
32. Salonga vs. Court of Appeals, 269 SCRA 534 [1997].
THIRD DIVISION
[G.R. No. 68053. May 7, 1990.]
LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,
vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and JESUS
YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and
ILUMINADO YANES, respondents.
Francisco G. Banzon for petitioners.
Renecio R. Espiritu for private respondents.
DECISION
FERNAN, C.J p:
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. llcd
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 behelf
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: cdll
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. T23165 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 T23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo
Siason to produce the certificates of title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he purchased Lots 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
propert(ies)"; 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 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. T19291 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
sheriff's 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 Alvarezes
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 Alvarezes 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: LexLib
"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 dismissed.
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 plaintiffs;
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 Alvarezes appealed to the then Intermediate Appellate Court which, in its
decision of August 31, 1983, 30 affirmed the lower court's decision "insofar as it
ordered defendants-appellants to pay jointly and severally the plaintiffsappellees the sum of P20,000.00 representing the actual value of Lots Nos.
773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is
reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00
as actual damages, moral damages and attorney's fees, respectively." 31
The dispositive portion of said decision reads:
"WHEREFORE, the decision appealed from is affirmed insofar as it ordered
defendants-appellants to pay jointly and severally the plaintiffs-appellees the
sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B
of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as
it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees, respectively. No costs.
SO ORDERED. 32
Finding no cogent reason to grant appellants' motion for reconsideration, said
appellate court denied the same.
Hence, the instant petition.
In their memorandum petitioners raised the following issues:
1.
Whether 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. prcd
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 deed. 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 long
become final and executory.
Petitioners further contend that the liability arising from the sale of Lots No. 773A 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. llcd
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. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation or by provision of law. The
heir is not liable beyond the value of the property 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. . . ."
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. LibLex
WHEREFORE, subject to the clarification herein above stated, the assailed
decision of the Court of Appeals is hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Bidin, J., took no part.
Footnotes
1. TSN, October 17, 1973, pp. 4-5.
2. TSN, December 11, 1973, pp. 11 & 55.
3. Exhibits 26 and 28.
4. Exhibit 27.
5. Exhibit B-Alvarez.
6. Exhibits 23 and 24-Siason.
7. Exhibits 1-Alvarez: Exh. 17-Siason.
8. Exh. 2-Alvarez.
9. Exh. 3-Alvarez.
10. Exh. 2-Siason.
11. Civil Case No. 5022; Exhibit B.
12. Exhibit F.

13. Exhibits 12 and 13.


14. Exhibits 10, 11, 14 and 15.
15. Exhibit 4-Alvarez.
16. Record on Appeal, p. 25.
17. Exhibit E.
18. Cad. Case No. 6; Exhibit 3.
19. Cad. Case No. 6.
20. Exhibit 5.
21. Exhibit 6.
22. Exhibit 78.
23. Exhibit 9.
24. Civil Case No. 8474.
25. Record on Appeal, pp. 8-9.
26. Record on Appeal, p. 36.
27. Ibid., p. 63.
28. Ibid., pp. 95-99.
29. Record on Appeal, pp. 100-101.
30. Porfirio V. Sison Jr. J., ponente Abdulwahid A. Bidin, Marcelino R. Veloso
and Desiderio P. Jurado , JJ. concurring.
31. Rollo, p. 32.
32. Rollo, p. 32.
33. Rollo, p. 119.
34. Rollo, p. 27.
35. Miranda v. C.A., 141 SCRA 302 [1986].
36. Ngo Bun Tiong v. Judge Sayo, G.R. No. 45825, June 30, 1988.
37. Record on Appeal, pp. 24-25.
38. Rollo, p. 27.
39. Quiniano et al. v. C.A., 39 SCRA 221 [1971].
40. Ibid.
41. 100 Phil. 388.
42. Lopez vs. Enriquez, 16 Phil. 336 (1910).
EN BANC
[G.R. No. 44837. November 23, 1938.]
SOCORRO LEDESMA and ANA QUITO LEDESMA, plaintiffs-appellees, vs.
CONCHITA MCLACHLIN, ET AL., defendants-appellants.
Adriano T. de la Cruz, for appellants.
Simeon Bitanga, for appellees.
SYLLABUS
1.
DESCENT AND DISTRIBUTION: FILING OF CLAIM AGAINST A
DECEASED SON BEFORE THE COMMITTEE ON CLAIMS AND APPRAISAL
IN THE INTESTATE OF HIS FATHER: PRESCRIPTION OF ACTION FOR THE

RECOVERY OF THE CLAIM. The filing of a claim before the committee on


claims and appraisal, appointed in the intestate of the father, for a monetary
obligation contracted by a son who died before him, does not suspend the
prescriptive period of the judicial action for the recovery of said indebtedness.
2.
ID.; ID.; The claim for the payment of an indebtedness contracted by a
deceased person cannot be filed for its collection before the committee on
claims and appraisal appointed in the intestate of his father, and the properties
inherited from the latter by the children of said deceased do not answer for the
payment of the indebtedness contracted during the lifetime of said person.
DECISION
VILLA-REAL, J p:
This case is before us by virtue of an appeal taken by the defendants Conchita
McLachlin, Lorenzo Quitco, jr., Sabina Quitco, Rafael Quitco and Marcela
Quitco, from the decision of the Court of First Instance of Occidental Negros, the
dispositive part of which reads:
"For the foregoing considerations, the court renders judgment in this case
declaring Ana Quitco Ledesma an acknowledged natural daughter of the
deceased Lorenzo M. Quitco, for legal purposes, but absolving the defendants
as to the prayer in the first cause of action that the said Ana Quitco Ledesma be
declared entitled to share in the properties left by the deceased Eusebio Quitco.
"As to the second cause of action, the said defendants are ordered to pay to the
plaintiff Socorro Ledesma, jointly and severally, only the sum of one thousand
five hundred pesos (P1,500), with the legal interest thereon from the filing of this
complaint until fully paid. No pronouncement is made as to the costs. So
ordered."
In support of their appeal, the appellants assign the following errors allegedly
committed by the trial court in its aforesaid decision:
"1. That the trial court erred in holding that the action for the recovery of the
sum of P1,500, representing the last installment of the note Exhibit C has not yet
prescribed.
"2. That the trial court erred in holding that the property inherited by the
defendants from their deceased grandfather by the right of representation is
subject to the debts and obligations of their deceased father who died without
any property whatsoever.
"3. That the trial court erred in condemning the defendants to pay jointly and
severally the plaintiff Socorro Ledesma the sum of P1,500."
The only facts to be considered in the determination of the legal questions
raised in this appeal are those set out in the appealed decision, which have
been established at the trial, namely:
"In the year 1916, the plaintiff Socorro Ledesma lived maritally with Lorenzo M.
Quitco, while the latter was still single, of which relation, lasting until the year
1921, was born daughter who is the other plaintiff Ana Quitco Ledesma. In 1921,

it seems that the relation between Socorro Ledesma and Lorenzo M. Quitco
came an end but the latter executed a deed (Exhibit A), acknowledging the
plaintiff Ana Quitco Ledesma as his natural daughter and on January 21, 1922,
he issued in favor of the plaintiff Socorro Ledesma a promissory note (Exhibit
C), of the following tenor:
"'P2,000.00. For value received I promise to pay Miss Socorro Ledesma the
sum of two thousand pesos (P2,000), Philippine currency under the following
terms: Two hundred and fifty pesos (P250) to be paid on the first day of March
1922: another two hundred fifty pesos (P250) to be paid on the first of
November 1922; the remaining one thousand and five hundred (P1,500) to be
paid two years from the date of the execution of this note. San Enrique, Occ.
Negros, P.I. Jan. 21, 1922.'
"Subsequently, Lorenzo M. Quitco married the defendant Conchita McLachlin,
with whom he had four children, who are the other defendants. On March 9,
1930, Lorenzo M. Quitco died (Exhibit 5), and, still later, that is, on December
15, 1932, his father Eusebio Quitco also died, and as the latter left real and
personal properties upon his death, administration proceedings of said
properties were instituted in this court, the said case being known as the
Intestate of the deceased Eusebio Quitco,' civil case No. 6153 of this court.
"Upon the institution of the intestate of the deceased Eusebio Quitco and the
appointment of the committee on claims and appraisal, the plaintiff Socorro
Ledesma, on August 26, 1935, filed before said committee the aforequoted
promissory note for payment, and the commissioners, upon receipt of said
promissory note, instead of passing upon it, elevated the same to this court en
consulta (Exhibit F), and as the Honorable Jose Lopez Vito, presiding over the
First Branch, returned said consulta and refrained from giving his opinion
thereon (Exhibit C), the aforesaid commissioners on claims and appraisal,
alleging lack of jurisdiction to pass upon the claim, denied the same (Exhibit H).
"On November 14, 1933 (Exhibit I), the court issued an order of declaration of
heirs in the intestate of the deceased Eusebio Quitco, and as Ana Quitco
Ledesma was not included among the declared heirs, Socorro Ledesma, as
mother of Ana Quitco Ledesma, asked for the reconsideration of said order, a
petition which the court denied. From the order denying the said petition no
appeal was taken, and in lieu thereof there was filed the complaint which gives
rise to this case."
The first question to be decided in this appeal, raised in the first assignment of
alleged error, in whether or not the action to recover the sum of P1,500,
representing the last installment for the payment of the promissory note Exhibit
C, has prescribed.
According to the promissory note Exhibit C, executed by the deceased Lorenzo
M. Quitco, on January 21, 1922, the last installment of P1,500 should be paid
two years from the date of execution of said promissory note, that is, on January

21, 1924. The complainant in the present case was filed on June 26, 1934, that
is, more than ten years after the expiration of the said period. The fact that the
plaintiff Socorro Ledesma filed her claim, on August 26, 1933, with the
committee on claims and appraisal appointed in the intestate of Eusebio Quitco,
does not suspend the running of the prescriptive period of judicial action for the
recovery of said debt, because the claim for the unpaid balance of the amount of
the promissory note should not have been presented in the intestate of Eusebio
Quitco, the said deceased not being the one who executed the same, but in the
intestate of Lorenzo M. Quitco, which should have been instituted by the said
Socorro Ledesma as provided in section 642 of the Code of Civil Procedure,
authorizing a creditor to institute said case through the appointment of an
administrator for the purpose of collecting his credit. More than ten years having
thus elapsed from the expiration of the period for the payment of said debt of
P1,500, the action for its recovery has prescribed under section 43, No. 1, of the
Code of Civil Procedure.
The first assignment of alleged error is, therefore, well-founded.
As to the second assignment of alleged error, consisting in that the trial court
erred in holding that the properties inherited by the defendants from their
deceased grandfather by representation are subject to the payment of debts and
by representation are subject to the payment of debts and obligations of their
deceased father, who died without leaving any property, while it is true that
under the provisions of articles 924 to 927 of the Civil Code, a child represents
his father or mother who died before him in the properties of his grandfather or
grandmother, this right of representation does not make the said child
answerable for the obligations contracted by his deceased father or mother,
because, as may be seen from the provisions of the Code of Civil Procedure
referring to partition of inheritances, the inheritance is received with the benefit
of inventory, that is to say, the heirs only answer with the properties received
from their predecessor. The herein defendants, as heirs of Eusebio Quitco, in
representation of their father Lorenzo M. Quitco, are not bound to pay the
indebtedness of their said father from whom they did inherit anything.
The second assignment of alleged error is also well-founded.
Being a mere sequel of the first two assignments of alleged errors, the third
assignment of error is also well-founded.
For the foregoing considerations, we are of the opinion and so hold: (1) That the
filing of a claim before the committee on claims and appraisal, appointed in the
intestate of the father, nor a monetary obligation contracted by a son who died
before him, does not suspend the prescriptive period of the judicial action for the
recovery of said indebtedness contracted by a deceased person cannot be filed
for its collection before the committee on claims and appraisal, appointed in the
intestate of his father, and the properties inherited from the latter by the children
of said deceased do not answer for the payment of the indebtedness contracted

during the lifetime of said person.


Wherefore, the appealed judgment is reversed, and the defendants are
absolved from the complaint, with the costs to the appellees. So ordered.
Avancena, C.J., Imperial, Diaz, Laurel and Concepcion, JJ., concur.
FIRST DIVISION
[G.R. No. 171035. August 24, 2009.]
WILLIAM ONG GENATO, petitioner, vs. BENJAMIN BAYHON, MELANIE
BAYHON, BENJAMIN BAYHON, JR., BRENDA BAYHON, ALINA BAYHONCAMPOS, IRENE BAYHON-TOLOSA, and the minor GINO BAYHON, as
represented herein by his natural mother as guardian ad-litem, JESUSITA M.
BAYHON, respondents.
DECISION
PUNO, C.J p:
At bar is a Petition for Review on Certiorari assailing the Decision of the Court of
Appeals dated September 16, 2005 1 and Resolution denying the petitioner's
motion for reconsideration issued on January 6, 2006. cCESaH
This is a consolidated case stemming from two civil cases filed before the
Regional Trial Court (RTC) Civil Case No. Q-90-7012 and Civil Case No. Q90-7551.
Civil Case No. Q-90-7012
On October 18, 1990, respondents Benjamin M. Bayhon, Melanie Bayhon,
Benjamin Bayhon Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene BayhonTolosa and the minor Gino Bayhon, as represented by his mother Jesusita M.
Bayhon, filed an action before the RTC, Quezon City, Branch 76, docketed as
Civil Case No. Q-90-7012. In their Complaint, respondents sought the
declaration of nullity of a dacion en pago allegedly executed by respondent
Benjamin Bayhon in favor of petitioner William Ong Genato. 2
Respondent Benjamin Bayhon alleged that on July 3, 1989, he obtained from
the petitioner a loan amounting to PhP1,000,000.00; 3 that to cover the loan, he
executed a Deed of Real Estate Mortgage over the property covered by Transfer
Certificate of Title (TCT) No. 38052; that, however, the execution of the Deed of
Real Estate Mortgage was conditioned upon the personal assurance of the
petitioner that the said instrument is only a private memorandum of
indebtedness and that it would neither be notarized nor enforced according to its
tenor. 4 CDTHSI
Respondent further alleged that he filed a separate proceeding for the
reconstitution of TCT No. 38052 before the RTC, Quezon City, Branch 87. 5
Petitioner William Ong Genato filed an Answer in Intervention in the said
proceeding and attached a copy of an alleged dacion en pago covering said lot.
6 Respondent assailed the dacion en pago as a forgery alleging that neither he
nor his wife, who had died 3 years earlier, had executed it. 7

In his Answer, petitioner Genato denied the claim of the respondent regarding
the death of the latter's wife. 8 He alleged that on the date that the real estate
mortgage was to be signed, respondent introduced to him a woman as his wife.
9 He alleged that the respondent signed the dacion en pago and that the
execution of the instrument was above-board. 10
Civil Case No. Q-90-7551
On December 20, 1990, petitioner William Ong Genato filed Civil Case No. Q90-7551, an action for specific performance, before the RTC, Quezon City,
Branch 79. In his Complaint, petitioner alleged that respondent obtained a loan
from him in the amount of PhP1,000,000.00. Petitioner alleged further that
respondent failed to pay the loan and executed on October 21, 1989 a dacion
en pago in favor of the petitioner. The dacion en pago was inscribed and
recorded with the Registry of Deeds of Quezon City. 11 STcAIa
Petitioner further averred that despite demands, respondent refused to execute
the requisite documents to transfer to him the ownership of the lot subject of the
dacion en pago. Petitioner prayed, inter alia, for the court to order the
respondent to execute the final deed of sale and transfer of possession of the
said lot. 12
Decision of the Consolidated Cases
The two cases were consolidated and transferred to the RTC, Quezon City,
Branch 215. On October 9, 1997, the trial court rendered its Decision. It found
that respondent obtained a loan in the amount of PhP1,000,000.00 from the
petitioner on July 3, 1989. The terms of the loan were interest payment at 5%
per month with an additional 3% penalty in case of nonpayment. 13
With respect to the dacion en pago, the trial court held that the parties have
novated the agreement. 14 It deduced the novation from the subsequent
payments made by the respondent to the petitioner. Of the principal amount, the
sum of PhP102,870.00 had been paid: PhP27,870.00 on March 23, 1990,
PhP55,000.00 on 26 March 1990 and PhP20,000.00 on 16 November 1990. 15
All payments were made after the purported execution of the dacion en pago.
IDaEHC
The trial court likewise found that at the time of the execution of the real estate
mortgage, the wife of respondent, Amparo Mercado, was already dead. It held
that the property covered by TCT No. 38052 was owned in common by the
respondents and not by respondent Benjamin Bayhon alone. It concluded that
the said lot could not have been validly mortgaged by the respondent alone; the
deed of mortgage was not enforceable and only served as evidence of the
obligation of the respondent. 16
In sum, the trial court upheld the respondent's liability to the petitioner and
ordered the latter to pay the sum of Php5,647,130.00. 17 This amount included
the principal, the stipulated interest of 5% per month, and the penalty; and, was
calculated from the date of demand until the date the RTC rendered its

judgment.
Appeal to the Court of Appeals
Respondents appealed before the Court of Appeals. On March 28, 2002,
respondent Benjamin Bayhon died while the case was still pending decision. 18
On September 16, 2005, the Court of Appeals rendered a decision reversing the
trial court. cSIHCA
The Court of Appeals held that the real estate mortgage and the dacion en pago
were both void. The appellate court ruled that at the time the real estate
mortgage and the dacion en pago were executed, or on July 3, 1989 and
October 21, 1989, respectively, the wife of respondent Benjamin Bayhon was
already dead. 19 Thus, she could not have participated in the execution of the
two documents. The appellate court struck down both the dacion en pago and
the real estate mortgage as being simulated or fictitious contracts pursuant to
Article 1409 of the Civil Code. 20
The Court of Appeals held further that while the principal obligation is valid, the
death of respondent Benjamin Bayhon extinguished it. 21 The heirs could not be
ordered to pay the debts left by the deceased. 22 Based on the foregoing, the
Court of Appeals dismissed petitioner's appeal. Petitioner's motion for
reconsideration was denied in a resolution dated January 6, 2006. 23
Petition for Review
Petitioner now comes before this Court assailing the decision of the Court of
Appeals and raising the following issues: CTDAaE
Whether or not Benjamin Bayhon is liable to Mr. Genato in the amount of
Php5,647,130.00 in principal and interest as of October 3, 1997 and 5% monthly
interest thereafter until the account shall have been fully paid. 24
The Court of Appeals erred in declaring the Real Estate Mortgage dated July 3,
1989 and the Dacion en Pago dated October 21, 1989, null and void. 25
We shall first tackle the nullity of the dacion en pago.
We affirm the ruling of the appellate court that the subject dacion en pago is a
simulated or fictitious contract, and hence void. The evidence shows that at the
time it was allegedly signed by the wife of the respondent, his wife was already
dead. This finding of fact cannot be reversed.
We now go to the ruling of the appellate court extinguishing the obligation of
respondent. As a general rule, obligations derived from a contract are
transmissible. Article 1311, par. 1 of the Civil Code provides:
Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received from the decedent.
cAaTED
In Estate of Hemady v. Luzon Surety Co., Inc., 26 the Court, through Justice JBL
Reyes, held:

While in our successional system the responsibility of the heirs for the debts of
their decedent cannot exceed the value of the inheritance they receive from him,
the principle remains intact that these heirs succeed not only to the rights of the
deceased but also to his obligations. Articles 774 and 776 of the New Civil Code
(and Articles 659 and 661 of the preceding one) expressly so provide, thereby
confirming Article 1311 already quoted.
"ART. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the inheritance, of a
person are transmitted through his death to another or others either by his will or
by operation of law."
"ART. 776. The inheritance includes all the property, rights and obligations of
a person which are not extinguished by his death." 27 (Emphasis supplied)
The Court proceeded further to state the general rule: TECIaH
Under our law, therefore, the general rule is that a party's contractual rights and
obligations are transmissible to the successors. The rule is a consequence of
the progressive "depersonalization" of patrimonial rights and duties that, as
observed by Victorio Polacco, has characterized the history of these institutions.
From the Roman concept of a relation from person to person, the obligation has
evolved into a relation from patrimony to patrimony, with the persons occupying
only a representative position, barring those rare cases where the obligation is
strictly personal, i.e., is contracted intuitu personae, in consideration of its
performance by a specific person and by no other. The transition is marked by
the disappearance of the imprisonment for debt. 28 (Emphasis supplied)
The loan in this case was contracted by respondent. He died while the case was
pending before the Court of Appeals. While he may no longer be compelled to
pay the loan, the debt subsists against his estate. No property or portion of the
inheritance may be transmitted to his heirs unless the debt has first been
satisfied. Notably, throughout the appellate stage of this case, the estate has
been amply represented by the heirs of the deceased, who are also his coparties in Civil Case No. Q-90-7012. acHETI
The procedure in vindicating monetary claims involving a defendant who dies
before final judgment is governed by Rule 3, Section 20 of the Rules of Civil
Procedure, to wit:
When the action is for recovery of money arising from contract, express or
implied, and the defendant dies before entry of final judgment in the court in
which the action was pending at the time of such death, it shall not be dismissed
but shall instead be allowed to continue until entry of final judgment. A favorable
judgment obtained by the plaintiff therein shall be enforced in the manner
especially provided in these Rules for prosecuting claims against the estate of a
deceased person.
Pursuant to this provision, petitioner's remedy lies in filing a claim against the
estate of the deceased respondent.

We now go to the interest awarded by the trial court. We note that the interest
has been pegged at 5% per month, or 60% per annum. This is unconscionable,
hence cannot be enforced. 29 In light of this, the rate of interest for this kind of
loan transaction has been fixed in the case of Eastern Shipping Lines v. Court of
Appeals, 30 at 12% per annum, calculated from October 3, 1989, the date of
extrajudicial demand. 31 TCaEAD
Following this formula, the total amount of the obligation of the estate of
Benjamin Bayhon is as follows:
Principal Php1,000,000.00
Less: Partial Payments
27,870.00
55,000.00
20,000.00

897,130.00
Plus: Interest
(12% per annum x 20 years)
2,153,552.00

TOTAL:
Php3,050,682.00
=============
IN VIEW WHEREOF, the decision of the Court of Appeals dated September 16,
2005 is AFFIRMED with the MODIFICATION that the obligation to pay the
principal loan and interest contracted by the deceased Benjamin Bayhon
subsists against his estate and is computed at PhP3,050,682.00.
No costs.
SO ORDERED.
Carpio, Corona, Leonardo-de Castro and Bersamin, JJ., concur.
Footnotes
1. CA G.R.-CV No. 63626, Benjamin M. Bayhon, Melanie Bayhon, Benjamin
Bayhon, Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene Bayhon-Tolosa, and
the minor Gino Bayhon, represented herein by his natural mother as guardianad-litem, Jesusita M. Bayhon v. William Ong Genato; penned by Associate
Justice Vicente Q. Roxas and concurred in by Associate Justices Portia AlioHormachuelos and Juan Q. Enriquez, Jr.
2. Original Records, pp. 1-9.
3. Id., pp. 3-4.
4. Id., p. 4.
5. Designated as LRC Case No. Q-1957.
6. Original Records, p. 4.
7. Id., p. 5.
8. Id., p. 166.
9. Id., p. 169.
10. Id., p. 170.

11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Id., pp. 353-354.


Id.
Id., p. 650.
Id., p. 657.
Id., pp. 656-657.
Id., p. 658.
Id., p. 659.
CA rollo, p. 148.
Rollo, pp. 47-48.
Article 1409 provides that:
The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals,
good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the
transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.
21. Rollo, p. 46.
22. Id.
23. Id., pp. 37-39.
24. Id., p. 18.
25. Id., p. 20.
26. No. L-8437, 100 Phil. 388 (1958).
27. Id., p. 393.
28. Id., p. 394.
29. Imperial v. Jaucian, G.R. No. 149004, 14 April 2004, 427 SCRA 517, 525.
30. G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95.
31. Rollo, p. 28.
FIRST DIVISION
[G.R. No. L-41715. June 18, 1976.]
ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO
BONILLA (their father) who represents the minors, petitioners, vs. LEON
BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA, MANUEL
BARCENA, AGUSTINA NERI, widow of JULIAN TAMAYO and HON.
LEOPOLDO GIRONELLA of the Court First Instance of Abra, respondents.

Federico Paredes for petitioners.


Demetrio V. Pre for private respondents.
SYNOPSIS
On March 31, 1975, Fortunata Barcena instituted a civil action to quiet title over
certain parcels of land. About three months later, Fortunata Barcena died and
defendants moved to dismiss the complaint. Counsels for plaintiff asked for
substitution by her minor children and her husband, but the court dismissed the
case and refused to reconsider. Hence this petition for review.
The Supreme Court reversed the respondent court, set aside the order of
dismissal and the orders denying the motion for reconsideration, and directed
the respondent court to allow the substitution of the minor children and to
appoint a qualified person as guardian ad litem for them.
SYLLABUS
1.
CIVIL PROCEDURES; DEATH OF A PARTY; SUBSTITUTION OF
PARTIES. While it is true that a 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.
Where plaintiff was still alive when the complaint was filed, the Court acquires
jurisdiction over the person. If thereafter she dies, Section 16, Rule 3 of the
Rules of Court, prescribes the procedures whereby a party who dies during the
pendency of the proceedings can be substituted; and where proper substitution
of parties had been asked for, it is grave error for the court to dismiss the
complaint on the ground that a dead person has no legal personality to sue.
2.
CIVIL LAW; SUCCESSION; RIGHTS TO SUCCESSION TRANSMITTED
FROM THE MOMENT OF DEATH OF 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 right thereto except by the methods provided for by law. The
moment of death is the determining factor where the heirs acquire a definite
right to the inheritance whether such right to be pure or contingent. The right of
the heirs to the property of the deceased vests in them even before judicial
declaration of their being heirs in the testate or intestate proceedings.
3.
ID.; ID.; ID.; HEIRS BECOME PARTIES IN INTEREST. The death of
the plaintiff during the pendency of an action to quiet title of a parcel of land did
not extinguish her claim or right to the parcels of land in litigation 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 Court not to follow their substitution as parties in
interest for the deceased plaintiff.
4.
CIVIL PROCEDURE; ACTIONS; SURVIVAL OF ACTIONS. The
question as to whether an action survives or not defends on the nature of the
action and the damaged sued for. In causes of action which survive the wrong
complained, of affects primarily and principally property and property rights, the

injuries to the person being merely incidental, while in the causes of action
which do not survive the injury complained of is to the person, the property and
rights of property affected being incidental.
5.
ID.; ID.; ID.; ACTION TO QUIET TITLE. An action to quiet title over a
parcel of land affects primarily and principally property and property rights and
therefore, is one that survives even after plaintiff's death. It is therefore, the duty
of the trial. Court to order the legal representative of the deceased plaintiff to
appear and to be substituted for said deceased, pursuant to Section 17, Rule 3
of the Rules of Court.
6.
ID.; ID.; ID.; REFUSAL OF COURT TO ALLOW SUBSTITUTION ON THE
GROUND THAT THE HEIRS WERE STILL MINORS IS A GRAVE ERROR.
Where, upon the death of the plaintiff in an action to quiet title, counsel has not
only asked that the minor children be substituted for her but also suggested that
the uncle be appointed as guardian ad litem for them because their father is
busy earning a living for the family; it is grave error for the respondent court to
refuse the request for substitution on the ground that the children were still
minors and cannot sue, because it ought to know that Section 17, Rule 3 of the
Rules of Court, directs the Court to appoint a guardian ad litem for the minor.
DECISION
MARTIN, J p:
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. cdll
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. LLjur
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 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 dismissing the complaint of the plaintiff in Civil Case No.
856 and refusing the substitution of parties in the case. prLL
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."
Teehankee (Chairman), Makasiar, Esguerra and Muoz Palma, JJ., concur.
Footnotes
1. Which this Court treats as special civil action as per its Resolution dated
February 11, 1976.
2. Section 16. Duty of Attorney upon death, incapacity, or incompetency of
party. Whenever a party to a pending case; becomes incapacitated or
incompetent, it shall be the duty of his attorney to inform the court promptly of
such death, incapacity or incompetency, and to give the name and residence of
his executor, administrator, guardian or other legal representative.
Section 17.Death of party. After a party dies and the claim is not
thereby extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted for deceased,
within a period of thirty (30) days, or within such time as may be granted. If the
legal representative fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal representative of the
deceased within a time to be specified by the court, and the representative shall
immediately appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the opposing
party, may be recovered as costs. The heirs of the deceased may be allowed to
be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litem for the
minor heirs.
3. Buan vs. Heirs of Buan, 53 Phil. 654.
4. Ibarle vs. Po, 92 Phil. 721.
5. Morales, et al. vs. Ybaez, 98 Phil. 677.
6. Iron Gate Bank vs. Brady, 184 U.S. 665, 22 SCT 529, 46 L. ed. 739.
7. Wenber vs. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79.
EN BANC
[G.R. No. 4275. March 23, 1909.]
PAULA CONDE, plaintiff-appellee, vs. ROMAN ABAYA, defendant-appellant.
C. Oben, for appellant.
L. Joaquin, for appellee.
SYLLABUS
1.
ESTATES: ACTION AGAINST EXECUTION OR ADMINISTRATIONS.
While an estate is in the course of settlement in a special proceeding, no
ordinary action can be maintained by a person claiming to be an heir, against

the executor or administrator, for the purpose of having his rights in the estate
determined. (Pimentel vs. Palanca, 5 Phil. Rep., 436.)
2.
DISTINCTION BETWEEN RIGHTS OF ACTION BY LEGITIMATE AND BY
NATURAL CHILDREN TO COMPEL RECOGNITION. As a general rule, the
right of action of a child to enforce recognition of its legitimacy lasts during the
lifetime of such child, but the right of a natural child to compel acknowledgment
of its status continues only during the life of the alleged parents. The right of
action for a declaration of legitimacy is transmitted to the heirs of the child only
when the latter dies during minority or while insane, or in case the action has
already been instituted. Action by a natural child can only be brought against the
heirs of the parents in the event of the death of the parents during the minority of
the child, or upon the discovery of a document, after the death of the parents,
expressly acknowledging such child. This right of action which the law concedes
to this natural child is not transmitted to his ascendants or descendants. (Arts.
18 and 137, Civil Code.)
Per Torres, J., dissenting:
3.
NATURAL CHILDREN; SUCCESSION AND TRANSMISSION OF RIGHTS
TO DEMAND RECOGNITION. Although article 137 of the Civil Code contains
no disposition authorizing the transfer, in favor of the natural mother in her
capacity of heir of her natural child, of the right to judicially demand the
recognition of her child by the heirs of his late natural father; yet there is no
express provision therein that prohibits such transfer or that declares such right
to be nontransferable.
4.
ID.; ID. The relation of paternity and filiation between natural parents
and children is also of a natural character, and therefore, reciprocal intestate
succession between them is exclusively governed by articles 944 and 945 of the
Civil Code.
5.
ID.; ID. If the right of succession granted by the law to the natural
children corresponds reciprocally to the natural father or mother in the same
cases, and if the estate includes all property, rights and obligations of a person
which do not expire at the latter's death, it is certain that, among the rights
transferred to the natural mother by inheritance, at the time of the death of her
natural child, is the right held by such child during his lifetime to demand his
recognition as such by his natural father, should the latter still live, or by his
heirs.
6.
ID.; ID. There is no legal provision that declares the said right to
demand the recognition of a natural child to be nontransferable to the latter's
heirs, and specially to his natural mother, nor is there any rule declaring such
right extinguished at the death of the natural child.
7.
ID.; ID. In the intestate succession of a natural child who dies during his
minority, recognized by the law in favor of his father or mother who have
acknowledged him, no limitation has been established excluding the said right

from transferable rights, nor has it been expressly declared that the abovementioned right to demand the recognition of the natural child is extinguished at
the latter's death, wherefore it is necessary to admit that the mother inherits from
the natural child at his death, and that she is entitled to institute the
corresponding action.
DECISION
ARELLANO, C.J p:
From the hearing of the appeal interposed by Roman Abaya in the special
proceedings brought in the Court of First Instance of La Laguna for the
settlement of the intestate estate and the distribution of the property of Casiano
Abaya it appears:
I.
As antecedents: that Casiano Abaya, unmarried, the son of Romualdo
Abaya and Sabina Labadia, died on the 6th of April 1899; that Paula Conde, as
the mother of the natural children Jose and Teopista Conde, whom she states
she had by Casiano Abaya, on the 6th of November, 1905, moved the
settlement of the said intestate succession; that an administrator having been
appointed for the said estate on the 25th of November, 1905, Roman Abaya, a
son of the said Romualdo Abaya and Sabina Labadia, the parents of the late
Casiano Abaya, came forward and opposed said appointment and claimed it for
himself as being the nearest relative of the deceased; that this was granted by
the court below on the 9th of January, 1906; that on the 17th of November,
1906, Roman Abaya moved that, after due process of law, the court declare him
to be the sole heir of Casiano Abaya, to the exclusion of all other persons,
especially of Paula Conde, and to be therefore entitled to take possession of all
the property of said estate, and that it be adjudicated to him; and that on
November 22, 1906, the court ordered the publication of notices for the
declaration of heirs and distribution of the property of the estate.
II.
That on the 28th of November, 1906, Paula Conde, in reply to the
foregoing motion of Roman Abaya, filed a petition wherein she stated that she
acknowledged the relationship alleged by Roman Abaya, but that she
considered that her right was superior to his and moved for a hearing of the
matter, and, in consequence of the evidence that she intended to present she
prayed that she be declared to have preferential rights to the property left by
Casiano Abaya, and that the same be adjudicated to her together with the
corresponding products thereof.
III. That the trial was held, both parties presenting documentary and oral
evidence, and the court below entered the following judgment:
"That the administrator of the estate of Casiana Abaya should recognize
Teopista and Jose Conde as being natural children of Casiano Abaya; that the
petitioner Paula Conde should succeed to the hereditary rights of her children
with respect to the inheritance of their deceased natural father Casiano Abaya;
and therefore, it is hereby declared that she is the only heir to the property of the

said intestate estate, to the exclusion of the administrator, Roman Abaya."


IV. That Roman Abaya excepted to the foregoing judgment, appealed to this
court, and presented the following statement of errors:
1.
The fact that the court below found that an ordinary action for the
acknowledgment of natural children under articles 135 and 137 of the Civil
Code, might be brought in special probate proceedings.
2.
The finding that after the death of a person claimed to be an
unacknowledged natural child, the mother of such presumed natural child, as
heir to the latter, may bring an action to enforce the acknowledgment of her
deceased child in accordance with articles 135 and 137 of the Civil Code.
3.
The finding in the judgment that the alleged continuous possession of the
deceased children of Paula Conde of the status of natural children of the late
Casiano Abaya, has been fully proven in these proceedings; and
4.
On the hypothesis that it was proper to adjudicate the property of this
intestate estate to Paula Conde, as improperly found by the court below, the
court erred in not having declared that said property should be reserved in favor
of relatives of Casiano Abaya to the third degree, and in not having previously
demanded securities from Paula Conde to guarantee the transmission of the
property to those who might fall within the reservation.
As to the first error assigned, the question is set up as to whether in special
proceedings for the administration and distribution of an intestate estate, an
action might be brought to enforce the acknowledgment of the natural child of
the person from whom the inheritance is derived, that is to say, whether one
might appear as heir on the ground that he is a recognized natural child of the
deceased, not having been so recognized by the deceased either voluntarily or
compulsory by reason of a preexisting judicial decision, but asking at the same
time that, in the special proceeding itself, he be recognized by the presumed
legitimate heirs of the deceased who claim to be entitled to the succession
opened in the special proceeding.
According to section 782 of the Code of Civil Procedure
"If there shall be a controversy before the Court of First Instance as to who the
lawful heirs of the deceased person are, or as to the distributive share to which
each person is entitled under the law, the testimony as to such controversy shall
be taken in writing by the judge, under oath and signed by witness. Any party in
interest whose distributive share is affected by the determination of such
controversy, may appeal from the judgment of the Court of First Instance
determining such controversy to the Supreme Court, within the time and in the
manner provided in the last preceding section."
This court has decided the present question in the manner shown in the case of
Juana Pimental vs. Engracio Palanca (5 Phil. Rep. 436.)
The main question with regard to the second error assigned, is whether or not
the mother of a natural child now deceased, but who survived the person who, it

is claimed, was his natural father, also deceased, may bring an action for the
acknowledgment of the natural filiation in favor of such child in order to appear
in his behalf to receive the inheritance from the person who is supposed to be
his natural father.
In order to decide in the affirmative the court below has assigned the following
as the only foundation:
"In resolving a similar question Manresa says: 'An acknowledgment can only be
demanded by the natural child and his descendants whom it shall benefit, and
should they be minors or otherwise incapacitated, such person as legally
represents them; the mother may ask it in behalf of her child so long as he is
under her authority.' On this point no positive declaration has been made,
undoubtedly because it was not considered necessary. A private action is in
question and the general rule must be followed. Elsewhere the same author
adds: 'It may so happen that the child dies before four years have expired after
attaining majority, or that the document supporting his petition for
acknowledgment is discovered after his death, such death perhaps occurring
after his parents had died, as is supposed by article 137, or during their lifetime.
In any case such right of action shall pertain to the descendants of the child
whom the acknowledgment may interest.' (See Commentaries to arts. 135 and
137, Civil Code. Vol. I.)'
The above doctrine, advanced by one of the most eminent commentators of the
Civil Code, lacks legal and doctrinal foundation. The power to transmit the right
of such action by the natural child to his descendants can not be sustained
under the law, and still less to his mother.
It is without any support in law because the rule laid down in the code is most
positive, limiting in form, when establishing the exception for the exercise of
such right of action after the death of the presumed parents, as is shown
hereafter. It is not supported by any doctrine, because up to the present time no
argument has been presented, upon which even an approximate conclusion
could be based.
Although the Civil Code considerably improved the condition of recognized
natural children, granting them rights and actions that they did not possess
under the former laws, they were not, however, placed upon the same plane as
legitimate ones. The difference that separates these two classes of children is
still great, as proven by so many articles dealing with the rights of the family and
with succession in relation to the members thereof. It may be laid down as a
legal maxim, that whatever the code does not grant to the legitimate children, or
in connection with their rights, must still less be understood as granted to
recognized natural children or in connection with their rights. There is not a
single exception in its provisions.
If legitimacy is the attribute that constitutes the basis of the absolute family rights
of the child, the acknowledgment of the natural child is, among illegitimate ones,

that which unites him to the family of the father or the mother who recognizes
him, and affords him a participation in the rights of the family, relatively
advantageous according to whether they are alone or whether they concur with
other individuals of the family of his purely natural father or mother.
Thus, in order to consider the spirit of the Civil Code nothing is more logical than
to establish a comparison between an action to claim the legitimacy, and one to
enforce acknowledgment.
"Art. 118. The action to claim its legitimacy may be brought by the child at any
time of its lifetime and shall be transmitted to its heirs, should it die during
minority or in a state of insanity. In such cases the heirs shall be allowed a
period of five years in which to institute the action.
"The action already instituted by the child is transmitted by its death to the heirs,
if it has not lapsed before then.
"Art. 137. The actions for the acknowledgment of natural children can be
instituted only during the life of the presumed parents, except in the following
cases:
"1. If the father or mother died during the minority of the child, in which case
the latter may institute the action before the expiration of the first four years of its
majority.
"2. If, after the death of the father or mother, some instrument, before
unknown, should be discovered in which the child is expressly acknowledged.
"In this case the action must be instituted within the six months following the
discovery of such instrument."
On this supposition the first difference that results between one action and the
other consists in that the right of action for legitimacy lasts during the whole
lifetime of the child, that is, it can always be brought against the presumed
parents or their heirs by the child itself, while the right of action for the
acknowledgment of a natural child does not last his whole lifetime, and, as a
general rule, it can not be instituted against the heirs of the presumed parents,
inasmuch as it can be exercised only during the life of the presumed parents.
With regard to the question at issue, that is, the transmission to the heirs of the
presumed parents of the obligation to admit the legitimate filiation, or to
recognize the natural filiation, there exists the most radical difference in that the
former continues during the life of the child who claims to be legitimate, and he
may demand it either directly and primarily from the said presumed parents, or
indirectly and secondarily from the heirs of the latter; while the second does not
endure for life; as a general rule, it only lasts during the life of the presumed
parents. Hence the other difference, derived as a consequence, that an action
for legitimacy is always brought against the heirs of the presumed parents in
case of the death of the latter, while the action for acknowledgment is not
brought against the heirs of such parents, with the exception of the two cases
prescribed by article 137 transcribed above.

So much for the passive transmission of the obligation to admit the legitimate
filiation, or to acknowledge the natural filiation.
As to the transmission to the heirs of the child of the latter's action to claim his
legitimacy, or to obtain the acknowledgment of his natural filiation, it is seen that
the code grants it in the first case, but not the second. It contains provisions for
the transmission of the right of action which, for the purpose of claiming his
legitimacy inheres in the child, but it does not say a word with regard to the
transmission of the right to obtain the acknowledgment of the natural filiation.
Therefore, the respective corollary of each of the two above-cited articles is: (1)
That the right of action which devolves upon the child to claim his legitimacy
under article 118, may be transmitted to his heirs in certain cases designated in
the said article; (2) That the right of action for the acknowledgment of natural
children to which article 137 refers, can never be transmitted, for the reason that
the code makes no mention of it in any case, not even as an exception.
It is most illogical and contrary to every rule of correct interpretation, that the
right of action to secure acknowledgment by the natural child should be
presumed to be transmitted, independently, as a rule, to his heirs, while the right
of action to claim legitimacy from his predecessor is not expressly,
independently, or, as a general rule, conceded to the heirs of the legitimate child,
but only relatively and as an exception. Consequently, the pretension that the
right of action on the part of the child to obtain the acknowledgment of his
natural filiation is transmitted to his descendants is altogether unfounded. No
legal provision exists to sustain such pretension, nor can an argument of
presumption be based on the lesser claim when there is no basis for the greater
one, and when it is only given as an exception in well-defined cases. It is placing
the heirs of the natural child on a better footing than the heirs of the legitimate
one, when, as a matter of fact, the position of a natural child is no better than,
nor even equal to, that of a legitimate child.
From the express and precise precepts of the code the following conclusions
are derived:
The right of action that devolves upon the child to claim his legitimacy lasts
during his whole life, while the right to claim the acknowledgment of a natural
child lasts only during the life of his presumed parents.
Inasmuch as the right of action accruing to the child to claim his legitimacy lasts
during his whole life, he may exercise it either against the presumed parents, or
their heirs; while the right of action to secure the acknowledgment of a natural
child, since it does not last during his whole life, but depends on that of the
presumed parents, as a general rule can only be exercised against the latter.
Usually the right of action for legitimacy devolving upon the child is of a personal
character and pertains exclusively to him, only the child may exercise it at any
time during his lifetime. As an exception, and in three cases only, it may be
transmitted to the heirs of the child, to wit, if he died during his minority, or while

insane, or after action had been already instituted.


An action for the acknowledgment of a natural child may, as an exception, be
exercised against the heirs of the presumed parents in two cases: first, in the
event of the death of the latter during the minority of the child, and second, upon
the discovery of some instrument of express acknowledgment of the child,
executed by the father or mother, the existence of which was unknown during
the life of the latter.
But as such action for the acknowledgment of a natural child can only be
exercised by him. It can not be transmitted to his descendants, or to his
ascendants.
In support of the foregoing the following authorities may be cited:
Sanchez Roman, in his Treatise on Civil Law, propounds the question as to
whether said action should be considered transmissive to the heirs or
descendants of the natural child, whether he had or had not exercised it up to
the time of his death, and decides it as follows;
"There is an entire absence of legal provisions, and at most, it might be deemed
admissible as a solution, that the right of action to claim the acknowledgment of
a natural child is transmitted by analogy to his heirs on the same conditions and
terms that it is transmitted to the descendants of a legitimate child, to claim his
legitimacy, under article 118, but nothing more; because on this point nothing
warrants placing the heirs of a natural child on a better footing than those of the
legitimate child, and even to compare them would not fail to be a strained and
questionable matter, and one of great difficulty for decision by the courts, for the
simple reason that for the heirs of the legitimate child, the said article 118 exists,
while for those of the natural child, as we have said, there is no provision in the
code authorizing the same, although on the other hand there is none that
prohibits it." (Vol. V.)
Diaz Guijarro and Martinez Ruiz in their work on "The Civil Code as construed
by the supreme court of Spain," commenting upon article 137, say:
"Article 118, taking into account the privileges due to the legitimacy of children,
grants them the right to claim said legitimacy during their lifetime, and even
authorizes the transmission of said right for the space of five years to the heirs
thereof, if the child die during his minority or in a state of insanity. But as article
137 is based on the consideration that in the case of a natural child, ties are less
strong and sacred in the eyes of the law, it does not fix such a long and
indefinite period for the exercise of the action; it limits it to the life of the parents,
excepting in the two cases mentioned in said article; and it does not allow, as
does article 118, the action to pass on to the heirs, inasmuch as, although it
does not prohibit it, and for that reason it might be deemed on general principles
of law to consent to it, such a supposition is inadmissible for the reason that a
comparison of both articles shows that the silence of the law in the latter case is
not, nor can it be, an omission, but a deliberate intent to establish a wide

difference between the advantages granted to a legitimate child and to a natural


one."
(Ibid., Vol. II, 171.)
Navarro Amandi (Cuestionario del Codigo Civil) raises the question: "Can the
heirs of a natural child claim the acknowledgment in those cases wherein the
father or mother are under obligation to acknowledge"? And says:
"Opinions are widely divergent. The court of Rennes held (on April 13, 1844)
that the right of investigation forms a part of the estate of the child, and along
with his patrimony is transmitted to his heirs. The affirmation is altogether too
categorical to be admissible. If it were correct the same thing would happen as
when the legitimacy of a child is claimed, and as already seen, the right of action
to demand the legitimacy is not transmitted to the heirs in every case and as an
absolute right, but under certain limitations and circumstances. Now, were we to
admit the doctrine of the court of Rennes, the result would be that the claim for
natural filiation would be more favored than one for legitimate filiation. This
would be absurd, because it can not be conceived that the legislator should
have granted a right of action to the heirs of the natural child, which is only
granted under great limitations and in very few cases to those of a legitimate
one. Some persons insist that the same rules that govern legitimate filiation
apply by analogy to natural filiation, and that in this conception the heirs of the
natural child are entitled to claim it in the cases prescribed by article 118. The
majority, however, are inclined to consider the right to claim acknowledgment as
a personal right, and consequently, not transmissive to the heirs. Really there
are not legal grounds to warrant the transmission." (Vol. 2, 229.)
In a decision like the present one it is impossible to bring forward the argument
of analogy for the purpose of considering that the heirs of the natural child are
entitled to the right of action which article 118 concedes to the heirs of the
legitimate child. The existence of a provision for the one case and the absence
thereof for the other is a conclusive argument that inclusio unius est exclusio
alterius, and it can not be understood that the provision of law should be the
same when the same reason does not hold in the one case as in the other.
The theory of the law of transmission is also entirely inapplicable in this case.
This theory, which in the Roman Law expressed the general rule that an heir
who did not accept an inheritance during his lifetime was incapacitated from
transmitting it to his own heirs, included at the same time the idea that if the
inheritance was not transmitted because the heir did not possess it, there were,
however, certain things which the heir held and could transmit. Such was the
law and the right to accept the inheritance, for the existing reason that all rights,
both real and personal, shall pass to the heir; quia haeres representat
defunctum in omnibus et per omnia. According to article 659 of the Civil Code,
"the inheritance includes all the property, rights, and obligations of a person,
which are not extinguished by his death." If the mother is the heir of her natural

child, and the latter, among other rights during his lifetime was entitled to
exercise an action for his acknowledgment against his father, during the life of
the latter, or after his death in some of the excepting cases of article 137, such
right, which is a portion of his inheritance, is transmitted to his mother as being
his heir, and it was so understood by the court of Rennes when it considered the
right in question, not as a personal and exclusive right of the child which is
extinguished by his death, but as any other right which might be transmitted
after his death. This right of supposed transmission is even less tenable than
that sought to be sustained by the argument of analogy.
The right of action pertaining to the child to claim his legitimacy is in all respects
superior to that of the child who claims acknowledgment as a natural child. And
it is evident that the right of action to claim his legitimacy is not one of those
rights which the legitimate child may transmit by inheritance to his heirs; it forms
no part of the component rights of his inheritance. If it were so, there would have
been no necessity to establish its transmissibility to heirs as an exception in the
terms and conditions of article 118 of the code. So that, in order that it may
constitute a portion of the child's inheritance, it is necessary that the conditions
and the terms contained in article 118 shall be present, since without them, the
right that the child held during his lifetime, being personal and exclusive in
principle, and therefore, as a general rule not susceptible of transmission, would
and should have been extinguished by his death. Therefore, where no express
provision like that of article 118 exists, the right of action for the acknowledgment
of a natural child is, in principle and without exception, extinguished by his
death, and can not be transmitted as a portion of the inheritance of the
deceased child.
On the other hand, it said right of action formed a part of the child's inheritance,
it would be necessary to establish the doctrine that the right to claim such an
acknowledgment from the presumed natural father and from his heirs is an
absolute right of the heirs of the child, not limited by certain circumstances as in
the case of the heirs of a legitimate child; and if it is unreasonable to compare a
natural child with a legitimate one to place the heirs of a natural child and his
inheritance on a better footing than those of a legitimate child would not only be
unreasonable, but, as stated in one of the above citations, most absurd and
illegal in the present state of the law and in accordance with the general
principles thereof.
For all of the foregoing reasons we hereby reverse the judgment appealed from
in all its parts, without any special ruling as to the costs of this instance.
Mapa, Johnson, Carson and Willard, JJ., concur.
Separate Opinions
TORRES, J., dissenting:
The questions arising from the facts and points of law discussed in this litigation
between the parties thereto, decided in the judgment appealed from, and set up

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

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

unquestionably be entitled to institute an action for acknowledgment against the


presumed heirs of their natural father; and as there is no law that provides that
said right is extinguished by the death of the same, and that the mother did not
inherit it from the said minors, it is also unquestionable that Paula Conde, the
natural mother and successor to the rights of said minors, is entitled to exercise
the corresponding action for acknowledgment.
If the natural mother had no right of action against the heirs of the natural father,
for the acknowledgment of her natural child, the unlimited and unconditional
reciprocity established by article 846 of the code would neither be true nor
correct. It should be noticed that the relation of paternity and that of filiation
between the above-mentioned father and children are both natural in character;
therefore, the intestate succession of the said children of Paula Conde is
governed exclusively by articles 944 and 945 of the said code.
It is true that nothing is provided by article 137 with reference to the
transmission to the natural mother of the right to claim the acknowledgment of
her natural children, but, as Sanchez Roman says, it does not expressly prohibit
it; and as opposed to the silence of the said article, we find the provisions of
articles 846 and 944 of the Civil code, which expressly recognized the right of
the natural mother to succeed her natural child, a right which is transmitted to
her by operation of law from the moment that the child ceases to exist.
The question herein does not bear upon the right of a child to claim his
legitimacy, as provided in article 118 of the code, nor is it claimed that the rights
of natural children and of their mother are equal to those of legitimate ones,
even by analogy.
The foundations of this opinion are based solely on the provisions of the abovementioned articles of the code, and I consider that they are sustainable so long
as it is not positively proven that the so often-mentioned right of action for
acknowledgment is extinguished by the death of the minor natural child, and is
not transmitted to the natural mother by express declaration or prohibition of the
law, together with the property and other rights in the intestate succession.
In view of the considerations above set forth it is my opinion that it should be
held: That Paula Conde, as the natural mother and sole heir of her children
Teopista and Jose, was and is entitled to the right to institute proceedings to
obtain the acknowledgment of the latter as natural children of the late Icasiano
Abaya, from Roman Abaya, as heir and administrator of the estate of the said
Icasiano Abaya; and that the said Teopista and Jose who died during their
minority, three years after the death of their father, should be considered and
acknowledged as such natural children of the latter, for the reason that while
living they uninterruptedly enjoyed the status of his natural children. The
judgment appealed from should be affirmed without any special ruling as to
costs.
With regard to the declaration that the property of the late Icasiano, which Paula

Conde might take, are of a reservable character, together with the other matter
contained in the third error assigned by the appellant to the said judgment, the
writer withholds his opinion until such time as the question may be raised
between the parties in proper form.
C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.
SECOND DIVISION
[G.R. No. 173292. September 1, 2010.]
MEMORACION Z. CRUZ, represented by EDGARDO Z. CRUZ, petitioner, vs.
OSWALDO Z. CRUZ, respondent.
DECISION
CARPIO, J p:
The Case
This is a petition for review 1 of the Court of Appeals' (CA) Decision 2 dated 20
December 2005 and Resolution dated 21 June 2006 in CA-G.R. CV No. 80355.
The CA affirmed with modification the Order 3 dated 2 June 1997 of the
Regional Trial Court of the National Capital Judicial Region, Branch 30, Manila
(RTC). ECaScD
The Antecedent Facts
The undisputed facts, as summarized by the Court of Appeals, are as follows:
On October 18, 1993, Memoracion Z. Cruz filed with the Regional Trial Court in
Manila a Complaint against her son, defendant-appellee Oswaldo Z. Cruz, for
"Annulment of Sale, Reconveyance and Damages."
Memoracion claimed that during her union with her common-law husband
(deceased) Architect Guido M. Cruz, she acquired a parcel of land located at
Tabora corner Limay Streets, Bo. Obrero, Tondo Manila; that the said lot was
registered in her name under TCT No. 63467 at the Register of Deeds of Manila;
that sometime in July 1992, she discovered that the title to the said property was
transferred by appellee and the latter's wife in their names in August 1991 under
TCT No. 0-199377 by virtue of a Deed of Sale dated February 12, 1973; that the
said deed was executed through fraud, forgery, misrepresentation and
simulation, hence, null and void; that she, with the help of her husband's
relatives, asked appellee to settle the problem; that despite repeated pleas and
demands, appellee refused to reconvey to her the said property; that she filed a
complaint against appellee before the office of the Barangay having jurisdiction
over the subject property; and that since the matter was unsettled, the barangay
. . . issued . . . a certification to file [an] action in court, now the subject of
controversy. SaDICE
After Memoracion . . . finished presenting her evidence in chief, she died on
October 30, 1996. Through a Manifestation, Memoracion's counsel, Atty.
Roberto T. Neri, notified the trial court on January 13, 1997 of the fact of such

death, evidenced by a certificate thereof.


For his part, appellee filed a Motion to Dismiss on the grounds that (1) the
plaintiff's reconveyance action is a personal action which does not survive a
party's death, pursuant to Section 21, Rule 3 of the Revised Rules of Court, and
(2) to allow the case to continue would result in legal absurdity whereby one heir
is representing the defendant [and is a] co-plaintiff in this case.
On June 2, 1997, the trial court issued the appealed Order in a disposition that
reads:
"Wherefore, in view of the foregoing, this case is ordered dismissed without
prejudice to the prosecution thereof in the proper estate proceedings."
On October 17, 1997, Memoracion's son-heir, Edgardo Z. Cruz, manifested to
the trial court that he is retaining the services of Atty. Neri for the plaintiff.
Simultaneously, Atty. Neri filed a Motion for Reconsideration of the June 2, 1997
Order. However, the said motion was subsequently denied by Acting Presiding
Judge Cielito N. Mindaro-Grulla [on October 31, 2000]. STHAaD
Thereafter, Edgardo Cruz, as an heir of Memoracion Cruz, filed a notice of
appeal in behalf of the deceased plaintiff, signed by Atty. Neri, but the appeal
was dismissed by Judge Mindaro-Grulla, [stating that] the proper remedy being
certiorari under Rule 65 of the Rules of Court. On appellant's motion for
reconsideration, Judge Lucia Pena Purugganan granted the same, stating that
the remedy under the circumstances is ordinary appeal. 4
The Court of Appeals' Ruling
Petitioner Memoracion Z. Cruz, represented by Edgardo Z. Cruz, filed with the
Court of Appeals a Petition for Review under Rule 45 of the 1997 Revised Rules
of Civil Procedure. On 20 December 2005, the CA rendered judgment affirming
with modification the RTC decision. We quote the dispositive portion of the CA's
decision below.
WHEREFORE, the appealed Order is AFFIRMED, with MODIFICATION. The
trial court's directive as to the prosecution of the action in the proper estate
proceedings is DELETED.
SO ORDERED. 5
Petitioner's Motion for Reconsideration was denied by the CA in its Resolution of
21 June 2006. 6 ACSaHc
Hence, this appeal.
The Issues
The issues for resolution in this case are:
1.
Whether the Court of Appeals erred in ruling that Memoracion Z. Cruz's
Petition for Annulment of Deed of Sale, Reconveyance and Damages is a purely
personal action which did not survive her death; and
2.
Whether the Court of Appeals erred in affirming with modification the RTC
Order dismissing the Petition for Annulment of Deed of Sale, Reconveyance and
Damages.

The Court's Ruling


We find the appeal meritorious.
The Petition for Annulment of Sale, Reconveyance
and Damages survived the death of petitioner
The criterion for determining whether an action survives the death of a petitioner
was elucidated in Bonilla v. Barcena, 7 to wit: AIaHES
The question as to whether an action survives or not depends on the nature of
the action and the damage sued for. In the causes of action which survive, the
wrong complained [of] affects primarily and principally property and property
rights, the injuries to the person being merely incidental, while in the causes of
action which do not survive, the injury complained of is to the person, the
property and rights of property affected being incidental. 8
If the case affects primarily and principally property and property rights, then it
survives the death of the plaintiff or petitioner. In Sumaljag v. Literato, 9 we held
that a Petition for Declaration of Nullity of Deed of Sale of Real Property is one
relating to property and property rights, and therefore, survives the death of the
petitioner. Accordingly, the instant case for annulment of sale of real property
merits survival despite the death of petitioner Memoracion Z. Cruz.
The CA erred in affirming RTC's dismissal of the
Petition for Annulment of Deed of Sale,
Reconveyance and Damages
When a party dies during the pendency of a case, Section 16, Rule 3 of the
1997 Revised Rules of Civil Procedure necessarily applies, viz.:
Sec. 16. Death of party; duty of counsel. Whenever a party to a pending
action dies, and the claim is not thereby extinguished, it shall be the duty of his
counsel to inform the court within thirty (30) days after such death of the fact
thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action. TCIHSa
The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator and the court
may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to
appear and be substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if
the one so named shall fail to appear within the specified period, the court may
order the opposing party, within a specified time, to procure the appointment of
an executor or administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may be
recovered as costs.
The foregoing section is a revision of Section 17, Rule 3 of the old Rules of

Court:
SEC. 17. Death of party. After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal representative
of the deceased to appear and to be substituted for the deceased, within a
period of thirty (30) days, or within such time as may be granted. If the legal
representative fails to appear within said time, the court may order the opposing
party to procure the appointment of a legal representative of the deceased
within a time to be specified by the court, and the representative shall
immediately appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the opposing
party, may be recovered as costs. The heirs of the deceased may be allowed to
be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litem for the
minor heirs. EHCcIT
If the action survives despite death of a party, it is the duty of the deceased's
counsel to inform the court of such death, and to give the names and addresses
of the deceased's legal representatives. The deceased may be substituted by
his heirs in the pending action. As explained in Bonilla:
. . . Article 777 of the Civil Code provides "that the rights to the succession are
transmitted from the moment of the death of the decedent." From the moment of
the death of the decedent, the heirs become the absolute owners of his property,
subject to the rights and obligations of the decedent, and they cannot be
deprived of their rights thereto except by the methods provided for by law. The
moment of death is the determining factor when the heirs acquire a definite right
to the inheritance whether such right be pure or contingent. The right of the heirs
to the property of the deceased vests in them even before judicial declaration of
their being heirs in the testate or intestate proceedings. When [plaintiff],
therefore, died[,] her claim or right to the parcels of land . . . was not
extinguished by her death but was transmitted to her heirs upon her death. Her
heirs have thus acquired interest in the properties in litigation and became
parties in interest in the case. There is, therefore, no reason for the respondent
Court not to allow their substitution as parties in interest for the deceased
plaintiff. 10
If no legal representative is named by the counsel of the deceased, or the legal
representative fails to appear within a specified period, it is the duty of the court
where the case is pending to order the opposing party to procure the
appointment of an executor or administrator for the estate of the deceased. The
reason for this rule is to protect all concerned who may be affected by the
intervening death, particularly the deceased and his estate. 11 cSEAHa
In the instant case, petitioner (plaintiff) Memoracion Z. Cruz died on 30 October
1996. Her counsel, Atty. Roberto T. Neri, notified the trial court of such death on
13 January 1997, through a Manifestation stating thus:

COMES NOW the undersigned counsel and to this Honorable Court respectfully
gives notice that the plaintiff, Memoracion Z. Cruz, died on October 30, 1996, in
Manila as shown by a Certificate of Death, a certified true copy of which is
hereto attached as Annex "A" hereof.
The legal representative of the deceased plaintiff is her son EDGARDO CRUZ
whose address is at No. 3231-E Tabora St., Bo. Obrero, Tondo, Manila.
xxx
xxx
xxx 12
On 24 January 1997, respondent (defendant) Oswaldo Z. Cruz moved to
dismiss the case alleging that it did not survive Memoracion's death. The RTC
granted the motion to dismiss in the assailed Order dated 2 June 1997.
We rule that it was error for the RTC to dismiss the case. As mentioned earlier,
the petition for annulment of deed of sale involves property and property rights,
and hence, survives the death of petitioner Memoracion. The RTC was
informed, albeit belatedly, 13 of the death of Memoracion, and was supplied with
the name and address of her legal representative, Edgardo Cruz. What the RTC
could have done was to require Edgardo Cruz to appear in court and substitute
Memoracion as party to the pending case, pursuant to Section 16, Rule 3 of the
1997 Revised Rules of Civil Procedure, and established jurisprudence.
cSIHCA
We note that on 17 October 1997, Edgardo Cruz filed with the RTC a
Manifestation, stating that he is retaining the services of Atty. Roberto T. Neri.
We quote: 14
UNDERSIGNED HEIR of the late Memoracion Z. Cruz respectfully manifests
that he is retaining the services of ATTY. ROBERTO T. NERI as counsel for the
plaintiff.
(Sgd.) EDGARDO Z. CRUZ
Plaintiff
Consistent with our ruling in Heirs of Haberer v. Court of Appeals, 15 we
consider such Manifestation, signed by Memoracion's heir, Edgardo Cruz, and
retaining Atty. Neri's services as counsel, a formal substitution of deceased
Memoracion by her heir, Edgardo Cruz. It also needs mention that Oswaldo
Cruz, although also an heir of Memoracion, should be excluded as a legal
representative in the case for being an adverse party therein. 16
WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals'
Decision dated 20 December 2005 and Resolution dated 21 June 2006 in CAG.R. CV No. 80355. We REMAND this case to the Regional Trial Court of the
National Capital Judicial Region, Branch 30, Manila, for further proceedings.
ScCIaA
SO ORDERED.
Nachura, Bersamin, * Abad and Mendoza, JJ., concur.
Footnotes
1. Under Rule 45 of the 1997 Revised Rules of Civil Procedure.

2. Penned by Associate Justice Magdangal M. De Leon, with Associate


Justices Portia Alio-Hormachuelos and Mariano del Castillo (now a member of
the Supreme Court), concurring.
3. Issued by RTC Judge Senecio O. Ortile.
4. Rollo, pp. 32-33. Citations omitted.
5. Id. at 39.
6. Id. at 43-44.
7. 163 Phil. 516 (1976). See also Torres v. Rodellas, G.R. No. 177836, 4
September 2009, 598 SCRA 390.
8. Id. at 521, citing Iron Gate Bank v. Brady, 184 U.S. 665, 22 SCT 529, 46
L.ed. 739 and Wenber v. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79.
9. G.R. No. 149787, 18 June 2008, 555 SCRA 53, 60.
10. Bonilla v. Barcena, supra note 7 at 520-521. Citations omitted.
11. Sumaljag v. Literato, supra note 9 at 62.
12. Records, pp. 172-173.
13. The counsel's late filing of the Notice of Death of Memoracion Z. Cruz was
not questioned by defendant Oswaldo Cruz.
14. Records, p. 196.
15. 192 Phil. 62, 73 (1981).
16. In Sumaljag v. Literato, supra note 9, the deceased's sister, although a
legal heir, was excluded as a legal representative for being one of the adverse
parties in the pending cases.
*
Designated additional member per Special Order No. 882 dated 31 August
2010.
FIRST DIVISION
[G.R. No. 162784. June 22, 2007.]
NATIONAL HOUSING AUTHORITY, petitioner, vs. SEGUNDA ALMEIDA,
COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31,
respondents.
DECISION
PUNO, C.J p:
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.
aTEScI
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita
Herrera several portions of land which are part of the Tunasan Estate in San
Pedro, Laguna. The award is evidenced by an Agreement to Sell No. 3787. 1 By
virtue of Republic Act No. 3488, the LTA was succeeded by the Department of
Agrarian Reform (DAR). On July 31, 1975, the DAR was succeeded by the NHA
by virtue of Presidential Decree No. 757. 2 NHA as the successor agency of LTA

is the petitioner in this case.


The records show that Margarita Herrera had two children: Beatriz HerreraMercado (the mother of private respondent) and Francisca Herrera. Beatriz
Herrera-Mercado predeceased her mother and left heirs.
Margarita Herrera passed away on October 27, 1971. 3
On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita
Herrera executed a Deed of Self-Adjudication claiming that she is the only
remaining relative, being the sole surviving daughter of the deceased. She also
claimed to be the exclusive legal heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated
October 7, 1960, allegedly executed by Margarita Herrera. The pertinent
portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo,
kasalukuyang naninirahan at tumatanggap ng sulat sa Nayon ng San Vicente,
San Pedro Laguna, sa ilalim ng panunumpa ay malaya at kusang loob kong
isinasaysay at pinagtitibay itong mga sumusunod:
1.
Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR),
tumatayo sa Nayon ng San Vicente, San Pedro, Laguna, mayroong PITONG
DAAN AT PITUMPU'T ISANG (771) METRONG PARISUKAT ang laki, humigit
kumulang, at makikilala sa tawag na Lote 17, Bloke 55, at pag-aari ng Land
Tenure Administration; CEcaTH
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 thumbmark 5
above her name in the second page and at the left-hand margin of the first page
of the document. ICASEH
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 Bian, 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 Resolution 8 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. DCESaI
This Office finds that protestee has a better preferential right to purchase the lots

in question. 9
Private respondent Almeida appealed to the Office of the President. 10 The NHA
Resolution was affirmed by the Office of the President in a Decision dated
January 23, 1987. 11
On February 1, 1987, Francisca Herrera died. Her heirs executed an
extrajudicial settlement of her estate which they submitted to the NHA. Said
transfer of rights was approved by the NHA. 12 The NHA executed several
deeds of sale in favor of the heirs of Francisca Herrera and titles were issued in
their favor. 13 Thereafter, the heirs of Francisca Herrera directed Segunda
Mercado-Almeida to leave the premises that she was occupying.
Feeling aggrieved by the decision of the Office of the President and the
resolution of the NHA, private respondent Segunda Mercado-Almeida sought
the cancellation of the titles issued in favor of the heirs of Francisca. She filed a
Complaint on February 8, 1988, for "Nullification of Government Lot's Award,"
with the Regional Trial Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year occupation
of the disputed properties, and re-raised the fact that Francisca Herrera's
declaration of self-adjudication has been adjudged as a nullity because the other
heirs were disregarded. The defendant heirs of Francisca Herrera alleged that
the complaint was barred by laches and that the decision of the Office of the
President was already final and executory. 14 They also contended that the
transfer of purchase of the subject lots is perfectly valid as the same was
supported by a consideration and that Francisca Herrera paid for the property
with the use of her own money. 15 Further, they argued that plaintiff's occupation
of the property was by mere tolerance and that they had been paying taxes
thereon. 16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the
case for lack of jurisdiction. 17 The Court of Appeals in a Decision dated June
26, 1989 reversed and held that the Regional Trial Court had jurisdiction to hear
and decide the case involving "title and possession to real property within its
jurisdiction." 18 The case was then remanded for further proceedings on the
merits. aETADI
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. ECDAcS
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. cADSCT
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. SHAcID
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. CSHEca
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 1980 26 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. CSHEAI
Well-within its jurisdiction, the Court of Appeals, in its decision of August 28,
2003, already ruled that the issue of the trial court's authority to hear and decide
the instant case has already been settled in the decision of the Court of Appeals
dated June 26, 1989 (which has become final and executory on August 20, 1989
as per entry of judgment dated October 10, 1989). 28 We find no reason to
disturb this ruling. Courts are duty-bound to put an end to controversies. The
system of judicial review should not be misused and abused to evade the
operation of a final and executory judgment. 29 The appellate court's decision
becomes the law of the case which must be adhered to by the parties by reason
of policy. 30
Next, petitioner NHA contends that its resolution was grounded on meritorious
grounds when it considered the application for the purchase of lots. Petitioner
argues that it was the daughter Francisca Herrera who filed her application on
the subject lot; that it considered the respective application and inquired whether
she had all the qualifications and none of the disqualifications of a possible
awardee. It is the position of the petitioner that private respondent possessed all
the qualifications and none of the disqualifications for lot award and hence the
award was not done arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang Salaysay"
was a will, it could not bind the NHA. 31 That, "insofar as [the] NHA is
concerned, it is an evidence that the subject lots were indeed transferred by
Margarita Herrera, the original awardee, to Francisca Herrera was then applying
to purchase the same before it." 32
We are not impressed. When the petitioner received the "Sinumpaang
Salaysay," it should have noted that the effectivity of the said document
commences at the time of death of the author of the instrument; in her words
"sakaling ako'y bawian na ng Dios ng aking buhay. . ." Hence, in such period, all

the interests of the person should cease to be hers and shall be in the
possession of her estate until they are transferred to her heirs by virtue of Article
774 of the Civil Code which provides that: CcADHI
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 resolution 35 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 Sell 36 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" 39 likely 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 void 40 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. aITECA
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. DCIAST
No cost.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna and Garcia, JJ., concur.
Footnotes
1. Rollo, at 8.
2. A Decree Creating the National Housing Authority and Dissolving the
Existing Housing Agencies, Defining Its Powers and Functions, Providing Funds
Therefor, and for Other Purposes, Presidential Decree No. 757, promulgated
July 31, 1975.
3. Rollo, at 70.
4. Id.
5. It should be noted that a thumbmark is considered a valid signature. As
held in Payad v. Tolentino, 62 Phil. 848 (1936): "The testator's thumbprint is
always valid and sufficient signature for the purpose of complying with the
requirement of the article. While in most of these cases, the testator was
suffering from some infirmity which made the writing of the testator's name
difficult or impossible, there seems to be no basis for limiting the validity of
thumbprints only to cases of illness or infirmity." AcISTE
6. Rollo, at 49.
7. Vol. 1, Original Record, at 11-14.
8. Rollo, at 39-43.
9. Id., at 41-42 (emphasis supplied).
10. Id., at 9.
11. Id., at 9, 44-47.
12. Id., at 9. IDScTE
13. Id., at 25-26. Francisca Herrera left behind her husband, Macario Berroya,
and children: Ramon, Antonio, Alberto, Rosita, Pacita, Bernabe, Gregorio,
Josefina and Rustica. In the extra judicial settlement made by the said heirs,
Rosita, Pacita, Bernabe, Gregorio, Josefina and Rustica waived all their rights,
interest and participation therein in favor of their siblings Macario, Alberto,
Ramon and Antonio. Deeds of sale involving the subject lots were executed by
the NHA in favor of Alberto, Antonio and Macario. Hence, TCT Nos. T-173557, T173579, T-173578 and T-183166 were issued to Macario, Alberto and Antonio,
respectively.
14. Id., at 27. EaIcAS

15. Id., at 27-28.


16. Id., at 28.
17. Id., at 5.
18. Id., at 6; see Annex "F."
19. Id., at 71-72.
20. Brillantes v. Castro, 99 Phil. 497, 503 (1956).
21. G.R. No. L-14791, September 30, 1963, 9 SCRA 75.
22. Administrative Code of 1987, Executive Order No. 292, Bk. VIII, ch. 1,
Section 2 (9). HSIaAT
23. Midland Insurance Corp. v. IAC, G.R. No. L-71905, August 13, 1986, 143
SCRA 458, 462.
24. 1987 PHIL. CONST., art. VIII, Section 1 as explained in United Residents
of Dominical Hills, Inc. v. Commission on Settlement of Land Problems, G.R. No.
135945, March 7, 2001, 353 SCRA 783, 797-798.
25. 1987 PHIL. CONST., art. VIII, Section 1 2.
26. An Act Reorganizing the Judiciary, Appropriating Funds Therefor and for
Other Purposes, Batas Pambansa Blg. 129, promulgated August 14, 1981.
27. Id. Section 9 (3). CAaEDH
28. Records, vol. 1, at 80.
29. Buaya v. Stronghold Insurance, Corp., 396 Phil. 739 (2000).
30. Ayala Corp. v. Rosa-Diana Realty and Dev't. Corp., 400 Phil. 511 (2000).
31. Rollo, at 17.
32. Id.
33. Civil Code, art. 774 (emphasis supplied).
34. Rollo, at 70.
35. Id., at 39-43.
36. Id., at 24; C.A. G.R. No. 68370 citing Agreement No. 3787, dated July 28,
1959. ASTcEa
37. Araneta v. Montelibano, 14 Phil. 117 (1909).
38. Civil Code, arts. 1544 (which prohibit double sales) and 1165 (which
established the obligation of the seller to the buyer respecting a thing which is
determinate in nature).
39. Because the estate acquires juridical personality to continue the
transmissible obligations and rights of the decedent.
40. Vol. 1, Original Record, at 11-14. TIaCAc
41. Rollo, at 34.
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