EN BANC

[G.R. No. L-8437. November 28, 1956.]

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

DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court of First Instance of Rizal, presided by Judge Hermogenes
Caluag, dismissing its claim against the Estate of K. H. Hemady (Special Proceeding No. Q-293) for failure to state a cause
of action.
The Luzon Surety Co. had filed a claim against the Estate based on twenty different indemnity agreements, or counter
bonds, each subscribed by a distinct principal and by the deceased K. H. Hemady, a surety solidary guarantor) in all of
them, in consideration of the Luzon Surety Co.’s of having guaranteed, the various principals in favor of different creditors.
The twenty counterbonds, or indemnity agreements, all contained the following stipulations:chanroblesvirtuallawlibrary
“Premiums. — As consideration for this suretyship, the undersigned jointly and severally, agree to pay the COMPANY the
sum of ________________ (P______) pesos, Philippines Currency, in advance as premium there of for every __________
months or fractions thereof, this ________ or any renewal or substitution thereof is in effect.
Indemnity. — The undersigned, jointly and severally, agree at all times to indemnify the COMPANY and keep it indemnified
and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges, and
expenses of whatsoever kind and nature which the COMPANY shall or may, at any time sustain or incur in consequence of
having become surety upon this bond or any extension, renewal, substitution or alteration thereof made at the instance of
the undersigned or any of them or any order executed on behalf of the undersigned or any of them; chan
roblesvirtualawlibraryand to pay, reimburse and make good to the COMPANY, its successors and assigns, all sums and
amount of money which it or its representatives shall pay or cause to be paid, or become liable to pay, on account of the
undersigned or any of them, of whatsoever kind and nature, including 15% of the amount involved in the litigation or other
matters growing out of or connected therewith for counsel or attorney’s fees, but in no case less than P25. It is hereby
further agreed that in case of extension or renewal of this ________ we equally bind ourselves for the payment thereof
under the same terms and conditions as above mentioned without the necessity of executing another indemnity agreement
for the purpose and that we hereby equally waive our right to be notified of any renewal or extension of this ________ which
may be granted under this indemnity agreement.
Interest on amount paid by the Company. — Any and all sums of money so paid by the company shall bear interest at the
rate of 12% per annum which interest, if not paid, will be accummulated and added to the capital quarterly order to earn
the same interests as the capital and the total sum thereof, the capital and interest, shall be paid to the COMPANY as soon
as the COMPANY shall have become liable therefore, whether it shall have paid out such sums of money or any part thereof
or not.
xxx xxx xxx
Waiver. — It is hereby agreed upon by and between the undersigned that any question which may arise between them by
reason of this document and which has to be submitted for decision to Courts of Justice shall be brought before the Court
of competent jurisdiction in the City of Manila, waiving for this purpose any other venue. Our right to be notified of the
acceptance and approval of this indemnity agreement is hereby likewise waived.
xxx xxx xxx
Our Liability Hereunder. — It shall not be necessary for the COMPANY to bring suit against the principal upon his default,
or to exhaust the property of the principal, but the liability hereunder of the undersigned indemnitor shall be jointly and
severally, a primary one, the same as that of the principal, and shall be exigible immediately upon the occurrence of such
default.” (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent claim, of the value of the twenty bonds it had executed in
consideration of the counterbonds, and further asked for judgment for the unpaid premiums and documentary stamps affixed
to the bonds, with 12 per cent interest thereon.
Before answer was filed, and upon motion of the administratrix of Hemady’s estate, the lower court, by order of September
23, 1953, dismissed the claims of Luzon Surety Co., on two grounds:chanroblesvirtuallawlibrary (1) that the premiums due
and cost of documentary stamps were not contemplated under the indemnity agreements to be a part of the undertaking of
the guarantor (Hemady), since they were not liabilities incurred after the execution of the counterbonds; chan
roblesvirtualawlibraryand (2) that “whatever losses may occur after 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:chanroblesvirtuallawlibrary
“The administratrix further contends that upon the death of Hemady, his liability as a guarantor terminated, and therefore,
in the absence of a showing that a loss or damage was suffered, the claim cannot be considered contingent. This Court
believes that there is merit in this contention and finds support in Article 2046 of the new Civil Code. It should be noted that
a new requirement has been added for a person to qualify as a guarantor, that is:chanroblesvirtuallawlibrary integrity. As
correctly pointed out by the Administratrix, integrity is something purely personal and is not transmissible. Upon the death
of Hemady, his integrity was not transmitted to his estate or successors. Whatever loss therefore, may occur after 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 operati on
of law.”
“ART. 776. — The inheritance includes all the property, rights and obligations of a person which are not extinguished by his
death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:chanroblesvirtuallawlibrary
“Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all the rights and obligations of the
deceased (Article 661) and cannot be regarded as third parties with respect to a contract to which the deceased was a
party, touching the estate of the deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected by the provisions of the new Code of Civil Procedure, and, in
accordance with that principle, the heirs of a deceased person cannot be held to be “third persons” in relation to any
contracts touching the real estate of their decedent which comes in to their hands by right of inheritance; chan
roblesvirtualawlibrarythey take such property subject to all the obligations resting thereon in the hands of him from whom
they derive their rights.”
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party is not altered by the provision in our Rules of Court that
money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs
(Rule 89). The reason is that whatever payment is thus made from the estate is ultimately a payment by the heirs and
distributees, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been
entitled to receive.
Under our law, therefore, the general rule is that a 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; chan
roblesvirtualawlibraryand to the Luzon Surety Co., it was indifferent that the reimbursement should be made by Hemady
himself or by some one else in his behalf, so long as the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the parties. Being exceptional and contrary
to the general rule, this intransmissibility should not be easily implied, but must be expressly established, or at the very
least, clearly inferable from the provisions of the contract itself, and the text of the agreements sued upon nowhere indicate
that they are non-transferable.
“(b) Intransmisibilidad por pacto. — Lo general es la transmisibilidad de darechos y obligaciones; chan
roblesvirtualawlibraryle excepcion, la intransmisibilidad. Mientras nada se diga en contrario impera el principio de la
transmision, como elemento natural a toda relacion juridica, salvo las personalisimas. Asi, para la no transmision, es
menester el pacto expreso, porque si no, lo convenido entre partes trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del causante, sobre ellos recaen los efectos de los vinculos juridicos
creados por sus antecesores, y para evitarlo, si asi se quiere, es indespensable convension terminante en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir más allá de las personas que les dieron vida, y a ejercer presion
sobre los sucesores de esa persona; chan roblesvirtualawlibrarycuando no se quiera esto, se impone una estipulacion
limitativa expresamente de la transmisibilidad o de cuyos tirminos claramente se deduzca la concresion del concreto a las
mismas personas que lo otorgon.” (Scaevola, Codigo Civil, Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a contract is deemed to have contracted for himself and his
heirs and assigns, it is unnecessary for him to expressly stipulate to that effect; chan roblesvirtualawlibraryhence, his failure
to do so is no sign that he intended his bargain to terminate upon his death. Similarly, that the Luzon Surety Co., did not
require bondsman Hemady to execute a mortgage indicates nothing more than the 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; chan
roblesvirtualawlibraryand if that be true of his capacity to bind himself, it should also be true of his integrity, which is a quality
mentioned in the article alongside the capacity.
The foregoing concept is confirmed by the next Article 2057, that runs as follows:chanroblesvirtuallawlibrary
“ART. 2057. — If the guarantor should be convicted in first instance of a crime involving dishonesty or should become
insolvent, the creditor may demand another who has all the qualifications required in the preceding article. The case is
excepted where the creditor has required and stipulated that a specified person should be guarantor.”
From this article it should be immediately apparent that the supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound) does not terminate the contract but merely entitles the creditor
to demand a replacement of the guarantor. But the step remains optional in the creditor:chanroblesvirtuallawlibrary it is his
right, not his duty; chan roblesvirtualawlibraryhe may waive it if he chooses, and hold the guarantor to his bargain. Hence
Article 2057 of the present Civil Code is incompatible with the trial court’s stand that the requirement of integrity i n 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; chan roblesvirtualawlibraryGaskell & Co.
vs. Tan Sit, 43 Phil. 810, 814).
“The most common example of the contigent claim is that which arises when a person is bound as surety or guarantor for
a principal who is insolvent or dead. Under the ordinary contract of suretyship the surety has no claim whatever against his
principal until he himself pays something by way of satisfaction upon the obligation which is secured. When he does this,
there instantly arises in favor of the surety the right to compel the principal to exonerate the surety. But until the surety has
contributed something to the payment of the debt, or has performed the secured obligation in whole or in part, he has no
right of action against anybody — no claim that could be reduced to judgment. (May vs. Vann, 15 Pla., 553; chan
roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521
Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs. Nou, 63 Wis., 134.)”
For Defendant administratrix it is averred that the above doctrine refers to a case where the surety files claims against the
estate of the principal debtor; chan roblesvirtualawlibraryand it is urged that the rule does not apply to the case before us,
where the late Hemady was a surety, not a principal debtor. The argument evinces a superficial view of the relations between
parties. If under the Gaskell ruling, the Luzon Surety Co., as guarantor, could file a contingent claim against the estate of
the principal debtors if the latter should die, there is absolutely no reason why it could not file such a claim against the estate
of Hemady, since Hemady is a solidary co-debtor of his principals. What the Luzon Surety Co. may claim from the estate of
a principal debtor it may equally claim from the estate of Hemady, since, in view of the existing solidarity, the latter does not
even enjoy the benefit of exhaustion of the assets of the principal debtor.
The foregoing ruling is of course without prejudice to the remedies of the administratrix against the principal debtors under
Articles 2071 and 2067 of the New Civil Code.
Our conclusion is that the solidary 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.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

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

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,

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

Francisco G. Banzon for petitioner.

Renecio R. Espiritu for private respondents.

FERNAN, C.J.:

This is a petition for review on certiorari seeking the reversal of: (a) the decision of the Fourth Civil Cases Division of the
Intermediate Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo
Siason et al." affirming the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as it
ordered the petitioners to pay jointly and severally the private respondents the sum of P20,000.00 representing the actual
value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the subject
decision insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and
attorney's fees, respectively and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for
reconsideration of its decision.

The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were originally known as
Lot 773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square meters, was
registered in the name of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on
October 9, 1917 by the Register of Deeds of Occidental Negros (Exh. A).

Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, Estelita, Iluminado
and Jesus, are the children of Rufino who died in 1962 while the other private respondents, Antonio and Rosario Yanes,
are children of Felipe. Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear why the latter is not included
as a party in this case.

Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823 as she could not attend to the
other portions of the two lots which had a total area of around twenty-four hectares. The record does not show whether
the children of Felipe also cultivated some portions of the lots but it is established that Rufino and his children left the
province to settle in other places as a result of the outbreak of World War II. According to Estelita, from the "Japanese
time up to peace time", they did not visit the parcels of land in question but "after liberation", when her brother went there
to get their share of the sugar produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and
Alvarez were in possession of Lot 773. 2

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797)
covering Lot 773-A with an area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot 773-A as a portion of Lot 773
of the cadastral survey of Murcia and as originally registered under OCT No. 8804.

The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in the name of Fortunato D.
Santiago on September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a
certification to the effect that Lot 773-B was originally registered under OCT No. 8804.

On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of
P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuentebella's name. 6

After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R. Vda. de
Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a motion
requesting authority to sell Lots 773-A and 773-B. 7 By virtue of a court order granting said motion, 8 on March 24, 1958,
Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos. T-
23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to Rosendo Alvarez. 10

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

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

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

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

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

SO ORDERED. 16

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

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

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

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

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

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

In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and 773-B, having been passed
upon by the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped from
questioning said order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause of action had been
"barred by res judicata, statute of limitation and estoppel." 27

In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties in question thru an
agent as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration.
Although the Yaneses were negligent in their failure to place a notice of lis pendens "before the Register of Deeds of
Negros Occidental in order to protect their rights over the property in question" in Civil Case No. 5022, equity demanded
that they recover the actual value of the land because the sale thereof executed between Alvarez and Siason was without
court approval. 28 The dispositive portion of the decision states:

IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the following

manner:
 A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic) hereby
dismmissed,

B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate children of the
deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros
Occidental; the sum of P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00
representing moral damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from
date of the filing of this complaint up to final payment.

C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora and
Raymundo, all surnamed Alvarez is hereby dismissed.

D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to pay the costs of
this suit.

SO ORDERED. 29

The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed the
lower court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the
sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros
Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages,
moral damages and attorney's fees, respectively." 31 The dispositive portion of said decision reads:

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

SO ORDERED. 32

Finding no cogent reason to grant appellants motion for reconsideration, said appellate court denied the same.

Hence, the instant petition. ln their memorandum petitioners raised the following issues:

1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and
raised by the petitioners in the lower court.

2. Whether or not the cause and/or causes of action of the private respondents, if ever there are any, as
alleged in their complaint dated February 21, 1968 which has been docketed in the trial court as Civil
Case No. 8474 supra, are forever barred by statute of limitation and/or prescription of action and
estoppel.

3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the
petitioners become a privy and/or party to the waiver (Exhibit 4-defendant Siason) in Civil Case No.
8474, supra where the private respondents had unqualifiedly and absolutely waived, renounced and
quitclaimed all their alleged rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of
Murcia Cadastre as appearing in their written manifestation dated November 6, 1962 (Exhibits "4" Siason)
which had not been controverted or even impliedly or indirectly denied by them.

4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A and
773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or
transmitted by operations (sic) of law to the petitioners without violation of law and due process . 33

The petition is devoid of merit.

As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the Supreme Court, to review the
decision in Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said
decision had long become final and executory and with the possible exception of Dr. Siason, who was not a party to said
case, the decision in Civil Case No. 5022 is the law of the case between the parties thereto. It ended when Alvarez or his
heirs failed to appeal the decision against them. 34

Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent jurisdiction,
so long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or
estate. 35 As consistently ruled by this Court, every litigation must come to an end. Access to the court is guaranteed. But
there must be a limit to it. Once a litigant's right has been adjudicated in a valid final judgment of a competent court, he
should not be granted an unbridled license to return for another try. The prevailing party should not be harassed by
subsequent suits. For, if endless litigation were to be allowed, unscrupulous litigations will multiply in number to the
detriment of the administration of justice. 36
There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil Case
No. 5022. As found by the lower court, from the uncontroverted evidence presented, the Yaneses have been illegally
deprived of ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review, arose from
the failure to execute Civil Case No. 5022, as subject lots can no longer be reconveyed to private respondents Yaneses,
the same having been sold during the pendency of the case by the petitioners' father to Dr. Siason who did not know
about the controversy, there being no lis pendens annotated on the titles. Hence, it was also settled beyond question that
Dr. Siason is a purchaser in good faith.

Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason on November
11, 1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who lost in Civil Case No. 5022 to
pay the plaintiffs (private respondents herein) the amount of P20,000.00 representing the actual value of the subdivided
lots in dispute. It did not order defendant Siason to pay said amount. 38

As to the propriety of the present case, it has long been established that the sole remedy of the landowner whose property
has been wrongfully or erroneously registered in another's name is to bring an ordinary action in the ordinary court of
justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for
damages. 39 "It is one thing to protect an innocent third party; it is entirely a different matter and one devoid of justification
if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by
the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be
guarded against." 40

The issue on the right to the properties in litigation having been finally adjudicated in Civil Case No. 5022 in favor of
private respondents, it cannot now be reopened in the instant case on the pretext that the defenses of prescription and
estoppel have not been properly considered by the lower court. Petitioners could have appealed in the former case but
they did not. They have therefore foreclosed their rights, if any, and they cannot now be heard to complain in another case
in order to defeat the enforcement of a judgment which has longing become final and executory.

Petitioners further contend that the liability arising from the sale of Lots No. 773-A and 773-B made by Rosendo Alvarez to
Dr. Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his estate, after his death.

Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the general transmissibility of the
rights and obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the Civil Code
state:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law.

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

Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond
the value of the property received from the decedent.

As explained by this Court through Associate Justice J.B.L. Reyes in the case of Estate of Hemady vs. Luzon Surety Co.,
Inc. 41

The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Rules of Court that money
debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89). The
reason is that whatever payment is thus made from the state is ultimately a payment by the heirs or distributees, since the amount
of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive.

Under our law, therefore. the general rule is that a party's contractual rights and obligations are transmissible to the successors.

The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as observed by Victorio
Polacco has characterized the history of these institutions. From the Roman concept of a relation from person to person, the
obligation has evolved into a relation from patrimony to patrimony with the persons occupying only a representative position, barring
those rare cases where the obligation is strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a
specific person and by no other.

xxx xxx xxx

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's transaction, which
gave rise to the present claim for damages. That petitioners did not inherit the property involved herein is of no moment because by
legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary estate, and we have ruled that the
hereditary assets are always liable in their totality for the payment of the debts of the estate. 42

It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With this clarification and
considering petitioners' admission that there are other properties left by the deceased which are sufficient to cover the amount
adjudged in favor of private respondents, we see no cogent reason to disturb the findings and conclusions of the Court of Appeals.

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

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-6622 July 31, 1957

Intestate Estate of the deceased MARCELO DE BORJA. CRISANTO DE BORJA, administrator-appellant,

vs.
JUAN DE BORJA, ET AL., oppositors-appellees.

E. V. Filamor for appellant.

Juan de Borja for himself and co-appellees.

FELIX, J.:

The case. — Quintin, Francisco, Crisanta and Juliana, all surnamed de Borja, are legitimate children of Marcelo de Borja
who, upon his demise sometime in 1924 or 1925, left a considerable amount of property. Intestate proceedings must have
followed, and the pre-war records of the case either burned, lost or destroyed during the last war, because the record
shows that in 1930 Quintin de Borja was already the administrator of the Intestate Estate of Marcelo de Borja.

In the early part of 1938, Quintin de Borja died and Crisanto de Borja, son of Francisco de Borja, was appointed and took
over as administrator of the Estate. Francisco de Borja, on the other hand, assumed his duties as executor of the will of
Quintin de Borja, but upon petition of the heirs of said deceased on the ground that his interests were conflicting with that
of his brother's estate he was later required by the Court to resign as such executor and was succeeded by Rogelio
Limaco, a son-in-law of Quintin de Borja.

It also appears that on February 16, 1940, at the hearing set for the approval of the statement of accounts of the late
administrator of the Intestate Estate of Marcelo de Borja, then being opposed by Francisco de Borja, the parties submitted
an agreement, which was approved by the Court (Exh. A). Said agreement, translated into English, reads as follows:

1. All the accounts submitted and those that are to be submitted corresponding to this year will be considered
approved;

2. No heir shall claim anything of the harvests from the lands in Cainta that came from Exequiel Ampil, deceased,
nor from the land in Tabuatin, Nueva Ecija;

3. That the amounts of money taken by each heir shall be considered as deposited in conjunction with the other
properties of the intestate and shall form part of the mass without drawing any interest;

4. That it shall be understood as included in this mass the sum of twelve thousand pesos (P12,000) that the
sisters Crisanta and Juliana de Borja paid of their own money as part of the price the lands and three thousand
pesos (P3,000) the price of the machinery for irrigation;

5. The right, interests or participation that the deceased Quintin de Borja has or may have in Civil Case No. 6190
of the Court of First Instance of Nueva Ecija, shall be likewise included in the total mass of the inheritance of the
Intestate;

6. Not only the lands in Tabuatin but also those in Cainta coming from the now deceased Exequiel Ampil shall
also from part of the total mass of the inheritance of the Intestate of the late Marcelo de Borja;

7. Once the total of the inheritance of the intestate is made up as specified before in this Agreement, partition
thereof will be made as follows:

From the total mass shall be deducted in case or in kind, Twelve Thousand Pesos (P12,000) that shall be
delivered to Da. Juliana de Borja and Da. Crisanta de Borja in equal shares, and the rest shall be divided among
the four heirs, i. e., Don Francisco de Borja, the heirs of Quintin de Borja, Da. Juliana de Borja, and Da. Crisanta
de Borja, in equal parts. (TRANSLATION)

The Intestate remained under the administration of Crisanto de Borja until the then outbreak of the war. From then on and
until the termination of the war, there was a lull and state of inaction in Special proceeding No. 2414 of the Court of First
Instance of Rizal, Pasig branch (In the Matter of the Intestate Estate of Marcelo de Borja), until upon petition filed by
Miguel B. Dayco, as administrator of the estate of his deceased mother, Crisanta de Borja, who is one of heirs, for
reconstitution of the records of this case, the Court on December 11, 1945, ordered the reconstitution of the same,
requiring the administrator to submit his report and a copy of the project of partition.

On January 3, 1946, the administrator, Dr. Crisanto de Borja, filed his accounts for the period ranging from March 1 to
December 22, 1945, which according to the heirs of Quintin de Borja were so inadequate and general that on February
28, 1946, they filed a motion for specification. On April 30, 1946, they also filed their opposition to said statement of
accounts alleging that the income reported in said statement was very much less than the true and actual income of the
estate and that the expenses appearing therein were exaggerated and/or not actually incurred, and prayed that the
statement of accounts submitted by the administrator be disapproved.

The administrator later filed another report of his administration, dated August 9, 1949, corresponding to the period lapsed
from December 23, 1945, to July 31, 1949, showing a cash balance of P71.96, but with pending obligation amounting to
P35,415.

On August 22, 1949, Juan de Borja and sisters, heirs of the deceased Quintin de Borja, filed their opposition to the
statement of accounts filed by the administrator on the ground that same was not detailed enough to enable the interested
parties to verify the same; that they cannot understand why the Intestate could suffer any loss considering that during the
administration of the same by Quintin de Borja, the Estate accumulated gains of more than P100,000 in the form of
advances to the heirs as well as cash balance; that they desired to examine the accounts of Dr. Crisanto de Borja to verify
the loss and therefore prayed that the administrator be ordered to deposit with the Clerk of Court all books, receipts,
accounts and other papers pertaining to the Estate of Marcelo de Borja. This motion was answered by the administrator
contending that the Report referred to was already clear and enough, the income as well as the expenditures being
specified therein; that he had to spend for the repairs of the properties of the Estate damaged during the Japanese
occupation; that the allegation that during the administration of Quintin de Boria the Estate realized a profit of P100,000
was not true, because instead of gain there was even a shortage in the funds although said administrator had collected all
his fees (honorarios) and commissions corresponding to the entire period of his incumbency; that the obligations
mentioned in said report will be liquidated before the termination of the proceedings in the same manner as it is done i n
any other intestate case; that he was willing to submit all the receipts of the accounts for the examination of the interested
parties before the Clerk or before the Court itself; that this Intestate could be terminated, the project of partition having
been allowed and confirmed by the Supreme Court and that the Administrator was also desirous of terminating it definitely
for the benefit of all the parties.

On September 14, 1949, the administrator filed another statement of accounts covering the period of from March 1, 1945,
to July 31, 1949, which showed a cash balance of P71.95, with pending obligations in the sum of P35,810.

The heirs of Quintin de Borja, Juan de Borja and his sisters, registered their opposition said statement of accounts and
prayed the Court to disapprove the same and to appoint an account to go over the books of the administrator and to
submit a report thereon as soon as possible. The heir Juliana de Borja also formally offered her objection to the approval
of the accounts submitted by the administrator and prayed further that said administrator be required to submit a complete
accounting of his administration of the Estate from 1937 to 1949. On the other hand, Francisco de Borja and Miguel B.
Dayco, as the only heir of the deceased Crisanta de Borja, submitted to the Court an agreement to relieve the
administrator from accounting for the period of the Japanese occupation; that as to the accounting from 1937 to 1941,
they affirmed their conformity with the agreement entered into by all the heirs appearing in the Bill of Exceptions of Juliana
de Borja; and they have no objection to the approval of the statement of accounts submitted by the administrator covering
of the years 1945 to 1949.

On December 6, 1949, the administrator, answered the opposition of the heir Juliana de Borja, alleging that the
corresponding statement of accounts for the years 1937, 1938, 1939, 1940 and 1941 were presented and approved by
the Court before and during the Japanese occupation, but the records of the same were destroyed in the Office of the
Clerk of that Court during the liberation of the province of Rizal, and his personal records were also lost during the
Japanese occupation, when his house was burned; that Judge Peña who was presiding over the Court in 1945 impliedly
denied the petition of heirs to require him to render an accounting for the period from 1942 to the early part of 1945, for
the reason that whatever money obtained from the Estate during said period could not be made the subject of any
adjudication it having been declared fiat money and without value, and ordered that the statement of accounts be
presented only for the period starting from March 1, 1945. The administrator further stated that he was anxious to
terminate this administration but some of the heirs had not yet complied with the conditions imposed in the project of
partition which was approved by the Supreme Court; that in accordance with said partition agreement, Juliana de Borja
must deliver to the administrator all the jewelry, objects of value, utensils and other personal belongings of the deceased
spouses Marcelo de Borja and Tircila Quiogue, which said heir had kept and continued to retain in her possession; that
the heirs of Quintin de Borja should deliver to the administrator all the lands and a document transferring in favor of the
Intestate the two parcels of land with a total area of 71 hectares of cultivated land in Cabanatuan, Nueva Ecija which were
in the possession of said heirs, together with the house of Feliciana Mariano Vda. de Sarangaya, which were the objects
of Civil Case No. 6190 mentioned in Paragraph 11 of the project of partition; that as consequence of the said
dispossession the heirs of Quintin de Borja must deliver to the administrator the products of the 71 hectares of land in
Cabanatuan, Nueva Ecija, and the rentals of the house of Feliciana Mariano or else render to the Court an accounting of
the products of these properties from the time they took possession of the same in 1937 to the present; that there was a
pending obligation amounting to P36,000 as of September 14, 1949, which the heirs should pay before the properties
adjudicated to them would be delivered. The Court, however, ordered the administrator on December 10, 1949, to show
and prove by evidence why he should not be accounts the proceeds of his administration from 1937.

Meantime, Juliana de Borja filed a Constancia denying possession of any jewelry belonging to the deceased spouses
Marcelo de Borja and Tarcilla Quiogue or any other personal belonging of said spouses, and signified her willingness to
turn over to the administrator the silver wares mentioned in Paragraph III of the project of partition, which were the only
property in her care, on the date that she would expect the delivery to her of her share in the inheritance from her
deceased parents.

On July 6, 1950, Juan de Borja and his sisters Marcela, Saturnina, Eufracia, Jacoba and Olimpia, all surnamed de Borja,
as heirs of Quintin de Borja, filed a motion for the delivery to them of their inheritance in the estate, tendering to the
administrator a document ceding and transferring to the latter all the rights, interests and participation of Quintin de Borja
in Civil Case No. 7190 of the Court of First Instance of Nueva Ecija, pursuant to the provisions of the project of Partition,
and expressing their willingness to put up a bond if required to do so by the Court, and on July 18, 1950, the Court
ordered the administrator to deliver to Marcela, Juan, Saturniana, Eufracia, Jacoba and Olimpia, all surnamed de Borja,
all the properties adjudicated to them in the Project of Partition dated February 8, 1944, upon the latter's filing a bond in
the sum of P10,000 conditioned upon the payment of such obligation as may be ordered by the Court after a hearing on
the controverted accounts of the administrator. The Court considered the fact that the heirs had complied with the
requirement imposed by the Project of Partition when they tendered the document ceding and transferring the rights and
interests of Quintin de Borja in the aforementioned lands and expressed the necessity of terminating the proceedings as
soon as practicable, observing that the Estate had been under administration for over twenty-five years already. The
Court, however, deferred action on the petition filed by the special administratrix of the Intestate Estate of Juliana de Borja
until after compliance with the conditions imposed by the project of partition. But on July 20, 1950, apparently before the
properties were delivered to the heirs, Francisco de Borja and Miguel B. Dayco filed a motion informing the Court that the
two parcels of land located in Cabanatuan, Nueva Ecija, produced some 21,300 cavans of palay, amounting to P213,000
at P10 per cavan, which were enjoyed by some heirs; that the administrator Crisanto de Borja had not taken possession
of the same for circumstances beyond his control; and that there also existed the sum of P70,204 which the former
administrator, Quintin de Borja, received from properties that were redeemed, but which amount did not come into the
hands of the present, administrator because according to reliable information, same was delivered to the heir Juliana de
Borja who deposited it in her name at the Philippine National Bank. It was, therefore prayed that the administrator be
required to exert the necessary effort to ascertain the identity of the person or persons who were in possession of the
same amount and of the value of the products of the lands in Mayapyap, Cabanatuan, Nueva Ecija, and to recover the
same for the Intestate Estate.

On July 28, 1950, the special administratrix of the estate of Juliana de Borja, then deceased, filed an answer to the motion
of these two heirs, denying the allegation that said heir any product of the lands mentioned from Quintin de Borja, and
informed the Court that the Mayapyap property had always been in the possession of Francisco de Borja himself and
prayed the court that the administrator be instructed to demand all the fruits and products of said property from Francisco
de Borja.

On July 28, 1950, the heirs of Quintin de Borja also filed their opposition to the said motion of Francisco de Borja and
Miguel B. Dayco on the ground that the petition was superfluous because the present proceeding was only for the
approval of the statement of accounts filed by the administrator; that said motion was improper because it was asking the
Court to order the administrator to perform what he was duty bound to do; and that said heirs were already barred or
stopped from raising that question in view of their absolute ratification of and assent to the statement of accounts
submitted by the administrator.

On August 16, 1950, by order of the Court, the properties adjudicated to Juliana de Borja in the project of Partition were
finally delivered to the estate of said heir upon the filing of a bond for P20,000. In that same order, the Court denied the
administrator's motion to reconsider the order of July 18, 1950, requiring him to deliver to the heirs of Quintin de Borja the
properties corresponding to them, on the ground that there existed no sufficient reason to disturb said order. It also ruled
that as the petition of Francisco de Borja and Miguel B. Dayco made mention of certain properties allegedly belonging to
the Intestate, said petition should properly be considered to gather with the final accounts of the administrator.

The administrator raised the matter by certiorari to this Tribunal, which was, docketed as G.R. No. L-4179, and on May
30, 1951, We rendered decision affirming the order complained of, finding that the Juan de Borja and sisters have
complied with the requirement imposed in the Project of Partition upon the tender of the document of cession of rights and
quit-claim executed by Marcela de Borja, the administratrix of the Estate of Quintin de Borja, and holding that the reasons
advanced by the administrator in opposing the execution of the order of delivery were trivial.

On August 27, 1951, the administrator filed his amended statement of accounts covering the period from March 1, 1945,
to July 31, 1949, which showed a cash balance of P36,660. An additional statement of accounts filed on August 31, 1961
for the period of from August 1, 1949, to August 31, 1951, showed a cash balance of P5,851.17 and pending obligations
in the amount of P6,165.03.

The heirs of Quintin de Borja again opposed the approval of the statements of accounts charging the administrator with
having failed to include the fruits which the estate should have accrued from 1941 to 1951 amounting to P479,429.70, but
as the other heirs seemed satisfied with the accounts presented by said administrator and as their group was only one of
the 4 heirs of Intestate Estate, they prayed that the administrator be held liable for only P119,932.42 which was 1/4 of the
amount alleged to have been omitted. On October 4, 1951, the administrator filed a reply to said opposition containing a
counterclaim for moral damages against all the heirs of Quintin de Borja in the sum of P30,000 which was admitted by the
Court over the objection of the heirs of Quintin de Borja that the said pleading was filed out of time.

The oppositors, the heirs of Quintin de Borja, then filed their answer to the counterclaim denying the charges therein, but
later served interrogatories on the administrator relative to the averments of said counterclaim. Upon receipt of the answer
to said interrogatories specifying the acts upon which the claim for moral damages was based, the oppositors filed an
amended answer contending that inasmuch as the acts, manifestations and pleadings referred to therein were admittedly
committed and prepared by their lawyer, Atty. Amador E. Gomez, same cannot be made the basis of a counterclaim, said
lawyer not being a party to the action, and furthermore, as the acts upon which the claim for moral damages were based
had been committed prior to the effectivity of the new Civil Code, the provisions of said Code on moral damages could not
be invoked. On January 15, 1952, the administrator filed an amended counterclaim including the counsel for the
oppositors as defendant.
There followed a momentary respite in the proceedings until another judge was assigned to preside over said court to
dispose of the old case pending therein. On August 15, 1952, Judge Encarnacion issued an order denying admission to
administrator's amended counterclaim directed against the lawyer, Atty. Amador E. Gomez, holding that a lawyer, not
being a party to the action, cannot be made answerable for counterclaims. Another order was also issued on the same
date dismissing the administrator's counterclaim for moral damages against the heirs of Quintin de Borja and their counsel
for the alleged defamatory acts, manifestation and utterances, and stating that granting the same to be meritorious, yet it
was a strictly private controversy between said heirs and the administrator which would not in any way affect the interest
of the Intestate, and, therefore, not proper in an intestate proceedings. The Court stressed that to allow the ventilation of
such personal controversies would further delay the proceedings in the case which had already lagged for almost 30
years, a situation which the Court would not countenance.

Having disposed of these pending incidents which arose out of the principal issue, that is, the disputed statement of
accounts submitted by the administrator, the Court rendered judgment on September 5, 1952, ordering the administrator
to distribute the funds in his possession to the heirs as follows: P1,395.90 to the heirs of Quintin de Borja; P314.99 to
Francisco de Borja; P314.99 to the Estate of Juliana de Borja and P314.99 to Miguel B. Dayco, but as the latter still owed
the intestate the sum of P900, said heirs was ordered to pay instead the 3 others the sum of P146.05 each. After
considering the testimonies of the witnesses presented by both parties and the available records on hand, the Court found
the administrator guilty of maladministration and sentenced Crisanto de Borja to pay to the oppositors, the heirs of Quintin
de Borja, the sum of P83,337.31, which was 1/4 of the amount which the state lost, with legal interest from the date of the
judgment. On the same day, the Court also issued an order requiring the administrator to deliver to the Clerk of that Court
PNB Certificate of Deposit No. 211649 for P978.50 which was issued in the name of Quintin de Borja.

The administrator, Dr. Crisanto de Borja, gave notice to appeal from the lower Court's orders of August 15, 1952, the
decision of September 5, 1952, and the order of even date, but when the Record on Appeal was finally approved, the
Court ordered the exclusion of the appeal from the order of September 5, 1952, requiring the administrator to deposit the
PNB Certificate of Deposit No. 2114649 with the Clerk of Court, after the oppositors had shown that during the hearing of
that incident, the parties agreed to abide by whatever resolution the Court would make on the ownership of the funds
covered by that deposit.

The issues. — Reducing the issues to bare essentials, the questions left for our determination are: (1) whether the
counsel for a party in a case may be included as a defendant in a counterclaim; (2) whether a claim for moral damages
may be entertained in a proceeding for the settlement of an estate; (3) what may be considered as acts of
maladministration and whether an administrator, as the one in the case at bar, may be held accountable for any loss or
damage that the estate under his administration may incur by reason of his negligence, bad faith or acts of
maladministration; and (4) in the case at bar has the Intestate or any of the heirs suffered any loss or damage by reason
of the administrator's negligence, bad faith or maladministration? If so, what is the amount of such loss or damage?

I. — Section 1, Rule 10, of the Rules of Court defines a counterclaim as:

SECTION 1. Counterclaim Defined. — A counterclaim is any claim, whether for money or otherwise, which a
party may have against the opposing party. A counterclaim need not dismiss or defeat the recovery sought by the
opposing party, but may claim relief exceeding in amount or different in kind from that sought by the opposing
party's claim.

It is an elementary rule of procedure that a counterclaim is a relief available to a party-defendant against the adverse party
which may or may not be independent from the main issue. There is no controversy in the case at bar, that the acts,
manifestations and actuations alleged to be defamatory and upon which the counterclaim was based were done or
prepared by counsel for oppositors; and the administrator contends that as the very oppositors manifested that whatever
civil liability arising from acts, actuations, pleadings and manifestations attributable to their lawyer is enforceable against
said lawyer, the amended counterclaim was filed against the latter not in his individual or personal capacity but as counsel
for the oppositors. It is his stand, therefore, that the lower erred in denying admission to said pleading. We differ from the
view taken by the administrator. The appearance of a lawyer as counsel for a party and his participation in a case as such
counsel does not make him a party to the action. The fact that he represents the interests of his client or that he acts in
their behalf will not hold him liable for or make him entitled to any award that the Court may adjudicate to the parties, other
than his professional fees. The principle that a counterclaim cannot be filed against persons who are acting in
representation of another — such as trustees — in their individual capacities (Chambers vs. Cameron, 2 Fed. Rules
Service, p. 155; 29 F. Supp. 742) could be applied with more force and effect in the case of a counsel whose participation
in the action is merely confined to the preparation of the defense of his client. Appellant, however, asserted that he filed
the counterclaim against said lawyer not in his individual capacity but as counsel for the heirs of Quintin de Borja. But as
we have already stated that the existence of a lawyer-client relationship does not make the former a party to the action,
even this allegation of appellant will not alter the result We have arrived at.

Granting that the lawyer really employed intemperate language in the course of the hearings or in the preparation of the
pleadings filed in connection with this case, the remedy against said counsel would be to have him cited for contempt of
court or take other administrative measures that may be proper in the case, but certainly not a counterclaim for moral
damages.

II. — Special Proceedings No. 6414 of the Court of First Instance of Rizal (Pasig branch) was instituted for the purpose of
settling the Intestate Estate of Marcelo de Borja. In taking cognizance of the case, the Court was clothed with a limited
jurisdiction which cannot expand to collateral matters not arising out of or in any way related to the settlement and
adjudication of the properties of the deceased, for it is a settled rule that the jurisdiction of a probate court is limited and
special (Guzman vs. Anog, 37 Phil. 361). Although there is a tendency now to relax this rule and extend the jurisdiction of
the probate court in respect to matters incidental and collateral to the exercise of its recognized powers (14 Am. Jur. 251-
252), this should be understood to comprehend only cases related to those powers specifically allowed by the statutes.
For it was even said that:

Probate proceedings are purely statutory and their functions limited to the control of the property upon the death
of its owner, and cannot extend to the adjudication of collateral questions (Woesmes, The American Law of
Administration, Vol. I, p. 514, 662-663).

It was in the acknowledgment of its limited jurisdiction that the lower court dismissed the administrator's counterclaim for
moral damages against the oppositors, particularly against Marcela de Borja who allegedly uttered derogatory remarks
intended to cast dishonor to said administrator sometime in 1950 or 1951, his Honor's ground being that the court
exercising limited jurisdiction cannot entertain claims of this kind which should properly belong to a court general
jurisdiction. From what ever angle it may be looked at, a counterclaim for moral damages demanded by an administrator
against the heirs for alleged utterances, pleadings and actuations made in the course of the proceeding, is an extraneous
matter in a testate or intestate proceedings. The injection into the action of incidental questions entirely foreign in probate
proceedings should not be encouraged for to do otherwise would run counter to the clear intention of the law, for it was
held that:

The speedy settlement of the estate of deceased persons for the benefit of the creditors and those entitled to the
residue by way of inheritance or legacy after the debts and expenses of administration have been paid, is the
ruling spirit of our probate law (Magabanua vs. Akel, 72 Phil., 567, 40 Off Gaz., 1871).

III. and IV. — This appeal arose from the opposition of the heirs of Quintin de Borja to the approval of the statements of
accounts rendered by the administrator of the Intestate Estate of Marcelo de Borja, on the ground that certain fruits which
should have been accrued to the estate were unaccounted for, which charge the administrator denied. After a protracted
and extensive hearing on the matter, the Court, finding the administrator, Dr. Crisanto de Borja, guilty of certain acts of
maladministration, held him liable for the payment to the oppositors, the heirs of Quintin de Borja, of 1/4 of the unreported
income which the estate should have received. The evidence presented in the court below bear out the following facts:

(a) The estate owns a 6-door building, Nos. 1541, 1543, 1545, 1547, 1549 and 1551 in Azcarraga Street, Manila, situated
in front of the Arranque market. Of this property, the administrator reported to have received for the estate the following
rentals:

Annual
Total
Period of time monthly
rentals
rental
March to December, 1945 P3,085.00 P51.42
January to December, 1946 4,980.00 69.17
January to December, 1947 8,330.00 115.70
January to December, 1948 9,000.00 125.00
January to December, 1949 8,840.00 122.77
January to December, 1950 6,060.00 184.16
Total P40,295.00

The oppositors, in disputing this record income, presented at the witness stand Lauro Aguila, a lawyer who occupied the
basement of Door No. 1541 and the whole of Door No. 1543 from 1945 to November 15, 1949, and who testified that he
paid rentals on said apartments as follows:

1945
Door No. 1541 (basement)
February P20.00 Door No. 1543
March 20.00 For 7 months at P300
April 60.00 a month P2,100.00
May-December 800.00
Total P900.00
1946
January-December P1,200.00 January-December P4,080.00
1947
January P100.00 January P380.00
February 100.00 February 380.00
March 180.00 March 1-15 190.00
April-December 1,140.00 March 16-December 4,085.00
P1,820.00 P5,035.00
1948
January-December P1,920.00 January-December P5,150.00
1949
 January-November P1,680.00 January-December P4,315.00
15

From the testimony of said witness, it appears that from 1945 to November 15,1949, he paid a total of P28,200 for the
lease of Door No. 1543 and the basement of Door No. 1541. These figures were not controverted or disputed by the
administrator but claim that said tenant subleased the apartments occupied by Pedro Enriquez and Soledad Sodora and
paid the said rentals, not to the administrator, but to said Enriquez. The transcript of the testimony of this witness really
bolster this contention — that Lauro Aguila talked with said Pedro Enriquez when he leased the aforementioned
apartments and admitted paying the rentals to the latter and not to the administrator. It is interesting to note that Pedro
Enriquez is the same person who appeared to be the administrator's collector, duly authorized to receive the rentals from
this Azcarraga property and for which services, said Enriquez received 5 per cent of the amount he might be able to
collect as commission. If we are to believe appellant's contention, aside from the commission that Pedro Enriquez
received he also sublet the apartments he was occupying at a very much higher rate than that he actually paid the estate
without the knowledge of the administrator or with his approval. As the administrator also seemed to possess that peculiar
habit of giving little importance to bookkeeping methods, for he never kept a ledger or book of entry for amounts received
for the estate, We find no record of the rentals the lessees of the other doors were paying. It was, however, brought about
at the hearing that the 6 doors of this building are of the same sizes and construction and the lower Court based its
computation of the amount this property should have earned for the estate on the rental paid by Atty. Aguila for the 1 1/2
doors that he occupied. We see no excuse why the administrator could not have taken cognizance of these rates and
received the same for the benefit of the estate he was administering, considering the fact that he used to make trips to
Manila usually once a month and for which he charged to the estate P8 as transportation expenses for every trip.

Basing on the rentals paid by Atty. Aguila for 1 1/2 doors, the estate received P112,800 from February 1, 1945, to
November 15, 1949, for the 6 doors, but the lower Court held him accountable not only for the sum of P34,235 reported
for the period ranging from March 1, 1945, to December 31, 1949, but also for a deficit of P90,525 or a total of P124,760.
The record shows, however that the upper floor of Door No. 1549 was vacant in September, 1949, and as Atty. Aguila
used to pay P390 a month for the use of an entire apartment from September to November, 1949, and he also paid P160
for the use of the basement of an apartment (Door No. 1541), the use, therefore, of said upper floor would cost P230
which should be deducted, even if the computation of the lower Court would have to be followed.

There being no proper evidence to show that the administrator collected more rentals than those reported by him, except
in the instance already mentioned, We are reluctant to bold him accountable in the amount for which he was held liable by
the lower Court, and We think that under the circumstances it would be more just to add to the sum reported by the
administrator as received by him as rents for 1945-1949 only, the difference between the sum reported as paid by Atty.
Aguila and the sum actually paid by the latter as rents of 1 1/2 of the apartments during the said period, or P25,457.09 1/4
of which is P6,364.27 which shall be paid to the oppositors.

The record also shows that in July, 1950, the administrator delivered to the other heirs Doors Nos. 1545, 1547, 1549 and
1551 although Doors Nos. 1541 and 1543 adjudicated to the oppositors remained under his administration. For the period
from January to June, 1950, that the entire property was still administered by him, the administrator reported to have
received for the 2 oppositors' apartments for said period of six months at P168.33 a month, the sum of P1,010 which
belongs to the oppositors and should be taken from the amount reported by the administrator.

The lower Court computed at P40 a month the pre-war rental admittedly received for every apartment, the income that
said property would have earned from 1941 to 1944, or a total of P11,520, but as We have to exclude the period covered
by the Japanese occupation, the estate should receive only P2,880 1/4 of which P720 the administrator should pay to the
oppositors for the year 1941.

(b) The Intestate estate also owned a parcel of land in Mayapyap, Nueva Ecija, with an area of 71 hectares, 95 ares and 4
centares, acquired by Quintin de Borja the spouses Cornelio Sarangaya and Feliciana Mariano in Civil Case NO. 6190 of
the Court of First Instance of said province, In virtue of the agreement entered into by the heirs, this property was turned
over by the estate of Quintin de Borja to the intestate and formed part of the general mass of said estate. The report of the
administrator failed to disclose any return from this property alleging that he had not taken possession of the same. He
does not deny however that he knew of the existence of this land but claimed that when he demanded the delivery of the
Certificate of Title covering this property, Rogelio Limaco, then administrator of the estate of Quintin de Borja, refused to
surrender the same and he did not take any further action to recover the same.

To counteract the insinuation that the Estate of Quintin de Borja was in possession of this property from 1940 to 1950, the
oppositors presented several witnesses, among them was an old man, Narciso Punzal, who testified that he knew both
Quintin and Francisco de Borja; that before the war or sometime in 1937, the former administrator of the Intestate, Quintin
de Borja, offered him the position of overseer (encargado) of this land but he was notable to assume the same due to the
death of said administrator; that on July 7, 1951, herein appellant invited him to go to his house in Pateros, Rizal, and
while in said house, he was instructed by appellant to testify in court next day that he was the overseer of the Mayapyap
property for Quintin de Borja from 1937-1944, delivering the yearly proceeds of 1,000 cavanes of Palay to Rogelio
Limaco; that he did not need to be afraid because both Quintin de Borja and Rogelio Limaco were already dead. But as
he knew that the facts on which he was to testify were false, he went instead to the house of one of the daughters of
Quintin de Borja, who, together with her brother, Atty. Juan de Borja, accompanied him to the house of the counsel for
said oppositors before whom his sworn declaration was taken (Exh. 3).

Other witnesses, i.e., Isidro Benuya, Federico Cojo, Emilio de la Cruz and Ernesto Mangulabnan, testified that they were
some of the tenants of the Mayapyap property; that they were paying their shares to the overseers of Francisco de Borja
and sometimes to his wife, which the administrator was not able to contradict, and the lower Court found no reason why
the administrator would fail to take possession of this property considering that this was even the subject of the agreement
of February 16, 1940, executed by the heirs of the Intestate.

The lower Court, giving due credence to the testimonies of the witnesses for the oppositors, computed the loss the estate
suffered in the form of unreported income from the rice lands for 10 years at P67,000 (6,700 a year)and the amount of
P4,000 from the remaining portion of the land not devoted to rice cultivation which was being leased at P20 per hectare.
Consequently, the Court held the administrator liable to appellees in the sum of P17,750 which is 1/4 of the total amount
which should have accrued to the estate for this item.

But if We exclude the 3 years of occupation, the income for 7 years would be P46,900 for the ricelands and P2,800 (at
P400 a year) for the remaining portion not developed to rice cultivation or a total of P48,700, 1/4 of which
is P12,175 which We hold the administrator liable to the oppositors.

(c) The Hacienda Jalajala located in said town of Rizal, was divided into 3 parts: the Punta section belonged to Marcelo
de Borja, the Bagombong pertained to Bernardo de Borja and Francisco de Borja got the Jalajala proper. For the purpose
of this case, we will just deal with that part called Junta. This property has an area of 1,345, hectares, 29 ares and 2
centares (Exh. 36) of which, according to the surveyor who measured the same, 200 hectares were of cultivated rice
fields and 100 hectares dedicated to the planting of upland rice. It has also timberland and forest which produce
considerable amount of trees and firewoods. From the said property which has an assessed value of P115,000 and for
which the estates pay real estate tax of P1,500 annually, the administrator reported the following:

Expenditure
(not including
administration's
Year Income fees
1945........... P625.00 P1,310.42
1946............. 1,800.00 3,471.00
1947............. 2,550.00 2,912.91
1948............. 1,828.00 3,311.88
1949............. 3,204.50 4,792.09
1950............. 2,082.00 2,940.91
P12,089.50 P18,739.21

This statement was assailed by the oppositors and to substantiate their charge that the administrator did not file the true
income of the property, they presented several witnesses who testified that there were about 200 tenants working therein;
that these tenants paid to Crisanto de Borja rentals at the rate of 6 cavanes of palay per hectare; that in the years of 1943
and 1944, the Japanese were the ones who collected their rentals, and that the estate could have received no less than
1,000 cavanes of palay yearly. After the administrator had presented witnesses to refute the facts previously testified to by
the witnesses for the oppositors, the Court held that the report of the administrator did not contain the real income of the
property devoted to rice cultivation, which was fixed at 1,000 cavanes every year — for 1941, 1942, 1945, 1946, 1947,
1948, 1949 and 1950, or a total of 8,000 cavanes valued at P73,000. But as the administrator accounted for the sum of
P11,155 collected from rice harvests and if to this amount we add the sum of P8,739.20 for expenses, this will make a
total of P19,894.20, thus leaving a deficit of P53,105.80, ¼ of which will be P13,276.45 which the administrator is held
liable to pay the heirs of Quintin de Borja.

It was also proved during the hearing that the forest land of this property yields considerable amount of marketable
firewoods. Taking into consideration the testimonies of witnesses for both parties, the Court arrived at the conclusion that
the administrator sold to Gregorio Santos firewoods worth P600 in 1941, P3,500 in 1945 and P4,200 in 1946 or a total of
P8,300. As the report included only the amount of P625, there was a balance of P7,675 in favor of the estate. The
oppositors were not able to present any proof of sales made after these years, if there were any and the administrator was
held accountable to the oppositors for only P1,918.75.

(d) The estate also, owned ricefields in Cainta, Rizal, with a total area of 22 hectares, 76 ares and 66 centares. Of this
particular item, the administrator reported an income of P12,104 from 1945 to 1951. The oppositors protested against this
report and presented witnesses to disprove the same.

Basilio Javier worked as a tenant in the land of Juliana de Borja which is near the land belonging to the Intestate, the 2
properties being separated only by a river. As tenant of Juliana de Borja, he knew the tenants working on the property and
also knows that both lands are of the same class, and that an area accommodating one cavan of seedlings yields at most
100 cavanes and 60 cavanes at the least. The administrator failed to overcome this testimony. The lower Court
considering the facts testified to by this witness made a finding that the property belonging to this Intestate was actually
occupied by several persons accommodating 13 ½ cavanes of seedlings; that as for every cavan of seedlings, the land
produces 60 cavanes of palay, the whole area under cultivation would have yielded 810 cavanes a year and under the 50-
50 sharing system (which was testified by witness Javier), the estate would have received no less than 405 cavanes every
year. Now, for the period of 7 years — from 1941 to 1950, excluding the 3 years of war — the corresponding earning of
the estate should be 2,835 cavanes, out of which the 405 cavanes from the harvest of 1941 is valued at P1,215 and the
rest 2,430 cavanes at P10 is valued at P24,300, or all in all P25,515. If from this amount the reported income of P12,104
is deducted, there will be a balance of P13,411.10 1/4 of which or P3,352.75 the administrator is held liable to pay to the
oppositors.
(e) The records show that the administrator paid surcharges and penalties with a total of P988.75 for his failure to pay on
time the taxes imposed on the properties under his administration. He advanced the reason that he lagged in the payment
of those tax obligations because of lack of cash balance for the estate. The oppositors, however, presented evidence that
on October 29, 1939, the administrator received from Juliana de Borja the sum of P20,475.17 together with certain papers
pertaining to the intestate (Exh. 4),aside from the checks in the name of Quintin de Borja. Likewise, for his failure to pay
the taxes on the building at Azcarraga for 1947, 1948 and 1949, said property was sold at public auction and the
administrator had to redeem the same at P3,295.48, although the amount that should have been paid was only
P2,917.26. The estate therefore suffered a loss of P378.22. Attributing these surcharges and penalties to the negligence
of the administrator, the lower Court adjudged him liable to pay the oppositors ¼ of P1,366.97, the total loss suffered by
the Intestate, or P341.74.

(f) Sometime in 1942, a big fire razed numerous houses in Pateros, Rizal, including that of Dr. Crisanto de Borja.
Thereafter, he claimed that among the properties burned therein was his safe containing P15,000 belonging to the estate
under his administration. The administrator contended that this loss was already proved to the satisfaction of the Court
who, approved the same by order of January 8, 1943, purportedly issued by Judge Servillano Platon(Exh. B). The
oppositors contested the genuineness of this order and presented on April 21, 1950, an expert witness who conducted
several tests to determine the probable age of the questioned document, and arrived at the conclusion that the questioned
ink writing "(Fdo)" appearing at the bottom of Exhibit B cannot be more than 4 years old (Exh. 39). However, another
expert witness presented by the administrator contradicted this finding and testified that this conclusion arrived at by
expert witness Mr. Pedro Manzañares was not supported by authorities and was merely the result of his own theory, as
there was no method yet discovered that would determine the age of a document, for every document has its own
reaction to different chemicals used in the tests. There is, however, another fact that called the attention of the lower
Court: the administrator testified that the money and other papers delivered by Juliana de Borja to him on October 29,
1939, were saved from said fire. The administrator justified the existence of these valuables by asserting that these
properties were locked by Juliana de Borja in her drawer in the "casa solariega" in Pateros and hence was not in his safe
when his house, together with the safe, was burned. This line of reasoning is really subject to doubt and the lower Court
opined, that it runs counter to the ordinary course of human behaviour for an administrator to leave in the drawer of the
"aparador" of Juliana de Borja the money and other documents belonging to the estate under his administration, which
delivery has receipted for, rather than to keep it in his safe together with the alleged P15,000 also belonging to the
Intestate. The subsequent orders of Judge Platon also put the defense of appellant to bad light, for on February 6, 1943,
the Court required Crisanto de Borja to appear before the Court of examination of the other heirs in connection with the
reported loss, and on March 1, 1943, authorized the lawyers for the other parties to inspect the safe allegedly burned
(Exh. 35). It is inconceivable that Judge Platon would still order the inspection of the safe if there was really an order
approving the loss of those P15,000. We must not forget, in this connection, that the records of this case were burned and
that at the time of the hearing of this incident in 1951, Judge Platon was already dead. The lower Court also found no
reason why the administrator should keep in his such amount of money, for ordinary prudence would dictate that as an
administration funds that come into his possession in a fiduciary capacity should not be mingled with his personal funds
and should have been deposited in the Bank in the name of the intestate. The administrator was held responsible for this
loss and ordered to pay ¼ thereof, or the sum of P3,750.

(g) Unauthorized expenditures —

1. The report of the administrator contained certain sums amounting to P2,130 paid to and receipted by Juanita V.
Jarencio the administrator's wife, as his private secretary. In explaining this item, the administrator alleged that he needed
her services to keep receipts and records for him, and that he did not secure first the authorization from the court before
making these disbursements because it was merely a pure administrative function.

The keeping of receipts and retaining in his custody records connected with the management of the properties under
administration is a duty that properly belongs to the administrator, necessary to support the statement of accounts that he
is obliged to submit to the court for approval. If ever his wife took charge of the safekeeping of these receipts and for
which she should be compensated, the same should be taken from his fee. This disbursement was disallowed by the
Court for being unauthorized and the administrator required to pay the oppositors ¼, thereof or P532.50.

2. The salaries of Pedro Enriquez, as collector of the Azcarraga property; of Briccio Matienzo and Leoncio Perez, as
encargados, and of Vicente Panganiban and Herminigildo Macetas as forest-guards were found justified, although un
authorized, as they appear to be reasonable and necessary for the care and preservation of the Intestate.

3. The lower Court disallowed as unjustified and unnecessary the expenses for salaries paid to special policemen
amounting to P1,509. Appellant contended that he sought for the services of Macario Kamungol and others to act as
special policemen during harvest time because most of the workers tilting the Punta property were not natives of Jalajala
but of the neighboring towns and they were likely to run away with the harvest without giving the share of the estate if they
were not policed. This kind of reasoning did not appear to be convincing to the trial judge as the cause for such fear
seemed to exist only in the imagination. Granting that such kind of situation existed, the proper thing for the administrator
to do would have been to secure the previous authorization from the Court if he failed to secure the help of the local
police. He should be held liable for this unauthorized expenditure and pay the heirs of Quintin de Borja ¼ thereof
or P377.25.

4. From the year 1942 when his house was burned, the administrator and his family took shelter at the house belonging to
the Intestate known as "casa solariega" which, in the Project of Partition was adjudicated to his father, Francisco de Borja.
This property, however, remained under his administration and for its repairs he spent from 1945-1950, P1465,14, duly
receipted.
None of these repairs appear to be extraordinary for the receipts were for nipa, for carpenters and thatchers. Although it is
true that Rule 85, section 2 provides that:

SEC. 2. EXECUTOR OR ADMINISTRATOR TO KEEP BUILDINGS IN REPAIR. — An executor or administrator

shall maintain in tenant able repair the houses and other structures and fences belonging to the estate, and
deliver the same in such repair to the heirs or devisees when directed so to do by the court.

yet considering that during his occupancy of the said "casa solariega" he was not paying any rental at all, it is but
reasonable that he should take care of the expenses for the ordinary repair of said house. Appellant asserted that had he
and his family not occupied the same, they would have to pay someone to watch and take care of said house. But this will
not excuse him from this responsibility for the disbursements he made in connection with the aforementioned repairs
because even if he stayed in another house, he would have had to pay rentals or else take charge also of expenses for
the repairs of his residence. The administrator should be held liable to the oppositors in the amount of P366.28.

5. Appellant reported to have incurred expenses amounting to P6,304.75 for alleged repairs on the rice mill in Pateros,
also belonging to the Intestate. Of the disbursements made therein, the items corresponding, to Exhibits I, I-1, I-21, L-26,
L-15, L-64 and L-65, in the total sum of P570.70 were rejected by the lower court on the ground that they were all
unsigned although some were dated. The lower Court, however, made an oversight in including the sum of P150 covered
by Exhibit L-26 which was duly signed by Claudio Reyes because this does not refer to the repair of the rice-mill but for
the roofing of the house and another building and shall be allowed. Consequently, the sum of P570.70 shall be reduced to
P420.70 which added to the sum of P3,059 representing expenditures rejected as unauthorized to wit:

Exhibit L-59 ............. P500.00 Yek Wing

Exhibit L-60 ............. 616.00 Yek Wing
Exhibit L-61 ............. 600.00 Yek Wing
Exhibit L-62 ............. 840.00 Yek Wing
Exhibit L-63 ............. 180.00 Yek Wing
scale
Exhibit Q-2 ............. 323.00 "Howe"
Total
...................... P3,059.00

will give a total of P3,479 1/4 of which is P869.92 that belongs to the oppositors.

6. On the expenses for planting in the Cainta ricefields: — In his statement of accounts, appellant reported to have
incurred a total expense of P5,977 for the planting of the ricefields in Cainta, Rizal, from the agricultural year 1945-46 to
1950-51. It was proved that the prevailing sharing system in this part of the country was on 50-50 basis. Appellant
admitted that expenses for planting were advanced by the estate and liquidated after each harvest. But the report, except
for the agricultural year 1950 contained nothing of the payments that the tenants should have made. If the total expenses
for said planting amounted to P5,977, ½ thereof or P2,988.50 should have been paid by the tenants as their share of such
expenditures, and as P965 was reported by the administrator as paid back in 1950, there still remains a balance of
P2,023.50 unaccounted for. For this shortage, the administrator is responsible and should pay the oppositors ¼ thereof
or P505.87.

7. On the transportation expenses of the administrator: — It appears that from the year 1945 to 1951, the administrator
charged the estate with a total of P5,170 for transportation expenses. The un receipted disbursements were
correspondingly itemized, a typical example of which is as follows:

1950
Gastos de viaje del administrador From Pateros
To Pasig ................ 50 x P4.00 = P200.00
50 x
To Manila ............... P10.00 = P500.00
To Cainta ................ 8 x P8.00 = P64.00
To Jalajala ............... 5 x P35.00 = P175.00
= P399.00

(Exhibit W-54).

From the report of the administrator, We are being made to believe that the Intestate estate is a losing proposition and
assuming arguendo that this is true, that precarious financial condition which he, as administrator, should know, did not
deter Crisanto de Borja from charging to the depleted funds of the estate comparatively big amounts for his transportation
expenses. Appellant tried to justify these charges by contending that he used his own car in making those trips to Manila,
Pasig and Cainta and a launch in visiting the properties in Jalajala, and they were for the gasoline consumed. This rather
unreasonable spending of the estate's fund prompted the Court to observe that one will have to spend only P0.40 for
transportation in making a trip from Pateros to Manila and practically the same amount in going to Pasig. From his report
for 1949 alone, appellant made a total of 97 trips to these places or an average of one trip for every 3 1/2 days. Yet We
must not forget that it was during this period that the administrator failed or refused to take cognizance of the prevailing
rentals of commercial places in Manila that caused certain loss to the estate and for which he was accordingly held
responsible. For the reason that the alleged disbursements made for transportation expenses cannot be said to be
economical, the lower Court held that the administrator should be held liable to the oppositors for ¼ thereof or the sum of
P1,292.50, though We think that this sum should still be reduced to P500.

8. Other expenses:

The administrator also ordered 40 booklets of printed contracts of lease in the name of the Hacienda Jalajala which cost
P150. As the said hacienda was divided into 3 parts one belonging to this Intestate and the other two parts to Francisco
de Boria and Bernardo de Borja, ordinarily the Intestate should only shoulder ¹/3 of the said expense, but as the tenants
who testified during the hearing of the matter testified that those printed forms were not being used, the Court adjudged
the administrator personally responsible for this amount. The records reveal, that this printed form was not utilized
because the tenants refused to sign any, and We can presume that when the administrator ordered for the printing of the
same, he did not foresee this situation. As there is no showing that said printed contracts were used by another and that
they are still in the possession of the administrator which could be utilized anytime, this disbursement may be allowed.

The report also contains a receipt of payment made to Mr. Severo Abellera in the sum of P375 for his transportation
expenses as one of the two commissioners who prepared the Project of Partition. The oppositors were able to prove that
on May 24, 1941, the Court authorized the administrator to withdraw from the funds of the intestate the sum of P300 to
defray the transportation expenses of the commissioners. The administrator, however, alleged that he used this amount
for the payment of certain fees necessary in connection with the approval of the proposed plan of the Azcarraga property
which was then being processed in the City Engineer's Office. From that testimony, it would seem that appellant could
even go to the extent of disobeying the order of the Court specifying for what purpose that amount should be appropriated
and took upon himself the task of judging for what it will serve best. Since he was not able to show or prove that the
money intended and ordered by the Court to be paid for the transportation expenses of the commissioners was spent for
the benefit of the estate as claimed, the administrator should be held responsible therefor and pay to the oppositors ¼ of
P375 or the sum of P93.75.

The records reveal that for the service of summons to the defendants in Civil Case No. 84 of the Court of First Instance of
Rizal, P104 was paid to the Provincial Sheriff of the same province (Exhibit H-7). However, an item for P40 appeared to
have been paid to the Chief of Police on Jalajala allegedly for the service of the same summons. Appellant claimed that
as the defendants in said civil case lived in remote barrios, the services of the Chief of Police as delegate or agent of the
Provincial Sheriff were necessary. He forgot probably the fact that the local chiefs of police are deputy sheriffs ex-officio.
The administrator was therefore ordered by the lower Court to pay ¼ of said amount or P10 to the oppositors.

The administrator included in his Report the sum of P550 paid to Atty. Filamor for his professional services rendered for
the defense of the administrator in G.R. No. L-4179, which was decided against him, with costs. The lower Court
disallowed this disbursement on the ground that this Court provided that the costs of that litigation should not be borne by
the estate but by the administrator himself, personally.

Costs of a litigation in the Supreme Court taxed by the Clerk of Court, after a verified petition has been filed by the
prevailing party, shall be awarded to said party and will only include his fee and that of his attorney for their appearance
which shall not be more than P40; expenses for the printing and the copies of the record on appeal; all lawful charges
imposed by the Clerk of Court; fees for the taking of depositions and other expenses connected with the appearance of
witnesses or for lawful fees of a commissioner (De la Cruz, Philippine Supreme Court Practice, p. 70-71). If the costs
provided for in that case, which this Court ordered to be chargeable personally against the administrator are not
recoverable by the latter, with more reason this item could not be charged against the Intestate. Consequently, the
administrator should pay the oppositors ¼ of the sum of P550 or P137.50.

(e) The lower Court in its decision required appellant to pay the oppositors the sum of P1,395 out of the funds still in the
possession of the administrator.

In the statement of accounts submitted by the administrator, there appeared a cash balance of P5,851.17 as of August
31, 1961. From this amount, the sum of P1,002.96 representing the Certificate of Deposit No. 21619 and Check No.
57338, both of the Philippine National Bank and in the name of Quintin de Borja, was deducted leaving a balance of
P4,848. As Judge Zulueta ordered the delivery to the oppositors of the amount of P1,890 in his order of October 8, 1951;
the delivery of the amount of P810 to the estate of Juliana de Borja in his order of October 23, 1951, and the sum of
P932.32 to the same estate of Juliana de Borja by order of the Court of February 29, 1952, or a total of P3,632.32 after
deducting the same from the cash in the possession of the administrator, there will only be a remainder of P134.98.

The Intestate is also the creditor of Miguel B. Dayco, heir and administrator of the estate of Crisanta de Borja, in the sum
of P900 (Exhibits S and S-1). Adding this credit to the actual cash on hand, there will be a total of P1,034.98, ¼, of which
or P258.74 properly belongs to the oppositors. However, as there is only a residue of P134.98 in the hands of the
administrator and dividing it among the 3 groups of heirs who are not indebted to the Intestate, each group will receive
P44.99, and Miguel B. Dayco is under obligation to reimburse P213.76 to each of them.

The lower Court ordered the administrator to deliver to the oppositors the amount of P1,395.90 and P314.99 each to
Francisco de Borja and the estate of Juliana de Borja, but as We have arrived at the computation that the three heirs not
idebted to the Intestate ought to receive P44.99 each out of the amount of P134.98, the oppositors are entitled to the sum
of P1,080.91 — the amount deducted from them as taxes but which the Court ordered to be returned to them — plus
P44.99 or a total of P1,125.90. It appearing however, that ina Joint Motion dated November 27, 1952, duly approved by
the Court, the parties agreed to fix the amount at P1,125.58, as the amount due and said heirs have already received this
amount in satisfaction of this item, no other sum can be chargeable against the administrator.
(f) The probate Court also ordered the administrator to render an accounting of his administration during the Japanese
occupation on the ground that although appellant maintained that whatever money he received during that period is
worthless, same having been declared without any value, yet during the early years of the war, or during 1942-43, the
Philippine peso was still in circulation, and articles of prime necessity as rice and firewood commanded high prices and
were paid with jewels or other valuables.

But We must not forget that in his order of December 11, 1945, Judge Peña required the administrator to render an
accounting of his administration only from March 1, 1945, to December of the same year without ordering said
administrator to include therein the occupation period. Although the Court below mentioned the condition then prevailing
during the war-years, We cannot simply presume, in the absence of proof to that effect, that the administrator received
such valuables or properties for the use or in exchange of any asset or produce of the Intestate, and in view of the
aforementioned order of Judge Peña, which We find no reason to disturb, We see no practical reason for requiring
appellant to account for those occupation years when everything was affected by the abnormal conditions created by the
war. The records of the Philippine National Bank show that there was a current account jointly in the names of Crisanto de
Borja and Juanita V. Jarencio, his wife, with a balance of P36,750.35 in Japanese military notes and admittedly belonging
to the Intestate and We do not believe that the oppositors or any of the heirs would be interested in an accounting for the
purpose of dividing or distributing this deposit.

(g) On the sum of P13,294 for administrator's fees:

It is not disputed that the administrator set aside for himself and collected from the estate the sum of P13,294 as his fees
from 1945 to 1951 at the rate of P2,400 a year. There is no controversy as to the fact that this appropriated amount was
taken without the order or previous approval by the probate Court. Neither is there any doubt that the administration of the
Intestate estate by Crisanto de Borja is far from satisfactory.

Yet it is a fact that Crisanto de Borja exercised the functions of an administrator and is entitled also to a certain amount as
compensation for the work and services he has rendered as such. Now, considering the extent and size of the estate, the
amount involved and the nature of the properties under administration, the amount collected by the administrator for his
compensation at P200 a month is not unreasonable and should therefore be allowed.

It might be argued against this disbursement that the records are replete with instances of highly irregular practices of the
administrator, such as the pretended ignorance of the necessity of a book or ledger or at least a list of chronological and
dated entries of money or produce the Intestate acquired and the amount of disbursements made for the same properties;
that admittedly he did not have even a list of the names of the lessees to the properties under his administration, nor even
a list of those who owed back rentals, and although We certainly agree with the probate Court in finding appellant guilty of
acts of maladministration, specifically in mixing the funds of the estate under his administration with his personal funds
instead of keeping a current account for the Intestate in his capacity as administrator, We are of the opinion that despite
these irregular practices for which he was held already liable and made in some instances to reimburse the Intestate for
amounts that were not properly accounted for, his claim for compensation as administrator's fees shall be as they are
hereby allowed.

Recapitulation. — Taking all the matters threshed herein together, the administrator is held liable to pay to the heirs of
Quintin de Borja the following:

Under Paragraphs III and IV:

(a) ............................................................................... P7,084.27

(b) ............................................................................... 12,175.00
(c) ............................................................................... 16,113.95
(d) ............................................................................... 3,352.75
(e) ............................................................................... 341.74
(f) ................................................................................ 3,750.00
(g) 1 ..................................................................... 532.50
2 ..................................................................... 377.25
3 ..................................................................... 366.28
4 ..................................................................... 869.92
5 ..................................................................... 505.87
6 ..................................................................... 500.00
7-a
b .................................................................. 93.75
c .................................................................. 10.00
d ................................................................... 137.50
P46,210.00

In view of the foregoing, the decision appealed from is modified by reducing the amount that the administrator was
sentenced to pay the oppositors to the sum of P46,210.78 (instead of P83,337.31), plus legal interests on this amount
from the date of the decision appealed from, which is hereby affirmed in all other respects. Without pronouncement as to
costs. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador and Endencia, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

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

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

Federico Paredes for petitioners.

Demetrio V. Pre for private respondents.

MARTIN, J:

This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil Case No. 856, entitled Fortunata
Barcena vs. Leon Barcena, et al., denying the motions for reconsideration of its order dismissing the complaint in the
aforementioned case.

On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion Bonilla and wife of Ponciano
Bonilla, instituted a civil action in the Court of First Instance of Abra, to quiet title over certain parcels of land located in
Abra.

On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before the hearing of the motion to
dismiss, the counsel for the plaintiff moved to amend the complaint in order to include certain allegations therein. The
motion to amend the complaint was granted and on July 17, 1975, plaintiffs filed their amended complaint.

On August 4, 1975, the defendants filed another motion to dismiss the complaint on the ground that Fortunata Barcena is
dead and, therefore, has no legal capacity to sue. Said motion to dismiss was heard on August 14, 1975. In said hearing,
counsel for the plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her minor children and
her husband, the petitioners herein; but the court after the hearing immediately dismissed the case on the ground that a
dead person cannot be a real party in interest and has no legal personality to sue.

On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the complaint and on August 23,
2
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.

On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the plaintiff for lack of merit. On
September 1, 1975, counsel for deceased plaintiff filed a written manifestation praying that the minors Rosalio Bonilla and
Salvacion Bonilla be allowed to substitute their deceased mother, but the court denied the counsel's prayer for lack of
merit. From the order, counsel for the deceased plaintiff filed a second motion for reconsideration of the order dismissing
the complaint claiming that the same is in violation of Sections 16 and 17 of Rule 3 of the Rules of Court but the same
was denied.

Hence, this petition for review.

The Court reverses the respondent Court and sets aside its order dismissing the complaint in Civil Case No. 856 and its
orders denying the motion for reconsideration of said order of dismissal. While it is true that a person who is dead cannot
sue in court, yet he can be substituted by his heirs in pursuing the case up to its completion. The records of this case
show that the death of Fortunata Barcena took place on July 9, 1975 while the complaint was filed on March 31, 1975.
This means that when the complaint was filed on March 31, 1975, Fortunata Barcena was still alive, and therefore, the
court had acquired jurisdiction over her person. If thereafter she died, the Rules of Court prescribes the procedure
whereby a party who died during the pendency of the proceeding can be substituted. Under Section 16, Rule 3 of the
Rules of Court "whenever a party to a pending case dies ... it shall be the duty of his attorney to inform the court promptly
of such death ... and to give the name and residence of his executor, administrator, guardian or other legal
representatives." This duty was complied with by the counsel for the deceased plaintiff when he manifested before the
respondent Court that Fortunata Barcena died on July 9, 1975 and asked for the proper substitution of parties in the case.
The respondent Court, however, instead of allowing the substitution, dismissed the complaint on the ground that a dead
person has no legal personality to sue. This is a grave error. Article 777 of the Civil Code provides "that the rights to the
succession are transmitted from the moment of the death of the decedent." From the moment of the death of the
decedent, the heirs become the absolute owners of his property, subject to the rights and obligations of the decedent, and
they cannot be deprived of their rights thereto except by the methods provided for by law. 3 The moment of death is the
determining factor when the heirs acquire a definite right to the inheritance whether such right be pure or contingent. 4 The
right of the heirs to the property of the deceased vests in them even before judicial declaration of their being heirs in the
testate or intestate proceedings. 5 When Fortunata Barcena, therefore, died her claim or right to the parcels of land in
litigation in Civil Case No. 856, was not extinguished by her death but was transmitted to her heirs upon her death. Her
heirs have thus acquired interest in the properties in litigation and became parties in interest in the case. There is,
therefore, no reason for the respondent Court not to allow their substitution as parties in interest for the deceased plaintiff.

Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not thereby extinguished, the court shall
order, upon proper notice, the legal representative of the deceased to appear and be substituted for the deceased, within
such time as may be granted ... ." The question as to whether an action survives or not depends on the nature of the
action and the damage sued for. 6 In the causes of action which survive the wrong complained affects primarily and
principally property and property rights, the injuries to the person being merely incidental, while in the causes of action
which do not survive the injury complained of is to the person, the property and rights of property affected being
incidental. 7 Following the foregoing criterion the claim of the deceased plaintiff which is an action to quiet title over the
parcels of land in litigation affects primarily and principally property and property rights and therefore is one that survives
even after her death. It is, therefore, the duty of the respondent Court to order the legal representative of the deceased
plaintiff to appear and to be substituted for her. But what the respondent Court did, upon being informed by the counsel for
the deceased plaintiff that the latter was dead, was to dismiss the complaint. This should not have been done for under
the same Section 17, Rule 3 of the Rules of Court, it is even the duty of the court, if the legal representative fails to
appear, to order the opposing party to procure the appointment of a legal representative of the deceased. In the instant
case the respondent Court did not have to bother ordering the opposing party to procure the appointment of a legal
representative of the deceased because her counsel has not only asked that the minor children be substituted for her but
also suggested that their uncle be appointed as guardian ad litem for them because their father is busy in Manila earning
a living for the family. But the respondent Court refused the request for substitution on the ground that the children were
still minors and cannot sue in court. This is another grave error because the respondent Court ought to have known that
under the same Section 17, Rule 3 of the Rules of Court, the court is directed to appoint a guardian ad litem for the minor
heirs. Precisely in the instant case, the counsel for the deceased plaintiff has suggested to the respondent Court that the
uncle of the minors be appointed to act as guardian ad litem for them. Unquestionably, the respondent Court has gravely
abused its discretion in not complying with the clear provision of the Rules of Court in dismissing the complaint of the
plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case.

IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in Civil Case No. 856 of the
Court of First Instance of Abra and the motions for reconsideration of the order of dismissal of said complaint are set aside
and the respondent Court is hereby directed to allow the substitution of the minor children, who are the petitioners therein
for the deceased plaintiff and to appoint a qualified person as guardian ad litem for them. Without pronouncement as to
costs.

SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

VALENTE RAYMUNDO, G.R. No. 149017

Petitioner,
Present:

PUNO, C.J.*
YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.

TEOFISTA ISAGON VDA. DE SUAREZ, DANILO I.

SUAREZ, EUFROCINA SUAREZ, MARCELO I. Promulgated:
SUAREZ, JR,
EVELYN SUAREZ, ET AL.,
Respondents. November 28, 2008

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This petition, filed under Rule 65 of the Rules of Court, assails the Court of Appeals (CA) Decision [1] and Resolution[2] in
CA-G.R. SP No. 58090 which reversed, set aside and recalled the Regional Trial Court (RTC) Orders[3] in Civil Case No.
51203.
First, the long settled facts.

Marcelo and Teofista Isagon Suarez[4] marriage was blessed with both material wealth and progeny in herein respondents,
namely, Danilo,[5] Eufrocina, Marcelo Jr., Evelyn, and Reggineo, [6] all surnamed Suarez. During their marriage, governed by
the conjugal partnership of gains regime, they acquired numerous properties, which included the following: (1) a parcel of
land situated in Barrio Caniogan, Pasig with an area of 348 square meters covered by Transfer Certificate of Title (TCT)
No. 30680; (2) property located in Pinagbuhatan, Pasig, with an area of 1,020 square meters under Tax Declaration No. A-
016-01003; and (3) Lot Nos. 5, 6 & 7, Block 2 covered by Tax Declaration No. A-01700723 (subject properties).
After the death of Marcelo Sr. in 1955, Teofista and herein respondents, as well as Elpidio Suarez,[7] executed an
Extrajudicial Settlement of Estate,[8] partitioning Marcelo Sr.s estate, thus:

WHEREAS, the said deceased is survived by the parties hereto who are his only legal heirs: TEOFISTA
ISAGON, being the surviving spouse, and EUFROCINA S. ANDRES, ELPIDIO SUAREZ, DANILO
SUAREZ, EVELYN SUAREZ, MARCELO SUAREZ, JR. and REGGINEO SUAREZ, being the legitimate
children of the deceased with the said TEOFISTA ISAGON;

WHEREAS, the minors ELPIDIO, SUAREZ, DANILO SUAREZ, EVELYN SUAREZ, MARCELO SUAREZ,
JR. and REGGINEO SUAREZ are represented herein by EUFROCINA S. ANDRES, in her capacity as the
guardian and legal administrator of the property of the said minors;

WHEREAS, there are no known debts or financial obligations of whatever nature and amount against the
estate of the deceased;

NOW, THEREFORE, in consideration of the foregoing premises, the Parties have agreed to settle
and liquidate the assets of the conjugal partnership between the deceased and TEOFISTA ISAGON, and
to settle and adjudicate the estate of the said deceased, by and pursuance to these presents, in the
following manner, to wit:
 1. That TEOFISTA ISAGON, as the surviving spouse and partner of the deceased, shall receive in absolute
and exclusive ownership the following properties as her lawful share in the assets of the conjugal
partnership of gains between her and the deceased, to wit:

(a) Half (1/2) interest and participation in the parcel of land covered by Tax Declaration No. 6938,
situated at Sitio Pantayan, Municipality of Taytay, Province of Rizal;

(b) Half (1/2) interest and participation in the parcel of land covered by Tax Declaration No. 6939,
situated at Sitio Pantayan, Municipality of Taytay, Province of Rizal;

(c) Half (1/2) interest and participation in the parcel of land covered by TCT No. 38291, situated at
Barrio Rosario, Municipality of Pasig, Province of Rizal;

(d) Half (1/2) interest and participation in the parcel of land covered by TCT No. 38290, situated at
Barrio Rosario, Municipality of Pasig, Province of Rizal;

(e) TWELVE THOUSAND FIVE HUNDRED THIRTY PESOS AND NINETY (P12,530.90)
deposited with the Commercial Bank and Trust Company of the Philippines, and THIRTY-
NINE PESOS (P39.00) deposited with Prudential Bank.

2. That the Parties TEOFISTA ISAGON, EUFROCINA S. ANDRES, ELPIDIO SUAREZ, DANILO
SUAREZ, EVELYN SUAREZ, MARCELO SUAREZ, JR. and REGGINEO SUAREZ, shall each and all
receive and be entitled to a share equivalent to one-seventh (1/7) of the estate of the deceased MARCELO
SUAREZ, which estate is comprised of the following properties, to wit:

(a) A parcel of land covered by TCT No. 30680, situated at Barrio

Kaniogan, Municipality of Pasig, Province of Rizal, with an assessed value of P4,150.00.

(b) Three (3) parcels of land covered by TCT Nos. 33982, 33983 and 33984, situated at Barrio
Pineda, Municipality of Pasig, Province of Rizal, with an assessed value of P560.00.

(c) A parcel of land covered by TCT 33986, situated at Barrio

Pineda, Municipality of Pasig, Province of Rizal, with an assessed value of P440.00.

(d) Two (2) parcels of land, being Lots Nos. 42 and 44 of the amendment-subdivision plan TY-
4653-Amd., being a portion of Lot 2 described on the original plan II-4653, G.L.R.O. Record
No. _____, situated at Barrio Santolan, Municipality of Pasig, Province of Rizal, with a total
assessed value of P590.00.

(e) Two parcels of land, being Lots Nos. 43 and 45 of the amendment-subdivision plan TY-4653-
Amd., being a portion of Lot 2 described on the original plan II-4653, G.L.R.O. Record No.
_______, situated at Barrio Santolan, Municipality of Pasig, Province of Rizal, with a total
assessed value of P1,190.00.

(f) A parcel of land, being Lot No. 6, Block 269 of the subdivision plan pos-112, being a portion of
Lot 2, Block 348, Psd-3188, G.L.R.O. Record Nos. 375,699 and 917, situated at San Felipe
Neri, Province of Rizal, with an assessed value of P6,340.00.

(g) A parcel of land covered by OCT No. 391, situated in the Municipality of Taytay, Province of
Rizal, with an assessed value of P1,840.00.

(h) TWELVE THOUSAND (12,000) shares of stock of the Consolidated Mines, Inc. represented by
Certificate No. 71-5-B (for 1,000 shares) and Certificate No. 12736 (for 11,000 shares).

PROVIDED, that their title to the properties hereinabove mentioned shall be in common and the
share of each heir being pro indiviso.

Curiously, despite the partition, title to the foregoing properties, explicitly identified in the Extrajudicial Settlement of Estate
as forming part of Marcelos and Isagons property regime, remained in the couples name. Not surprisingly, Teofista
continued to administer and manage these properties. On the whole, apart from those now owned exclusively by Teofista,
all the properties were held pro indiviso by Teofista and her children; and respective titles thereto were not changed, with
Teofista as de facto administrator thereof.

In 1975, Rizal Realty Corporation (Rizal Realty) and Teofista, the latter owning ninety percent (90%) of the formers shares
of stock, were sued by petitioner Valente Raymundo, his wife Violeta, Virginia Banta and Maria Concepcion Vito (plaintiffs)
in consolidated cases for Rescission of Contract and Damages, docketed as Civil Case Nos. 21736 to 21739. Thereafter,
in 1975, the then Court of First Instance (CFI) of Rizal, Branch 1, rendered judgment: (1) rescinding the respective contracts
of plaintiffs with Rizal Realty and Teofista, and (2) holding the two defendants solidarily liable to plaintiffs for damages in
the aggregate principal amount of about P70,000.00.[9]
When the judgment of the CFI became final and executory, herein subject properties were levied and sold on execution
on June 24, 1983 to satisfy the judgment against Teofista and Rizal Realty. The aforementioned plaintiffs were the highest
bidder, and bought the levied properties for the amount of P94,170.00. As a result, a certificate of sale was issued to them
and registered in their favor on August 1, 1983. On July 31, 1984, the Provincial Sheriff of Rizal issued a final deed of sale
over the subject properties.

Parenthetically, before expiration of the redemption period, or on June 21, 1984, herein respondents filed a revindicatory
action against petitioner Valente, Violeta, Virginia and Maria Concepcion, docketed as Civil Case No. 51203, for the
annulment of the auction sale and recovery of ownership of the levied properties. Essentially, respondents alleged in their
complaint that they cannot be held liable for the judgment rendered against their mother, Teofista, not having been
impleaded therein; and consequently, the subject properties, which they own pro indiviso with their mother, can neither be
levied nor be sold on execution.

Meanwhile, the RTC, Branch 151, formerly the CFI, Branch 1, in Civil Case Nos. 21376 to 21379, issued an
Order[10] directing Teofista: (1) to vacate the subject properties, (2) to desist from despoiling, dismantling, removing or
alienating the improvements thereon, (3) to place petitioner Valente, Violeta, Virginia and Maria Concepcion in
peaceful possession

thereof, and (4) to surrender to them the owners duplicate copy of the torrens title and other pertinent documents. Herein
respondents, joined by their mother, Teofista, filed a Motion for Reconsideration arguing that the subject properties are co-
owned by them and further informing the RTC of the filing and pendency of Civil Case No. 51203. Nonetheless, the trial
court denied Teofistas and herein respondents motion, reiterated its previous order, which included, among others, the
order for Teofista and all persons claiming right under her, to vacate the lots subject of the judicial sale.

Undaunted, Teofista and herein respondents filed a petition for certiorari before the CA to annul the foregoing orders. The
appellate court, on July 6, 1987, dismissed Teofistas and herein respondents petition, thus:

We believe this petition cannot prosper for two reasons. First, as purported case for certiorari it fails to show
how the respondent judge had acted without or in excess of jurisdiction or with grave abuse of discretion.
The two orders being assailed were preceded by a final judgment, a corresponding writ of execution, a levy
on execution and a judicial sale, all of which enjoy a strong sense presumption of regularity.

Secondly, as far as [petitioner] Teofista Suarez is concerned, she cannot complain about the levy because
she was a party in the consolidated cases where judgment was rendered against her in her personal
capacity. Since she did not appeal from the decision, she cannot say that the judgment is erroneous for an
obligation that belong to the corporation. And with respect to the children of Teofista Suarez, who are co-
petitioners in this proceedings [herein respondents], suffice it to point out that not being parties in the
consolidated cases, what they should have done was to immediately file a third party claim. The moment
levy was made on the parcels of land, which they claim are theirs by virtue of hereditary succession, they
should have seasonably filed such claim to protect their rights. As the record discloses, however, the
children chose to remain silent, and even allowed the auction sale to be held, filing almost a year later a
half-hearted complaint to annul the proceedings which they allowed to be dismissed by not diligently
prosecuting it.

In Santos v. Mojica (10 SCRA 318), a partition case with third- party claimants, the Supreme Court came
out with the following ruling: The procedure (a petition for certiorari) followed by him (a petitioner not party
to the original partition case) in vindicating his right is not the one sanctioned by law, for he should have
filed a separate and independent action making parties therein the sheriff and the plaintiffs responsible for
the execution xxx. It can, therefore, be said that (he) acted improperly in filing the present petition because
his remedy was to file a separate and independent action to vindicate his ownership over the land.

WHEREFORE, the petition is denied and the restraining order previously issued is DISSOLVED, with costs
against petitioners.[11]

On the other litigation front concerning Civil Case No. 51203, a writ of preliminary injunction was issued by the RTC Pasig,
Branch 155, on February 25, 1985, enjoining petitioner Valente, Violeta, Virginia and Maria Concepcion from transferring to
third parties the levied properties based on its preliminary finding that the auctioned properties are co-owned by Teofista
and herein respondents. Subsequently, however, Civil Case No. 51203 was dismissed by the RTC, Branch 155, at the
instance of petitioner Valente for failure of herein respondents to prosecute. But in yet another turn of events, the RTC,
Branch 155, lifted its previous order of dismissal and directed the issuance of alias summons.

Thus, it was now petitioner Valentes, Violetas, Virginias and Maria Concepcions turn to file a petition for certiorari with the
CA, assailing the various orders of the RTC, Branch 155, which all rejected their bid to dismiss Civil Case No. 51203. The
CA granted their petition, thus:

And the fact that herein private respondents, as the legal heirs of Teofista Vda. de Suarez and supposedly
not parties in Civil Case Nos. 21376 - 21379 does not preclude the application of the doctrine of res judicata
since, apart from the requisites constitutive of this procedural tenet, they were admittedly the children of
Teofista Suarez, who is the real party-in-interest in the previous final judgment. As successors-in-interest
of Teofista Suarez, private respondents merely stepped into the shoes of their mother in regard to the levied
pieces of property. Verily, there is identity of parties, not only where the parties in both actions are the same,
 but where there is privity with them as in the cases of successors-in-interest by title subsequent to the
commencement of the action or where there is substantial identity.

Finally, the action to annul the judicial sale filed by herein private respondents is not the reinvindicatory suit,
much less the third party claim contemplated by Section 17 of Rule 39.

WHEREFORE, the petition for certiorari is hereby granted and the questioned orders dated February 25,
1985, May 19, 1989 and February 26, 1990 issued in Civil Case No. 51203 are hereby annulled; further
respondent judge is ordered to dismiss Civil Case No. 51203.[12]

From this ruling, herein respondents appealed to the Supreme Court. In Suarez v. Court of Appeals,[13] we reversed the
appellate court, thus:

Even without touching on the incidents and issues raised by both petitioner [herein respondents] and private
respondents [petitioner Valente, Violeta, Virginia and Maria Concepcion] and the developments subsequent
to the filing of the complaint, [w]e cannot but notice the glaring error committed by the trial court.

It would be useless to discuss the procedural issue on the validity of the execution and the manner of
publicly selling en masse the subject properties for auction. To start with, only one-half of the 5 parcels of
land [subject properties] should have been the subject of the auction sale.

The law in point is Article 777 of the Civil Code, the law applicable at the time of the institution of the case:

The rights to the succession are transmitted from the moment of the death of the decedent.

Article 888 further provides:

The legitime of the legitimate children and descendants consists of one-half of the hereditary estate
of the father and of the mother.

The latter may freely dispose of the remaining half, subject to the rights of illegitimate children and
of the surviving spouse as hereinafter provided.

Article 892, par. 2 likewise provides:

If there are two or more legitimate children or descendants, the surviving spouse shall be entitled
to a portion equal to the legitime of each of the legitimate children or descendants.

Thus, from the foregoing, the legitime of the surviving spouse is equal to the legitime of each child.

The proprietary interest of petitioners [herein respondents] in the levied and auctioned property is different
from and adverse to that of their mother [Teofista]. Petitioners [herein respondents] became co-owners of
the property not because of their mother [Teofista] but through their own right as children of their deceased
father [Marcelo Sr.]. Therefore, petitioners [herein respondents] are not barred in any way from instituting
the action to annul the auction sale to protect their own interest.

WHEREFORE, the decision of the Court of Appeals dated July 27, 1990 as well as its Resolution of August
28, 1990 are hereby REVERSED and set aside; and Civil Case No. 51203 is reinstated only to determine
that portion which belongs to petitioners and to annul the sale with regard to said portion.

It was at this point when another series of events transpired, culminating in the present petition.

Upon our reinstatement of Civil Case No. 51203, each and every pleading filed by herein respondents, as plaintiffs therein,
was hotly contested and opposed by therein defendants, including petitioner Valente. Moreover, even at that stage, when
the case had been remanded with a directive to determine that portion which belongs to [herein respondents] and to annul
the sale with regard to said portion, Civil Case No. 51203 had to be re-raffled and transferred, for varied reasons, to the
different court branches in Pasig City. In between all these, petitioner Valente, along with the other defendants, repeatedly
filed a Motion to Dismiss Civil Case No. 51203 for the purported failure of herein respondents to prosecute the case. Most
of these Motions to Dismiss were denied.
With each transfer of Civil Case No. 51203, the judge to which the case was raffled had to study the records anew.
Expectedly, part of the records went missing and were lost. On April 12, 1993, the Clerk of Court of RTC, Branch 71, to
which Civil Case No. 51203 was remanded, filed a report on the records of the case, to wit:

1. The first volume of the record in the above-entitled case was recorded as received on June 20, 1990, by
Sheriff Alejandro O. Loquinario;

2. That the staff of Branch 71 at this time was sharing a small room with Branch 161 at the First Floor of
the Justice Hall, and as the Branch was newly formed, it had no equipment or furniture of its own, and was
still undermanned;

3. That sometime in August 1990, Branch 71 moved to the staffroom of Branch 159 at the Second Floor of
the Justice Hall;
 4. That on October 25, 1990, this Court received a Notice of Judgment dated October 22, 1990 from the
Court of Appeals that ruled the dismissal of the above-entitled case, and as per standing instructions of
Judge Graduacion A. Reyes-Claravall, the same was bound as volume 2 of the case;

5. That just before the Christmas vacation in 1991, the branch was forced to hastily move all of its records
and equipment to branch 69, because of the unexpected notice we received that the room we were
occupying was to be demolished in order to meet the schedule for the renovation of the building;

6. That unfortunately, the room was demolished before the undersigned could make a last check to see if
everything was transferred;

7. That it was only later on that this office discovered that important documents were indeed lost, including
transcripts of stenographic notes in a case that was submitted for decision;

8. That sometime in May 1992, the branch moved its Office to its present location;

9. That on March 8, 1993, this Court received a copy of a Decision of the Supreme Court reversing the
earlier ruling of the Court of Appeals;

10. That it was at this time that the first volume of this case, which was bundled along with other cases
which were decided and/or archived, was reported as missing;

11. That from the time the same was found to be missing, Judge Claravall ordered that a search for the
same be made in all of the offices wherein this branch was forced to share a room with, as well as the Court
of Appeals, in the event that the same was transmitted to said Court;

12. That all the efforts were in vain, as said record could not be located anywhere;

13. That the undersigned now concludes that the first volume of the above-entitled case was probably lost
during the renovation of the Justice Hall Building, and will have to be reconstituted with the use of
documents in the possession of the parties, or documents entered as exhibits in other Courts. [14]

In this regard, herein respondents filed a Motion for Reconstitution of Records [15] of the case. Initially,
petitioner Valente, and the other defendants -- Violeta, Virginia and Maria Concepcion -- opposed the motion.[16] However,
the trial court eventually granted the motion for reconstitution, and ordered petitioner Valente and the other defendants to
submit a copy of their Answer filed thereat and copies of other pleadings pertinent to the case. [17]

Thereafter, three (3) incidents, among numerous others, set off by the parties pleadings, are worth mentioning, to wit:

1. A Motion for Leave to File and Admit Supplemental Complaint[18] filed by herein respondents. The Supplemental
Complaint additionally prayed that the levy and sale at public auction of the subject properties be annulled and set aside,
as the bid price was unconscionable and grossly inadequate to the current value of the subject properties. The Supplemental
Complaint further sought a re-bidding with respect to Teofistas share in the subject properties. Finally, it prayed that TCT
No. 6509 in the name of petitioner Valente, Violeta, Virginia and Maria Concepcion be cancelled and TCT No. 30680 in the
name of Marcelo Suarez, married to Teofista Isagon, be reinstated.

2. A Manifestation and Motion (to Execute/Enforce Decision dated September 4, 1992 of the Supreme Court) [19] filed by
herein respondents pointing out that the Supreme Court itself had noted the current increased value of the subject properties
and that petitioner Valente, Violeta, Virginia and Maria Concepcion unjustly enriched themselves in appropriating the subject
properties worth millions then, for a measly bid price of P94,170.00, for a judgment obligation worth only P70,000.00.

3. An Urgent Motion [to direct compliance by plaintiffs (herein respondents) with Supreme Court Decision or to consider the
matter submitted without evidence on the part of plaintiffs] [20] filed by therein defendants, including herein petitioner Valente,
pointing out that plaintiffs (herein respondents) have yet to comply with the RTC, Branch 67 Order commanding them to
submit (to the RTC) any evidence showing settlement of the estate of the deceased Marcelo Suarez, in order for the court
to determine the portion in the estate which belongs to Teofista. The Urgent Motion stated in paragraph 2, thus:

2. The defendants [including herein petitioner Valente] did everything possible to expedite the disposition
of this case while the plaintiffs [herein respondents] did everything possible to DELAY the disposition of the
same obviously because the plaintiffs [herein respondents] are in full possession and enjoyment of the
property in dispute. In its decision of September 4, 1992, the SUPREME COURT nullified TWO final and
executory DECISIONS of the Court of Appeals in an unprecedented action. In said decision, the Supreme
Court ordered the plaintiffs [herein respondents] to establish with evidence their personality as heirs of
Marcelo Suarez, and after being able to do so, to adduce evidence that would determine what portion
belongs to plaintiffs hence the above matters need be litigated upon before the RTC can annul the sale
with regard to said portion (belonging to the plaintiffs alleged heirs).

On these incidents, the records reveal the following Orders issued by the different branches of the RTC:
1. Order dated March 17, 1995, issued by Presiding Judge Rodrigo B. Lorenzo of Branch 266, Pasig City, admitting herein
respondents Supplemental Complaint. [21]

2. Order dated January 22, 1996, issued by Judge Apolinario B. Santos resolving: (a) herein respondents Manifestation and
Motion (to execute/enforce Decision dated September 4, 1992 of the Supreme Court), and (b) therein defendants (including
herein petitioner Valentes) Request for Answer to Written Interrogatories. [22] The RTC, Branch 67, resolved the incidents,
thus:

From the foregoing uncontroverted facts, this Court is convinced beyond a shadow of doubt that the
Decision of the Supreme Court of September 4, 1992, being the final arbiter in any judicial dispute, should
be implemented for the following reasons:

xxxx

On the request for Answers to Written Interrogatories filed by the defendants, it is obvious that at this stage
of the proceedings where the Supreme Court had already pronounced the undisputed facts, which binds
this court, the answer sought to be elicited through written interrogatories, therefore, are entirely irrelevant,
aside from having been filed way out of time.

WHEREFORE, premises considered, this court, implements the decision of the Supreme Court
dated September 4, 1992 which mandates that:

xxx and Civil Case No. 51203 is reinstated only to determine that portion which belongs to
petitioner and to annul the sale with regard to said portion.

In order to enforce such mandate of the Supreme Court, this court orders that:

a. The auction sale of the five (5) parcels of land and all prior and subsequent proceedings in
relation thereto are declared null and void.

b. Transfer Certificate of Title No. 6509 in the name of defendant Valente Raymundo is also
declared null and void, and the Register of Deeds of Rizal, Pasig City, is ordered to issue a new
one in the name of the deceased Marcelo Suarez or to reinstate Transfer Certificate of Title No.
30680 in the name of Marcelo Suarez.

c. Teofista Suarez is ordered to reimburse the amount of P94,170.00, plus legal interest from the
date of issuance of this order, and failing which, the portion of the estate of Marcelo Suarez
belonging to the surviving spouse, Teofista Suarez, may be levied on execution.

d. [Herein respondents], including Teofista Suarez, are hereby ordered to submit to this court any
evidence showing settlement of the estate of the deceased, Marcelo Suarez, in order for this court
to determine the portion in the estate which belongs to Teofista Suarez.

Therein defendants, including petitioner Valente, filed a Motion for Reconsideration which the trial court denied on May 29,
1996.

3. Order dated September 10, 1996, issued by Judge Santos denying the appeal interposed by petitioner Valente from the
January 22, 1996 and May 29, 1996 Orders, ruling that these are interlocutory orders, and, therefore, not appealable. [23]

4. Order dated April 8, 1999, issued by Pairing Judge Santiago Estrella which declared, thus:

Considering that counsel for the plaintiffs does not have the birth certificates of the heirs of the plaintiff to
prove their affiliation with the deceased which is one of the matters written in the decision of the higher
court which must be complied with, and in order for counsel for the plaintiffs [herein respondents] to have
the opportunity to complete all documentary evidence and in view of abbreviating the proceedings and as
prayed for, todays scheduled pre-trial is re-set for the last time to May 19, 1999 at 8:30 a.m.

In this connection, counsel for plaintiffs [herein respondents] is advised to secure all the documentary
evidence she needs material to this case which will expedite the disposition of this case. [24]

This last Order and therein defendants Urgent Motion spawned another contentious issue between the parties. In this
connection, Judge Estrella issued an Order [25] requiring the parties to file their respective position papers due to the
divergent views on the nature of the hearing that should be conducted in compliance with our decision in Suarez. Both
parties duly filed their position papers, with herein respondents attaching thereto a copy of the Extrajudicial Settlement of
Estate executed by the heirs of Marcelo Suarez in 1957.

In resolving this latest crossfire between the parties, the RTC, Branch 67, issued an Order dated January 11, 2000, which
reads, in part:

This Court is of the view that the Honorable Supreme Court is not a trier of facts, precisely it directed that
the records of this case be remanded to the Regional Trial Court for further proceedings.
 xxxx

It is a matter of record that there was no trial on the merits completed in the Regional Trial Court. xxx The
Supreme Court reversed the judgment of the Court of Appeals and ordered the reinstatement of Civil Case
No. 51203. Naturally, there was no trial on the merits before this Court that allowed the parties to adduce
evidence to establish their respective claims in the plaintiffs [herein respondents] complaint and in the
defendants [including petitioner Valente] counter-claim, respectively. It is in this context that the Honorable
Supreme Court reinstated the action [of herein respondents] to annul the auction sale to protect their [herein
respondents] own interest.

While this Court is of the view that trial on the merits is necessary for the purpose of giving the plaintiffs
[herein respondents] a chance to adduce evidence to sustain their complaint and the defendants [including
petitioner Valente] to prove their defense, consistent with the directive of the Honorable Supreme Court (in
its Decision promulgated on September 4, 1992), the Court is, however, confronted with the very recent
decision of the Honorable Supreme Court in Heirs of Guido Yaptinchay, et al. vs. Del Rosario, et al., G.R.
No. 124320, March 2, 1999 where it held that

The declaration of heirship must be made in an administration proceeding, and not in an

independent civil action. This doctrine was reiterated in Solve vs. Court of Appeals (182
SCRA 119, 128). The trial court cannot make a declaration of heirship in the civil action for
the reason that such a declaration can only be made in a special proceeding. Under Section
3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as one by which a
party sues another for the enforcement or protection of a right, or the prevention or redress
of a wrong while a special proceeding is a remedy by which a party seeks to establish a
status, a right, or a particular fact. It is then decisively clear that the declaration of heirship
can be made only in a special proceeding inasmuch as the petitioners here are seeking
the establishment of a status or right.

In as much as the leading case on the matter is that of Heirs of Yaptinchay v. Del Rosario, G.R. No.
124320, March 2, 1999 it is left with no choice but to obey said latter doctrine.

WHEREFORE, the foregoing premises considered, this Court holds that in the light of the doctrine laid
down in the case of Heirs of Yaptinchay vs. Del Rosario, G.R. No. 124320, March 2, 1999 this case is
dismissed without prejudice to the plaintiffs [herein respondents] filing a special proceeding consistent with
said latest ruling.[26]

Herein respondents moved for reconsideration thereof which, however, was denied by the RTC, Branch 67 on March 14,
2000.[27]
Consequently, herein respondents filed a petition for certiorari before the CA alleging grave abuse of discretion in the trial
courts order dismissing Civil Case No. 51203 without prejudice. All the defendants in the trial court were impleaded as
private respondents in the petition. Yet, curiously, only petitioner Valente filed a Comment thereto. The appellate court
granted the petition, recalled and set aside RTC, Branch 67s Orders dated January 11, 2000 and March 14, 2000, and
reinstated Judge Santos Orders dated May 29, 1996 and September 6, 1996. It disposed of the petition, thus:

We agree with [herein respondents].

On September 4, 1992, the Supreme Court (G.R. No. 94918) reversed the decision of the Court of Appeals
and mandates that Civil Case No. 51203 be reinstated in order to determine the portion in the estate which
belongs to Teofista Suarez. The sale of the parcels of land was declared null and void. Necessarily, the title
(TCT No. 5809) in the name of respondents was also declared null and void. xxx

xxxx

Hon. Apolinario Santos of Br. 67, Regional Trial Court, Pasig City, on January 22, 1996 and on motion of
[herein respondents], issued an order to execute/enforce the decision of the Supreme Court xxx.

xxxx

[Petitioner Valente, Violeta, Virginia and Maria Concepcion] filed a notice of appeal on the order of Judge
Santos. The appeal, on motion of [herein respondents] was denied on September 10, 1996. Obviously, the
decision of the Supreme Court had become final and executory. Likewise, both orders of Judge Santos
dated May 29, 1996 denying the motion for reconsideration and the denial of the notice of appeal
dated September 6, 1996 had also become final and executory.

The denial of petitioner Valentes Motion for Reconsideration prompted the filing of this present petition for certiorari.

Petitioner Valente posits that the appellate court committed grave abuse of discretion in recalling and setting aside the
Orders of Judge Estrella and reinstating those of Judge Santos because:
1. The CA ruled that the Orders dated May 29, 1996 and September 6, 1996 issued by Judge Santos were final and
executory, and yet the latter did not allow an appeal to be taken therefrom ratiocinating that the questioned orders
were interlocutory, and therefore, not appealable; and

2. The CA ignored and violated the Supreme Courts ruling in Heirs of Yaptinchay v. Del Rosario[28] which held that a
declaration of heirship must be made in a special proceeding and not in a civil action.

We find the petition bereft of merit.

At the outset, we note that petitioner Valente incorrectly filed a petition for certiorari to appeal the CA decision. Petitioner
should have filed a petition for review on certiorari under Rule 45 of the Rules of Court. Simply imputing in a petition that
the decision sought to be reviewed is tainted with grave abuse of discretion does not magically transform a petition into a
special civil action for certiorari. The CA decision disposed of the merits of a special civil action, an original petition, filed
thereat by herein respondents. That disposition is a final and executory order, appealable to, and may be questioned before,
this Court by persons aggrieved thereby, such as petitioner Valente, via Rule 45.

On this score alone, the petition should have been dismissed outright. However, we have disregarded this procedural flaw
and now resolve this case based on the merits or lack thereof.

Petitioner asseverates that the assailed CA ruling is unfair and it amounts to a trickery to prevent an appeal against a final
order by claiming that the appealed order is merely interlocutory and later maintain that the same order has become final
after declaring it to be interlocutory.

We reject petitioners paltry contention. Petitioner apparently does not comprehend the distinction between an interlocutory
order which is final and executory, and a final order which disposes of the controversy or case; much less, understand the
available remedies therefrom.
We have defined an interlocutory order as referring to something between the commencement and the end of the
suit which decides some point or matter but it is not the final decision on the whole controversy. [29] It does not terminate or
finally dismiss or finally dispose of the case, but leaves something to be done by the court before the case is finally decided
on the merits.[30] Upon the other hand, a final order is one which leaves to the court nothing more to do to resolve the case. [31]

On more than one occasion, we laid down the test to ascertain whether an order is interlocutory or final i.e., Does
it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does
not, it is final. The key test to what is interlocutory is when there is something more to be done on the merits of the
case.[32] The Orders dated May 29, 1996 and September 6, 1996 issued by Judge Santos are interlocutory, and therefore,
not appealable, as they leave something more to be done on the merits of the case. In fact, in paragraph (d) of Judge Santos
Order dated May 29, 1996, herein respondents were directed to submit evidence showing settlement of the estate of the
deceased Marcelo Sr.

Contrary to petitioner Valentes stance, there is no trickery or chicanery in the CAs distinction between an
interlocutory and a final order. Indeed, as ruled by the CA, the RTC Order denying petitioner Valentes Notice of Appeal
attained finality when he failed to file a petition for certiorari under Rule 65 of the Rules of Court.

We cannot overemphasize the rule that the correct identification of the nature of an assailed order determines the
remedies available to an aggrieved party. The old Rules of Court in Section 2, Rule 41 reads, thus:
SEC. 2. Judgments or orders subject to appeal.Only final judgments or orders shall be subject to appeal.
No interlocutory or incidental judgment or order shall stay the progress of an action, nor shall it be the
subject of appeal until final judgment or order is rendered for one party or the other.

xxxx

With the advent of the 1997 Rules of Civil Procedure, Section 1, Rule 41 now provides for the appropriate remedy to be
taken from an interlocutory order, thus:
SECTION 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely
disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.

No appeal may be taken from:

xxx

(c) An interlocutory order;

xxx

In all the above instances where the judgment or final order is not appealable, the aggrieved party may file
an appropriate special civil action under Rule 65.

Clearly, the denial of therein defendants (including petitioner Valentes) appeal from the Orders dated May 29,
1996 and September 6, 1996 was in order. Thus, the CA decision affirming the RTCs denial was correct.
 Further, on this crucial distinction as applied to this case, petitioner Valente filed a petition for certiorari from the CA
decision in CA-G.R. SP No. 58090, which is not an interlocutory order. It is a final order which completely disposed of the
merits of the case with nothing more left to be done therein. The correct and available remedy available to petitioner Valente
was, as previously discussed, a petition for review on certiorari under Rule 45 of the Rules of Court.

In fine, petitioner Valente erroneously sought relief through reversed remedies. He tried to appeal the interlocutory
orders of the RTC which are unappealable. Thus, the RTC properly denied his Notice of Appeal, and the CA correctly upheld
the RTC. He should have filed a petition for certiorari; under Rule 65. On the other hand, from the final order of the CA, he
comes before this Court on a petition for certiorari under Rule 65, when the proper remedy is an appeal by certiorari under
Rule 45.

In the recent case of Jan-Dec Construction Corporation v. Court of Appeals[33] we ruled in this wise:

As a rule, the remedy from a judgment or final order of the CA is appeal via petition for review under Rule
45 of the Rules.

Under Rule 45, decisions, final orders or resolutions of the CA in any case, i.e., regardless of the
nature of the action or proceedings involved, may be appealed to the Court by filing a petition for review,
which would be but a continuation of the appellate process over the original case. It seeks to correct errors
of judgment committed by the court, tribunal, or officer. In contrast, a special civil action for certiorari under
Rule 65 is an independent action based on the specific grounds therein provided and proper only if there is
no appeal or any plain, speedy and adequate remedy in the ordinary course of law. It is an extraordinary
process for the correction of errors of jurisdiction and cannot be availed of as a substitute for the lost remedy
of an ordinary appeal.

Independently of this procedural infirmity, even on the merits of the case, the petition does not fare otherwise. It
must be dismissed for lack of merit.

Petitioner Valente insists that, following our ruling in Heirs of Yaptinchay v. Del Rosario,[34] herein respondents must
first be declared heirs of Marcelo Sr. before they can file an action to annul the judicial sale of what is, undisputedly, conjugal
property of Teofista and Marcelo Sr.

We disagree. Our ruling in Heirs of Yaptinchay is not applicable.

Herein respondents status as legitimate children of Marcelo Sr. and Teofista ― and thus, Marcelo Sr.s heirs ― has
been firmly established, and confirmed by this Court in Suarez v. Court of Appeals.[35] True, this Court is not a trier of
facts,[36] but as the final arbiter of disputes,[37] we found and so ruled that herein respondents are children, and heirs of their
deceased father, Marcelo Sr. This having been settled, it should no longer have been a litigated issue when we ordered a
remand to the lower court. In short, petitioner Valentes, Violetas, Virginias, and Maria Concepcions representation in the
RTC that our ruling in Suarez required herein respondents to present evidence of their affiliation with the deceased, Marcelo
Sr., is wrong.

As was set forth in the dispositive portion of Suarez, Civil Case No. 51203 is reinstated only to determine that portion
which belongs to [herein respondents] and to annul the sale with regard to said portion. There is clearly no intimation in our
decision for the RTC to have to determine an already settled issue i.e., herein respondents status as heirs of Marcelo Sr.

Moreover, petitioner Valente cannot assail, directly or indirectly, the status of herein respondents as legitimate
children of Marcelo Sr. and Teofista, and likewise demand that herein respondents first prove their filiation to Marcelo
Sr. The following records bear out Marcelo, Sr.s and Teofistas paternity of herein respondents, and the latters status as
legitimate children:

1. The CA decision in CA-G.R. SP Nos. 10646 to 10649 where Teofista, along with herein respondents, questioned the
RTC, Branch 151s Orders dated October 10, 1984 and October 14, 1986. Although the CA ruled against Teofista and herein
respondents, it explicitly recognized the latters status as legitimate children of Teofista and Marcelo Sr.; and [38]

2. The CA decision in CA-G.R. SP No. 20320 which incorrectly ruled that herein respondents were, as children of
Teofista, merely successors-in-interest of the latter to the property and by virtue thereof, bound by the judgment in Civil
Case Nos. 21376 to 21379 consistent with the doctrine of res judicata.[39] We subsequently reversed this ruling on the wrong
application of res judicata in the conclusive case of Suarez. We retained and affirmed, however, the CAs factual finding of
herein respondents status as heirs of Marcelo Sr. We categorically held therein that the proprietary interest of [herein
respondents] in the levied and auctioned [properties] is different from and adverse to that of [Teofista]. [Herein respondents]
became co-owners of the property not because of [Teofista] but through their own right as children of their deceased father
[, Marcelo Sr.].
Clearly, herein respondents long possessed status of legitimate children of Marcelo Sr. and Teofista cannot be indirectly or
directly attacked by petitioner Valente in an action to annul a judicial sale.

Articles 262,[40] 263,[41] 265 and 266[42] of the Civil Code, the applicable law at the time of Marcelos death, support
the foregoing conclusion, to wit:

Art. 262. The heirs of the husband may impugn the legitimacy of the child only in the following cases:

(1) If the husband should die before the expiration of the period fixed for bringing his action;
 (2) If the husband should die after the filing of the complaint, without having desisted from the same;

(3) If the child was born after the death of the husband.

Art. 263. The action to impugn the legitimacy of the child shall be brought within one year from the recording
of birth in the Civil Register, if the husband should be in the same place, or in a proper case, any of his
heirs.

If he or his heirs are absent, the period shall be eighteen months if they should reside in the Philippines;
and two years if abroad. If the birth of the child has been concealed, the term shall be counted from the
discovery of the fraud.

Art. 265. The filiation of legitimate children is proved by the record of birth appearing in the Civil Register,
or by an authentic document or a final judgment.

Art. 266. In the absence of the titles indicated in the preceding article, the filiation shall be proved by the
continuous possession of status of a legitimate child.

In Heirs of Yaptinchay, the complaint for annulment and/or declaration of nullity of certain TCTs was dismissed for failure of
the petitioners to demonstrate any proof or even a semblance of it that they had been declared the legal heirs of the
deceased couple, the spouses Yaptinchay. In stark contrast, the records of this case reveal a document, an Extrajudicial
Settlement of Marcelo Sr.s estate, which explicitly recognizes herein respondents as Marcelo Sr.s legitimate children and
heirs. The same document settles and partitions the estate of Marcelo Sr. specifying Teofistas paraphernal properties, and
separates the properties she owns in common with her children, herein respondents. Plainly, there is no need to re-declare
herein respondents as heirs of Marcelo Sr., and prolong this case interminably.

Petitioner Valente, along with Violeta, Virginia and Maria Concepcion, became owners of the subject properties only
by virtue of an execution sale to recover Teofistas judgment obligation. This judgment obligation is solely Teofistas, and
payment therefor cannot be made through an execution sale of properties not absolutely owned by her. These properties
were evidently conjugal properties and were, in fact, even titled in the name of Marcelo, Sr. married to Teofista. Thus, upon
Marcelo Sr.s death, by virtue of compulsory succession, Marcelo Sr.s share in the conjugal partnership was transmitted by
operation of law to his compulsory heirs.

Compulsory succession is a distinct kind of succession, albeit not categorized as such in Article 778 [43] of the Civil Code. It
reserves a portion of the net estate of the decedent in favor of certain heirs, or group of heirs, or combination of heirs,
prevailing over all kinds of succession.[44] The portion that is so reserved is the legitime. Article 886 of the Civil Code defines
legitime as that part of the testators property which he cannot dispose of because the law has reserved it for certain heirs
who are, therefore, called compulsory heirs. Herein respondents are primary compulsory heirs, [45] excluding secondary
compulsory heirs,[46] and preferred over concurring compulsory heirs in the distribution of the decedents estate.[47]

Even without delving into the Extrajudicial Settlement of Marcelo Sr.s estate in 1957, it must be stressed that herein
respondents rights to the succession vested from the moment of their fathers death. [48] Herein respondents ownership of
the subject properties is no longer inchoate; it became absolute upon Marcelos death, although their respective shares
therein remained pro indiviso. Ineluctably, at the time the subject properties were sold on execution sale to answer for
Teofistas judgment obligation, the inclusion of herein respondents share therein was null and void.

In fine, Teofistas ownership over the subject properties is not absolute. Significantly, petitioner Valente does not even
attempt to dispute the conjugal nature of the subject properties. Since Teofista owns only a portion of the subject properties,
only that portion could have been, and was actually, levied upon and sold on auction by the provincial sheriff of Rizal. Thus,
a separate declaration of heirship by herein respondents is not necessary to annul the judicial sale of their share in the
subject properties.

We note the recent case of Portugal v. Portugal-Beltran,[49] where we scrutinized our rulings in Heirs of
Yaptinchay and the cited cases of Litam v.
Rivera[50] and Solivio v. Court of Appeals,[51] and Guilas v. CFI Judge of Pampanga[52] cited in Solivio. We ruled thus:

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the
estate of a decedent or parties to the special proceedings for its settlement is that if the special proceedings
are pending, or if there are no special proceedings filed but there is, under the circumstances of the case,
a need to file one, then the determination of, among other issues, heirship should be raised and settled in
said special proceedings. Where special proceedings had been instituted but had been finally closed and
terminated, however, or if a putative heirs has lost the right to have himself declared in the special
proceedings as co-heir and he can no longer ask for its re-opening, then an ordinary civil action can be filed
for his declaration as heir in order to bring about the annulment of the partition or distribution or adjudication
of a property or properties belonging to the estate of the deceased.

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugals estate,
executed on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule
74, Section of the Revised Rules of Court. Said rule is an exception to the general rule that when a person
dies leaving property, it should be judicially administered and the competent court should appoint a qualified
administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he
did, he failed to name an executor therein.

xxx
 It appearing, however, that in the present case the only property of the intestate estate of Portugal is the
Caloocan parcel of land, to still subject it, under the circumstances of the case, to a special proceeding
which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only
impractical; it is burdensome to the estate with the costs and expenses of an administration proceedings.
And it is superfluous in light of the fact that the parties to the civil casesubject of the present case, could
and had already in fact presented evidence before the trial court which assumed jurisdiction over the case
upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still
subject Portugals estate to administration proceedings since a determination of petitioners status
as heirs could be achieved in the civil case filed by petitioners xxx.[53]
All told, under the circumstances, in addition to the already settled status of herein respondents as heirs of Marcelo Sr.,
there is no need to dismiss Civil Case No. 51203 and require herein respondents to institute a separate special proceeding
for a declaration of their heirship.
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
58090 is AFFIRMED. The Orders dated May 29, 1996 and September 6, 1996 issued by Judge Santos
are REINSTATED. Costs against the petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 82027 March 29, 1990

ROMARICO G. VITUG, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA, respondents.

Rufino B. Javier Law Office for petitioner.

Quisumbing, Torres & Evangelista for private respondent.

SARMIENTO, J.:

This case is a chapter in an earlier suit decided by this Court 1 involving the probate of the two wills of the late Dolores
Luchangco Vitug, who died in New York, U. S.A., on November 10, 1980, naming private respondent Rowena Faustino-
Corona executrix. In our said decision, we upheld the appointment of Nenita Alonte as co-special administrator of Mrs.
Vitug's estate with her (Mrs. Vitug's) widower, petitioner Romarico G. Vitug, pending probate.

On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the probate court to sell certain shares of
stock and real properties belonging to the estate to cover allegedly his advances to the estate in the sum of P667,731.66,
plus interests, which he claimed were personal funds. As found by the Court of Appeals, 2 the alleged advances consisted
of P58,147.40 spent for the payment of estate tax, P518,834.27 as deficiency estate tax, and P90,749.99 as "increment
thereto." 3 According to Mr. Vitug, he withdrew the sums of P518,834.27 and P90,749.99 from savings account No.
35342-038 of the Bank of America, Makati, Metro Manila.

On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn from savings
account No. 35342-038 were conjugal partnership properties and part of the estate, and hence, there was allegedly no
ground for reimbursement. She also sought his ouster for failure to include the sums in question for inventory and for
"concealment of funds belonging to the estate." 4

Vitug insists that the said funds are his exclusive property having acquired the same through a survivorship agreement
executed with his late wife and the bank on June 19, 1970. The agreement provides:

We hereby agree with each other and with the BANK OF AMERICAN NATIONAL TRUST AND SAVINGS
ASSOCIATION (hereinafter referred to as the BANK), that all money now or hereafter deposited by us or
any or either of us with the BANK in our joint savings current account shall be the property of all or both of
us and shall be payable to and collectible or withdrawable by either or any of us during our lifetime, and
after the death of either or any of us shall belong to and be the sole property of the survivor or survivors,
and shall be payable to and collectible or withdrawable by such survivor or survivors.

We further agree with each other and the BANK that the receipt or check of either, any or all of us during
our lifetime, or the receipt or check of the survivor or survivors, for any payment or withdrawal made for
our above-mentioned account shall be valid and sufficient release and discharge of the BANK for such
payment or withdrawal. 5

The trial courts 6 upheld the validity of this agreement and granted "the motion to sell some of the estate of Dolores L.
Vitug, the proceeds of which shall be used to pay the personal funds of Romarico Vitug in the total sum of P667,731.66 ...
." 7

On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein private respondent, held that the
above-quoted survivorship agreement constitutes a conveyance mortis causa which "did not comply with the formalities of
a valid will as prescribed by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere donation inter
vivos, it is a prohibited donation under the provisions of Article 133 of the Civil Code. 9

The dispositive portion of the decision of the Court of Appeals states:

WHEREFORE, the order of respondent Judge dated November 26, 1985 (Annex II, petition) is hereby set
aside insofar as it granted private respondent's motion to sell certain properties of the estate of Dolores L.
Vitug for reimbursement of his alleged advances to the estate, but the same order is sustained in all other
respects. In addition, respondent Judge is directed to include provisionally the deposits in Savings
Account No. 35342-038 with the Bank of America, Makati, in the inventory of actual properties possessed
by the spouses at the time of the decedent's death. With costs against private respondent. 10
In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the strength of our decisions in Rivera v.
People's Bank and Trust Co. 11 and Macam v. Gatmaitan 12 in which we sustained the validity of "survivorship
agreements" and considering them as aleatory contracts. 13

The petition is meritorious.

The conveyance in question is not, first of all, one of mortis causa, which should be embodied in a will. A will has been
defined as "a personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights
and declares or complies with duties to take effect after his death." 14 In other words, the bequest or device must pertain to
the testator. 15 In this case, the monies subject of savings account No. 35342-038 were in the nature of conjugal funds In
the case relied on, Rivera v. People's Bank and Trust Co., 16 we rejected claims that a survivorship agreement purports to
deliver one party's separate properties in favor of the other, but simply, their joint holdings:

xxx xxx xxx

... Such conclusion is evidently predicated on the assumption that Stephenson was the exclusive owner
of the funds-deposited in the bank, which assumption was in turn based on the facts (1) that the account
was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only as
housemaid of the deceased." But it not infrequently happens that a person deposits money in the bank in
the name of another; and in the instant case it also appears that Ana Rivera served her master for about
nineteen years without actually receiving her salary from him. The fact that subsequently Stephenson
transferred the account to the name of himself and/or Ana Rivera and executed with the latter the
survivorship agreement in question although there was no relation of kinship between them but only that
of master and servant, nullifies the assumption that Stephenson was the exclusive owner of the bank
account. In the absence, then, of clear proof to the contrary, we must give full faith and credit to the
certificate of deposit which recites in effect that the funds in question belonged to Edgar Stephenson and
Ana Rivera; that they were joint (and several) owners thereof; and that either of them could withdraw any
part or the whole of said account during the lifetime of both, and the balance, if any, upon the death of
either, belonged to the survivor. 17

xxx xxx xxx

In Macam v. Gatmaitan, 18 it was held:

xxx xxx xxx

This Court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the
Civil Code, one of the parties or both reciprocally bind themselves to give or do something as an
equivalent for that which the other party is to give or do in case of the occurrence of an event which is
uncertain or will happen at an indeterminate time. As already stated, Leonarda was the owner of the
house and Juana of the Buick automobile and most of the furniture. By virtue of Exhibit C, Juana would
become the owner of the house in case Leonarda died first, and Leonarda would become the owner of
the automobile and the furniture if Juana were to die first. In this manner Leonarda and Juana reciprocally
assigned their respective property to one another conditioned upon who might die first, the time of death
determining the event upon which the acquisition of such right by the one or the other depended. This
contract, as any other contract, is binding upon the parties thereto. Inasmuch as Leonarda had died
before Juana, the latter thereupon acquired the ownership of the house, in the same manner as Leonarda
would have acquired the ownership of the automobile and of the furniture if Juana had died first. 19

xxx xxx xxx

There is no showing that the funds exclusively belonged to one party, and hence it must be presumed to be conjugal,
having been acquired during the existence of the marita. relations. 20

Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it was to take effect after the
death of one party. Secondly, it is not a donation between the spouses because it involved no conveyance of a spouse's
own properties to the other.

It is also our opinion that the agreement involves no modification petition of the conjugal partnership, as held by the Court
of Appeals, 21 by "mere stipulation" 22 and that it is no "cloak" 23 to circumvent the law on conjugal property relations.
Certainly, the spouses are not prohibited by law to invest conjugal property, say, by way of a joint and several bank
account, more commonly denominated in banking parlance as an "and/or" account. In the case at bar, when the spouses
Vitug opened savings account No. 35342-038, they merely put what rightfully belonged to them in a money-making
venture. They did not dispose of it in favor of the other, which would have arguably been sanctionable as a prohibited
donation. And since the funds were conjugal, it can not be said that one spouse could have pressured the other in placing
his or her deposits in the money pool.

The validity of the contract seems debatable by reason of its "survivor-take-all" feature, but in reality, that contract
imposed a mere obligation with a term, the term being death. Such agreements are permitted by the Civil Code. 24

Under Article 2010 of the Code:

 ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give or to
do something in consideration of what the other shall give or do upon the happening of an event which is
uncertain, or which is to occur at an indeterminate time.

Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the happening of an event which
is (1) "uncertain," (2) "which is to occur at an indeterminate time." A survivorship agreement, the sale of a sweepstake
ticket, a transaction stipulating on the value of currency, and insurance have been held to fall under the first category,
while a contract for life annuity or pension under Article 2021, et sequentia, has been categorized under the second. 25 In
either case, the element of risk is present. In the case at bar, the risk was the death of one party and survivorship of the
other.

However, as we have warned:

xxx xxx xxx

But although the survivorship agreement is per se not contrary to law its operation or effect may be
violative of the law. For instance, if it be shown in a given case that such agreement is a mere cloak to
hide an inofficious donation, to transfer property in fraud of creditors, or to defeat the legitime of a forced
heir, it may be assailed and annulled upon such grounds. No such vice has been imputed and
established against the agreement involved in this case. 26

xxx xxx xxx

There is no demonstration here that the survivorship agreement had been executed for such unlawful purposes, or, as
held by the respondent court, in order to frustrate our laws on wills, donations, and conjugal partnership.

The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired upon
her death a vested right over the amounts under savings account No. 35342-038 of the Bank of America. Insofar as the
respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the court was in error.
Being the separate property of petitioner, it forms no more part of the estate of the deceased.

WHEREFORE, the decision of the respondent appellate court, dated June 29, 1987, and its resolution, dated February 9,
1988, are SET ASIDE.

No costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado JJ., concur.