EN BANC
Under the present Civil Code (Article 1311), as well as under
[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.
the Civil Code of 1889 (Article 1257), the rule is that —
“Contracts take effect only as between the parties, their assigns and heirs, except in the case
where the rights and obligations arising from the contract are not transmissible by their nature,
or by stipulation or by provision of law.”
While in our successional system the responsibility of the heirs for the debts of their decedent
cannot exceed the value of the inheritance they receive from him, the principle remains intact
that these heirs succeed not only to the rights of the deceased but also to his obligations.
Articles 774 and 776 of the New Civil Code (and Articles 659 and 661 of the preceding one)
expressly so provide, thereby confirming Article 1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through his
death to another or others either by his will or by operation of law.”
“ART. 776. — The inheritance includes all the property, rights and obligations of a person
which are not extinguished by his death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:chanroblesvirtuallawlibrary
“Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all the
rights and obligations of the deceased (Article 661) and cannot be regarded as third parties
with respect to a contract to which the deceased was a party, touching the estate of the
deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected by the provisions of the new Code
of Civil Procedure, and, in accordance with that principle, the heirs of a deceased person
cannot be held to be “third persons” in relation to any contracts touching the real estate of their
decedent which comes in to their hands by right of inheritance; 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 in the guarantor or surety makes the latter’s
undertaking strictly personal, so linked to his individuality that the guaranty automatically
terminates upon his death.

The contracts of suretyship entered into by K. H. Hemady in favor of Luzon Surety Co. not
being rendered intransmissible due to the nature of the undertaking, nor by the stipulations of
the contracts themselves, nor by provision of law, his eventual liability thereunder necessarily
passed upon his death to his heirs. The contracts, therefore, give rise to contingent claims
provable against his estate under section 5, Rule 87 (2 Moran, 1952 ed., p. 437; 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.
G.R. No. 118248 April 5, 2000
DKC HOLDINGS CORPORATION,petitioner,
vs.
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO
MANILA, DISTRICT III, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari seeking the reversal of the December 5, 1994
Decision of the Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC Holdings Corporation
vs. Victor U. Bartolome, et al.",1 affirming in toto the January 4, 1993 Decision of the Regional
Trial Court of Valenzuela, Branch 172,2 which dismissed Civil Case No. 3337-V-90 and
ordered petitioner to pay P30,000.00 as attorney's fees.
The subject of the controversy is a 14,021 square meter parcel of land located in Malinta,
Valenzuela, Metro Manila which was originally owned by private respondent Victor U.
Bartolome's deceased mother, Encarnacion Bartolome, under Transfer Certificate of Title No.
B-37615 of the Register of Deeds of Metro Manila, District III. This lot was in front of one of the
textile plants of petitioner and, as such, was seen by the latter as a potential warehouse site.
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with
Encarnacion Bartolome, whereby petitioner was given the option to lease or lease with
purchase the subject land, which option must be exercised within a period of two years
counted from the signing of the Contract. In turn, petitioner undertook to pay P3,000.00 a
month as consideration for the reservation of its option. Within the two-year period, petitioner
shall serve formal written notice upon the lessor Encarnacion Bartolome of its desire to
exercise its option. The contract also provided that in case petitioner chose to lease the
property, it may take actual possession of the premises. In such an event, the lease shall be
for a period of six years, renewable for another six years, and the monthly rental fee shall be
P15,000.00 for the first six years and P18,000.00 for the next six years, in case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion
until her death in January 1990. Thereafter, petitioner coursed its payment to private
respondent Victor Bartolome, being the sole heir of Encarnacion. Victor, however, refused to
accept these payments.
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over all the
properties of Encarnacion, including the subject lot. Accordingly, respondent Register of Deeds
cancelled Transfer Certificate of Title No. B-37615 and issued Transfer Certificate of Title No.
V-14249 in the name of Victor Bartolome.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it was
exercising its option to lease the property, tendering the amount of P15,000.00 as rent for the
month of March. Again, Victor refused to accept the tendered rental fee and to surrender
possession of the property to petitioner.
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking
Corporation, Cubao Branch, in the name of Victor Bartolome and deposited therein the
P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the months of
February and March.
Petitioner also tried to register and annotate the Contract on the title of Victor to the property.
Although respondent Register of Deeds accepted the required fees, he nevertheless refused to
register or annotate the same or even enter it in the day book or primary register.1âwphi1.nêt
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and damages
against Victor and the Register of Deeds,3 docketed as Civil Case No. 3337-V-90 which was
raffled off to Branch 171 of the Regional Trial Court of Valenzuela. Petitioner prayed for the
surrender and delivery of possession of the subject land in accordance with the Contract
terms; the surrender of title for registration and annotation thereon of the Contract; and the
payment of P500,000.00 as actual damages, P500,000.00 as moral damages, P500,000.00 as
exemplary damages and P300,000.00 as attorney's fees.
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss4 was filed by one
Andres Lanozo, who claimed that he was and has been a tenant-tiller of the subject property,
which was agricultural riceland, for forty-five years. He questioned the jurisdiction of the lower
court over the property and invoked the Comprehensive Agrarian Reform Law to protect his
rights that would be affected by the dispute between the original parties to the case.
On May 18, 1990, the lower court issued an Order5 referring the case to the Department of
Agrarian Reform for preliminary determination and certification as to whether it was proper for
trial by said court.
On July 4, 1990, the lower court issued another Order6 referring the case to Branch 172 of the
RTC of Valenzuela which was designated to hear cases involving agrarian land, after the
Department of Agrarian Reform issued a letter-certification stating that referral to it for
preliminary determination is no longer required.
On July 16, 1990, the lower court issued an Order denying the Motion to Intervene,7 holding
that Lanozo's rights may well be ventilated in another proceeding in due time.
After trial on the merits, the RTC of Valenzuela, Branch 172 rendered its Decision on January
4, 1993, dismissing the Complaint and ordering petitioner to pay Victor P30,000.00 as
attorney's fees. On appeal to the CA, the Decision was affirmed in toto.
Hence, the instant Petition assigning the following errors:
(A)
FIRST ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PROVISION ON
THE NOTICE TO EXERCISE OPTION WAS NOT TRANSMISSIBLE.
(B)
SECOND ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE NOTICE OF
OPTION MUST BE SERVED BY DKC UPON ENCARNACION BARTOLOME PERSONALLY.
(C)
THIRD ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT WAS
ONE-SIDED AND ONEROUS IN FAVOR OF DKC.
(D)
FOURTH ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE EXISTENCE OF A
REGISTERED TENANCY WAS FATAL TO THE VALIDITY OF THE CONTRACT.
(E)
FIFTH ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-
APPELLANT WAS LIABLE TO DEFENDANT-APPELLEE FOR ATTORNEY'S FEES.8
The issue to be resolved in this case is whether or not the Contract of Lease with Option to
Buy entered into by the late Encarnacion Bartolome with petitioner was terminated upon her
death or whether it binds her sole heir, Victor, even after her demise.
Both the lower court and the Court of Appeals held that the said contract was terminated upon
the death of Encarnacion Bartolome and did not bind Victor because he was not a party
thereto.
Art. 1311 of the Civil Code provides, as follows —
Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.
xxx xxx xxx
The general rule, therefore, is that heirs are bound by contracts entered into by their
predecessors-in-interest except when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making the rights
and obligations under the contract intransmissible. More importantly, the nature of the rights
and obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as
follows:
Among contracts which are intransmissible are those which are purely personal, either by
provision of law, such as in cases of partnerships and agency, or by the very nature of the
obligations arising therefrom, such as those requiring special personal qualifications of the
obligor. It may also be stated that contracts for the payment of money debts are not
transmitted to the heirs of a party, but constitute a charge against his estate. Thus, where the
client in a contract for professional services of a lawyer died, leaving minor heirs, and the
lawyer, instead of presenting his claim for professional services under the contract to the
probate court, substituted the minors as parties for his client, it was held that the contract could
not be enforced against the minors; the lawyer was limited to a recovery on the basis of
quantum meruit.9
In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of
special knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or
other personal qualification of one or both parties, the agreement is of a personal nature, and
terminates on the death of the party who is required to render such service." 10
It has also been held that a good measure for determining whether a contract terminates upon
the death of one of the parties is whether it is of such a character that it may be performed by
the promissor's personal representative. Contracts to perform personal acts which cannot be
as well performed by others are discharged by the death of the promissor. Conversely, where
the service or act is of such a character that it may as well be performed by another, or where
the contract, by its terms, shows that performance by others was contemplated, death does
not terminate the contract or excuse nonperformance. 11
In the case at bar, there is no personal act required from the late Encarnacion Bartolome.
Rather, the obligation of Encarnacion in the contract to deliver possession of the subject
property to petitioner upon the exercise by the latter of its option to lease the same may very
well be performed by her heir Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs." 12 In
1952, it was ruled that if the predecessor was duty-bound to reconvey land to another, and at
his death the reconveyance had not been made, the heirs can be compelled to execute the
proper deed for reconveyance. This was grounded upon the principle that heirs cannot escape
the legal consequence of a transaction entered into by their predecessor-in-interest because
they have inherited the property subject to the liability affecting their common ancestor. 13
It is futile for Victor to insist that he is not a party to the contract because of the clear provision
of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there is privity of
interest between him and his deceased mother. He only succeeds to what rights his mother
had and what is valid and binding against her is also valid and binding as against him. 14 This
is clear from Parañaque Kings Enterprises vs. Court of Appeals, 15 where this Court rejected a
similar defense —
With respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have violated
its provisions, but he is nevertheless a proper party. Clearly, he stepped into the shoes of the
owner-lessor of the land as, by virtue of his purchase, he assumed all the obligations of the
lessor under the lease contract. Moreover, he received benefits in the form of rental payments.
Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the
properties to him. Both pleadings also alleged collusion between him and respondent Santos
which defeated the exercise by petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if
not indispensable, party to the case. A favorable judgment for the petitioner will necessarily
affect the rights of respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease, which is a property
right. The death of a party does not excuse nonperformance of a contract which involves a
property right, and the rights and obligations thereunder pass to the personal representatives
of the deceased. Similarly, nonperformance is not excused by the death of the party when the
other party has a property interest in the subject matter of the contract. 16
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the
subject Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had complied with its
obligations under the contract and with the requisites to exercise its option. The payment by
petitioner of the reservation fees during the two-year period within which it had the option to
lease or purchase the property is not disputed. In fact, the payment of such reservation fees,
except those for February and March, 1990 were admitted by Victor. 17 This is clear from the
transcripts, to wit —
ATTY. MOJADO:
One request, Your Honor. The last payment which was allegedly made in January 1990 just
indicate in that stipulation that it was issued November of 1989 and postdated January 1990
and then we will admit all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There was no payment with respect to payment of rentals. 18
Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing
the same in China Bank Savings Account No. 1-04-02558-I-1, in the name of Victor as the sole
heir of Encarnacion Bartolome, 19 for the months of March to July 30, 1990, or a total of five
(5) months, despite the refusal of Victor to turn over the subject property. 20
Likewise, petitioner complied with its duty to inform the other party of its intention to exercise
its option to lease through its letter dated Match 12, 1990, 21 well within the two-year period for
it to exercise its option. Considering that at that time Encarnacion Bartolome had already
passed away, it was legitimate for petitioner to have addressed its letter to her heir.1âwphi1

It appears, therefore, that the exercise by petitioner of its option to lease the subject property
was made in accordance with the contractual provisions. Concomitantly, private respondent
Victor Bartolome has the obligation to surrender possession of and lease the premises to
petitioner for a period of six (6) years, pursuant to the Contract of Lease with Option to Buy.

Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the
present petition. We note that the Motion to Intervene and to Dismiss of the alleged tenant,
Andres Lanozo, was denied by the lower court and that such denial was never made the
subject of an appeal. As the lower court stated in its Order, the alleged right of the tenant may
well be ventilated in another proceeding in due time.

WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The
Decision of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional Trial Court
of Valenzuela in Civil Case No. 3337-V-90 are both SET ASIDE and a new one rendered
ordering private respondent Victor Bartolome to:

(a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of
Title No. V-14249 by way of lease to petitioner and to perform all obligations of his
predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease with
Option to Buy;

(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent
Register of Deeds for registration and annotation thereon of the subject Contract of Lease with
Option to Buy;

(c) pay costs of suit.

Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject
Contract of Lease with Option to Buy at the back of Transfer Certificate of Title No. V-14249
upon submission by petitioner of a copy thereof to his office.

SO ORDERED.1âwphi1.nêt

Davide, Jr., C.J., Puno, Kapunan and Pardo, 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.

Gutierrez, Jr., Feliciano and Cortes, JJ., concur.

Bidin J., took no part.

Republic of the Philippines That the interest of an heir in the estate of a deceased person may be attached for purposes of
SUPREME COURT execution, even if the estate is in the process of settlement before the courts, is already a
Manila settled matter in this jurisdiction. 9

EN BANC It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on
May 25, 1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the
G.R. No. L-24434 January 17, 1968 entire estate of the decedent — provided all the requisites for its validity are fulfilled 10 — even
without the approval of the court. Therefore, the estate for all practical purposes have been
HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIA REGANON, JOSEFA settled. The heirs are at full liberty to withdraw the residuary estate from the Philippine National
REGANON, VIOLETA REGANON, and FLORA REGANON, plaintiffs-appellees, Bank-Dipolog Branch and divide it among themselves. The only reason they have not done so
vs. is because of the alleged illegal withdrawal from said estate of the amount of P1,080.00 by one
RUFINO IMPERIAL, defendant-appellant. Gloria Gomez by authority of Branch I of the Court of First Instance of Zamboanga del Norte,
which incident is now on appeal before the Court of Appeals. This appeal, however, does not
Torcuato L. Galon for plaintiffs-appellees. detract any from the fact that the guardianship proceedings is closed and terminated and the
V. Lacaya for defendant-appellant. residuary estate no longer under custodia legis.

BENGZON, J.P., J.:
This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964,
respectively, of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).
The facts of the case are admitted by both parties.
On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership
and possession of about one-hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952,
situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of
7.9954 hectares), with damages, against Rufino Imperial.
Finally, it is defendant-appellant's position that the residuary estate of Eulogio Imperial, a
former U.S. veteran, having been set aside from the monthly allowances given him by the
United States Veterans Administration (USVA) during his lifetime, is exempt from execution.
Any pension, annuity, or gratuity granted by a Government to its officers or employees in
recognition of past services rendered, is primordially aimed at tiding them over during their old
age and/or disability. This is therefore a right personalissima, purely personal because founded
on necessity. It requires no argument to show that where the recipient dies, the necessity
motivating or underlying its grant necessarily ceases to be. Even more so in this case where
the law 11 providing for the exemption is calculated to benefit U.S. veterans residing here, and
is therefore merely a manifestation of comity.

Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have
1963 filed a motion to declare the former in default. The trial court granted the motion in its already executed a Deed of Extrajudicial Partition — the end result of which is that the property
order dated April 10, 1963. is no longer the property of the estate but of the individual heirs. And it is settled that:

On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court When the heirs by mutual agreement have divided the estate among themselves, one of the
acting as Commissioner. The court a quo on May 6, 1963, rendered a decision declaring the heirs can not therefore secure the appointment of an administrator to take charge of and
plaintiffs lawful owners of the land in question and entitled to its peaceful possession and administer the estate or a part thereof. The property is no longer the property of the estate, but
enjoyment; ordering defendant immediately to vacate the portion occupied by him and to of the individual heirs, whether it remains undivided or not. 12
restore the peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs
the amount of P1,929.20 and the costs. WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-
appellant. So ordered.1äwphï1.ñët
On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This
was granted by the trial court in its order of December 9, 1963. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.
The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff's return of proceedings
reporting the garnishment and sale of a carabao and goat belonging to defendant for P153.00,
and the attachment and sale of defendant's parcel of land covered by Tax Declaration No.
4694, situated in Sicet, Polanco, Zamboanga del Norte, for P500.00 — both sales having been
made to the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-
Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of
P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del
Norte in Sp. Proc. No. R-145.

On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a
Deed of Extrajudicial Partition of the residuary estate, wherein was apportioned P1,471.97 as
defendant Rufino Imperial's share.

Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for
issuance of an alias writ of execution and of an order directing the manager, or the
representative, of the Philippine National Bank-Dipolog Branch, to hold the share of defendant
and deliver the same to the provincial sheriff of the province to be applied to the satisfaction of
the balance of the money judgment. This was granted by the trial court (Branch II) in its order
dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy
addressed to defendant, giving notice of the garnishment of the rights, interests, shares and
participation that defendant may have over the residuary estate of the late Eulogio Imperial,
consisting of the money deposited in the Philippine National Bank-Dipolog Branch.

Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964
filed a motion for reconsideration of the order dated June 9, 1964, and to quash the alias writ
of execution issued pursuant to it, to which plaintiffs filed their opposition on July 6, 1964. On
July 14, 1964, the trial court denied defendant's aforesaid motion.

Defendant's second motion for reconsideration likewise having denied by the trial court in its
order of August 11, 1964, defendant appealed to Us, raising the following issues:

(1) Upon the death of a ward, is the money accumulated in his guardianship proceedings and
deposited in a bank, still considered in custodia legis and therefore cannot be attached?

(2) Is the residuary estate of a U.S. veteran, which consists in the aggregate accumulated sum
from the monthly allowances given him by the United States Veterans Administration (USVA)
during his lifetime, exempt from execution?

Defendant-appellant argues that the property of an incompetent under guardianship is in

custodia legis and therefore can not be attached.

It is true that in a former case 1 it was held that property under custodia legis can not be
attached. But this was under the old Rules of Court. The new Rules of Court 2 now specifically
provides for the procedure to be followed in case what is attached is in custodia legis. 3 The
clear import of this new provision is that property under custodia legis is now attachable,
subject to the mode set forth in said rule.

Besides, the ward having died, the guardianship proceedings no longer subsist:

The death of the ward necessarily terminates the guardianship, and thereupon all powers and
duties of the guardian cease, except the duty, which remains, to make a proper accounting
and settlement in the probate court. 4

As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I
of the Court of First Instance of Zamboanga del Norte in which it was pending, in its order of
February 8, 1964, where it stated —

In the meantime, the guardian Philippine National Bank is hereby directed to deposit the
residuary estate of said ward with its bank agency in Dipolog, this province, in the name of the
estate of the deceased ward Eulogio Imperial, preparatory to the eventual distribution of the
same to the heirs when the latter shall be known, and upon proof of deposit of said residuary
estate, the guardian Philippine National Bank shall forthwith be relieved from any responsibility
as such, and this proceeding shall be considered closed and terminated. 5

And the condition has long been fulfilled, because on March 13, 1964 the Philippine National
Bank-Manila deposited the residuary estate of the ward with the Philippine National Bank-
Dipolog Branch, evidenced by a receipt attached to the records in Sp. Proc. No. R-145. 6

When Eulogio Imperial died on September 13, 1962, the rights to his succession — from the
moment of his death — were transmitted to his heirs, one of whom is his son and heir,
defendant-appellant herein. 7 This automatic transmission can not but proceed with greater
ease and certainty than in this case where the parties agree that the residuary estate is not
burdened with any debt. For,

The rights to the succession of a person are transmitted from the moment of death, and where,
as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir
immediately succeeds, by force of law, to the dominion, ownership, and possession of the
properties of his predecessor and consequently stands legally in the shoes of the latter. 8
SECOND DIVISION
G.R. No. 191031, October 05, 2015
DOLORES L. HACBANG AND BERNARDO J. HACBANG, Petitioners, v. ATTY. BASILIO H.
ALO, Respondent.
DECISION
BRION, J.:*
This petition for review on certiorari seeks to reverse the 13 October 2009 Decision and the 21
January 2010 resolution of the Court of Appeals (CA) in CA-G.R CV No. 83137.1 The CA
affirmed the Quezon City Regional Trial Court's (RTC) dismissal of the petitioners' complaint in
Civil Case No. Q 99-366602 for lack of cause of action.
ANTECEDENTS
On 3 April 1937, Bishop Sofronio Hacbang (Bishop Sofronio) died leaving several properties
behind. Among these was Lot No. 8-A of subdivision Plan Psd-6227 located at España Street,
San Juan, Rizal,3 covered by Transfer Certificate of Title (TCT) No. (19896) 227644 (the
subject lot).
Bishop Sofronio was survived by his parents, Basilio and Maria Hacbang, and his siblings:
Perfecto Hacbang, Joaquin Hacbang, Lucia Teresita Hacbang, and Dolores Hacbang Alo.
Petitioner Dolores L. Hacbang is the grandchild of Perfecto while petitioner Bernardo Hacbang
(Bernardo) is a son of Joaquin. The respondent Basilio Alo is the son of Dolores.
Bishop Sofronio left a will denominated as Ultima Voluntad y Testamento. He left one-half of
his properties to his parents and devised the other half - including the subject lot - to his sister
Dolores. The pertinent portions of his will read:cralawlawlibrary
FOURTH: By these presents I give, name, declare and institute as heirs my parents BASILIO
HACBANG and MARIA GABORNY DE HACBANG of one-half of all my properties, whether
real, personal or mixed, in whatever place they may be found, whether they were acquired
before or after the execution of this testament, including all the properties that at the time of my
death I may have the power to dispose of by will, and which properties consist of the
following:chanRoblesvirtualLawlibrary
Fifty (50) percent of the shares of stock that I own in the "SAMAR NAVIGATION CO. INC."
A parcel of land with its camarin situated in the Municipality of Carigara, Province of Leyte.
A parcel of land in the Barrio of Pinamopuan, of the Municipality of Capoocan, Province of
Leyte.
A parcel of land with house and planted to coconuts in the Barrio of Sorsogon, Municipality of
Sta. Margarita, Province of Samar.
FIFTH: The other remaining half of my properties wherever they may be located, by these
presents I give, cede and hand over to my sister Dolores Hacbang, which properties are more
particularly described as follows:chanRoblesvirtualLawlibrary
Fifty (50) percent of my stockholdings in the "SAMAR NAVIGATION CO. INC."
A piece of land with one house where the Botica San Antonio is located, in the Municipality of
Calbayog, Province of Samar.
A piece of land with house in Acedillo St., Municipality of Calbayog, Province of Samar.
A piece of land with 1 camarin in the barrio of Sorsogon, Municipality of Sta. Margarita,
Province of Samar.
Six (6) Parcels of land located in "NEW MANILA," Municipality of San Juan, Province of Rizal,
in 7th St., described as follows: Block 7, Lots 16, 18, 20 and 22, and in 3rd Street, Block 3,
Lots 4 and 6.
A piece of land situated in Espana St., Municipality of San Juan del Monte of the Province of
Rizal, marked as Lot 8-A, Block 17, of 1,403 square meters in area.4chanrobleslaw
On 16 April 1937, a petition for the probate of Bishop Sofronio's will and the settlement of his
estate was filed before the then Court of First Instance (CFI) of Manila. The petition was
docketed as SP. PROC. No. 51199.
On 21 May 1937, the CFI admitted Bishop Sofronio's will to probate.5
The records are bare with respect to what happened next. They show, however, that the CFI
ordered the proceedings to be archived on 2 November 1957.
On 24 September 1971, the Register of Deeds of Quezon City appears to have issued TCT
No. 169342 over the subject lot in the name of respondent Basilio H. Alo. TCT No. 169342
cancelled TCT No. 117322/T-500. However, this Court cannot determine the circumstances
surrounding the issuance of TCT No. 169342 or the relationship between TCT No. 117322/T-
500 and TCT No. (19896) 227644 due to the inadequacy of the documents on record.
On 17 March 1975, Dolores Hacbang Alo moved to revive the settlement proceedings because
the CFI had not yet completed adjudicating the properties.
On 23 May 1975, the CFI denied the motion for revival because the order to archive "had long
become final and executory."6
On 1 February 1999, petitioners Dolores L. Hacbang and Bernardo filed a petition to cancel
TCT No. 169342 on the ground that it was fraudulently secured. In support of their allegations,
they submitted the 5 March 1997 Investigation Report of Land Registration Authority (LRA)
Investigator Rodrigo I. Del Rosario. The report concluded that TCT No. 117322 was of
"doubtful authenticity" and was neither derived from TCT No. 117322 nor issued by the
Registry of Deeds of Quezon City on 24 September 1971 at 2:30 PM.
In his Answer dated 18 August 1999, Basilio denied all allegations of irregularity and
wrongdoing. He also moved to dismiss the petition because the petitioners were neither heirs
nor devisees of Bishop Sofronio and had no legal interest in the subject lot.
On 7 January 2003, the RTC dismissed the petition because the petitioners had no right to
prosecute the case on the subject lot. The RTC noted that Bishop Sofronio's will had already
been admitted into probate in 1937; thus, the intrinsic validity of the will is no longer in
question. Though the settlement proceedings were archived, Bishop Sofronio already
designated his heirs: Bishop Sofronio's parents were compulsory heirs entitled to half of his
estate while the respondent's mother, Dolores Hacbang Alo, was devised the remaining half
(the free portion). Thus, the petitioners, who are neither compulsory nor testamentary heirs,
are not real parties in interest.
The petitioners moved for reconsideration which the RTC denied on 19 August 2003.
The petitioners appealed to the CA, arguing that: (1) Bishop Sofronio's will did not validly
transfer the subject property to Dolores Hacbang Alo; (2) the probate of the will is not
conclusive as to the validity of its intrinsic provisions; and (3) only a final decree of distribution
of the estate vests title on the properties from the estate on the distributees.7 The appeal was
docketed as CA-G.R CV No. 83137.
They further argued that the distribution of the estate should be governed by intestate
succession because: (1) the subject property was not adjudicated; and (2) the settlement
proceedings were archived and dismissed. Thus, all the properties passed on to and became
part of the estate of Bishop Sofronio's parents. The petitioners concluded that they had legal
interest in the subject lot as representatives of their ascendants, the other children of Bishop
Sofronio's parents.
In his appeal brief, the respondent insisted that the petitioners do not have a clear legal right to
maintain the suit because: (1) as collateral relatives, they cannot invoke the right of
representation to the estate of Bishop Sofronio; and (2) they are not real parties in interest and
have no right of action over the subject lot.
On 13 October 2009, the CA affirmed the RTC's order of dismissal. The CA held that the
admission of Bishop Sofronio's will to probate precluded intestate succession unless the will
was intrinsically invalid or failed to completely dispose of his estate. Contrary to the petitioners'
contention, the settlement proceedings were not dismissed but archived; the will did not lose
its validity merely because the proceedings were archived. Undoubtedly, Bishop Sofronio did
not die intestate.
The CA denied the petitioners' claim to a right of inheritance by representation. It held that the
presence of Bishop Sofronio's parents during his death excluded his brothers and sisters from
being compulsory heirs; the petitioners cannot represent those who are hot entitled to
succeed. Considering that they are neither compulsory nor testamentary heirs, petitioners
have no legal interest in the subject property.
The petitioners moved for reconsideration which the CA denied on 21 January 2010. The
denial paved the way for the petitioners to file the present petition for review on certiorari.
THE PETITION
The petitioners argue: (1) that the CA erred when it failed to rule on the validity of TCT No.
169342; (2) that the probate proceedings of the estate was dismissed, not archived; and (3)
that the CA erred when it used Bishop Sofronio's will as basis to declare that they are not real
parties in interest.
In his Comment, the respondent maintained that the petitioners had no right over the property
and moved to dismiss the present petition.
OUR RULING
At the outset, this Court observes that the parties and even the lower courts erroneously
applied the provisions of the present Civil Code to the will and the estate of Bishop Sofronio.
The law in force at the time of the decedent's death determines the applicable law over the
settlement of his estate.8 Bishop Sofronio died in 1937 before the enactment of the Civil Code
in 1949. Therefore, the correct applicable laws to the settlement of his estate are the 1889
Spanish Civil Code and the 1901 Code of Civil Procedure.
In any case, under both the Spanish Code and our Civil Code, successional rights are vested
at the precise moment of the death of the decedent. Section 657 of the Spanish code
provides:cralawlawlibrary
Art. 657. Los derechos a la sucesion de una persona se transmiten desde el momento de su
muerte.9chanrobleslaw
The inheritance vests immediately upon the decedent's death without a moment's interruption.
This provision was later on translated and adopted as Article 777 of our Civil Code.10
As a consequence of this principle, ownership over the inheritance passes to the heirs at the
precise moment of death - not at the time the heirs are declared, nor at the time of the
partition, nor at the distribution of the properties. There is no interruption between the end of
the decedent's ownership and the start of the heir/legatee/devisee's ownership.
For intestate heirs, this means that they are immediately entitled to their hereditary shares in
the estate even though they may not be entitled to any particular properties yet. For legatees
and devisees granted specific properties, this means that they acquire ownership over the
legacies and devises at that immediate moment without prejudice to the legitimes of
compulsory heirs.
Undoubtedly, Bishop Sofronio did not die intestate. He left a will that was probated in 1937. He
left half of his properties to his parents and the remaining half to his sister Dolores Hacbang
Alo. The admission of his will to probate is conclusive with respect to its due execution and
extrinsic validity.11
Unfortunately, the settlement proceedings were never concluded; the case was archived
without any pronouncement as to the intrinsic validity of the will or an adjudication of the
properties. Because of this, the petitioners posit that intestate succession should govern. They
maintain that the entire inheritance should have gone to Bishop Sofronio's parents, the
petitioners' ascendants. Thus, they claim to have a legal interest in the subject lot as
representatives of the other children of Bishop Sofronio's parents.
We do not find the petitioners' argument meritorious.
Our jurisdiction has always respected a decedent's freedom to dispose of his estate, whether
under the Spanish Civil Code or under the present Civil Code. Article 763 of the Spanish Code
provides:cralawlawlibrary
Art. 763. El que no tuviere herederos forzosos puede disponer por testamento de todos sus
bienes o de parte de ellos en favor de cualquiera persona que tenga capacidad para
adquirirlos. El que tuviere herederos forzosos solo podra disponer de sus bienes en la forma y
con las limitaciones que se establecen en la section quinta de este capitulo.chanrobleslaw
This provision states that a person without compulsory heirs may dispose of his estate, either
in part or in its entirety, in favor of anyone capacitated to succeed him; if the testator has
compulsory heirs, he can dispose of his property provided he does not impair their legitimes.
This provision was later translated and adopted as Article 842 of our Civil Code.12
Our jurisdiction accords great respect to the testator's freedom of disposition. Hence, testate
succession has always been preferred over intestacy.13 As much as possible, a testator's will
is treated and interpreted in a way that would render all of its provisions operative.14 Hence,
there is no basis to apply the provisions on intestacy when testate succession evidently
applies.
Even though the CFI archived the settlement proceedings, there is no indication that it
declared any of the dispositions in the will invalid. The records are understandably bare
considering the probate proceedings were initiated as early as 1937. Nonetheless, we find no
reason to doubt the intrinsic validity of the will.
Bishop Sofronio was free to dispose of his estate without prejudice to the legitimes of his
compulsory heirs. Bishop Sofronio's only compulsory heirs were his parents.15 Their legitime
was one-half of Bishop Sofronio's estate.16 Considering that Bishop Sofronio gave his parents
half of his estate, then he was free to dispose of the free portion of his estate in favor of his
sister, Dolores Hacbang Alo. Thus, his will was intrinsically valid.
The CFPs failure to adjudicate the specific properties is irrelevant because Bishop Sofronio did
not just name his heirs; he also identified the specific properties forming part of their
inheritance. The dispositions in the will rendered court adjudication and distribution
unnecessary.
The petitioners' contention that only a final decree of distribution of the estate vests title to the
land of the estate in the distributees is also incorrect. Again, ownership over the inheritance
vests upon the heirs, legatees, and devisees immediately upon the death of the decedent.
At the precise moment of death, the heirs become owners of the estate pro-indiviso. They
become absolute owners of their undivided aliquot share but with respect to the individual
properties of the estate, they become co-owners. This co-ownership remains until partition and
distribution. Until then, the individual heirs cannot claim any rights over a specific property from
the estate. This is because the heirs do not know which properties will be adjudicated to them
yet. Hence, there is a need for a partition before title over particular properties vest in the
distributee-heirs.
However, heirs, legatees, and devisees bequeathed specific properties do not require Court
adjudication to identify which particular properties become theirs; the testator had already
identified these. From the very moment of the testator's death, title over these particular
properties vests on the heir, legatee, or devisee.

On 3 April 1937, title over the subject lot passed on to the respondent's mother, Dolores
Hacbang Alo, at the exact moment of her brother's death. From that moment on, she was free
to dispose of the subject lot as a consequence of her ownership.

On the other hand, Bishop Sofronio's parents, Basilio and Maria Gaborny Hacbang, never
acquired the title over the subject lot. Thus, it never became part of their estate. Clearly, the
petitioners - who claim to represent the children of Basilio and Maria Gaborny in the spouses'
estate -have no legal right or interest over the subject lot.

Every ordinary civil action must be based on a cause of action - an act or omission that
violates the rights of the plaintiff.17 A cause of action requires:chanRoblesvirtualLawlibrary

(1) a legal right in favor of the plaintiff;ChanRoblesVirtualawlibrary

(2) a correlative duty of the defendant to respect the plaintiffs right; and

(3) an act or omission of the defendant in violation of the plaintiffs right.18

Every action must also be prosecuted or defended in the name of the real party in interest: the
party who stands to be benefited or injured by the judgment.19 These fundamental
requirements are not merely technical matters; they go into the very substance of every suit.

The petitioners came to the courts praying for the annulment of the respondent's title yet they
failed to show that they are entitled to even ask for such relief. They have no right over the
subject lot and the respondent has no legal obligation to them with respect to the subject lot.
Even if we assume that the respondent fraudulently or irregularly secured his certificate of title,
the bottom-line is that the petitioners have no legal standing to sue for the cancellation of this
title. This right only belongs to the rightful owner of the subject lot.

Judicial power is the duty of the courts to settle actual controversies involving rights which are
legally demandable and enforceable.20 Courts settle real legal disputes involving the rights
and obligations between parties. If either of the parties is not the real party in interest, the
Court cannot grant the reliefs prayed for because that party has no legal right or duty with
respect to his opponent. Further litigation becomes an academic exercise in legal theory that
eventually settles nothing - a waste of time that could have been spent resolving actual
justiciable controversies.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. Costs against
the petitioners.

SO ORDERED.chanroblesvirtuallawlibrary

Peralta,** Del Castillo, Leonen, and Jardeleza,*** JJ., concur.

Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 140182. April 12, 2005
TANAY RECREATION CENTER AND DEVELOPMENT CORP., Petitioners,
vs.
CATALINA MATIENZO FAUSTO* and ANUNCIACION FAUSTO PACUNAYEN, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Petitioner Tanay Recreation Center and Development Corp. (TRCDC) is the lessee of a 3,090-
square meter property located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo
Fausto,1 under a Contract of Lease executed on August 1, 1971. On this property stands the
Tanay Coliseum Cockpit operated by petitioner. The lease contract provided for a 20-year
term, subject to renewal within sixty days prior to its expiration. The contract also provided that
should Fausto decide to sell the property, petitioner shall have the "priority right" to purchase
the same.2
On June 17, 1991, petitioner wrote Fausto informing her of its intention to renew the lease.3
However, it was Fausto’s daughter, respondent Anunciacion F. Pacunayen, who replied,
asking that petitioner remove the improvements built thereon, as she is now the absolute
owner of the property.4 It appears that Fausto had earlier sold the property to Pacunayen on
August 8, 1990, for the sum of ₱10,000.00 under a "Kasulatan ng Bilihan Patuluyan ng
Lupa,"5 and title has already been transferred in her name under Transfer Certificate of Title
(TCT) No. M-35468.6
Despite efforts, the matter was not resolved. Hence, on September 4, 1991, petitioner filed an
Amended Complaint for Annulment of Deed of Sale, Specific Performance with Damages, and
Injunction, docketed as Civil Case No. 372-M.7
In her Answer, respondent claimed that petitioner is estopped from assailing the validity of the
deed of sale as the latter acknowledged her ownership when it merely asked for a renewal of
the lease. According to respondent, when they met to discuss the matter, petitioner did not
demand for the exercise of its option to purchase the property, and it even asked for grace
period to vacate the premises.8
After trial on the merits, the Regional Trial Court of Morong, Rizal (Branch 78), rendered
judgment extending the period of the lease for another seven years from August 1, 1991 at a
monthly rental of ₱10,000.00, and dismissed petitioner’s claim for damages.9
On appeal, docketed as CA-G.R. CV No. 43770, the Court of Appeals (CA) affirmed with
modifications the trial court’s judgment per its Decision dated June 14, 1999.10 The dispositive
portion of the decision reads:
WHEREFORE, the appealed decision is AFFIRMED AND ACCORDINGLY MODIFIED AS
DISCUSSED.
Furthermore, we resolved:
1.0. That TRCDC VACATE the leased premises immediately;
2.0. To GRANT the motion of Pacunayen to allow her to withdraw the amount of ₱320,000.00,
deposited according to records, with this court.
3.0. To order TRCDC to MAKE THE NECESSARY ACCOUNTING regarding the amounts it
had already deposited (for unpaid rentals for the extended period of seven [7] years of the
contract of lease). In case it had not yet completed its deposit, to immediately pay the
remaining balance to Pacunayen.
4.0. To order TRCDC to PAY the amount of ₱10,000.00 as monthly rental, with regard to its
continued stay in the leased premises even after the expiration of the extended period of
seven (7) years, computed from August 1, 1998, until it finally vacates therefrom.
SO ORDERED.11
In arriving at the assailed decision, the CA acknowledged the priority right of TRCDC to
purchase the property in question. However, the CA interpreted such right to mean that it shall
be applicable only in case the property is sold to strangers and not to Fausto’s relative. The CA
stated that "(T)o interpret it otherwise as to comprehend all sales including those made to
relatives and to the compulsory heirs of the seller at that would be an absurdity," and "her
(Fausto’s) only motive for such transfer was precisely one of preserving the property within her
bloodline and that someone administer the property."12 The CA also ruled that petitioner
already acknowledged the transfer of ownership and is deemed to have waived its right to
purchase the property.13 The CA even further went on to rule that even if the sale is annulled,
petitioner could not achieve anything because the property will be eventually transferred to
Pacunayen after Fausto’s death.14
Petitioner filed a motion for reconsideration but it was denied per Resolution dated September
14, 1999.15
Dissatisfied, petitioner elevated the case to this Court on petition for review on certiorari,
raising the following grounds:
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
HOLDING THAT THE CONTRACTUAL STIPULATION GIVING PETITIONER THE PRIORITY
RIGHT TO PURCHASE THE LEASED PREMISES SHALL ONLY APPLY IF THE LESSOR
DECIDES TO SELL THE SAME TO STRANGERS;
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
HOLDING THAT PETITIONER’S PRIORITY RIGHT TO PURCHASE THE LEASED
PREMISES IS INCONSEQUENTIAL.16
The principal bone of contention in this case refers to petitioner’s priority right to purchase, also
referred to as the right of first refusal.
Petitioner’s right of first refusal in this case is expressly provided for in the notarized "Contract
of Lease" dated August 1, 1971, between Fausto and petitioner, to wit:
7. That should the LESSOR decide to sell the leased premises, the LESSEE shall have the
priority right to purchase the same;17
When a lease contract contains a right of first refusal, the lessor is under a legal duty to the
lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at
a certain price and the lessee has failed to accept it. The lessee has a right that the lessor's
first offer shall be in his favor.18 Petitioner’s right of first refusal is an integral and indivisible
part of the contract of lease and is inseparable from the whole contract. The consideration for
the lease includes the consideration for the right of first refusal19 and is built into the reciprocal
obligations of the parties.
It was erroneous for the CA to rule that the right of first refusal does not apply when the
property is sold to Fausto’s relative.20 When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon. As such, there can be,
between the parties and their successors in interest, no evidence of such terms other than the
contents of the written agreement, except when it fails to express the true intent and
agreement of the parties.21 In this case, the wording of the stipulation giving petitioner the
right of first refusal is plain and unambiguous, and leaves no room for interpretation. It simply
means that should Fausto decide to sell the leased property during the term of the lease, such
sale should first be offered to petitioner. The stipulation does not provide for the qualification
that such right may be exercised only when the sale is made to strangers or persons other
than Fausto’s kin. Thus, under the terms of petitioner’s right of first refusal, Fausto has the
legal duty to petitioner not to sell the property to anybody, even her relatives, at any price until
after she has made an offer to sell to petitioner at a certain price and said offer was rejected by
petitioner. Pursuant to their contract, it was essential that Fausto should have first offered the
property to petitioner before she sold it to respondent. It was only after petitioner failed to
exercise its right of first priority could Fausto then lawfully sell the property to respondent.
The rule is that a sale made in violation of a right of first refusal is valid. However, it may be
rescinded, or, as in this case, may be the subject of an action for specific performance.22 In
Riviera Filipina, Inc. vs. Court of Appeals,23 the Court discussed the concept and
interpretation of the right of first refusal and the consequences of a breach thereof, to wit:
. . . It all started in 1992 with Guzman, Bocaling & Co. v. Bonnevie where the Court held that a
lease with a proviso granting the lessee the right of first priority "all things and conditions being
equal" meant that there should be identity of the terms and conditions to be offered to the
lessee and all other prospective buyers, with the lessee to enjoy the right of first priority. A
deed of sale executed in favor of a third party who cannot be deemed a purchaser in good
faith, and which is in violation of a right of first refusal granted to the lessee is not voidable
under the Statute of Frauds but rescissible under Articles 1380 to 1381 (3) of the New Civil
Code.
Subsequently in 1994, in the case of Ang Yu Asuncion v. Court of Appeals, the Court en banc
departed from the doctrine laid down in Guzman, Bocaling & Co. v. Bonnevie and refused to
rescind a contract of sale which violated the right of first refusal. The Court held that the so-
called "right of first refusal" cannot be deemed a perfected contract of sale under Article 1458
of the New Civil Code and, as such, a breach thereof decreed under a final judgment does not
entitle the aggrieved party to a writ of execution of the judgment but to an action for damages
in a proper forum for the purpose.
In the 1996 case of Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the Court en
banc reverted back to the doctrine in Guzman Bocaling & Co. v. Bonnevie stating that
rescission is a relief allowed for the protection of one of the contracting parties and even third
persons from all injury and damage the contract may cause or to protect some incompatible
and preferred right by the contract.
Thereafter in 1997, in Parañaque Kings Enterprises, Inc. v. Court of Appeals, the Court
affirmed the nature of and the concomitant rights and obligations of parties under a right of first
refusal. The Court, summarizing the rulings in Guzman, Bocaling & Co. v. Bonnevie and
Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., held that in order to have full
compliance with the contractual right granting petitioner the first option to purchase, the sale of
the properties for the price for which they were finally sold to a third person should have
likewise been first offered to the former. Further, there should be identity of terms and
conditions to be offered to the buyer holding a right of first refusal if such right is not to be
rendered illusory. Lastly, the basis of the right of first refusal must be the current offer to sell of
the seller or offer to purchase of any prospective buyer.
The prevailing doctrine therefore, is that a right of first refusal means identity of terms and
conditions to be offered to the lessee and all other prospective buyers and a contract of sale
entered into in violation of a right of first refusal of another person, while valid, is rescissible.24
It was also incorrect for the CA to rule that it would be useless to annul the sale between
Fausto and respondent because the property would still remain with respondent after the death
of her mother by virtue of succession, as in fact, Fausto died in March 1996, and the property
now belongs to respondent, being Fausto’s heir.25
For one, Fausto was bound by the terms and conditions of the lease contract. Under the right
of first refusal clause, she was obligated to offer the property first to petitioner before selling it
to anybody else. When she sold the property to respondent without offering it to petitioner, the
sale while valid is rescissible so that petitioner may exercise its option under the contract.
With the death of Fausto, whatever rights and obligations she had over the property, including
her obligation under the lease contract, were transmitted to her heirs by way of succession, a
mode of acquiring the property, rights and obligation of the decedent to the extent of the value
of the inheritance of the heirs. Article 1311 of the Civil Code provides:
ART. 1311. Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.
A lease contract is not essentially personal in character.26 Thus, the rights and obligations
therein are transmissible to the heirs. The general rule is that heirs are bound by contracts
entered into by their predecessors-in-interest except when the rights and obligations arising
therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law.27
In this case, the nature of the rights and obligations are, by their nature, transmissible. There is
also neither contractual stipulation nor provision of law that makes the rights and obligations
under the lease contract intransmissible. The lease contract between petitioner and Fausto is a
property right, which is a right that passed on to respondent and the other heirs, if any, upon
the death of Fausto.
In DKC Holdings Corporation vs. Court of Appeals,28 the Court held that the Contract of Lease
with Option to Buy entered into by the late Encarnacion Bartolome with DKC Holdings
Corporation was binding upon her sole heir, Victor, even after her demise and it subsists even
after her death. The Court ruled that:
. . . Indeed, being an heir of Encarnacion, there is privity of interest between him and his
deceased mother. He only succeeds to what rights his mother had and what is valid and
binding against her is also valid and binding as against him. This is clear from Parañaque
Kings Enterprises vs. Court of Appeals, where this Court rejected a similar defense-
With respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have violated
its provisions, but he is nevertheless a proper party. Clearly, he stepped into the shoes of the
owner-lessor of the land as, by virtue of his purchase, he assumed all the obligations of the
lessor under the lease contract. Moreover, he received benefits in the form of rental payments.
Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the
properties to him. Both pleadings also alleged collusion between him and respondent Santos
which defeated the exercise by petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if
not indispensable, party to the case. A favorable judgment for the petitioner will necessarily
affect the rights of respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.29 (Emphasis supplied)
Likewise in this case, the contract of lease, with all its concomitant provisions, continues even
after Fausto’s death and her heirs merely stepped into her shoes.30 Respondent, as an heir of
Fausto, is therefore bound to fulfill all its terms and conditions.
There is no personal act required from Fausto such that respondent cannot perform it.
Fausto’s obligation to deliver possession of the property to petitioner upon the exercise by the
latter of its right of first refusal may be performed by respondent and the other heirs, if any.
Similarly, nonperformance is not excused by the death of the party when the other party has a
property interest in the subject matter of the contract.31
The CA likewise found that petitioner acknowledged the legitimacy of the sale to respondent
and it is now barred from exercising its right of first refusal. According to the appellate court:
Second, when TRCDC, in a letter to Fausto, signified its intention to renew the lease contract,
it was Pacunayen who answered the letter on June 19, 1991. In that letter Pacunayen
demanded that TRCDC vacate the leased premises within sixty (60) days and informed it of
her ownership of the leased premises. The pertinent portion of the letter reads:
Furtherly, please be advised that the land is no longer under the absolute ownership of my
mother and the undersigned is now the real and absolute owner of the land.
Instead of raising a howl over the contents of the letter, as would be its expected and natural
reaction under the circumstances, TRCDC surprisingly kept silent about the whole thing. As we
mentioned in the factual antecedents of this case, it even invited Pacunayen to its special
board meeting particularly to discuss with her the renewal of the lease contract. Again, during
that meeting, TRCDC did not mention anything that could be construed as challenging
Pacunayen’s ownership of the leased premises. Neither did TRCDC assert its priority right to
purchase the same against Pacunayen.32
The essential elements of estoppel are: (1) conduct of a party amounting to false
representation or concealment of material facts or at least calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the party subsequently
attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by,
or at least influence, the other party; and (3) knowledge, actual or constructive, of the real
facts.33
The records are bereft of any proposition that petitioner waived its right of first refusal under
the contract such that it is now estopped from exercising the same. In a letter dated June 17,
1991, petitioner wrote to Fausto asking for a renewal of the term of lease.34 Petitioner cannot
be faulted for merely seeking a renewal of the lease contract because obviously, it was
working on the assumption that title to the property is still in Fausto’s name and the latter has
the sole authority to decide on the fate of the property. Instead, it was respondent who replied,
advising petitioner to remove all the improvements on the property, as the lease is to expire on
the 1st of August 1991. Respondent also informed petitioner that her mother has already sold
the property to her.35 In order to resolve the matter, a meeting was called among petitioner’s
stockholders, including respondent, on July 27, 1991, where petitioner, again, proposed that
the lease be renewed. Respondent, however, declined. While petitioner may have sought the
renewal of the lease, it cannot be construed as a relinquishment of its right of first refusal.
Estoppel must be intentional and unequivocal.36
Also, in the excerpts from the minutes of the special meeting, it was further stated that the
possibility of a sale was likewise considered.37 But respondent also refused to sell the land,
while the improvements, "if for sale shall be subject for appraisal."38 After respondent refused
to sell the land, it was then that petitioner filed the complaint for annulment of sale, specific
performance and damages.39 Petitioner’s acts of seeking all possible avenues for the
amenable resolution of the conflict do not amount to an intentional and unequivocal
abandonment of its right of first refusal.
Respondent was well aware of petitioner’s right to priority of sale, and that the sale made to
her by her mother was merely for her to be able to take charge of the latter’s affairs. As
admitted by respondent in her Appellee’s Brief filed before the CA, viz.:
After June 19, 1991, TRCDC invited Pacunayen to meeting with the officers of the corporation.
. . . In the same meeting, Pacunayen’s attention was called to the provision of the Contract of
Lease had by her mother with TRCDC, particularly paragraph 7 thereof, which states:
7. That should the lessor decide to sell the leased premises, the LESSEE shall have the
priority right to purchase the same.
Of course, in the meeting she had with the officers of TRCDC, Pacunayen explained that the
sale made in her favor by her mother was just a formality so that she may have the proper
representation with TRCDC in the absence of her parents, more so that her father had already
passed away, and there was no malice in her mine (sic) and that of her mother, or any
intention on their part to deceive TRCDC. All these notwithstanding, and for her to show their
good faith in dealing with TRCDC, Pacunayen started the ground work to reconvey ownership
over the whole land, now covered by Transfer Certificare (sic) of Title No. M-259, to and in the
name of her mother (Fausto), but the latter was becoming sickly, old and weak, and they found
no time to do it as early as they wanted to.40 (Emphasis supplied)
Given the foregoing, the "Kasulatan ng Bilihan Patuluyan ng Lupa" dated August 8, 1990
between Fausto and respondent must be rescinded. Considering, however, that Fausto
already died on March 16, 1996, during the pendency of this case with the CA, her heirs
should have been substituted as respondents in this case. Considering further that the Court
cannot declare respondent Pacunayen as the sole heir, as it is not the proper forum for that
purpose, the right of petitioner may only be enforced against the heirs of the deceased
Catalina Matienzo Fausto, represented by respondent Pacunayen.
In Parañaque Kings Enterprises, Inc. vs. Court of Appeals,41 it was ruled that the basis of the
right of the first refusal must be the current offer to sell of the seller or offer to purchase of any
prospective buyer. It is only after the grantee fails to exercise its right of first priority under the
same terms and within the period contemplated, could the owner validly offer to sell the
property to a third person, again, under the same terms as offered to the grantee. The
circumstances of this case, however, dictate the application of a different ruling. An offer of the
property to petitioner under identical terms and conditions of the offer previously given to
respondent Pacunayen would be inequitable. The subject property was sold in 1990 to
respondent Pacunayen for a measly sum of ₱10,000.00. Obviously, the value is in a small
amount because the sale was between a mother and daughter. As admitted by said
respondent, "the sale made in her favor by her mother was just a formality so that she may
have the proper representation with TRCDC in the absence of her parents…"42 Consequently,
the offer to be made to petitioner in this case should be under reasonable terms and
conditions, taking into account the fair market value of the property at the time it was sold to
respondent.
In its complaint, petitioner prayed for the cancellation of TCT No. M-35468 in the name of
respondent Pacunayen,43 which was issued by the Register of Deeds of Morong on February
7, 1991.44 Under ordinary circumstances, this would be the logical effect of the rescission of
the "Kasulatan ng Bilihan Patuluyan ng Lupa" between the deceased Fausto and respondent
Pacunayen. However, the circumstances in this case are not ordinary. The buyer of the subject
property is the seller’s own daughter. If and when the title (TCT No. M-35468) in respondent
Pacunayen’s name is cancelled and reinstated in Fausto’s name, and thereafter negotiations
between petitioner and respondent Pacunayen for the purchase of the subject property break
down, then the subject property will again revert to respondent Pacunayen as she appears to
be one of Fausto’s heirs. This would certainly be a winding route to traverse. Sound reason
therefore dictates that title should remain in the name of respondent Pacunayen, for and in
behalf of the other heirs, if any, to be cancelled only when petitioner successfully exercises its
right of first refusal and purchases the subject property.
Petitioner further seeks the award of the following damages in its favor: (1) ₱100,000.00 as
actual damages; (2) ₱1,100,000.00 as compensation for lost goodwill or reputation; (3)
₱100,000.00 as moral damages; (4) ₱100,000.00 as exemplary damages; (5) ₱50,000.00 as
attorney’s fees; (6) ₱1,000.00 appearance fee per hearing; and (7) the costs of suit.45
According to petitioner, respondent’s act in fencing the property led to the closure of the Tanay
Coliseum Cockpit and petitioner was unable to conduct cockfights and generate income of not
less than ₱100,000.00 until the end of September 1991, aside from the expected rentals from
the cockpit space lessees in the amount of ₱11,000.00.46
Under Article 2199 of the Civil Code, it is provided that:
Except as provided by law or by stipulation, one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred
to as actual or compensatory damages. (Emphasis supplied)
The rule is that actual or compensatory damages cannot be presumed, but must be proved
with reasonable degree of certainty. A court cannot rely on speculations, conjectures, or
guesswork as to the fact and amount of damages, but must depend upon competent proof that
they have been suffered by the injured party and on the best obtainable evidence of the actual
amount thereof. It must point out specific facts, which could afford a basis for measuring
whatever compensatory or actual damages are borne.47
In the present case, there is no question that the Tanay Coliseum Cockpit was closed for two
months and TRCDC did not gain any income during said period. But there is nothing on record
to substantiate petitioner’s claim that it was bound to lose some ₱111,000.00 from such
closure. TRCDC’s president, Ambrosio Sacramento, testified that they suffered income losses
with the closure of the cockpit from August 2, 1991 until it re-opened on October 20, 1991.48
Mr. Sacramento, however, cannot state with certainty the amount of such unrealized
income.49 Meanwhile, TRCDC’s accountant, Merle Cruz, stated that based on the
corporation’s financial statement for the years 1990 and 1991,50 they derived the amount of
₱120,000.00 as annual income from rent.51 From said financial statement, it is safe to
presume that TRCDC generated a monthly income of ₱10,000.00 a month (₱120,000.00
annual income divided by 12 months). At best therefore, whatever actual damages that
petitioner suffered from the cockpit’s closure for a period of two months can be reasonably
summed up only to ₱20,000.00.
Such award of damages shall earn interest at the legal rate of six percent (6%) per annum,
which shall be computed from the time of the filing of the Complaint on August 22, 1991, until
the finality of this decision. After the present decision becomes final and executory, the rate of
interest shall increase to twelve percent (12%) per annum from such finality until its
satisfaction, this interim period being deemed to be equivalent to a forbearance of credit.52
This is in accord with the guidelines laid down by the Court in Eastern Shipping Lines, Inc. vs.
Court of Appeals,53 regarding the manner of computing legal interest, viz.:
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum
to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code)
but when such certainty cannot be so reasonably established at the time the demand is made,
the interest shall begin to run only from the date the judgment of the court is made (at which
time quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount finally
adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed to be
by then an equivalent to a forbearance of credit.54
Petitioner also claims the amount of ₱1,100,000.00 as compensation for lost goodwill or
reputation. It alleged that "with the unjust and wrongful conduct of the defendants as above-
described, plaintiff stands to lose its goodwill and reputation established for the past 20
years."55
An award of damages for loss of goodwill or reputation falls under actual or compensatory
damages as provided in Article 2205 of the Civil Code, to wit:
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary or permanent personal
injury;
(2) For injury to the plaintiff’s business standing or commercial credit.
Even if it is not recoverable as compensatory damages, it may still be awarded in the concept
of temperate or moderate damages.56 In arriving at a reasonable level of temperate damages
to be awarded, trial courts are guided by the ruling that:
. . . There are cases where from the nature of the case, definite proof of pecuniary loss cannot
be offered, although the court is convinced that there has been such loss. For instance, injury
to one's commercial credit or to the goodwill of a business firm is often hard to show certainty
in terms of money. Should damages be denied for that reason? The judge should be
empowered to calculate moderate damages in such cases, rather than that the plaintiff should
suffer, without redress from the defendant's wrongful act. (Araneta v. Bank of America, 40
SCRA 144, 145)57
In this case, aside from the nebulous allegation of petitioner in its amended complaint, there is
no evidence on record, whether testimonial or documentary, to adequately support such claim.
Hence, it must be denied.
Petitioner’s claim for moral damages must likewise be denied. The award of moral damages
cannot be granted in favor of a corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot,
therefore, experience physical suffering and mental anguish, which can be experienced only
by one having a nervous system.58 Petitioner being a corporation,59 the claim for moral
damages must be denied.
With regard to the claim for exemplary damages, it is a requisite in the grant thereof that the
act of the offender must be accompanied by bad faith or done in wanton, fraudulent or
malevolent manner.60 Moreover, where a party is not entitled to actual or moral damages, an
award of exemplary damages is likewise baseless.61 In this case, petitioner failed to show that
respondent acted in bad faith, or in wanton, fraudulent or malevolent manner.
Petitioner likewise claims the amount of ₱50,000.00 as attorney’s fees, the sum of ₱1,000.00
for every appearance of its counsel, plus costs of suit. It is well settled that no premium should
be placed on the right to litigate and not every winning party is entitled to an automatic grant of
attorney's fees. The party must show that he falls under one of the instances enumerated in
Article 2208 of the Civil Code. In this case, since petitioner was compelled to engage the
services of a lawyer and incurred expenses to protect its interest and right over the subject
property, the award of attorney’s fees is proper. However there are certain standards in fixing
attorney's fees, to wit: (1) the amount and the character of the services rendered; (2) labor,
time and trouble involved; (3) the nature and importance of the litigation and business in which
the services were rendered; (4) the responsibility imposed; (5) the amount of money and the
value of the property affected by the controversy or involved in the employment; (6) the skill
and the experience called for in the performance of the services; (7) the professional character
and the social standing of the attorney; and (8) the results secured, it being a recognized rule
that an attorney may properly charge a much larger fee when it is contingent than when it is
not.62 Considering the foregoing, the award of ₱10,000.00 as attorney’s fees, including the
costs of suit, is reasonable under the circumstances.
WHEREFORE, the instant Petition for Review is PARTIALLY GRANTED. The Court of
Appeals’ Decision dated June 14, 1999 in CA-G.R. CV No. 43770 is MODIFIED as follows:
(1) the "Kasulatan ng Bilihan Patuluyan ng Lupa" dated August 8, 1990 between Catalina
Matienzo Fausto and respondent Anunciacion Fausto Pacunayen is hereby deemed
rescinded;
(2) The Heirs of the deceased Catalina Matienzo Fausto who are hereby deemed substituted
as respondents, represented by respondent Anunciacion Fausto Pacunayen, are ORDERED
to recognize the obligation of Catalina Matienzo Fausto under the Contract of Lease with
respect to the priority right of petitioner Tanay Recreation Center and Development Corp. to
purchase the subject property under reasonable terms and conditions;
(3) Transfer Certificate of Title No. M-35468 shall remain in the name of respondent
Anunciacion Fausto Pacunayen, which shall be cancelled in the event petitioner successfully
purchases the subject property;
(4) Respondent is ORDERED to pay petitioner Tanay Recreation Center and Development
Corporation the amount of Twenty Thousand Pesos (₱20,000.00) as actual damages, plus
interest thereon at the legal rate of six percent (6%) per annum from the filing of the Complaint
until the finality of this Decision. After this Decision becomes final and executory, the
applicable rate shall be twelve percent (12%) per annum until its satisfaction; and,

(5) Respondent is ORDERED to pay petitioner the amount of Ten Thousand Pesos
(₱10,000.00) as attorney’s fees, and to pay the costs of suit.

(6) Let the case be remanded to the Regional Trial Court, Morong, Rizal (Branch 78) for further
proceedings on the determination of the "reasonable terms and conditions" of the offer to sell
by respondents to petitioner, without prejudice to possible mediation between the parties.

The rest of the unaffected dispositive portion of the Court of Appeals’ Decision is AFFIRMED.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31,
respondents.
DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing Authority
(NHA) against the Court of Appeals, the Regional Trial Court of San Pedro Laguna, Branch 31,
and private respondent Segunda Almeida.
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera
several portions of land which are part of the Tunasan Estate in San Pedro, Laguna. The
award is evidenced by an Agreement to Sell No. 3787.1 By virtue of Republic Act No. 3488,
the LTA was succeeded by the Department of Agrarian Reform (DAR). On July 31, 1975, the
DAR was succeeded by the NHA by virtue of Presidential Decree No. 757.2 NHA as the
successor agency of LTA is the petitioner in this case.
The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado (the
mother of private respondent) and Francisca Herrera. Beatriz Herrera-Mercado predeceased
her mother and left heirs.
Margarita Herrera passed away on October 27, 1971.3
On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita Herrera
executed a Deed of Self-Adjudication claiming that she is the only remaining relative, being the
sole surviving daughter of the deceased. She also claimed to be the exclusive legal heir of the
late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960,
allegedly executed by Margarita Herrera. The pertinent portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo, kasalukuyang
naninirahan at tumatanggap ng sulat sa Nayon ng San Vicente, San Pedro Laguna, sa ilalim
ng panunumpa ay malaya at kusang loob kong isinasaysay at pinagtitibay itong mga
sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR), tumatayo sa Nayon
ng San Vicente, San Pedro, Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771)
METRONG PARISUKAT ang laki, humigit kumulang, at makikilala sa tawag na Lote 17, Bloke
55, at pag-aari ng Land Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog sa Land Tenure
Administration, at noong ika 30 ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT
TO SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng Maynila, sa harap ng Notario
Publico na si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento
No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako ay nakatira at
pinagsisilbihan nang aking anak na si Francisca Herrera, at ang tinitirikan o solar na nasasabi
sa unahan ay binabayaran ng kaniyang sariling cuarta sa Land Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na ng Dios ng aking
buhay, ang lupang nasasabi sa unahan ay aking ipinagkakaloob sa nasabi kong anak na
FRANCISCA HERRERA, Filipina, nasa katamtamang gulang, kasal kay Macario Berroya,
kasalukuyang naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro
Laguna, o sa kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay bawian na ng Dios ng
aking buhay ay KILALANIN, IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking
anak na si Francisca Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong kamay sa ibaba
nito at sa kaliwang gilid ng unang dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng
Octubre, 1960.4
The said document was signed by two witnesses and notarized. The witnesses signed at the
left-hand side of both pages of the document with the said document having 2 pages in total.
Margarita Herrera placed her thumbmark5 above her name in the second page and at the left-
hand margin of the first page of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-
Adjudication before the then Court of First Instance of Laguna, Branch 1 in Binan, Laguna
(now, Regional Trial Court Branch 25). The case for annulment was docketed as Civil Case
No. B-1263.6
On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the Deed of Self-
Adjudication) was rendered and the deed was declared null and void.7
During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca
Herrera filed an application with the NHA to purchase the same lots submitting therewith a
copy of the "Sinumpaang Salaysay" executed by her mother. Private respondent Almeida, as
heir of Beatriz Herrera-Mercado, protested the application.
In a Resolution8 dated February 5, 1986, the NHA granted the application made by Francisca
Herrera, holding that:
From the evidence of the parties and the records of the lots in question, we gathered the
following facts: the lots in question are portions of the lot awarded and sold to the late
Margarita Herrera on July 28, 1959 by the defunct Land Tenure Administration; protestant is
the daughter of the late Beatriz Herrera Mercado who was the sister of the protestee; protestee
and Beatriz are children of the late Margarita Herrera; Beatriz was the transferee from
Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots transferred to Beatriz,
e.g. Lot 47, with an area of 148 square meters is in the name of the protestant; protestant
occupied the lots in question with the permission of the protestee; protestee is a resident of the
Tunasan Homesite since birth; protestee was born on the lots in question; protestee left the
place only after marriage but resided in a lot situated in the same Tunasan Homesite; her
(protestee) son Roberto Herrera has been occupying the lots in question; he has been there
even before the death of the late Margarita Herrera; on October 7, 1960, Margarita Herrera
executed a "Sinumpaang Salaysay" whereby she waived or transferred all her rights and
interest over the lots in question in favor of the protestee; and protestee had paid the lots in
question in full on March 8, 1966 with the defunct Land Tenure Administration.
This Office finds that protestee has a better preferential right to purchase the lots in question.9
Private respondent Almeida appealed to the Office of the President.10 The NHA Resolution
was affirmed by the Office of the President in a Decision dated January 23, 1987.11
On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial settlement of
her estate which they submitted to the NHA. Said transfer of rights was approved by the
NHA.12 The NHA executed several deeds of sale in favor of the heirs of Francisca Herrera
and titles were issued in their favor.13 Thereafter, the heirs of Francisca Herrera directed
Segunda Mercado-Almeida to leave the premises that she was occupying.
Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA,
private respondent Segunda Mercado-Almeida sought the cancellation of the titles issued in
favor of the heirs of Francisca. She filed a Complaint on February 8, 1988, for "Nullification of
Government Lot's Award," with the Regional Trial Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed
properties, and re-raised the fact that Francisca Herrera's declaration of self-adjudication has
been adjudged as a nullity because the other heirs were disregarded. The defendant heirs of
Francisca Herrera alleged that the complaint was barred by laches and that the decision of the
Office of the President was already final and executory.14 They also contended that the
transfer of purchase of the subject lots is perfectly valid as the same was supported by a
consideration and that Francisca Herrera paid for the property with the use of her own
money.15 Further, they argued that plaintiff's occupation of the property was by mere tolerance
and that they had been paying taxes thereon.16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of
jurisdiction.17 The Court of Appeals in a Decision dated June 26, 1989 reversed and held that
the Regional Trial Court had jurisdiction to hear and decide the case involving "title and
possession to real property within its jurisdiction."18 The case was then remanded for further
proceedings on the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of
the NHA and the decision of the Office of the President awarding the subject lots in favor of
Francisca Herrera. It declared the deeds of sale executed by NHA in favor of Herrera's heirs
null and void. The Register of Deeds of Laguna, Calamba Branch was ordered to cancel the
Transfer Certificate of Title issued. Attorney's fees were also awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of
rights but a disposition of property which shall take effect upon death. It then held that the said
document must first be submitted to probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective motions for
reconsideration which were both denied on July 21, 1998 for lack of merit. They both appealed
to the Court of Appeals. The brief for the heirs of Francisca Herrera was denied admission by
the appellate court in a Resolution dated June 14, 2002 for being a "carbon copy" of the brief
submitted by the NHA and for being filed seventy-nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial Court,
viz:
There is no dispute that the right to repurchase the subject lots was awarded to Margarita
Herrera in 1959. There is also no dispute that Margarita executed a "Sinumpaang Salaysay"
on October 7, 1960. Defendant NHA claims that the "Sinumpaang Salaysay" is, in effect, a
waiver or transfer of rights and interest over the subject lots in favor of Francisca Herrera. This
Court is disposed to believe otherwise. After a perusal of the "Sinumpaang Salaysay" of
Margarita Herrera, it can be ascertained from its wordings taken in their ordinary and
grammatical sense that the document is a simple disposition of her estate to take effect after
her death. Clearly the Court finds that the "Sinumpaang Salaysay" is a will of Margarita
Herrera. Evidently, if the intention of Margarita Herrera was to merely assign her right over the
lots to her daughter Francisca Herrera, she should have given her "Sinumpaang Salaysay" to
the defendant NHA or to Francisca Herrera for submission to the defendant NHA after the full
payment of the purchase price of the lots or even prior thereto but she did not. Hence it is
apparent that she intended the "Sinumpaang Salaysay" to be her last will and not an
assignment of rights as what the NHA in its resolution would want to make it appear. The
intention of Margarita Herrera was shared no less by Francisca Herrera who after the former's
demise executed on August 22, 1974 a Deed of Self-Adjudication claiming that she is her sole
and legal heir. It was only when said deed was questioned in court by the surviving heirs of
Margarita Herrera's other daughter, Beatriz Mercado, that Francisca Herrera filed an
application to purchase the subject lots and presented the "Sinumpaang Salaysay" stating that
it is a deed of assignment of rights.19
The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots to the heirs of
Francisca Herrera. It upheld the trial court ruling that the "Sinumpaang Salaysay" was not an
assignment of rights but one that involved disposition of property which shall take effect upon
death. The issue of whether it was a valid will must first be determined by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE DECISION OF THE
OFFICE OF THE PRESIDENT HAVE ATTAINED FINALITY, AND IF SO, WHETHER OR NOT
THE PRINCIPLE OF ADMINISTRATIVE RES JUDICATA BARS THE COURT FROM
FURTHER DETERMINING WHO BETWEEN THE PARTIES HAS PREFERENTIAL RIGHTS
FOR AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE AWARD ON THE
SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE NHA IS
ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court decisions in accordance with the
hierarchy of courts. But jurisprudence has also recognized the rule of administrative res
judicata: "the rule which forbids the reopening of a matter once judicially determined by
competent authority applies as well to the judicial and quasi-judicial facts of public, executive
or administrative officers and boards acting within their jurisdiction as to the judgments of
courts having general judicial powers . . . It has been declared that whenever final adjudication
of persons invested with power to decide on the property and rights of the citizen is
examinable by the Supreme Court, upon a writ of error or a certiorari, such final adjudication
may be pleaded as res judicata."20 To be sure, early jurisprudence were already mindful that
the doctrine of res judicata cannot be said to apply exclusively to decisions rendered by what
are usually understood as courts without unreasonably circumscribing the scope thereof and
that the more equitable attitude is to allow extension of the defense to decisions of bodies
upon whom judicial powers have been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,21 the Court held that the rule
prescribing that "administrative orders cannot be enforced in the courts in the absence of an
express statutory provision for that purpose" was relaxed in favor of quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial powers will always be subject to true
judicial power—that which is held by the courts. Quasi-judicial power is defined as that power
of adjudication of an administrative agency for the "formulation of a final order."22 This function
applies to the actions, discretion and similar acts of public administrative officers or bodies who
are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action and to exercise discretion of a judicial
nature.23 However, administrative agencies are not considered courts, in their strict sense.
The doctrine of separation of powers reposes the three great powers into its three (3)
branches—the legislative, the executive, and the judiciary. Each department is co-equal and
coordinate, and supreme in its own sphere. Accordingly, the executive department may not, by
its own fiat, impose the judgment of one of its agencies, upon the judiciary. Indeed, under the
expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or not
there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government."24 Courts have an expanded role under
the 1987 Constitution in the resolution of societal conflicts under the grave abuse clause of
Article VIII which includes that duty to check whether the other branches of government
committed an act that falls under the category of grave abuse of discretion amounting to lack
or excess of jurisdiction.25

Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 198026
where it is therein provided that the Intermediate Appellate Court (now, Court of Appeals) shall
exercise the "exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards, of the Regional Trial Courts and Quasi-Judicial agencies, instrumentalities,
boards or commissions, except those falling within the jurisdiction of the Supreme Court in
accordance with the Constitution…"27 and contends that the Regional Trial Court has no
jurisdiction to rule over awards made by the NHA.

Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003, already
ruled that the issue of the trial court's authority to hear and decide the instant case has already
been settled in the decision of the Court of Appeals dated June 26, 1989 (which has become
final and executory on August 20, 1989 as per entry of judgment dated October 10, 1989).28
We find no reason to disturb this ruling. Courts are duty-bound to put an end to controversies.
The system of judicial review should not be misused and abused to evade the operation of a
final and executory judgment.29 The appellate court's decision becomes the law of the case
which must be adhered to by the parties by reason of policy.30

Next, petitioner NHA contends that its resolution was grounded on meritorious grounds when it
considered the application for the purchase of lots. Petitioner argues that it was the daughter
Francisca Herrera who filed her application on the subject lot; that it considered the respective
application and inquired whether she had all the qualifications and none of the disqualifications
of a possible awardee. It is the position of the petitioner that private respondent possessed all
the qualifications and none of the disqualifications for lot award and hence the award was not
done arbitrarily.

The petitioner further argues that assuming that the "Sinumpaang Salaysay" was a will, it could
not bind the NHA.31 That, "insofar as [the] NHA is concerned, it is an evidence that the subject
lots were indeed transferred by Margarita Herrera, the original awardee, to Francisca Herrera
was then applying to purchase the same before it."32

We are not impressed. When the petitioner received the "Sinumpaang Salaysay," it should
have noted that the effectivity of the said document commences at the time of death of the
author of the instrument; in her words "sakaling ako'y bawian na ng Dios ng aking buhay…"
Hence, in such period, all the interests of the person should cease to be hers and shall be in
the possession of her estate until they are transferred to her heirs by virtue of Article 774 of the
Civil Code which provides that:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through his
death to another or others either by his will or by operation of law.33

By considering the document, petitioner NHA should have noted that the original applicant has
already passed away. Margarita Herrera passed away on October 27, 1971.34 The NHA
issued its resolution35 on February 5, 1986. The NHA gave due course to the application
made by Francisca Herrera without considering that the initial applicant's death would transfer
all her property, rights and obligations to the estate including whatever interest she has or may
have had over the disputed properties. To the extent of the interest that the original owner had
over the property, the same should go to her estate. Margarita Herrera had an interest in the
property and that interest should go to her estate upon her demise so as to be able to properly
distribute them later to her heirs—in accordance with a will or by operation of law.

The death of Margarita Herrera does not extinguish her interest over the property. Margarita
Herrera had an existing Contract to Sell36 with NHA as the seller. Upon Margarita Herrera's
demise, this Contract to Sell was neither nullified nor revoked. This Contract to Sell was an
obligation on both parties—Margarita Herrera and NHA. Obligations are transmissible.37
Margarita Herrera's obligation to pay became transmissible at the time of her death either by
will or by operation of law.

If we sustain the position of the NHA that this document is not a will, then the interests of the
decedent should transfer by virtue of an operation of law and not by virtue of a resolution by
the NHA. For as it stands, NHA cannot make another contract to sell to other parties of a
property already initially paid for by the decedent. Such would be an act contrary to the law on
succession and the law on sales and obligations.38

When the original buyer died, the NHA should have considered the estate of the decedent as
the next "person"39 likely to stand in to fulfill the obligation to pay the rest of the purchase
price. The opposition of other heirs to the repurchase by Francisca Herrera should have put
the NHA on guard as to the award of the lots. Further, the Decision in the said Civil Case No.
B-1263 (questioning the Deed of Self-Adjudication) which rendered the deed therein null and
void40 should have alerted the NHA that there are other heirs to the interests and properties of
the decedent who may claim the property after a testate or intestate proceeding is concluded.
The NHA therefore acted arbitrarily in the award of the lots.

We need not delve into the validity of the will. The issue is for the probate court to determine.
We affirm the Court of Appeals and the Regional Trial Court which noted that it has an element
of testamentary disposition where (1) it devolved and transferred property; (2) the effect of
which shall transpire upon the death of the instrument maker.41

IN VIEW WHEREOF, the petition of the National Housing Authority is DENIED. The decision of
the Court of Appeals in CA-G.R. No. 68370 dated August 28, 2003, affirming the decision of
the Regional Trial Court of San Pedro, Laguna in Civil Case No. B-2780 dated March 9, 1998,
is hereby AFFIRMED.

No cost.

SO ORDERED.

Sandoval-Gutierrez, Corona, Azcuna, Garcia, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169129 March 28, 2007
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.VICTORINO F. SANTOS, &
LAGRIMAS SANTOS, ERNESTO F. SANTOS, and TADEO F. SANTOS, Petitioners,
vs.
SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised
Rules of Civil Procedure seeking to annul and set aside the Decision1 and Resolution2 of the
Court of Appeals in CA-G.R. CV No. 60450 entitled, Spouses Jose Lumbao and Proserfina
Lumbao v. Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and
Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June 2005 and 29 July
2005, respectively, which granted the appeal filed by herein respondents Spouses Jose
Lumbao and Proserfina Lumbao (Spouses Lumbao) and ordered herein petitioners Spouses
Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos,
Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents Spouses Lumbao the
subject property and to pay the latter attorney’s fees and litigation expenses, thus, reversing
the Decision3 of the Regional Trial Court (RTC) of Pasig City, dated 17 June 1998 which
dismissed the Complaint for Reconveyance with Damages filed by respondents Spouses
Lumbao for lack of merit.
Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed Santos, are the
legitimate and surviving heirs of the late Rita Catoc Santos (Rita), who died on 20 October
1985. The other petitioners Esperanza Lati and Lagrimas Santos are the daughters-in-law of
Rita.
Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the alleged owners of
the 107-square meter lot (subject property), which they purportedly bought from Rita during her
lifetime.
The facts of the present case are as follows:
On two separate occasions during her lifetime, Rita sold to respondents Spouses Lumbao the
subject property which is a part of her share in the estate of her deceased mother, Maria Catoc
(Maria), who died intestate on 19 September 1978. On the first occasion, Rita sold 100 square
meters of her inchoate share in her mother’s estate through a document denominated as
"Bilihan ng Lupa," dated 17 August 1979.4 Respondents Spouses Lumbao claimed the
execution of the aforesaid document was witnessed by petitioners Virgilio and Tadeo, as
shown by their signatures affixed therein. On the second occasion, an additional seven square
meters was added to the land as evidenced by a document also denominated as "Bilihan ng
Lupa," dated 9 January 1981.5
After acquiring the subject property, respondents Spouses Lumbao took actual possession
thereof and erected thereon a house which they have been occupying as exclusive owners up
to the present. As the exclusive owners of the subject property, respondents Spouses Lumbao
made several verbal demands upon Rita, during her lifetime, and thereafter upon herein
petitioners, for them to execute the necessary documents to effect the issuance of a separate
title in favor of respondents Spouses Lumbao insofar as the subject property is concerned.
Respondents Spouses Lumbao alleged that prior to her death, Rita informed respondent
Proserfina Lumbao she could not deliver the title to the subject property because the entire
property inherited by her and her co-heirs from Maria had not yet been partitioned.
On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently and in
conspiracy with one another, executed a Deed of Extrajudicial Settlement,6 adjudicating and
partitioning among themselves and the other heirs, the estate left by Maria, which included the
subject property already sold to respondents Spouses Lumbao and now covered by TCT No.
817297 of the Registry of Deeds of Pasig City.
On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal demand
letter8 to petitioners but despite receipt of such demand letter, petitioners still failed and
refused to reconvey the subject property to the respondents Spouses Lumbao. Consequently,
the latter filed a Complaint for Reconveyance with Damages9 before the RTC of Pasig City.
Petitioners filed their Answer denying the allegations that the subject property had been sold to
the respondents Spouses Lumbao. They likewise denied that the Deed of Extrajudicial
Settlement had been fraudulently executed because the same was duly published as required
by law. On the contrary, they prayed for the dismissal of the Complaint for lack of cause of
action because respondents Spouses Lumbao failed to comply with the Revised Katarungang
Pambarangay Law under Republic Act No. 7160, otherwise known as the Local Government
Code of 1991, which repealed Presidential Decree No. 150810 requiring first resort to
barangay conciliation.
Respondents Spouses Lumbao, with leave of court, amended their Complaint because they
discovered that on 16 February 1990, without their knowledge, petitioners executed a Deed of
Real Estate Mortgage in favor of Julieta S. Esplana for the sum of ₱30,000.00. The said Deed
of Real Estate Mortgage was annotated at the back of TCT No. PT-81729 on 26 April 1991.
Also, in answer to the allegation of the petitioners that they failed to comply with the mandate
of the Revised Katarungang Pambarangay Law, respondents Spouses Lumbao said that the
Complaint was filed directly in court in order that prescription or the Statute of Limitations may
not set in.
During the trial, respondents Spouses Lumbao presented Proserfina Lumbao and Carolina
Morales as their witnesses, while the petitioners presented only the testimony of petitioner
Virgilio.
The trial court rendered a Decision on 17 June 1998, the dispositive portion of which reads as
follows:
Premises considered, the instant complaint is hereby denied for lack of merit.
Considering that [petitioners] have incurred expenses in order to protect their interest,
[respondents spouses Lumbao] are hereby directed to pay [petitioners], to wit: 1) the amount
of ₱30,000.00 as attorney’s fees and litigation expenses, and 2) costs of the suit.11
Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8 June 2005,
the appellate court rendered a Decision, thus:
WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed
Decision dated June 17, 1998 of the Regional Trial Court of Pasig City, Branch 69 in Civil
Case No. 62175 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered
ordering [petitioners] to reconvey 107 square meters of the subject [property] covered by TCT
No. PT-81729 of the Registry of Deeds of Pasig City, Metro Manila, and to pay to [respondents
spouses Lumbao] the sum of ₱30,000.00 for attorney’s fees and litigation expenses.
No pronouncement as to costs.12
Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid Decision but it was
denied in the Resolution of the appellate court dated 29 July 2005 for lack of merit.
Hence, this Petition.
The grounds relied upon by the petitioners are the following:
I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN REVERSING THE
DECISION OF THE TRIAL COURT, THEREBY CREATING A VARIANCE ON THE FINDINGS
OF FACTS OF TWO COURTS.
II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN ORDERING THE
PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY] TO THE RESPONDENTS
[SPOUSES LUMBAO] AND IN NOT RULING THAT THEY ARE GUILTY OF LACHES,
HENCE THEY CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM.
III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING
HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING THE "DEED OF
EXTRAJUDICIAL SETTLEMENT" DATED [2 MAY 1986].
IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING
THAT PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY WITH THE SUPPOSED
BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981] THAT WERE
SUPPOSEDLY EXECUTED BY THE LATE RITA CATOC.
V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENTS [SPOUSES LUMBAO’S] ACTION FOR RECONVEYANCE WITH DAMAGES
CANNOT BE SUPPORTED WITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE
BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981].
VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING
THAT RESPONDENTS [SPOUSES LUMBAO’S] COMPLAINT FOR RECONVEYANCE IS
DISMISSABLE (SIC) FOR NON COMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS
AMENDED BY Republic Act No. 7160.
VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING
THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD LIABLE FOR
PETITIONERS’ CLAIM FOR DAMAGES AND ATTORNEY[‘]S FEES.
Petitioners ask this Court to scrutinize the evidence presented in this case, because they claim
that the factual findings of the trial court and the appellate court are conflicting. They allege
that the findings of fact by the trial court revealed that petitioners Virgilio and Tadeo did not
witness the execution of the documents known as "Bilihan ng Lupa"; hence, this finding runs
counter to the conclusion made by the appellate court. And even assuming that they were
witnesses to the aforesaid documents, still, respondents Spouses Lumbao were not entitled to
the reconveyance of the subject property because they were guilty of laches for their failure to
assert their rights for an unreasonable length of time. Since respondents Spouses Lumbao had
slept on their rights for a period of more than 12 years reckoned from the date of execution of
the second "Bilihan ng Lupa," it would be unjust and unfair to the petitioners if the respondents
will be allowed to recover the subject property.
Petitioners allege they are in good faith in executing the Deed of Extrajudicial Settlement
because even respondents Spouses Lumbao’s witness, Carolina Morales, testified that neither
petitioner Virgilio nor petitioner Tadeo was present during the execution of the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981. Petitioners affirm that the Deed of
Extrajudicial Settlement was published in a newspaper of general circulation to give notice to
all creditors of the estate subject of partition to contest the same within the period prescribed
by law. Since no claimant appeared to interpose a claim within the period allowed by law, a
title to the subject property was then issued in favor of the petitioners; hence, they are
considered as holders in good faith and therefore cannot be barred from entering into any
subsequent transactions involving the subject property.
Petitioners also contend that they are not bound by the documents denominated as "Bilihan ng
Lupa" because the same were null and void for the following reasons: 1) for being falsified
documents because one of those documents made it appear that petitioners Virgilio and
Tadeo were witnesses to its execution and that they appeared personally before the notary
public, when in truth and in fact they did not; 2) the identities of the properties in the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981 in relation to the subject property in litigation
were not established by the evidence presented by the respondents Spouses Lumbao; 3) the
right of the respondents Spouses Lumbao to lay their claim over the subject property had
already been barred through estoppel by laches; and 4) the respondents Spouses Lumbao’s
claim over the subject property had already prescribed.
Finally, petitioners claim that the Complaint for Reconveyance with Damages filed by
respondents Spouses Lumbao was dismissible because they failed to comply with the
mandate of Presidential Decree No. 1508, as amended by Republic Act No. 7160, particularly
Section 412 of Republic Act No. 7160.
Given the foregoing, the issues presented by the petitioners may be restated as follows:
I. Whether or not the Complaint for Reconveyance with Damages filed by respondents
spouses Lumbao is dismissible for their failure to comply with the mandate of the Revised
Katarungang Pambarangay Law under R.A. No. 7160.
II. Whether or not the documents known as "Bilihan ng Lupa" are valid and enforceable, thus,
they can be the bases of the respondents spouses Lumbao’s action for reconveyance with
damages.
III. Whether or not herein petitioners are legally bound to comply with the "Bilihan ng Lupa"
dated 17 August 1979 and 9 January 1981 and consequently, reconvey the subject property to
herein respondents spouses Lumbao.
It is well-settled that in the exercise of the Supreme Court’s power of review, the court is not a
trier of facts and does not normally undertake the re-examination of the evidence presented by
the contending parties during the trial of the case considering that the findings of fact of the
Court of Appeals are conclusive and binding on the Court.13 But, the rule is not without
exceptions. There are several recognized exceptions14 in which factual issues may be
resolved by this Court. One of these exceptions is when the findings of the appellate court are
contrary to those of the trial court. This exception is present in the case at bar.
Going to the first issue presented in this case, it is the argument of the petitioners that the
Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao should be
dismissed for failure to comply with the barangay conciliation proceedings as mandated by the
Revised Katarungang Pambarangay Law under Republic Act No. 7160. This argument cannot
be sustained.
Section 408 of the aforesaid law and Administrative Circular No. 14-9315 provide that all
disputes between parties actually residing in the same city or municipality are subject to
barangay conciliation. A prior recourse thereto is a pre-condition before filing a complaint in
court or any government offices. Non-compliance with the said condition precedent could
affect the sufficiency of the plaintiff’s cause of action and make his complaint vulnerable to
dismissal on ground of lack of cause of action or prematurity; but the same would not prevent a
court of competent jurisdiction from exercising its power of adjudication over the case before it,
where the defendants failed to object to such exercise of jurisdiction.16
While it is true that the present case should first be referred to the Barangay Lupon for
conciliation because the parties involved herein actually reside in the same city (Pasig City)
and the dispute between them involves a real property, hence, the said dispute should have
been brought in the city in which the real property, subject matter of the controversy, is located,
which happens to be the same city where the contending parties reside. In the event that
respondents Spouses Lumbao failed to comply with the said condition precedent, their
Complaint for Reconveyance with Damages can be dismissed. In this case, however,
respondents Spouses Lumbao’s non-compliance with the aforesaid condition precedent
cannot be considered fatal. Although petitioners alleged in their answer that the Complaint for
Reconveyance with Damages filed by respondents spouses Lumbao should be dismissed for
their failure to comply with the condition precedent, which in effect, made the complaint
prematurely instituted and the trial court acquired no jurisdiction to hear the case, yet, they did
not file a Motion to Dismiss the said complaint.
Emphasis must be given to the fact that the petitioners could have prevented the trial court
from exercising jurisdiction over the case had they filed a Motion to Dismiss. However, instead
of doing so, they invoked the very same jurisdiction by filing an answer seeking an affirmative
relief from it. Worse, petitioners actively participated in the trial of the case by presenting their
own witness and by cross-examining the witnesses presented by the respondents Spouses
Lumbao. It is elementary that the active participation of a party in a case pending against him
before a court is tantamount to recognition of that court’s jurisdiction and a willingness to abide
by the resolution of the case which will bar said party from later on impugning the court’s
jurisdiction.17 It is also well-settled that the non-referral of a case for barangay conciliation
when so required under the law is not jurisdictional in nature and may therefore be deemed
waived if not raised seasonably in a motion to dismiss.18 Hence, herein petitioners can no
longer raise the defense of non-compliance with the barangay conciliation proceedings to seek
the dismissal of the complaint filed by the respondents Spouses Lumbao, because they
already waived the said defense when they failed to file a Motion to Dismiss.
As regards the second issue, petitioners maintain that the "Bilihan ng Lupa," dated 17 August
1979 and 9 January 1981 are null and void for being falsified documents as it is made to
appear that petitioners Virgilio and Tadeo were present in the execution of the said documents
and that the identities of the properties in those documents in relation to the subject property
has not been established by the evidence of the respondents Spouses Lumbao. Petitioners
also claim that the enforceability of those documents is barred by prescription of action and
laches.
It is the petitioners’ incessant barking that the "Bilihan ng Lupa" documents dated 17 August
1979 and 9 January 1981 were falsified because it was made to appear that petitioners Virgilio
and Tadeo were present in the executions thereof, and their allegation that even respondents
Spouses Lumbao’s witness Carolina Morales proved that said petitioners were not present
during the execution of the aforementioned documents. This is specious.
Upon examination of the aforesaid documents, this Court finds that in the "Bilihan ng Lupa,"
dated 17 August 1979, the signatures of petitioners Virgilio and Tadeo appeared thereon.
Moreover, in petitioners’ Answer and Amended Answer to the Complaint for Reconveyance
with Damages, both petitioners Virgilio and Tadeo made an admission that indeed they acted
as witnesses in the execution of the "Bilihan ng Lupa," dated 17 August 1979.19 However, in
order to avoid their obligations in the said "Bilihan ng Lupa," petitioner Virgilio, in his cross-
examination, denied having knowledge of the sale transaction and claimed that he could not
remember the same as well as his appearance before the notary public due to the length of
time that had passed. Noticeably, petitioner Virgilio did not categorically deny having signed
the "Bilihan ng Lupa," dated 17 August 1979 and in support thereof, his testimony in the cross-
examination propounded by the counsel of the respondents Spouses Lumbao is quoted
hereunder:
ATTY. CHIU:
Q. Now, you said, Mr. Witness…Virgilio Santos, that you don’t know about this document
which was marked as Exhibit "A" for the [respondents spouses Lumbao]?
ATTY. BUGARING:
The question is misleading, your Honor. Counsel premised the question that he does not have
any knowledge but not that he does not know.
ATTY. CHIU:
Q. Being… you are one of the witnesses of this document? [I]s it not?
WITNESS:
A. No, sir.
Q. I am showing to you this document, there is a signature at the left hand margin of this
document Virgilio Santos, will you please go over the same and tell the court whose signature
is this?
A. I don’t remember, sir, because of the length of time that had passed.
Q. But that is your signature?
A. I don’t have eyeglasses… My signature is different.
Q. You never appeared before this notary public Apolinario Mangahas?
A. I don’t remember.20
As a general rule, facts alleged in a party’s pleading are deemed admissions of that party and
are binding upon him, but this is not an absolute and inflexible rule. An answer is a mere
statement of fact which the party filing it expects to prove, but it is not evidence.21 And in spite
of the presence of judicial admissions in a party’s pleading, the trial court is still given leeway
to consider other evidence presented.22 However, in the case at bar, as the Court of Appeals
mentioned in its Decision, "[herein petitioners] had not adduced any other evidence to override
the admission made in their [A]nswer that [petitioners Virgilio and Tadeo] actually signed the
[Bilihan ng Lupa dated 17 August 1979] except that they were just misled as to the purpose of
the document, x x x."23 Virgilio’s answers were unsure and quibbled. Hence, the general rule
that the admissions made by a party in a pleading are binding and conclusive upon him applies
in this case.
On the testimony of respondents Spouses Lumbao’s witness Carolina Morales, this Court
adopts the findings made by the appellate court. Thus -
[T]he trial court gave singular focus on her reply to a question during cross-examination if the
[petitioners Virgilio and Tadeo] were not with her and the vendor [Rita] during the transaction. It
must be pointed out that earlier in the direct examination of said witness, she confirmed that
[respondents spouses Lumbao] actually bought the lot from [Rita] ("nagkabilihan"). Said
witness positively identified and confirmed the two (2) documents evidencing the sale in favor
of [respondents spouse Lumbao]. Thus, her subsequent statement that the [petitioners Virgilio
and Tadeo] were not with them during the transaction does not automatically imply that
[petitioners Virgilio and Tadeo] did not at any time sign as witnesses as to the deed of sale
attesting to their mother’s voluntary act of selling a portion of her share in her deceased
mother’s property. The rule is that testimony of a witness must be considered and calibrated in
its entirety and not by truncated portions thereof or isolated passages therein.24
Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981
were duly notarized before a notary public. It is well-settled that a document acknowledged
before a notary public is a public document25 that enjoys the presumption of regularity. It is a
prima facie evidence of the truth of the facts stated therein and a conclusive presumption of its
existence and due execution.26 To overcome this presumption, there must be presented
evidence that is clear and convincing. Absent such evidence, the presumption must be
upheld.27 In addition, one who denies the due execution of a deed where one’s signature
appears has the burden of proving that contrary to the recital in the jurat, one never appeared
before the notary public and acknowledged the deed to be a voluntary act. Nonetheless, in the
present case petitioners’ denials without clear and convincing evidence to support their claim
of fraud and falsity were not sufficient to overthrow the above-mentioned presumption; hence,
the authenticity, due execution and the truth of the facts stated in the aforesaid "Bilihan ng
Lupa" are upheld.
The defense of petitioners that the identities of the properties described in the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981 in relation to the subject property were not
established by respondents Spouses Lumbao’s evidence is likewise not acceptable.
It is noteworthy that at the time of the execution of the documents denominated as "Bilihan ng
Lupa," the entire property owned by Maria, the mother of Rita, was not yet divided among her
and her co-heirs and so the description of the entire estate is the only description that can be
placed in the "Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981" because the exact
metes and bounds of the subject property sold to respondents Spouses Lumbao could not be
possibly determined at that time. Nevertheless, that does not make the contract of sale
between Rita and respondents Spouses Lumbao invalid because both the law and
jurisprudence have categorically held that even while an estate remains undivided, co-owners
have each full ownership of their respective aliquots or undivided shares and may therefore
alienate, assign or mortgage them.28 The co-owner, however, has no right to sell or alienate a
specific or determinate part of the thing owned in common, because such right over the thing is
represented by an aliquot or ideal portion without any physical division. In any case, the mere
fact that the deed purports to transfer a concrete portion does not per se render the sale void.
The sale is valid, but only with respect to the aliquot share of the selling co-owner.
Furthermore, the sale is subject to the results of the partition upon the termination of the co-
ownership.29
In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986 by virtue
of a Deed of Extrajudicial Settlement, the 107- square meter lot sold by the mother of the
petitioners to respondents Spouses Lumbao should be deducted from the total lot, inherited by
them in representation of their deceased mother, which in this case measures 467 square
meters. The 107-square meter lot already sold to respondents Spouses Lumbao can no longer
be inherited by the petitioners because the same was no longer part of their inheritance as it
was already sold during the lifetime of their mother.
Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa" documents was
described as "a portion of a parcel of land covered in Tax Declarations No. A-018-01674,"
while the subject matter of the Deed of Extrajudicial Settlement was the property described in
Transfer Certificate of Title (TCT) No. 3216 of the Registry of Deeds of the Province of Rizal in
the name of Maria is of no moment because in the "Bilihan ng Lupa," dated 17 August 1979
and 9 January 1981, it is clear that there was only one estate left by Maria upon her death.
And this fact was not refuted by the petitioners. Besides, the property described in Tax
Declaration No. A-018-01674 and the property mentioned in TCT No. 3216 are both located in
Barrio Rosario, Municipality of Pasig, Province of Rizal, and almost have the same boundaries.
It is, thus, safe to state that the property mentioned in Tax Declaration No. A-018-01674 and in
TCT No. 3216 are one and the same.
The defense of prescription of action and laches is likewise unjustifiable. In an action for
reconveyance, the decree of registration is respected as incontrovertible. What is sought
instead is the transfer of the property or its title which has been wrongfully or erroneously
registered in another person’s name to its rightful or legal owner, or to the one with a better
right. It is, indeed, true that the right to seek reconveyance of registered property is not
absolute because it is subject to extinctive prescription. However, when the plaintiff is in
possession of the land to be reconveyed, prescription cannot set in. Such an exception is
based on the theory that registration proceedings could not be used as a shield for fraud or for
enriching a person at the expense of another.30
In the case at bar, the right of the respondents Spouses Lumbao to seek reconveyance does
not prescribe because the latter have been and are still in actual possession and occupation
as owners of the property sought to be reconveyed, which fact has not been refuted nor denied
by the petitioners. Furthermore, respondents Spouses Lumbao cannot be held guilty of laches
because from the very start that they bought the 107-square meter lot from the mother of the
petitioners, they have constantly asked for the transfer of the certificate of title into their names
but Rita, during her lifetime, and the petitioners, after the death of Rita, failed to do so on the
flimsy excuse that the lot had not been partitioned yet. Inexplicably, after the partition of the
entire estate of Maria, petitioners still included the 107-square meter lot in their inheritance
which they divided among themselves despite their knowledge of the contracts of sale
between their mother and the respondents Spouses Lumbao.
Under the above premises, this Court holds that the "Bilihan ng Lupa" documents dated 17
August 1979 and 9 January 1981 are valid and enforceable and can be made the basis of the
respondents Spouses Lumbao’s action for reconveyance. The failure of respondents Spouses
Lumbao to have the said documents registered does not affect its validity and enforceability. It
must be remembered that registration is not a requirement for validity of the contract as
between the parties, for the effect of registration serves chiefly to bind third persons. The
principal purpose of registration is merely to notify other persons not parties to a contract that a
transaction involving the property had been entered into. Where the party has knowledge of a
prior existing interest which is unregistered at the time he acquired a right to the same land, his
knowledge of that prior unregistered interest has the effect of registration as to him.31 Hence,
the "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981, being valid and
enforceable, herein petitioners are bound to comply with their provisions. In short, such
documents are absolutely valid between and among the parties thereto.
Finally, the general rule that heirs are bound by contracts entered into by their predecessors-
in-interest applies in the present case. Article 131132 of the NCC is the basis of this rule. It is
clear from the said provision that whatever rights and obligations the decedent have over the
property were transmitted to the heirs by way of succession, a mode of acquiring the property,
rights and obligations of the decedent to the extent of the value of the inheritance of the
heirs.33 Thus, the heirs cannot escape the legal consequence of a transaction entered into by
their predecessor-in-interest because they have inherited the property subject to the liability
affecting their common ancestor. Being heirs, there is privity of interest between them and their
deceased mother. They only succeed to what rights their mother had and what is valid and
binding against her is also valid and binding as against them. The death of a party does not
excuse nonperformance of a contract which involves a property right and the rights and
obligations thereunder pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other party has a property
interest in the subject matter of the contract.34
In the end, despite the death of the petitioners’ mother, they are still bound to comply with the
provisions of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981. Consequently,
they must reconvey to herein respondents Spouses Lumbao the 107-square meter lot which
they bought from Rita, petitioners’ mother. And as correctly ruled by the appellate court,
petitioners must pay respondents Spouses Lumbao attorney’s fees and litigation expenses for
having been compelled to litigate and incur expenses to protect their interest.35 On this matter,
we do not find reasons to reverse the said findings.
WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and
Resolution of the Court of Appeals dated 8 June 2005 and 29 July 2005, respectively, are
hereby AFFIRMED. Herein petitioners are ordered to reconvey to respondents Spouses
Lumbao the subject property and to pay the latter attorney’s fees and litigation expenses.
Costs against petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 182836 October 13, 2009
CONTINENTAL STEEL MANUFACTURING CORPORATION, Petitioner,
vs.
HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAÑO and
NAGKAKAISANG MANGGAGAWA NG CENTRO STEEL CORPORATION-SOLIDARITY OF
UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (NMCSC-SUPER),
Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing
the Decision1 dated 27 February 2008 and the Resolution2 dated 9 May 2008 of the Court of
Appeals in CA-G.R. SP No. 101697, affirming the Resolution3 dated 20 November 2007 of
respondent Accredited Voluntary Arbitrator Atty. Allan S. Montaño (Montaño) granting
bereavement leave and other death benefits to Rolando P. Hortillano (Hortillano), grounded on
the death of his unborn child.
The antecedent facts of the case are as follows:
Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental
Steel) and a member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-
Solidarity of Trade Unions in the Philippines for Empowerment and Reforms (Union) filed on 9
January 2006, a claim for Paternity Leave, Bereavement Leave and Death and Accident
Insurance for dependent, pursuant to the Collective Bargaining Agreement (CBA) concluded
between Continental and the Union, which reads:
ARTICLE X: LEAVE OF ABSENCE
xxxx
Section 2. BEREAVEMENT LEAVE—The Company agrees to grant a bereavement leave with
pay to any employee in case of death of the employee’s legitimate dependent (parents,
spouse, children, brothers and sisters) based on the following:
2.1 Within Metro Manila up to Marilao, Bulacan - 7 days
2.2 Provincial/Outside Metro Manila - 11 days
xxxx
ARTICLE XVIII: OTHER BENEFITS
xxxx
Section 4. DEATH AND ACCIDENT INSURANCE—The Company shall grant death and
accidental insurance to the employee or his family in the following manner:
xxxx
4.3 DEPENDENTS—Eleven Thousand Five Hundred Fifty Pesos (Php11,550.00) in case of
death of the employees legitimate dependents (parents, spouse, and children). In case the
employee is single, this benefit covers the legitimate parents, brothers and sisters only with
proper legal document to be presented (e.g. death certificate).4
The claim was based on the death of Hortillano’s unborn child. Hortillano’s wife, Marife V.
Hortillano, had a premature delivery on 5 January 2006 while she was in the 38th week of
pregnancy.5 According to the Certificate of Fetal Death dated 7 January 2006, the female fetus
died during labor due to fetal Anoxia secondary to uteroplacental insufficiency.6
Continental Steel immediately granted Hortillano’s claim for paternity leave but denied his
claims for bereavement leave and other death benefits, consisting of the death and accident
insurance.7
Seeking the reversal of the denial by Continental Steel of Hortillano’s claims for bereavement
and other death benefits, the Union resorted to the grievance machinery provided in the CBA.
Despite the series of conferences held, the parties still failed to settle their dispute,8 prompting
the Union to file a Notice to Arbitrate before the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment (DOLE), National Capital Region
(NCR).9 In a Submission Agreement dated 9 October 2006, the Union and Continental Steel
submitted for voluntary arbitration the sole issue of whether Hortillano was entitled to
bereavement leave and other death benefits pursuant to Article X, Section 2
and Article XVIII, Section 4.3 of the CBA.10 The parties mutually chose Atty. Montaño, an
Accredited Voluntary Arbitrator, to resolve said issue.11
When the preliminary conferences again proved futile in amicably settling the dispute, the
parties proceeded to submit their respective Position Papers, 12 Replies,13 and Rejoinders14
to Atty. Montaño.
The Union argued that Hortillano was entitled to bereavement leave and other death benefits
pursuant to the CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section
4.3 of the CBA did not specifically state that the dependent should have first been born alive or
must have acquired juridical personality so that his/her subsequent death could be covered by
the CBA death benefits. The Union cited cases wherein employees of MKK Steel Corporation
(MKK Steel) and Mayer Steel Pipe Corporation (Mayer Steel), sister companies of Continental
Steel, in similar situations as Hortillano were able to receive death benefits under similar
provisions of their CBAs.
The Union mentioned in particular the case of Steve L. Dugan (Dugan), an employee of Mayer
Steel, whose wife also prematurely delivered a fetus, which had already died prior to the
delivery. Dugan was able to receive paternity leave, bereavement leave, and voluntary
contribution under the CBA between his union and Mayer Steel.15 Dugan’s child was only 24
weeks in the womb and died before labor, as opposed to Hortillano’s child who was already
37-38 weeks in the womb and only died during labor.
The Union called attention to the fact that MKK Steel and Mayer Steel are located in the same
compound as Continental Steel; and the representatives of MKK Steel and Mayer Steel who
signed the CBA with their respective employees’ unions were the same as the representatives
of Continental Steel who signed the existing CBA with the Union.
Finally, the Union invoked Article 1702 of the Civil Code, which provides that all doubts in labor
legislations and labor contracts shall be construed in favor of the safety of and decent living for
the laborer.
On the other hand, Continental Steel posited that the express provision of the CBA did not
contemplate the death of an unborn child, a fetus, without legal personality. It claimed that
there are two elements for the entitlement to the benefits, namely: (1) death and (2) status as
legitimate dependent, none of which existed in Hortillano’s case. Continental Steel, relying on
Articles 40, 41 and 4216 of the Civil Code, contended that only one with civil personality could
die. Hence, the unborn child never died because it never acquired juridical personality.
Proceeding from the same line of thought, Continental Steel reasoned that a fetus that was
dead from the moment of delivery was not a person at all. Hence, the term dependent could
not be applied to a fetus that never acquired juridical personality. A fetus that was delivered
dead could not be considered a dependent, since it never needed any support, nor did it ever
acquire the right to be supported.
Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since
neither of the parties qualified the terms used in the CBA, the legally accepted definitions
thereof were deemed automatically accepted by both parties. The failure of the Union to have
unborn child included in the definition of dependent, as used in the CBA – the death of whom
would have qualified the parent-employee for bereavement leave and other death benefits –
bound the Union to the legally accepted definition of the latter term.
Continental Steel, lastly, averred that similar cases involving the employees of its sister
companies, MKK Steel and Mayer Steel, referred to by the Union, were irrelevant and
incompetent evidence, given the separate and distinct personalities of the companies. Neither
could the Union sustain its claim that the grant of bereavement leave and other death benefits
to the parent-employee for the loss of an unborn child constituted "company practice."
On 20 November 2007, Atty. Montaño, the appointed Accredited Voluntary Arbitrator, issued a
Resolution17 ruling that Hortillano was entitled to bereavement leave with pay and death
benefits.
Atty. Montaño identified the elements for entitlement to said benefits, thus:
This Office declares that for the entitlement of the benefit of bereavement leave with pay by the
covered employees as provided under Article X, Section 2 of the parties’ CBA, three (3)
indispensable elements must be present: (1) there is "death"; (2) such death must be of
employee’s "dependent"; and (3) such dependent must be "legitimate".
On the otherhand, for the entitlement to benefit for death and accident insurance as provided
under Article XVIII, Section 4, paragraph (4.3) of the parties’ CBA, four (4) indispensable
elements must be present: (a) there is "death"; (b) such death must be of employee’s
"dependent"; (c) such dependent must be "legitimate"; and (d) proper legal document to be
presented.18
Atty. Montaño found that there was no dispute that the death of an employee’s legitimate
dependent occurred. The fetus had the right to be supported by the parents from the very
moment he/she was conceived. The fetus had to rely on another for support; he/she could not
have existed or sustained himself/herself without the power or aid of someone else,
specifically, his/her mother. Therefore, the fetus was already a dependent, although he/she
died during the labor or delivery. There was also no question that Hortillano and his wife were
lawfully married, making their dependent, unborn child, legitimate.
In the end, Atty. Montaño decreed:
WHEREFORE, premises considered, a resolution is hereby rendered ORDERING [herein
petitioner Continental Steel] to pay Rolando P. Hortillano the amount of Four Thousand Nine
Hundred Thirty-Nine Pesos (₱4,939.00), representing his bereavement leave pay and the
amount of Eleven Thousand Five Hundred Fifty Pesos (₱11,550.00) representing death
benefits, or a total amount of ₱16,489.00
The complaint against Manuel Sy, however, is ORDERED DISMISSED for lack of merit.
All other claims are DISMISSED for lack of merit.
Further, parties are hereby ORDERED to faithfully abide with the herein dispositions.
Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on
Certiorari,19 under Section 1, Rule 43 of the Rules of Court, docketed as CA-G.R. SP No.
101697.
Continental Steel claimed that Atty. Montaño erred in granting Hortillano’s claims for
bereavement leave with pay and other death benefits because no death of an employee’s
dependent had occurred. The death of a fetus, at whatever stage of pregnancy, was excluded
from the coverage of the CBA since what was contemplated by the CBA was the death of a
legal person, and not that of a fetus, which did not acquire any juridical personality. Continental
Steel pointed out that its contention was bolstered by the fact that the term death was qualified
by the phrase legitimate dependent. It asserted that the status of a child could only be
determined upon said child’s birth, otherwise, no such appellation can be had. Hence, the
conditions sine qua non for Hortillano’s entitlement to bereavement leave and other death
benefits under the CBA were lacking.
The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaño’s
Resolution dated 20 November 2007. The appellate court interpreted death to mean as
follows:
[Herein petitioner Continental Steel’s] exposition on the legal sense in which the term "death"
is used in the CBA fails to impress the Court, and the same is irrelevant for ascertaining the
purpose, which the grant of bereavement leave and death benefits thereunder, is intended to
serve. While there is no arguing with [Continental Steel] that the acquisition of civil personality
of a child or fetus is conditioned on being born alive upon delivery, it does not follow that such
event of premature delivery of a fetus could never be contemplated as a "death" as to be
covered by the CBA provision, undoubtedly an event causing loss and grief to the affected
employee, with whom the dead fetus stands in a legitimate relation. [Continental Steel] has
proposed a narrow and technical significance to the term "death of a legitimate dependent" as
condition for granting bereavement leave and death benefits under the CBA. Following
[Continental Steel’s] theory, there can be no experience of "death" to speak of. The Court,
however, does not share this view. A dead fetus simply cannot be equated with anything less
than "loss of human life", especially for the expectant parents. In this light, bereavement leave
and death benefits are meant to assuage the employee and the latter’s immediate family,
extend to them solace and support, rather than an act conferring legal status or personality
upon the unborn child. [Continental Steel’s] insistence that the certificate of fetal death is for
statistical purposes only sadly misses this crucial point.20
Accordingly, the fallo of the 27 February 2008 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the present petition is hereby DENIED for lack of merit.
The assailed Resolution dated November 20, 2007 of Accredited Voluntary Arbitrator Atty.
Allan S. Montaño is hereby AFFIRMED and UPHELD.
With costs against [herein petitioner Continental Steel].21
In a Resolution22 dated 9 May 2008, the Court of Appeals denied the Motion for
Reconsideration23 of Continental Steel.
Hence, this Petition, in which Continental Steel persistently argues that the CBA is clear and
unambiguous, so that the literal and legal meaning of death should be applied. Only one with
juridical personality can die and a dead fetus never acquired a juridical personality.
We are not persuaded.
As Atty. Montaño identified, the elements for bereavement leave under Article X, Section 2 of
the CBA are: (1) death; (2) the death must be of a dependent, i.e., parent, spouse, child,
brother, or sister, of an employee; and (3) legitimate relations of the dependent to the
employee. The requisites for death and accident insurance under Article XVIII, Section 4(3) of
the CBA are: (1) death; (2) the death must be of a dependent, who could be a parent, spouse,
or child of a married employee; or a parent, brother, or sister of a single employee; and (4)
presentation of the proper legal document to prove such death, e.g., death certificate.
It is worthy to note that despite the repeated assertion of Continental Steel that the provisions
of the CBA are clear and unambiguous, its fundamental argument for denying Hortillano’s
claim for bereavement leave and other death benefits rests on the purportedly proper
interpretation of the terms "death" and "dependent" as used in the CBA. If the provisions of the
CBA are indeed clear and unambiguous, then there is no need to resort to the interpretation or
construction of the same. Moreover, Continental Steel itself admitted that neither management
nor the Union sought to define the pertinent terms for bereavement leave and other death
benefits during the negotiation of the CBA.
The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal
definition of death is misplaced. Article 40 provides that a conceived child acquires personality
only when it is born, and Article 41 defines when a child is considered born. Article 42 plainly
states that civil personality is extinguished by death.

First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil
Code on natural persons, must be applied in relation to Article 37 of the same Code, the very
first of the general provisions on civil personality, which reads:

Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in
every natural person and is lost only through death. Capacity to act, which is the power to do
acts with legal effect, is acquired and may be lost.

We need not establish civil personality of the unborn child herein since his/her juridical
capacity and capacity to act as a person are not in issue. It is not a question before us whether
the unborn child acquired any rights or incurred any obligations prior to his/her death that were
passed on to or assumed by the child’s parents. The rights to bereavement leave and other
death benefits in the instant case pertain directly to the parents of the unborn child upon the
latter’s death.

Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death.
Moreover, while the Civil Code expressly provides that civil personality may be extinguished by
death, it does not explicitly state that only those who have acquired juridical personality could
die.

And third, death has been defined as the cessation of life.24 Life is not synonymous with civil
personality. One need not acquire civil personality first before he/she could die. Even a child
inside the womb already has life. No less than the Constitution recognizes the life of the
unborn from conception,25 that the State must protect equally with the life of the mother. If the
unborn already has life, then the cessation thereof even prior to the child being delivered,
qualifies as death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental
Steel itself defines, a dependent is "one who relies on another for support; one not able to exist
or sustain oneself without the power or aid of someone else." Under said general definition,26
even an unborn child is a dependent of its parents. Hortillano’s child could not have reached
38-39 weeks of its gestational life without depending upon its mother, Hortillano’s wife, for
sustenance. Additionally, it is explicit in the CBA provisions in question that the dependent may
be the parent, spouse, or child of a married employee; or the parent, brother, or sister of a
single employee. The CBA did not provide a qualification for the child dependent, such that the
child must have been born or must have acquired civil personality, as Continental Steel avers.
Without such qualification, then child shall be understood in its more general sense, which
includes the unborn fetus in the mother’s womb.

The term legitimate merely addresses the dependent child’s status in relation to his/her
parents. In Angeles v. Maglaya,27 we have expounded on who is a legitimate child, viz:

A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove
the element of lawful union and there is strictly no legitimate filiation between parents and
child. Article 164 of the Family Code cannot be more emphatic on the matter: "Children
conceived or born during the marriage of the parents are legitimate." (Emphasis ours.)

Conversely, in Briones v. Miguel,28 we identified an illegitimate child to be as follows:

The fine distinctions among the various types of illegitimate children have been eliminated in
the Family Code. Now, there are only two classes of children -- legitimate (and those who, like
the legally adopted, have the rights of legitimate children) and illegitimate. All children
conceived and born outside a valid marriage are illegitimate, unless the law itself gives them
legitimate status. (Emphasis ours.)

It is apparent that according to the Family Code and the afore-cited jurisprudence, the
legitimacy or illegitimacy of a child attaches upon his/her conception. In the present case, it
was not disputed that Hortillano and his wife were validly married and that their child was
conceived during said marriage, hence, making said child legitimate upon her
conception.1avvphi1

Also incontestable is the fact that Hortillano was able to comply with the fourth element
entitling him to death and accident insurance under the CBA, i.e., presentation of the death
certificate of his unborn child.

Given the existence of all the requisites for bereavement leave and other death benefits under
the CBA, Hortillano’s claims for the same should have been granted by Continental Steel.

We emphasize that bereavement leave and other death benefits are granted to an employee
to give aid to, and if possible, lessen the grief of, the said employee and his family who
suffered the loss of a loved one. It cannot be said that the parents’ grief and sense of loss
arising from the death of their unborn child, who, in this case, had a gestational life of 38-39
weeks but died during delivery, is any less than that of parents whose child was born alive but
died subsequently.

Being for the benefit of the employee, CBA provisions on bereavement leave and other death
benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the
Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor.29 In the same way, the
CBA and CBA provisions should be interpreted in favor of labor. In Marcopper Mining v.
National Labor Relations Commission,30 we pronounced:

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that
"when the pendulum of judgment swings to and fro and the forces are equal on both sides, the
same must be stilled in favor of labor." While petitioner acknowledges that all doubts in the
interpretation of the Labor Code shall be resolved in favor of labor, it insists that what is
involved-here is the amended CBA which is essentially a contract between private persons.
What petitioner has lost sight of is the avowed policy of the State, enshrined in our
Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise, sworn
to uphold.

In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA 451 (1990)], we
categorically stated that:

When conflicting interests of labor and capital are to be weighed on the scales of social justice,
the heavier influence of the latter should be counter-balanced by sympathy and compassion
the law must accord the underprivileged worker.

Likewise, in Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)], we
declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social
justice policy.

IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27 February 2008 and
Resolution dated 9 May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the
Resolution dated 20 November 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montaño,
which granted to Rolando P. Hortillano bereavement leave pay and other death benefits in the
amounts of Four Thousand Nine Hundred Thirty-Nine Pesos (₱4,939.00) and Eleven
Thousand Five Hundred Fifty Pesos (₱11,550.00), respectively, grounded on the death of his
unborn child, are AFFIRMED. Costs against Continental Steel Manufacturing Corporation.

SO ORDERED.
G.R. No. 230751
ESTRELLITA TADEO-MATIAS, Petitioner
vs
REPUBLIC OF THE PHILIPPINES, Respondent
DECISION
VELASCO, JR., J.:
This is an appeal1 assailing the Decision2 dated November 28, 2016 and Resolution3 dated
March 20, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 129467.
The facts are as follows:
On April 10, 2012, petitioner Estrellita Tadco-Matias filed before the Regional Trail Court (RTC)
of Tarlac City a petition for the declaration of presumptive death of her husband, Wifredo N.
Matias (Wilfredo).4 The allegations of the petition read:
1. [Petitioner] is of legal age, married to [Wilfredo], Filipino and curr[e]ntly a residnet of 106
Molave street, Zone B. San Miguel Tarlac City;
2. [Wifredo] is of legal age, a member of the Philippine Constabulary and was assigned in
Araya, Pampanga since August 24, 1967[;]
3. The[p]etitioner and [Wilfredo] entered into a lawful marriage on January 7, 1968 in Imbo,
Anda, Pangasinan x x x;
4. After the solemnization of their marriage vows, the couple put up their conjugal home at 106
Molave street, Zone B. San Miguel, Tarlac City;
5. [Wilfredo] continued to serve the Philippines and on September 15, 1979, he set out from
their conjugal home to again serve as a member of the Philippine Constabulary;
6. [Wilfredo] never came back from his tour of duty in Arayat, Pampanga since 1979 and he
never made contact or communicated with the [p]etitioner nor to his relatives;
7. That according to the service record of [Wilfredo] issued by the National Police Commission,
[Wilfredo] was already declared missing since 1979 x x x;
8. Petitioner constantly pestered the then Philippine Constabulary for any news regarding [her]
beloved husband [Wilfredo], but the Philippine Constabulary had no answer to his
whereabouts, [neither] did they have any news of him going AWOL, all they know was he was
assigned to a place frequented by the New People's Army;
9. [W]eeks became years and years became decades, but the [p]etitioner never gave up hope,
and after more than three (3) decades of awaiting, the [p]etitioner is still hopeful, but the times
had been tough on her, specially with a meager source of income coupled with her age, it is
now necessary for her to request for the benefits that rightfully belong to her in order to
survive;
10. [T]hat one of the requirements to attain the claim of benefits is for a proof of death or at
least declaration of presumptive death by the Honorable Court;
11. That this petition is being filed not for any other purpose but solely to claim for the benefit
under P.D. No. 1638 as amended.
The petition was docketed as Spec. Proc. No. 4850 and was raffled to Branch 65 of the Tarlac
City RTC. A copy of the petition was then furnished to the Office of the Solicitor General
(OSG)_.
Subsequently, the OSG filed its notice of appearance on behalf of herein respondent Republic
of the Philippines (Republic).5
On January 15, 2012, the RTC issued a Decision6 in Spec. Proc. No. 4850 granting the
petition. The dispositive portion of the Decision reads:7
WHEREFORE in view of the foregoing the Court hereby declared (sic) WILFREDO N. MATIAS
absent or presumptively dead under Article 41 of the Family Code of the Philippines for
purpose of claiming financial benefits due to him as former military officer.
xxxx
SO ORDERED. (Emphasis supplied)
The Republic questioned the decision of the RTC via a petition for certiotrari.8
On November 28, 2012, the CA rendered a decision granting the certiorari petition of the
Republic and setting aside the decision of the RTC. It accordingly disposed:
WHEREFORE, premises considered, the petition for certiorari is GRANTED. The Decision
dated January 15, 2012 of the Regional Trial Court, branch 65, Tarlac City, in Special
Proceeding no. 4850 is ANNULED and SET ASIDE, and the petition is DISMISSED.
The CA premised its decision on the following ratiocinations:
1. The RTC erred when it declared Wilfredo presumptively dead on the basis of Article 41 of
the Family Code (FC). Article 41 of the FC does not seek to remarry. If anything, the petition
was invoking the presumption of death established under Articles 390 and 391 of the Civil
Code, and not that provided for under Article 41 of the FC.
2. Be that it may, the petition to declare Wilfredo presumptively dead should have been
dismissed by the RTC. The RTC is without authority to take cognizance of a petition whose
sole purpose is to have a person declared presumptively dead under either Article 390 or
Article 391 of the Civil Code. As been held by jurisprudence, Articles 390 and 391 of the Civil
Code merely express rules of evidence that allow a court or a tribunal to presume that a
person is dead-which presumption may be invoked in any action or proceeding, but itself
cannot be the subject of an independent action or proceeding.
Petitioner moved for reconsideration, but the CA remained steadfast. Hence,this appeal.
Our Ruling
We deny the appeal
I
The CA was correct. The petition for the declaration of presumptive death filed by the petitioner
is not an authorized suit and should have been dismissed by the RTC. The RTC's decision
must, therefore, be set aside.
RTC Erred I Declaring the
Presumptive Death of Wilfredo under
Article 41 of the FC; Petitioner's
Petition for the Declaration of
Presumptive Death is Not Based on
Article 41 of the FC, but on the Civil
Code
A conspicuous error in the decision of the RTC must first be addressed.
It can be recalled that the RTC, in fallo of its January 15, 2012 Decision, granted the
petitioner's petition by declaring Wilfredo presumptively dead "under Article 41 of the FC." By
doing so, RTC gave the impression that the petition for the declaration of presumptive death
filed by petitioner was likewise filed pursuant to Article 41 of the FC.9 This is wrong.
The petition for the declaration of presumptive death filed by petitioner is not an action that
would have warranted the application of Article 41 of the FC shows that the presumption of
death established therein is only applicable for the purpose of contracting a valid subsequent
marriage under the said law. Thus:
Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall
be null and void, unless before the celebration of the subsequent marriage, the prior spouse
had been absent for four consecutive years and the spouse present has a well-founded belief
that the absent spouse was already dead. In case of disappearance where there is danger of
death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an
absence of only two years shall be sufficient.
For the purpose of contracting the subsequent marriage under the preceding paragraph the
spouse present must institute a summary proceeding as provided in this Code for the
declaration of presumptive death of the absentee, without prejudice to the effect of
reappearance of the absent spouse.
Here, petitioner was forthright that she was not seeking the declaration of the presumptive
death Wilfredo as a prerequisite for remarriage. In her petition for the declaration of
presumptive death, petitioner categorically stated that the same was filed "not for any other
purpose but solely to claim for the benefit under P.D. No. 1638 a amended.10
Given that her petition for the declaration of presumptive death was not filed for the purpose of
remarriage, petitioner was clearly relying on the presumption of death under either Article 390
or Article 391 of the Civil Code11 as the basis of her petition. Articles 390 and 391 of the Civil
Code express the general rule regarding presumption s of death for any civil purpose, to wit:
Art. 390. After an absence of seven years, it being unknown whether or not the absence still
lives, he shall be presumed dead for all purposes except for those of succession.
The absentee shall not be presumed dead for the purpose of opening his succession till after
an absence of five years shall be sufficient in order that his succession may be opened.
Art. 391. The following shall be presumed dead for all purposes, including the division of the
estate among the heirs:
(1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing,
who has not been heard of for four years since the loss of the vessel or aeroplane;
(2) A person in the armed forces who has taken part in war, and has been missing for four
years;
(3) a person who has been in danger of death under other circumstances and his existence
has not been known for four years.
Verily, the RTC's use of Article 41 of the FC as its basis in declaring the presumptive death of
Wilfredo was misleading and grossly improper.The petition for the declaration of presumptive
death filed by the petitioner was based on the Civil Code, and not on Article 41 of the FC.
Petitioner's Petition for Declaration of
Presumptive Death Ought to Have Been
Dismissed; A Petition Whose Sole Objective is
To Declare a Person Presumptively Dead Under
the CivilCode, Like that Filed by the Petitioner
Before the RTC, Is Not a Viable Suit in Our
Jurisdiction
The true fault in the RTC's decision, however, goes beyond its misleading fallo. The decision
itself is objectionable.
Since the petition filed by the petitioner merely seeks the declaration of presumptive death of
Wilfredo under the Civil Code, the RTC should have dismissed such petition outright. This is
because, in our jurisdiction, a petition whose sole objective is to have a person declared
presumptively dead under the Civil Code is not regarded as a valid suit and no court has any
authority to take cognizance of the same.
The above norm had its conceptual roots in the 1948 case of In re: Petition for the
Presumption of Death of Nicolai Szatraw.12 In the said case, we held that a rule creating a
presumption of death13 is merely one of the evidence that-while may be invoked in any action
or proceeding-cannot be the lone subject of an independent action or proceeding. Szatraw
explained:
The rule invoked by the latter is merely one of the evidence which permits the court to
presume that a person had been unheard from in seven years had been established. This
presumption may arise and be invoked and made in a case, either in an action or in a special
proceeding, which is tried or heard by, and submitted for decision to, a competent court.
Independently of such an action or special proceeding, the presumption of death cannot be
invoked, nor can it be made the subject of an action or special proceeding. In this case, there
is no right ti be enforced nor is there a remedy prayed for by the petitioner against her absent
husband. Neither is there a prayer for the final determination of his right or status or for the
ascertainment of particular fact, for the petition does not pray for the declaration that the
petitioner 's husband us dead, but merely asks for a declaration that he be presumed dead
because he had been unheard from in seven years. If there is any pretense at securing a
declaration that the petitioner's husband os dead, such a pretension cannot be granted
because it is unauthorized. The petition is for a declaration, even if judicially made, would not
improve the petitioner's situation, because such a presumption is already established by law. A
judicial pronouncement to that effect, even if final and executory, would be a prima facie
presumption only. It is still disputable. It is for that reason that it cannot be the subject of
judicial pronouncement or declaration, if it is tha only question or matter involved in a case, or
upon which a competent court has to pass. The latter must decide finally the controversy
between the parties, or determine finally the right or status of a party or establish finally a
particular fact, out of which certain rights and obligations arise or may arise; and once such
controversy is decided by a final decree, then the judgement on the subject of the controversy,
or the decree upon the right or status of a party or upon the existence of a particular fact,
becomes res judicata, subject to no collateral attack, except in a few rare instances especially
provided by law. It is, therefore, clear that judicial declaration that a person is presumptively
dead, because he had been unheard from in seven years, being a presumption juris tantum
only, subject to contrary proof, cannot reach the stage of finality or become final. (Citations
omitted and emphasis supplied)
The above ruling in Szatraw has since been ussed by the subsequent cases of Lukban v.
Republic14 and Gue v. Republic15 in disallowing petitions for declaration of presumptive death
based on Article 390 of the Civil Code (and, implicity, also those based on the Civil based on
Article 391 of the Civil Code).
Dissecting the rulings of Szatraw, Gue and Lukban collectively, we are able to ascertain the
considerations why a petition for declaration of presumptive death based on the Civil Code
was disallowed in our jurisdiction, viz:16
1. Articles 390 and 391 of the Civil Code merely express rules of evidence that only allow a
court or a tribunal to presume that a person is dead upon the establishment of certain facts.
2. Since Articles 390 an d 391 of the Civil Code merely express rules of evidence, an action
brought exclusively to declare a person presumptively dead under either of the said articles
actually presents
no actual controversy that a court could decide. In such action, there would be no actual rights
to be enforces, no wrong to be remedied nor any status to be established.
3. A judicial pronouncement declaring a person presumptively dead under Article 390 or Article
391 of the Civil Code, in an action exclusively based thereon, would never really become
"final" as the same only confirms tha existence of a prima facie or disputable presumption. The
function of a court to render decisions that is supposed to be final and binding between
litigants is thereby compromised.
4. Moreove, a court action to declare a person presumptively dead under Articles 390 and 391
of the Civil Code would be unnecessary. The presumption in the said articles is already
established by law.

Verily, under prevailing case law, courts are without any authority to take cognizance of a
petition that-like the one filed by the petitioner in the case at bench-only seeks to have a
person declared presumptively dead under the Civil Code. Such a petition is not authorized by
law.17 Hence, by acting upon and eventually granting the petitioner's petition for the
declaration of presumptive death, the RTC violated prevailing jurisprudence and thereby
committed grave abuse of discretion. The CA, therefore, was only correct in setting aside the
RTC's decision.

II

Before bringing this case to its logical conclusion, however, there are a few points the Court is
minded to make.

It is not lost on this Court that much of the present controversy stemmed from the
misconception that a court declaration is required in order to establish a person is
presumptively dead for purposes of claiming his death benefits as a military serviceman under
pertinent laws.18 This misconception is what moved petitioner to file her misguided petition for
the declaration of presumptive death of Wilfredo and what ultimately exposed her to
unnecessary difficulties in prosecuting an otherwise simple claim for death benefits either
before the Philippine Veterans' Affair Office (PVAO) of the Armed Forces of the Philippines
(AFP).

What the Court finds deeply disconnecting, however, is the possibility that such misconception
may have been peddles by no less than the PVAO and the AFP themselves; that such
agencies, as a matter of practice, had been requiring claimants, such as the petitioner, to first
secure a court declaration of presumptive death before processing the death before
processing the death benefits of missing serviceman.

In view of the foregoing circumstances, the Court deems it necessary to issue the following
guidelines-culled from relevant law and jurisprudential pronouncements-to aid the public,
PVAO and the AFP in making or dealing with claims of death benefits which are similar to that
of the petitioner:

1. The PVAO and the AFP can decide claims of death benefits of a missing soldier without
requiring the claimant to first produce a court declaration of the presumptive death of such
soldier. In such claims, the PVAO and the AFP can make their own determination, on the basis
of the evidence presented by the claimant, whether the presumption of death under Articles
390 and 391 of the Civil Code may be applied or not.

It must be stressed that the presumption of death under Articles 390 and 391 of the Civil Code
arises by operation of law, without need of a court declaration, once the factual conditions
mentioned in the said articles are established.19 Hence, requiring the claimant to further
secure a court declaration in order to establish the presumptive death of a missing soldier is
not proper and contravenes established jurisprudence on the matter.20

2. In order to avail of the presumption, therefore, the claimant need only present before the
PVAO or the appropriate office of the AFP, as the case may be, any "evidence"21 which
shows that the concerned soldier had been missing for such number of years and or under the
circumstances prescribed under Articles 390 and 391 of the Civil Code. Obviously, the
"evidence" referred to here excludes a court declaration of presumptive death.

3. The PVAO or the AFP, as the case may be, may then weigh the evidence submitted by the
claimant and determine their sufficiency to establish the requisite factual conditions specified
under Article 390 or 391 of the Civil Code in order for the presumption of death to arise. If the
PVAO or the AFP determines that the evidence submitted by the claimant is sufficient, they
should not hesitate to apply the presumption of death and pay the latter's claim.

4. If the PVAO or the AFP determines that the evidence submitted by the claimant is not
sufficient to invoke the presumption of death under the Civil Code and denies the latter's claim
by reason thereof, the claimant may file an appeal with the Office of the President (OP)
pursuant to the principle of exhaustion of administrative remedies.

If the OP denies the appeal, the claimant may next seek recourse via a petition for review with
the CA under Rule 43 of the Rules of the Court.1avvphi1 And finally, shold such recourse still
fail, the claimant may file an appeal by certiorari with the Supreme Court.

While we are constrained by case law to deny the instant petition, the Court is hopeful that, by
the foregoing guidelines, the unfortunate experience of the petitioner would no longer be
replicated in the future.

WHEREFORE, the instant appeal is DENIED. The Decision dated November 28, 2016 and
Resolution dated March 20, 2017 of the Court of Appeals in CA-G.R. SP No. 129467 are
AFFIRMED. The Court declares that a judicial decision of a court of law that a person is
presumptively dead is not requirement before the Philippine Veterans' Affairs Office and the
Armed Forces of the Philippines for their consideration.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 180863 September 8, 2009
ANGELITA VALDEZ, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision of the Regional Trial Court (RTC) of Camiling, Tarlac dated November
12, 2007 dismissing petitioner Angelita Valdez’s petition for the declaration of presumptive
death of her husband, Sofio Polborosa (Sofio).
The facts of the case are as follows:
Petitioner married Sofio on January 11, 1971 in Pateros, Rizal. On December 13, 1971,
petitioner gave birth to the spouses’ only child, Nancy. According to petitioner, she and Sofio
argued constantly because the latter was unemployed and did not bring home any money. In
March 1972, Sofio left their conjugal dwelling. Petitioner and their child waited for him to return
but, finally, in May 1972, petitioner decided to go back to her parents’ home in Bancay 1st,
Camiling, Tarlac. Three years passed without any word from Sofio. In October 1975, Sofio
showed up at Bancay 1st. He and petitioner talked for several hours and they agreed to
separate. They executed a document to that effect.1 That was the last time petitioner saw him.
After that, petitioner didn’t hear any news of Sofio, his whereabouts or even if he was alive or
not.2
Believing that Sofio was already dead, petitioner married Virgilio Reyes on June 20, 1985.3
Subsequently, however, Virgilio’s application for naturalization filed with the United States
Department of Homeland Security was denied because petitioner’s marriage to Sofio was
subsisting.4 Hence, on March 29, 2007, petitioner filed a Petition before the RTC of Camiling,
Tarlac seeking the declaration of presumptive death of Sofio.
The RTC rendered its Decision5 on November 12, 2007, dismissing the Petition for lack of
merit. The RTC held that Angelita "was not able to prove the well-grounded belief that her
husband Sofio Polborosa was already dead." It said that under Article 41 of the Family Code,
the present spouse is burdened to prove that her spouse has been absent and that she has a
well-founded belief that the absent spouse is already dead before the present spouse may
contract a subsequent marriage. This belief, the RTC said, must be the result of proper and
honest-to-goodness inquiries and efforts to ascertain the whereabouts of the absent spouse.
The RTC found that, by petitioner’s own admission, she did not try to find her husband
anymore in light of their mutual agreement to live separately. Likewise, petitioner’s daughter
testified that her mother prevented her from looking for her father. The RTC also said there is a
strong possibility that Sofio is still alive, considering that he would have been only 61 years old
by then, and people who have reached their 60s have not become increasingly low in health
and spirits, and, even assuming as true petitioner’s testimony that Sofio was a chain smoker
and a drunkard, there is no evidence that he continues to drink and smoke until now.
Petitioner filed a motion for reconsideration.6 She argued that it is the Civil Code that applies in
this case and not the Family Code since petitioner’s marriage to Sofio was celebrated on
January 11, 1971, long before the Family Code took effect. Petitioner further argued that she
had acquired a vested right under the provisions of the Civil Code and the stricter provisions of
the Family Code should not be applied against her because Title XIV of the Civil Code, where
Articles 384 and 390 on declaration of absence and presumption of death, respectively, can be
found, was not expressly repealed by the Family Code. To apply the stricter provisions of the
Family Code will impair the rights petitioner had acquired under the Civil Code.
The RTC denied the Motion for Reconsideration in a Resolution dated December 10, 2007.7
Petitioner now comes before this Court seeking the reversal of the RTC Decision and Motion
for Reconsideration.
In its Manifestation and Motion,8 the Office of the Solicitor General (OSG) recommended that
the Court set aside the assailed RTC Decision and grant the Petition to declare Sofio
presumptively dead. The OSG argues that the requirement of "well-founded belief" under
Article 41 of the Family Code is not applicable to the instant case. It said that petitioner could
not be expected to comply with this requirement because it was not yet in existence during her
marriage to Virgilio Reyes in 1985. The OSG further argues that before the effectivity of the
Family Code, petitioner already acquired a vested right as to the validity of her marriage to
Virgilio Reyes based on the presumed death of Sofio under the Civil Code. This vested right
and the presumption of Sofio’s death, the OSG posits, could not be affected by the obligations
created under the Family Code.9
Next, the OSG contends that Article 390 of the Civil Code was not repealed by Article 41 of the
Family Code.10 Title XIV of the Civil Code, the OSG said, was not one of those expressly
repealed by the Family Code. Moreover, Article 256 of the Family Code provides that its
provisions shall not be retroactively applied if they will prejudice or impair vested or acquired
rights.11
The RTC Decision, insofar as it dismissed the Petition, is affirmed. However, we must state
that we are denying the Petition on grounds different from those cited in the RTC Decision.
Initially, we discuss a procedural issue. Under the Rules of Court, a party may directly appeal
to this Court from a decision of the trial court only on pure questions of law. A question of law
lies, on one hand, when the doubt or difference arises as to what the law is on a certain set of
facts; on the other hand, a question of fact exists when the doubt or difference arises as to the
truth or falsehood of the alleged facts. Here, the facts are not disputed; the controversy merely
relates to the correct application of the law or jurisprudence to the undisputed facts.12
The RTC erred in applying the provisions of the Family Code and holding that petitioner
needed to prove a "well-founded belief" that Sofio was already dead. The RTC applied Article
41 of the Family Code, to wit:
Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall
be null and void, unless before the celebration of the subsequent marriage, the prior spouse
had been absent for four consecutive years and the spouse present has a well-founded belief
that the absent spouse was already dead. In case of disappearance where there is danger
under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence
of only two years shall be sufficient.
For the purpose of contracting a subsequent marriage under the preceding paragraph, the
spouse present must institute a summary proceeding as provided in this Code for the
declaration of presumptive death of the absentee, without prejudice to the effect of
reappearance of the absent spouse.
It is readily apparent, however, that the marriages of petitioner to Sofio and Virgilio on January
11, 1971 and June 20, 1985, respectively, were both celebrated under the auspices of the Civil
Code.
The pertinent provision of the Civil Code is Article 83:
Art. 83. Any marriage subsequently contracted by any person during the lifetime of the first
spouse of such person with any person other than such first spouse shall be illegal and void
from its performance, unless:
(1) The first marriage was annulled or dissolved; or
(2) The first spouse had been absent for seven consecutive years at the time of the second
marriage without the spouse present having news of the absentee being alive, of if the
absentee, though he has been absent for less than seven years, is generally considered as
dead and believed to be so by the spouse present at the time of contracting such subsequent
marriage, or if the absentee is presumed dead according to Articles 390 and 391. The
marriage so contracted shall be valid in any of the three cases until declared null and void by a
competent court.
Article 390 of the Civil Code states:
Art. 390. After an absence of seven years, it being unknown whether or not the absentee still
lives, he shall be presumed dead for all purposes, except for those of succession.
The absentee shall not be presumed dead for the purpose of opening his succession till after
an absence of ten years. If he disappeared after the age of seventy-five years, an absence of
five years shall be sufficient in order that his succession may be opened.
The Court, on several occasions, had interpreted the above-quoted provision in this wise:
For the purposes of the civil marriage law, it is not necessary to have the former spouse
judicially declared an absentee. The declaration of absence made in accordance with the
provisions of the Civil Code has for its sole purpose to enable the taking of the necessary
precautions for the administration of the estate of the absentee. For the celebration of civil
marriage, however, the law only requires that the former spouse has been absent for seven
consecutive years at the time of the second marriage, that the spouse present does not know
his or her former spouse to be living, that such former spouse is generally reputed to be dead
and the spouse present so believes at the time of the celebration of the marriage.13
Further, the Court explained that presumption of death cannot be the subject of court
proceedings independent of the settlement of the absentee’s estate.
In re Szatraw14 is instructive. In that case, petitioner contracted marriage with a Polish
national in 1937. They lived together as husband and wife for three years. Sometime in 1940,
the husband, on the pretext of visiting some friends, left the conjugal abode with their child and
never returned. After inquiring from friends, petitioner found that her husband went to
Shanghai, China. However, friends who came from Shanghai told her that the husband was
not seen there. In 1948, petitioner filed a petition for the declaration of presumptive death of
her husband arguing that since the latter had been absent for more than seven years and she
had not heard any news from him and about her child, she believes that he is dead. In deciding
the case, the Court said:
The petition is not for the settlement of the estate of Nicolai Szatraw, because it does not
appear that he possessed property brought to the marriage and because he had acquired no
property during his married life with the petitioner. The rule invoked by the latter is merely one
of evidence which permits the court to presume that a person is dead after the fact that such
person had been unheard from in seven years had been established. This presumption may
arise and be invoked and made in a case, either in an action or in a special proceeding, which
is tried or heard by, and submitted for decision to, a competent court. Independently of such an
action or special proceeding, the presumption of death cannot be invoked, nor can it be made
the subject of an action or special proceeding. In this case, there is no right to be enforced nor
is there a remedy prayed for by the petitioner against her absent husband. Neither is there a
prayer for the final determination of his right or status or for the ascertainment of a particular
fact (Hagans v. Wislizenus, 42 Phil. 880), for the petition does not pray for a declaration that
the petitioner's husband is dead, but merely asks for a declaration that he be presumed dead
because he had been unheard from in seven years. If there is any pretense at securing a
declaration that the petitioner's husband is dead, such a pretension cannot be granted
because it is unauthorized. The petition is for a declaration that the petitioner's husband is
presumptively dead. But this declaration, even if judicially made, would not improve the
petitioner's situation, because such a presumption is already established by law. A judicial
pronouncement to that effect, even if final and executory, would still be a prima facie
presumption only. It is still disputable. It is for that reason that it cannot be the subject of a
judicial pronouncement or declaration, if it is the only question or matter involved in a case, or
upon which a competent court has to pass. The latter must decide finally the controversy
between the parties, or determine finally the right or status of a party or establish finally a
particular fact, out of which certain rights and obligations arise or may arise; and once such
controversy is decided by a final judgment, or such right or status determined, or such
particular fact established, by a final decree, then the judgment on the subject of the
controversy, or the decree upon the right or status of a party or upon the existence of a
particular fact, becomes res judicata, subject to no collateral attack, except in a few rare
instances especially provided by law. It is, therefore, clear that a judicial declaration that a
person is presumptively dead, because he had been unheard from in seven years, being a
presumption juris tantum only, subject to contrary proof, cannot reach the stage of finality or
become final. Proof of actual death of the person presumed dead because he had been
unheard from in seven years, would have to be made in another proceeding to have such
particular fact finally determined.1avvphi1 If a judicial decree declaring a person presumptively
dead, because he had not been heard from in seven years, cannot become final and executory
even after the lapse of the reglementary period within which an appeal may be taken, for such
presumption is still disputable and remains subject to contrary proof, then a petition for such a
declaration is useless, unnecessary, superfluous and of no benefit to the petitioner.15
In Lukban v. Republic,16 petitioner Lourdes G. Lukban contracted marriage with Francisco
Chuidian on December 10, 1933. A few days later, on December 27, Francisco left Lourdes
after a violent quarrel. She did not hear from him after that day. Her diligent search, inquiries
from his parents and friends, and search in his last known address, proved futile. Believing her
husband was already dead since he had been absent for more than twenty years, petitioner
filed a petition in 1956 for a declaration that she is a widow of her husband who is presumed to
be dead and has no legal impediment to contract a subsequent marriage. On the other hand,
the antecedents in Gue v. Republic17 are similar to Szatraw. On January 5, 1946, Angelina
Gue’s husband left Manila where they were residing and went to Shanghai, China. From that
day on, he had not been heard of, had not written to her, nor in anyway communicated with her
as to his whereabouts. Despite her efforts and diligence, she failed to locate him. After 11
years, she asked the court for a declaration of the presumption of death of Willian Gue,
pursuant to the provisions of Article 390 of the Civil Code of the Philippines.
In both cases, the Court reiterated its ruling in Szatraw. It held that a petition for judicial
declaration that petitioner's husband is presumed to be dead cannot be entertained because it
is not authorized by law.18
From the foregoing, it can be gleaned that, under the Civil Code, the presumption of death is
established by law19 and no court declaration is needed for the presumption to arise. Since
death is presumed to have taken place by the seventh year of absence,20 Sofio is to be
presumed dead starting October 1982.
Consequently, at the time of petitioner’s marriage to Virgilio, there existed no impediment to
petitioner’s capacity to marry, and the marriage is valid under paragraph 2 of Article 83 of the
Civil Code.
Further, considering that it is the Civil Code that applies, proof of "well-founded belief" is not
required. Petitioner could not have been expected to comply with this requirement since the
Family Code was not yet in effect at the time of her marriage to Virgilio. The enactment of the
Family Code in 1988 does not change this conclusion. The Family Code itself states:
Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair
vested or acquired rights in accordance with the Civil Code or other laws.
To retroactively apply the provisions of the Family Code requiring petitioner to exhibit "well-
founded belief" will, ultimately, result in the invalidation of her second marriage, which was
valid at the time it was celebrated. Such a situation would be untenable and would go against
the objectives that the Family Code wishes to achieve.
In sum, we hold that the Petition must be dismissed since no decree on the presumption of
Sofio’s death can be granted under the Civil Code, the same presumption having arisen by
operation of law. However, we declare that petitioner was capacitated to marry Virgilio at the
time their marriage was celebrated in 1985 and, therefore, the said marriage is legal and valid.
WHEREFORE, the foregoing premises considered, the Petition is DENIED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 184148 June 9, 2014
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG, Petitioners,
vs.
ROSARIO CALALANG-GARCIA, LEONORA CALALANG-SABILE, and CARLITO S.
CALALANG, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari assailing the Decision1 dated December 21,
2007 and Resolution2 dated July 25, 2008 of the Thirteenth Division of the Court of Appeals
(CA) in CA-G.R. CV No. 72531. The CA modified the Decision3 dated July 10, 2001 of the
Regional Trial Court (RTC), Branch 21, of Malolos, Bulacan, in Civil Case No. 370-M-91.
The facts, as culled from the records, follow:
In a Complaint4 for Annulment of Sale and Reconveyance of Property filed with the RTC of
Malolos, Bulacan on June 10, 1991, the respondents Rosario Calalang-Garcia, Leonora
Calalang-Sabile, and Carlito S. Calalang asserted their ownership over a certain parcel of land
against the petitioners Nora B. Calalang-Parulan and Elvira B. Calalang. The said lot with an
area of 1,266 square meters and specifically identified as Lot 1132, Cad. 333, Bigaa Cadastre
situated in Brgy. Burol 2nd, Municipality of Balagtas, Province of Bulacan, was allegedly
acquired by the respondents from their mother Encarnacion Silverio, through succession as
the latter’s compulsory heirs.
According to the respondents, their father, Pedro Calalang contracted two marriages during his
lifetime. The first marriage was with their mother Encarnacion Silverio. During the subsistence
of this marriage, their parents acquired the above-mentioned parcel of land from their maternal
grandmother Francisca Silverio. Despite enjoying continuous possession of the land, however,
their parents failed to register the same. On June 7, 1942, the first marriage was dissolved with
the death of Encarnacion Silverio.
On November 6, 1967, Pedro Calalang entered into a second marriage with Elvira B. Calalang
who then gave birth to Nora B. Calalang-Parulan and Rolando Calalang. According to the
respondents, it was only during this time that Pedro Calalang filed an application for free patent
over the parcel of land with the Bureau of Lands. Pedro Calalang committed fraud in such
application by claiming sole and exclusive ownership over the land since 1935 and concealing
the fact that he had three children with his first spouse. As a result, on September 22, 1974,
the Register of Deeds of Bulacan issued Original Certificate of Title (OCT) No. P-28715 in
favor of Pedro Calalang only.
On February 17, 1984, Pedro Calalang sold the said parcel of land to Nora B. Calalang-
Parulan as evidenced by a Deed of Sale6 executed by both Pedro Calalang and Elvira B.
Calalang. Accordingly, the Register of Deeds of Bulacan cancelled OCT No. P-2871 and
issued Transfer Certificate of Title (TCT) No. 283321 in the name of Nora B. Calalang-Parulan.
On December 27, 1989,7 Pedro Calalang died.
The respondents assailed the validity of TCT No. 283321 on two grounds. First, the
respondents argued that the sale of the land was void because Pedro Calalang failed to obtain
the consent of the respondents who were co-owners of the same. As compulsory heirs upon
the death of Encarnacion Silverio, the respondents claimed that they acquired successional
rights over the land. Thus, in alienating the land without their consent, Pedro Calalang
allegedly deprived them of their pro indiviso share in the property. Second, the respondents
claimed that the sale was absolutely simulated as Nora B. Calalang-Parulan did not have the
capacity to pay for the consideration stated in the Deed of Sale.
In their Answer,8 the petitioners argued that the parcel of land was acquired during the second
marriage of Pedro Calalang with Elvira B. Calalang. They stressed that OCT No. P-2871 itself
stated that it was issued in the name of "Pedro Calalang, married to Elvira Berba [Calalang]."
Thus, the property belonged to the conjugal partnership of the spouses Pedro Calalang and
Elvira B. Calalang. The petitioners likewise denied the allegation that the sale of the land was
absolutely simulated as Nora B. Calalang-Parulan was gainfully employed in Spain at the time
of the sale. Moreover, they alleged that the respondents did not have a valid cause of action
against them and that their cause of action, if any, was already barred by laches, estoppel and
prescription. By way of counterclaim, the petitioners also sought the payment to them of moral
and exemplary damages plus costs of suit for the filing of the clearly unfounded suit.
On July 10, 2001, the trial court rendered decision in favor of the respondents. The dispositive
portion of the RTC decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendants in the following manner:
1. Ordering the defendants to reconvey in favor of the plaintiffs, their rightful share to three-
fourth (3/4) of one-half (1/2) or a total of 474.75 square meters at 158.25 square meters for
each of the three plaintiffs, namely: Rosario, Leonora, and Juanito all surname[d] Calalang, of
the real property covered by TCT No. 283321 of the Registry of Deeds of Bulacan
corresponding to their shares in the conjugal estate of the late Encarnacion S. Calalang [sic];
2. Ordering defendants to pay plaintiffs the amount of ₱50,000.00 for moral damages;
₱50,000.00 for attorney’s fees and another ₱50,000.00 for litigation expenses.
3. Dismissing the defendants’ counterclaims.
With costs against the defendants.
SO ORDERED.9
The trial court declared that the parcel of land was jointly acquired by the spouses Pedro
Calalang and Encarnacion Silverio from the parents of the latter. Thus, it was part of the
conjugal property of the first marriage of Pedro Calalang. When this marriage was dissolved
upon the death of Encarnacion Silverio on June 7, 1942,the corresponding shares to the
disputed property were acquired by the heirs of the decedent according to the laws of
succession. In particular, the trial court allocated half of the disputed property to Pedro
Calalang as his share in the conjugal partnership and allocated the other half to the three
respondents and Pedro Calalang to be divided equally among them. The trial court then
ordered all of Pedro’s share to be given to Nora B. Calalang-Parulan on account of the sale.
The trial court also ruled that because the application for free patent filed by Pedro Calalang
was attended by fraud and misrepresentation, Pedro Calalang should be considered as a
trustee of an implied trust.
Aggrieved by the adverse ruling, the petitioners appealed the case to the CA which rendered
the assailed Decision on December 21, 2007. The dispositive portion of the CA decision reads,
WHEREFORE, in light of the foregoing premises, the Decision dated July 10, 2001of the
Regional Trial Court of Malolos, Bulacan is hereby MODIFIED to read as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs, and against the
defendants in the following manner:
1. Ordering the defendants to reconvey in favor of the plaintiffs, their rightful share to the
property owned by their common father Pedro Calalang, equivalent to one half(1/2) portion of
the whole area or 633 square meters to be divided equally by the three plaintiffs, namely:
Rosario, Leonora and Carlito, all surnamed Calalang, each getting an area of 211 square
meters of the property covered by TCT No. 2883321 of the Registry of Deeds of Bulacan
corresponding to their shares in the property of their late father Pedro Calalang;
2. Ordering defendants to pay plaintiffs the amount of ₱50,000.00 for moral damages;
₱50,000.00 for attorney’s fees and another ₱50,000.00 for litigation expenses.
3. Dismissing the defendants’ counterclaims.
With costs against the defendants.
SO ORDERED.
SO ORDERED.10
The CA reversed the factual findings of the trial court and held that Pedro Calalang was the
sole and exclusive owner of the subject parcel of land. Firstly, it held that there was insufficient
evidence to prove that the disputed property was indeed jointly acquired from the parents of
Encarnacion Silverio during the first marriage. Secondly, the CA upheld the indefeasibility of
OCT No. P-2871. It held that although the free patent was issued in the name of "Pedro
Calalang, married to Elvira Berba [Calalang]" this phrase was merely descriptive of the civil
status of Pedro Calalang at the time of the registration of the disputed property. Thus, contrary
to the ruling of the trial court, upon the death of Encarnacion Silverio on June 7, 1942, the
respondents did not acquire any successional rights to the parcel of land which was
exclusively owned by Pedro Calalang. However, applying the rules of succession, Pedro’s
heirs namely, Rosario Calalang-Garcia, Leonora Calalang-Sabile, Carlito Calalang, Nora B.
Calalang-Parulan, Elvira B. Calalang, and Rolando Calalang, succeeded Pedro to the land in
equal shares upon his death. Thus, the CA ordered the petitioners to reconvey in favor of the
respondents their rightful shares to the land. The CA ruled that the sale by Pedro Calalang to
Nora B. Calalang-Parulan was fraudulent and fictitious as the vendee was in bad faith and the
respondents were unlawfully deprived of their pro indiviso shares over the disputed property.
As regards the issue of prescription, the CA ruled that the prescriptive period for reconveyance
of fraudulently registered real property is ten years. Since the property was registered in the
name of Nora in1984 and the action for reconveyance was filed in 1991, the action has not yet
prescribed.
On January 23, 2008, petitioners filed their Motion for Reconsideration. The CA, however,
denied their motion in its Resolution dated July 25, 2008.
Hence, this petition raising the sole issue:
Whether or not the court a quo gravely erred in rendering its December 21, 2007 Decision
modifying the July 10, 2001 Decision of the trial court, and in issuing its July 25, 2008
Resolution denying petitioners’ Motion for Reconsideration dated January 23, 2008.11
Essentially, the only issue in this case is whether Pedro Calalang was the exclusive owner of
the disputed property prior to its transfer to his daughter Nora B. Calalang-Parulan.
The petitioners argue that the disputed property belonged to the conjugal partnership of the
second marriage of Pedro Calalang with Elvira B. Calalang as evidenced by OCT No. P-2871
which was issued to Pedro Calalang during the subsistence of his marriage to Elvira B.
Calalang. On the other hand, the respondents claim that the disputed property was transferred
by their maternal grandmother, Francisca Silverio, to their parents, Pedro Calalang and
Encarnacion Silverio, during the latter’s marriage. Thus, the respondents argue that it
belonged to the conjugal partnership of the first marriage of Pedro Calalang with Encarnacion
Silverio.
The petition is meritorious.
Preliminarily, we note that the resolution of the issue in this case requires a reevaluation of the
probative value of the evidence presented by the parties in order to trace the title of the
disputed property. What is involved is indeed a question of fact which is generally beyond the
jurisdiction of this Court to resolve in a petition for review on certiorari.12 However, a
recognized exception to the rule is when the RTC and CA have conflicting findings of fact as in
this case.13 Here, while the trial court ruled that the disputed property belonged to the conjugal
partnership of the first marriage of Pedro Calalang with Encarnacion Silverio, the court a quo
declared that the evidence proved the sole and exclusive ownership of the disputed property of
Pedro Calalang.
We have carefully reviewed the records of this case and sustain the finding of the CA that
Pedro Calalang is the sole and exclusive owner of the disputed property.
The trial court ruled that the respondents were able to establish that Lot 1132, Cad. 333
originated from the parents of Encarnacion, and therefore said property "either became
property of Encarnacion in her own right or jointly with her husband Pedro Calalang in 1936."
In so ruling, the trial court relied on the testimony of Rosario Calalang-Garcia that her parents
built a nipa house on the subject lot and lived there before and after World War II. The trial
court further noted that Rosario’s testimony was corroborated by her cousin and adjacent
neighbor Manolo Calalang.14
However, as correctly pointed out by the CA, a close perusal of the records of this case would
show that the records are bereft of any concrete proof to show that the subject property indeed
belonged to respondents’ maternal grandparents. The evidence respondents adduced merely
consisted of testimonial evidence such as the declaration of Rosario Calalang-Garcia that they
have been staying on the property as far as she can remember and that the property was
acquired by her parents through purchase from her maternal grandparents. However, she was
unable to produce any document to evidence the said sale, nor was she able to present any
documentary evidence such as the tax declaration issued in the name of either of her parents.
Moreover, we note that the free patent was issued solely in the name of Pedro Calalang and
that it was issued more than 30 years after the death of Encarnacion and the dissolution of the
conjugal partnership of gains of the first marriage. Thus, we cannot subscribe to respondents’
submission that the subject property originally belonged to the parents of Encarnacion and was
acquired by Pedro Calalang and Encarnacion.
We likewise cannot sustain the argument of the petitioners that the disputed property belongs
to the conjugal partnership of the second marriage of Pedro Calalang with Elvira B. Calalang
on the ground that the title was issued in the name of "Pedro Calalang, married to Elvira Berba
[Calalang]."
The contents of a certificate of title are enumerated by Section 45 of Presidential Decree No.
1529, otherwise known as the Property Registration Decree:
SEC. 45. Statement of personal circumstances in the certificate. – Every certificate of title shall
set forth the full names of all persons whose interests make up the full ownership in the whole
land, including their civil status, and the names of their respective spouses, if married, as well
as their citizenship, residence and postal address. If the property covered belongs to the
conjugal partnership, it shall be issued in the names of both spouses.1âwphi1
A plain reading of the above provision would clearly reveal that the phrase "Pedro Calalang,
married to Elvira Berba [Calalang]" merely describes the civil status and identifies the spouse
of the registered owner Pedro Calalang. Evidently, this does not mean that the property is
conjugal. In Litam v. Rivera,15 we declared:
Further strong proofs that the properties in question are the paraphernal properties of Marcosa
Rivera, are the very Torrens Titles covering said properties. All the said properties are
registered in the name of "Marcosa Rivera, married to Rafael Litam." This circumstance
indicates that the properties in question belong to the registered owner, Marcosa Rivera, as
her paraphernal properties, for if they were conjugal, the titles covering the same should have
been issued in the names of Rafael Litam and Marcosa Rivera. The words "married to Rafael
Litam" written after the name of Marcosa Rivera, in each of the above mentioned titles are
merely descriptive of the civil status of Marcosa Rivera, the registered owner of the properties
covered by said titles.
It must likewise be noted that in his application for free patent,16 applicant Pedro Calalang
averred that the land was first occupied and cultivated by him since 1935 and that he had
planted mango trees, coconut plants, caimito trees, banana plants and seasonal crops and
built his house on the subject lot. But he applied for free patent only in 1974 and was issued a
free patent while already married to Elvira B. Calalang. Thus, having possessed the subject
land in the manner and for the period required by law after the dissolution of the first marriage
and before the second marriage, the subject property ipso jure became private property and
formed part of Pedro Calalang’s exclusive property.17 It was therefore excluded from the
conjugal partnership of gains of the second marriage.18

As the sole and exclusive owner, Pedro Calalang had the right to convey his property in favor
of Nora B. Calalang-Parulan by executing a Deed of Sale on February 17, 1984. The CA
therefore erred in ruling that Pedro Calalang deprived his heirs of their respective shares over
the disputed property when he alienated the same.

It is hornbook doctrine that successional rights are vested only at the time of death. Article 777
of the New Civil Code provides that "[t]he rights to the succession are transmitted from the
moment of the death of the decedent." In Butte v. Manuel Uy and Sons, Inc.,19 we proclaimed
the fundamental tenets of succession:

The principle of transmission as of the time of the predecessor's death is basic in our Civil
Code, and is supported by other related articles. Thus, the capacity of the heir is determined
as of the time the decedent died (Art. 1034); the legitime is to be computed as of the same
moment (Art. 908), and so is the in officiousness of the donation inter vivas (Art. 771).
Similarly, the legacies of credit and remission are valid only in the amount due and outstanding
at the death of the testator (Art. 935), and the fruits accruing after that instant are deemed to
pertain to the legatee (Art. 948).

Thus, it is only upon the death of Pedro Calalang on December 27, 1989 that his heirs
acquired their respective inheritances, entitling them to their pro indiviso shares to his whole
estate. At the time of the sale of the disputed property, the rights to the succession were not
yet bestowed upon the heirs of Pedro Calalang. And absent clear and convincing evidence
that the sale was fraudulent or not duly supported by valuable consideration (in effect an in
officious donation inter vivas), the respondents have no right to question the sale of the
disputed property on the ground that their father deprived them of their respective shares. Well
to remember, fraud must be established by clear and convincing evidence. Mere
preponderance of evidence is not even adequate to prove fraud.20 The Complaint for
Annulment of Sale and Reconveyance of Property must therefore be dismissed.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
December 21, 2007 and Resolution dated July 25, 2008 of the Thirteenth Division of the Court
of Appeals in CA-G.R. CV No. 72531 are REVERSED and SET ASIDE. Civil Case No. 370-M-
91, or the Complaint for Annulment of Sale and Reconveyance of Property filed by the
respondents with the Regional Trial Court, Branch 21 of Malolos, Bulacan, on June 10, 1991,
is hereby DISMISSED for lack of merit.

No pronouncement as to costs.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15499 February 28, 1962
ANGELA M. BUTTE, plaintiff-appellant,
vs.
MANUEL UY and SONS, INC., defendant-appellee.
Delgado, Flores and Macapagal for plaintiff-appellant.
Pelaez and Jalandoni for defendant-appellee.
REYES, J.B.L., J.:
Appeal from a decision of the Court of First instance of Manila dismissing the action for legal
redemption filed by plaintiff-appellant.
It appears that Jose V. Ramirez, during his lifetime, was a co-owner of a house and lot located
at Sta. Cruz, Manila, as shown by Transfer Certificate of Title No. 52789, issued in the name of
the following co-owners: Marie Garnier Vda. de Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E.
Ramirez, 1/6; Rita de Ramirez, 1/6; and Jose Ma. Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died. Subsequently, Special Proceeding No. 15026
was instituted to settle his estate, that included the one-sixth (1/6) undivided share in the
aforementioned property. And although his last will and testament, wherein he bequeathed his
estate to his children and grandchildren and one-third (1/3) of the free portion to Mrs. Angela
M. Butte, hereinafter referred to as plaintiff-appellant, has been admitted to probate, the estate
proceedings are still pending up to the present on account of the claims of creditors which
exceed the assets of the deceased. The Bank of the Philippine Islands was appointed judicial
administrator.
Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de Ramirez, one of the co-owners
of the late Jose V. Ramirez in the Sta. Cruz property, sold her undivided 1/6 share to Manuel
Uy & Sons, Inc. defendant-appellant herein, for the sum of P500,000.00. After the execution by
her attorney-in-fact, Mrs. Elsa R. Chambers, of an affidavit to the effect that formal notices of
the sale had been sent to all possible redemptioners, the deed of sale was duly registered and
Transfer Certificate of Title No. 52789 was cancelled in lieu of which a new one was issued in
the name of the vendee and the other-co-owners.
On the same day (December 9, 1958), Manuel Uy & Sons, Inc. sent a letter to the Bank of the
Philippine Islands as judicial administrator of the estate of the late Jose V. Ramirez informing it
of the above-mentioned sale. This letter, together with that of the bank, was forwarded by the
latter to Mrs. Butte c/o her counsel Delgado, Flores & Macapagal, Escolta, Manila, and having
received the same on December 10, 1958, said law office delivered them to plaintiff-appellant's
son, Mr. Miguel Papa, who in turn personally handed the letters to his mother, Mrs. Butte, on
December 11 and 12, 1958. Aside from this letter of defendant-appellant, the vendor, thru her
attorney-in-fact Mrs. Chambers, wrote said bank on December 11, 1958 confirming vendee's
letter regarding the sale of her 1/6 share in the Sta. Cruz property for the sum of P500,000.00.
Said letter was received by the bank on December 15, 1958 and having endorsed it to Mrs.
Butte's counsel, the latter received the same on December 16, 1958. Appellant received the
letter on December 19, 1958.
On January 15, 1959, Mrs. Angela M. Butte, thru Atty. Resplandor Sobretodo, sent a letter and
a Philippine National Bank cashier's check in the amount of P500,000.00 to Manuel Uy &
Sons, Inc. offering to redeem the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez. This
tender having been refused, plaintiff on the same day consigned the amount in court and filed
the corresponding action for legal redemption. Without prejudice to the determination by the
court of the reasonable and fair market value of the property sold which she alleged to be
grossly excessive, plaintiff prayed for conveyance of the property, and for actual, moral and
exemplary damages.
After the filing by defendant of its answer containing a counterclaim, and plaintiff's reply
thereto, trial was held, after which the court rendered decision on May 13, 1959, dismissing
plaintiff's complaint on the grounds that she has no right to redeem the property and that, if
ever she had any, she exercised the same beyond the statutory 30-day period for legal
redemptions provided by the Civil Code. The counterclaim of defendant for damages was
likewise dismissed for not being sufficiently established. Both parties appealed directly to this
Court.
Based on the foregoing facts, the main issues posed in this appeal are: (1) whether or not
plaintiff-appellant, having been bequeathed 1/3 of the free portion of the estate of Jose V.
Ramirez, can exercise the right of legal redemption over the 1/6 share sold by Mrs. Marie
Garnier Vda. de Ramirez despite the presence of the judicial administrator and pending the
final distribution of her share in the testate proceedings; and (2) whether or not she exercised
the right of legal redemption within the period prescribed by law.
The applicable law involved in the present case is contained in Articles 1620, p. 1, and 1623 of
the Civil Code of the Philippines, which read as follows:
ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of
all the other-co-owners or of any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption, they may only do so
in proportion to the share they may respectively have in the thing owned in common. (1522a)
ART. 1623. The right of legal predemption or redemption shall not be exercised except within
thirty days from the notice in writing by the respective vendor, or by the vendor, as the case
may be. The deed of sale shall not be accorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written notice thereof at all
possible redemptioners.
The right of redemption of co-owners excludes that of adjoining owners. (1524a)
That the appellant Angela M. Butte is entitled to exercise the right of legal redemption is clear.
As testamentary heir of the estate of J.V. Ramirez, she and her co-heirs acquired an interest in
the undivided one-sixth (1/6) share owned by her predecessor (causante) in the Santa Cruz
property, from the moment of the death of the aforesaid co-owner, J.V. Ramirez. By law, the
rights to the succession of a deceased persons are transmitted to his heirs from the moment of
his death, and the right of succession includes all property rights and obligations that survive
the decedent.
ART. 776. The inheritance includes all the property, rights and obligations of a person which
are not extinguished by his death. (659)
ART. 777. The rights to the succession are transmitted from the moment of the death of the
decedent. (657a)
ART. 947. The legatee or devisee acquires a right to the pure and simple legacies or devisees
from the death of the testator, and transmits it to his heirs. (881a)
The principle of transmission as of the time of the predecessor's death is basic in our Civil
Code, and is supported by other related articles. Thus, the capacity of the heir is determined
as of the time the decedent died (Art. 1034); the legitime is to be computed as of the same
moment(Art. 908), and so is the in officiousness of the donation inter vivos (Art. 771). Similarly,
the legacies of credit and remission are valid only in the amount due and outstanding at the
death of the testator (Art. 935),and the fruits accruing after that instant are deemed to pertain
to the legatee (Art. 948).
As a consequence of this fundamental rule of succession, the heirs of Jose V. Ramirez
acquired his undivided share in the Sta. Cruz property from the moment of his death, and from
that instant, they became co-owners in the aforesaid property, together with the original
surviving co-owners of their decedent (causante). A co-owner of an undivided share is
necessarily a co-owner of the whole. Wherefore, any one of the Ramirez heirs, as such co-
owner, became entitled to exercise the right of legal redemption (retracto de comuneros) as
soon as another co-owner (Maria Garnier Vda. de Ramirez) had sold her undivided share to a
stranger, Manuel Uy & Sons, Inc. This right of redemption vested exclusively in consideration
of the redemptioner's share which the law nowhere takes into account.
The situation is in no wise altered by the existence of a judicial administrator of the estate of
Jose V. Ramirez while under the Rules of Court the administrator has the right to the
possession of the real and personal estate of the deceased, so far as needed for the payment
of the decedent's debts and the expenses of administration (sec. 3, Rule 85), and the
administrator may bring or defend actions for the recovery or protection of the property or
rights of the deceased (sec. 2, Rule 88), such rights of possession and administration do not
include the right of legal redemption of the undivided share sold to Uy & Company by Mrs.
Garnier Ramirez. The reason is obvious: this right of legal redemption only came into
existence when the sale to Uy & Sons, Inc. was perfected, eight (8) years after the death of
Jose V. Ramirez, and formed no part of his estate. The redemption right vested in the heirs
originally, in their individual capacity, they did not derivatively acquire it from their decedent, for
when Jose V. Ramirez died, none of the other co-owners of the Sta. Cruz property had as yet
sold his undivided share to a stranger. Hence, there was nothing to redeem and no right of
redemption; and if the late Ramirez had no such right at his death, he could not transmit it to
his own heirs. Much less could Ramirez acquire such right of redemption eight years after his
death, when the sale to Uy & Sons, Inc. was made; because death extinguishes civil
personality, and, therefore, all further juridical capacity to acquire or transmit rights and
obligations of any kind (Civil Code of the Phil., Art. 42).
It is argued that the actual share of appellant Mrs. Butte in the estate of Jose V. Ramirez has
not been specifically determined as yet, that it is still contingent; and that the liquidation of
estate of Jose V. Ramirez may require the alienation of the decedent's undivided portion in the
Sta. Cruz property, in which event Mrs. Butte would have no interest in said undivided portion.
Even if it were true, the fact would remain that so long as that undivided share remains in the
estate, the heirs of Jose V. Ramirez own it, as the deceased did own it before his demise, so
that his heirs are now as much co-owners of the Sta. Cruz property as Jose V. Ramirez was
himself a co-owner thereof during his lifetime. As co-owners of the property, the heirs of Jose
V. Ramirez, or any one of them, became personally vested with right of legal redemption as
soon as Mrs. Garnier sold her own pro-indiviso interest to Uy & Sons. Even if subsequently,
the undivided share of Ramirez (and of his heirs) should eventually be sold to satisfy the
creditors of the estate, it would not destroy their ownership of it before the sale, but would only
convey or transfer it as in turn sold (of it actually is sold) to pay his creditors. Hence, the right
of any of the Ramirez heirs to redeem the Garnier share will not be retroactively affected. All
that the law requires is that the legal redemptioner should be a co-owner at the time the
undivided share of another co-owner is sold to a stranger. Whether or not the redemptioner will
continue being a co-owner after exercising the legal redemptioner is irrelevant for the purposes
of law.
Nor it can be argued that if the original share of Ramirez is sold by the administrator, his heirs
would stand in law as never having acquired that share. This would only be true if the
inheritance is repudiated or the heir's quality as such is voided. But where the heirship is
undisputed, the purchaser of hereditary property is not deemed to have acquired the title
directly from the deceased Ramirez, because a dead man can not convey title, nor from the
administrator who owns no part of the estate; the purchaser can only derive his title from the
Ramirez heirs, represented by the administrator, as their trustee or legal representative.
The right of appellant Angela M. Butte to make the redemption being established, the next
point of inquiry is whether she had made or tendered the redemption price within the 30 days
from notices as prescribed by law. This period, be it noted, is peremptory, because the policy
of the law is not to leave the purchaser's title in uncertainty beyond the established 30-day
period. In considering whether or not the offer to redeem was timely, we think that the notice
given by the vendee (buyer) should not be taken into account. The text of Article 1623 clearly
and expressly prescribes that the thirty days for making the redemption are to be counted from
notice in writing by the vendor. Under the old law (Civ. Code of 1889, Art. 1524), it was
immaterial who gave the notice; so long as the redeeming co-owner learned of the alienation in
favor of the stranger, the redemption period began to run. It is thus apparent that the Philippine
legislature in Article 1623 deliberately selected a particular method of giving notice, and that
method must be deemed exclusive (39 Am. Jur., 237; Payne vs. State, 12 S.W. [2d] 528). As
ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275) —
Why these provisions were inserted in the statute we are not informed, but we may assume
until the contrary is shown, that a state of facts in respect thereto existed, which warranted the
legislature in so legislating.
The reasons for requiring that the notice should be given by the seller, and not by the buyer,
are easily divined. The seller of an undivided interest is in the best position to know who are
his co-owners that under the law must be notified of the sale. Also, the notice by the seller
removes all doubts as to the fact of the sale, its perfection; and its validity, the notice being a
reaffirmation thereof, so that the party need not entertain doubt that the seller may still contest
the alienation. This assurance would not exist if the notice should be given by the buyer.
The notice which became operative is that given by Mrs. Chambers, in her capacity as
attorney-in-fact of the vendor Marie Garnier Vda. de Ramirez. Under date of December 11,
1958, she wrote the Administrator Bank of the Philippine Islands that her principal's one-sixth
(1/6) share in the Sta. Cruz property had been sold to Manuel Uy & Sons, Inc. for
P500,000.00. The Bank received this notice on December 15, 1958, and on the same day
endorsed it to Mrs. Butte, care of Delgado, Flores and Macapagal (her attorneys), who
received the same on December 16, 1958. Mrs. Butte tendered redemption and upon the
vendee's refusal, judicially consigned the price of P500,000.00 on January 15, 1959. The latter
date was the last one of the thirty days allowed by the Code for the redemption, counted by
excluding December 16, 1958 and including January 15, 1959, pursuant to Article 13 of the
Civil Code. Therefore, the redemption was made in due time.
The date of receipt of the vendor's notice by the Administrator Bank (December 15) can not be
counted as determining the start of thirty days; for the Administrator of the estate was not a
proper redemptioner, since, as previously shown, the right to redeem the share of Marie
Garnier did not form part of the estate of Jose V. Ramirez.
We find no jurisdiction for appellant's claim that the P500,000,00. paid by Uy & Sons, Inc. for
the Garnier share is grossly excessive. Gross excess cannot be predicated on mere individual
estimates of market price by a single realtor.
The redemption and consignation having been properly made, the Uy counterclaim for
damages and attorney's fees predicated on the assumption that plaintiff's action was clearly
unfounded, becomes untenable.
PREMISES CONSIDERED, the judgment appealed from is hereby reversed and set aside,
and another one entered:
(a) Declaring the consignation of P500,000,00 made by appellant Angela M. Butte duly and
properly made;
(b) Declaring that said appellant properly exercised in due time the legal redemption of the
one-sixth (1/6) undivided portion of the land covered by Certificate of Title No. 59363 of the
Office of the Register of Deeds of the City of Manila, sold on December 9, 1958 by Marie
Garnier Vda. de Ramirez to appellant Manuel Uy & Sons, Inc.
(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned price and to convey to
Angela M. Butte the undivided portion above referred to, within 30 days from the time our
decision becomes final, and subsequently to account for the rentals and fruits of the redeemed
share from and after January 15, 1958, until its conveyance; and.
(d) Ordering the return of the records to the court of origin for further proceedings conformable
to this opinion.
Without finding as to costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Dizon, JJ.,
concur.
Paredes and De Leon, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 166236 July 29, 2010
NOLI ALFONSO and ERLINDA FUNDIALAN, Petitioners,
vs.
SPOUSES HENRY and LIWANAG ANDRES, Respondents.
DECISION
DEL CASTILLO, J.:
Technical rules may be relaxed only for the furtherance of justice and to benefit the deserving.
In the present petition for review, petitioners assail the August 10, 2004 Resolution1 of the
Court of Appeals (CA) in CA-G.R. CV. No. 78362, which dismissed the appeal before it for
failure of petitioners to file their brief within the extended reglementary period.
Factual Antecedents
The present case stemmed from a complaint for accion publiciana with damages filed by
respondent spouses Henry and Liwanag Andres against Noli Alfonso and spouses Reynaldo
and Erlinda Fundialan before the Regional Trial Court (RTC), Branch 77, San Mateo, Rizal.
On July 8, 1997, the RTC rendered a Decision2 in favor of respondents. The dispositive
portion of the Decision states:
WHEREFORE, premises considered judgment is rendered in favor of the plaintiffs and against
the defendants and all persons claiming rights under them who are ordered:
1. to vacate the premises located at 236 General Luna St., Dulongbayan 11, San Mateo, Rizal;
2. to jointly and severally pay the sum [of] ₱100.00 as reasonable compensation for the use of
said premises commencing from 04 September 1995; [and]
3. to jointly and severally pay the sum of ₱10,000.00 as and for attorney's fees and to pay the
cost of suit.
SO ORDERED.3
Petitioners,4 thus, appealed to the CA.
Proceedings Before the Court of Appeals
On November 5, 2003, petitioners' previous counsel was notified by the CA to file appellants'
brief within 45 days from receipt of the notice. The original 45-day period expired on December
21, 2003. But before then, on December 8, 2003, petitioners' former counsel filed a Motion to
Withdraw Appearance. Petitioners consented to the withdrawal.
On December 19, 2003, petitioners themselves moved for an extension of 30 days or until
January 21, 2004 within which to file their appellants' brief. Then on March 3, 2004, petitioners
themselves again moved for a fresh period of 45 days from March 3, 2004 or until April 18,
2004 within which to file their appellants' brief.
On March 17, 2004, the CA issued a Resolution:5 a) noting the withdrawal of appearance of
petitioners' former counsel; b) requiring petitioners to cause the Entry of Appearance of their
new counsel; and c) granting petitioners' motions for extension of time to file their brief for a
period totaling 75 days, commencing from December 21, 2003 or until March 5, 2004.
Petitioners themselves received a copy of this Resolution only on April 6, 2004. By that time,
the extension to file appellants' brief had already long expired.
On April 14, 2004, the Public Attorney's Office (PAO), having been approached by petitioners,
entered6 its appearance as new counsel for petitioners. However, on August 10, 2004, the CA
issued the assailed Resolution dismissing petitioners' appeal, to wit:
FOR failure of defendants-appellants to file their brief within the extended reglementary period
which expired on March 5, 2004 as per Judicial Records Division report dated July 26, 2004,
the appeal is hereby DISMISSED pursuant to Sec. 1 (e), Rule 50 of the 1997 Rules of Civil
Procedure.
SO ORDERED.
On September 6, 2004, the PAO filed their Motion for Reconsideration7 which requested for a
fresh period of 45 days from September 7, 2004 or until October 22, 2004 within which to file
appellants' brief. On October 21, 2004, the brief8 was filed by the PAO.
On November 26, 2004, the CA issued a Resolution9 which denied petitioners' motion for
reconsideration. Hence, this petition for review.
Issues
Petitioners raise the following issues:
I put to rest already so that the respondents may not be deprived of their rights.
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING PETITIONERS' APPEAL
FOR FAILURE TO FILE THEIR DEFENDANTS-APPELLANTS’ BRIEF, DESPITE THE
ATTENDANCE OF PECULIAR FACTS AND CIRCUMSTANCES SURROUNDING SUCH
FAILURE, LIKE THE GROSS AND RECKLESS NEGLIGENCE OF THEIR FORMER
COUNSEL, THE ABSENCE OF MANIFEST INTENT TO CAUSE DELAY, THE SERIOUS
QUESTIONS OF LAW POSED FOR RESOLUTION BEFORE THE APPELLATE COURT,
AND THE FACT THAT THE APPELLANTS' BRIEF HAD ALREADY BEEN FILED WITH THE
COURT OF APPEALS AND ALREADY FORMED PART OF THE RECORDS OF THE CASE.
II
THE DISMISSAL OF PETITIONERS' APPEAL BY THE HONORABLE COURT OF APPEALS
IS HIGHLY UNJUSTIFIED, INIQUITOUS AND UNCONSCIONABLE BECAUSE IT
OVERLOOKED AND/OR DISREGARDED THE MERITS OF PETITIONERS’ CASE WHICH
INVOLVES A DEPRIVATION OF THEIR PROPERTY RIGHTS.10
Petitioners' Arguments
Petitioners contend that their failure to file their appellants' brief within the required period was
due to their indigency and poverty. They submit that there is no justification for the dismissal of
their appeal specially since the PAO had just entered its appearance as new counsel for
petitioners as directed by the CA, and had as yet no opportunity to prepare the brief. They
contend that appeal should be allowed since the brief had anyway already been prepared and
filed by the PAO before it sought reconsideration of the dismissal of the appeal and is already
part of the records. They contend that the late filing of the brief should be excused under the
circumstances so that the case may be decided on the merits and not merely on technicalities.
Respondents’ Arguments
On the other hand, respondents contend that failure to file appellants' brief on time is one
instance where the CA may dismiss an appeal. In the present case, they contend that the CA
exercised sound discretion when it dismissed the appeal upon petitioners’ failure to file their
appellants' brief within the extended period of 75 days after the original 45-day period expired.
Our Ruling
The petition has no merit.
Failure to file Brief On Time
Rule 50 of the Rules of Court states:
Section 1. Grounds for dismissal of appeal.-An appeal may be dismissed by the Court of
Appeals, on its own motion or on that of the appellee, on the following grounds:
xxxx
(e) Failure of the appellant to serve and file the required number of copies of his brief or
memorandum within the time provided by these Rules;
Petitioners plead for the suspension of the rules and cite a number of cases where the Court
excused the late filing of a notice of appeal as well as the late filing of the appellant's brief.
They further cite Development Bank of the Philippines v. Court of Appeals11 where the late
filing of the appellant's brief was excused because the Court found the case impressed with
public interest.
The cases cited by petitioners are not in point. In the present civil case which involves the
failure to file the appellants' brief on time, there is no showing of any public interest involved.
Neither is there a showing that an injustice will result due to the application of technical rules.
Poverty cannot be used as an excuse to justify petitioners' complacency in allowing months to
pass by before exerting the required effort to find a replacement lawyer. Poverty is not a
justification for delaying a case. Both parties have a right to a speedy resolution of their case.
Not only petitioners, but also the respondents, have a right to have the case finally settled
without delay.
Furthermore, the failure to file a brief on time was due primarily to petitioners' unwise choices
and not really due to poverty. Petitioners were able to get a lawyer to represent them despite
their poverty. They were able to get two other lawyers after they consented to the withdrawal of
their first lawyer. But they hired their subsequent lawyers too late.
It must be pointed out that petitioners had a choice of whether to continue the services of their
original lawyer or consent to let him go. They could also have requested the said lawyer to file
the required appellants' brief before consenting to his withdrawal from the case. But they did
neither of these. Then, not having done so, they delayed in engaging their replacement lawyer.
Their poor choices and lack of sufficient diligence, not poverty, are the main culprits for the
situation they now find themselves in. It would not be fair to pass on the bad consequences of
their choices to respondents. Petitioners' low regard for the rules or nonchalance toward
procedural requirements, which they camouflage with the cloak of poverty, has in fact
contributed much to the delay, and hence frustration of justice, in the present case.
No compelling reason to disregard technicalities
Petitioners beg us to disregard technicalities because they claim that on the merits their case
is strong. A study of the records fails to so convince us.
Petitioners theorize that publication of the deed of extrajudicial settlement of the estate of
Marcelino Alfonso is required before their father, Jose Alfonso (Jose) could validly transfer the
subject property. We are not convinced. In Alejandrino v. Court of Appeals,12 the Court upheld
the effectivity of a deed of extrajudicial settlement that was neither notarized nor published.
Significantly, the title of the property owned by a person who dies intestate passes at once to
his heirs. Such transmission is subject to the claims of administration and the property may be
taken from the heirs for the purpose of paying debts and expenses, but this does not prevent
an immediate passage of the title, upon the death of the intestate, from himself to his
heirs.131avvphi1 The deed of extrajudicial settlement executed by Filomena Santos Vda. de
Alfonso and Jose evidences their intention to partition the inherited property. It delineated what
portion of the inherited property would belong to whom.
The sale to respondents was made after the execution of the deed of extrajudicial settlement
of the estate. The extrajudicial settlement of estate, even though not published, being deemed
a partition14 of the inherited property, Jose could validly transfer ownership over the specific
portion of the property that was assigned to him.15
The records show that Jose did in fact sell to respondents the subject property. The deed of
sale executed by Jose in favor of the respondents being a public document, is entitled to full
faith and credit in the absence of competent
evidence that its execution was tainted with defects and irregularities that would warrant a
declaration of nullity. As found by the RTC, petitioners failed to prove any defect or
irregularities in the execution of the deed of sale. They failed to prove
by strong evidence, the alleged lack of consent of Jose to the sale of the subject real property.
As found by the RTC, although Jose was suffering from partial paralysis and could no longer
sign his name, there is no showing that his mental faculties were affected in such a way as to
negate the existence of his valid consent to the sale, as manifested by his thumbmark on the
deed of sale. The records sufficiently show that he was capable of boarding a tricycle to go on
trips by himself. Sufficient testimonial evidence in fact shows that Jose asked respondents to
buy the subject property so that it could be taken out from the bank to which it was mortgaged.
This fact evinces that Jose’s mental faculties functioned intelligently.
In view of the foregoing, we find no compelling reason to overturn the assailed CA resolution.
We find no injustice in the dismissal of the appeal by the CA. Justice dictates that this case be
WHEREFORE, the petition is DENIED. The August 10, 2004 Resolution of the Court of
Appeals in CA-G.R. CV. No. 78362 is AFFIRMED.
SO ORDERED.
Republic of the Philippines SO ORDERED.
SUPREME COURT
Manila

FIRST DIVISION

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

ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA

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

Federico Paredes for petitioners.

Demetrio V. Pre for private respondents.

MARTIN, J:

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

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

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

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

On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the
complaint and on August 23, 1975, he moved to set aside the order of the dismissal pursuant
to Sections 16 and 17 of Rule 3 of the Rules of Court. 2

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

Hence, this petition for review.

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

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

IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in
Civil Case No. 856 of the Court of First Instance of Abra and the motions for reconsideration of
the order of dismissal of said complaint are set aside and the respondent Court is hereby
directed to allow the substitution of the minor children, who are the petitioners therein for the
deceased plaintiff and to appoint a qualified person as guardian ad litem for them. Without
pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 193551 November 19, 2014
HEIRS OF GREGORIO LOPEZ, represented by Rogelia Lopez, et al., Petitioners,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES [Now substituted by Philippine Investment Two
(SPVAMC), Inc.], Respondents.
DECISION
LEONEN, J.:
This case involves the application of the doctrine on innocent purchaser or mortgagee for
value. It also involves the application of the doctrines on sales by persons who are not owners
of the property.
This is a Rule 45 petition1 filed on October 15, 2010, assailing the Court of Appeals May 8,
2009 decision2 and August 16, 2010 resolution.3 The Court of Appeals reversed and set aside
the Regional Trial Court's December 27, 2005 decision,4 which ordered the nullification of the
affidavit of self-adjudication executed by Enrique Lopez, and the documents relating
to the sale and mortgage of the property to respondent Development Bank of the Philippines.
Gregoria Lopez owned a 2,734-square-meter property in Bustos, Bulacan.5 She died on
March 19, 19226 and was survived by her three sons: Teodoro Lopez, Francisco Lopez, and
Carlos Lopez.7 Tax Declaration No. 613 was issued under the names of Teodoro, Francisco,
and Carlos.8
Teodoro, Francisco, and Carlos died.9 Only Teodoro was survived by children: Gregorio,
Enrique, Simplicio, and Severino.10
Petitioners in this case are Simplicio substituted by his daughter Eliza Lopez, and the heirs of
Gregorio and Severino.11 Enrique is deceased.12
Petitioners discovered that on November 29, 1990, Enrique executed an affidavit of self-
adjudication declaring himself to be Gregoria Lopez’s only surviving heir, thereby adjudicating
upon himself the land in Bulacan.13 He sold the property to Marietta Yabut.14
Petitioners demanded from Marietta the nullification of Enrique’s affidavit of self-adjudication
and the deed of absolute sale.15 They also sought to redeem Enrique’s one-fourth share.16
Marietta, who was already in possession of the property, refused.17
Sometime in 1993, Marietta obtained a loan from Development Bank of the Philippines (DBP)
and mortgaged the property to DBP as security.18 At the time of the loan, the property was
covered by Tax Declaration No. 18727, with the agreement that the land shall be brought
under the Torrens system.19 On July 26, 1993, an original certificate of title was issued in
Marietta’s name.20 Marietta and DBP "executed a supplemental document dated 28 February
1995 placing the subject [property]within the coverage of the mortgage."21 The mortgage was
annotated to the title.22
Sometime between 1993 and 1994, petitioners filed a complaint23 and an amended
complaint24 with the Regional Trial Court for the annulment of document, recovery of
possession, and reconveyance of the property. They prayed that judgment be rendered,
ordering the annulment of Enrique’s affidavit of self-adjudication, the deed of sale executed by
Enrique and Marietta, and the deed of real estate mortgage executed by Marietta in favor of
DBP.25 Petitioners also prayed for the reconveyance of their three-fourth share in the
property, their exercise of their right of redemption of Enrique’s one-fourth share, as well as
attorney’s fees and costs of suit.26
Petitioners caused the annotation of a notice of lis pendens at the back of the original
certificate of title.27 The annotation was inscribed on June 27, 1994.28
Marietta failed to pay her loan to DBP.29 "DBP instituted foreclosure proceedings on the . . .
land."30 It was "awarded the sale of the [property] as the highest bidder."31 "The Certificate of
Sale was registered with the Register of Deeds . . . on 11 September 1996."32 Marietta failed
to redeem the property.33 The title to the property was "consolidated in favor of DBP."34
On December 27, 2005, the Regional Trial Court ruled in favor of petitioners.35 The Regional
Trial Court found that the affidavit of self-adjudication and the deed of absolute sale did not
validly transfer to Marietta the title to the property.36 Enrique could not transfer three-fourths of
the property since this portion belonged to his co-heirs.37 The Regional Trial Court also found
that Marietta was not an innocent purchaser for value because when the deed of absolute sale
was executed, the property was only covered by a tax declaration in the name of the heirs of
Gregoria Lopez,38 thus:
[Marietta] should have looked further into the veracity of vendor Enrique Lopez’ claim of
ownership over the subject property considering that he has not presented her any other proof
of his ownership when the said Deed of Absolute Sale was executed other than his mere
allegation of ownership thereof.39
Hence, the issuance of the original certificate of title would not protect Marietta. Title is not
vested through a certificate.40 At best, Marietta’s ownership over the subject property would
cover only Enrique’s share.41
The Regional Trial Court also found that DBP was not a mortgagee in good faith because at
the time of the execution of the mortgage contract, a certificate of title was yet to be issued in
favor of Marietta.42 Marietta’s title at that time was still based on a tax declaration.43 Based on
jurisprudence, a tax declaration is not a conclusive proof of ownership.44 The DBP should
have exerted due diligence in ascertaining Marietta’s title to the property.45
The Regional Trial Court ordered the nullification of Enrique’s affidavit of self-adjudication, the
sale of the three-fourth portion of the subject property in favor of Marietta, the reconveyance of
the three-fourth share of the property in favor of petitioners, the nullification of the real estate
mortgage executed in favor of DBP, and the surrender of possession of the property to
petitioners.46 The trial court also ordered DBP to pay attorney’s fees.
DBP, substituted by Philippine Investment Two (PI Two), appealed to the Court of Appeals.47
The Court of Appeals reversed the decision of the Regional Trial Court in the decision48
promulgated on May 8, 2009. It held that DBP was a mortgagee in good faith:
[W]ith the absence of any evidence to show that the DBP was ever privy to the fraudulent
execution of the late Enrique Lopez’ [sic] affidavit of Adjudication over the subject land, the
right of the former over the same must be protected and respected by reason of public
policy.49
The dispositive portion of the Court of Appeals’ decision reads:
WHEREFORE, the appeal is GRANTED. The 27 December 2005 Decision of the Regional
Trial Court is hereby REVERSED and SET ASIDE as to defendant-appellant Development
Bank of the Philippines and dismissing the complaint against the latter [now substituted by
Philippine Investment Two (SPV-AMC), Inc.]50
The Court of Appeals denied petitioners’ motion for reconsideration on August 16, 2010.51
Petitioners filed a Rule 45 petition52 before this court on October 15, 2010.
The issue in this case is whether the property was validly transferred to Marietta and,
eventually, to DBP.
Petitioners argued that the Court of Appeals erred in its application of the doctrine on "innocent
purchaser for value."53 DBP should have exercised diligence in ascertaining Marietta’s claim
of ownership since at the time of the mortgage, the property was only covered by a tax
declaration under Marietta’s name.54 As a financial institution of which "greater care and
prudence"55 is required, DBP should not have relied on the face of a certificate of title to the
property.56
On the other hand, DBP’s position, citing Blanco v. Esquierdo,57 was that since its
participation in Enrique’s execution of the affidavit of self-adjudication was not shown on
record, it could not have been aware that there was any irregularity in the sale in favor of
Marietta and in her title to the property.58 Moreover, Marietta was in possession of the
property at the time of the contract with DBP.59 Therefore, DBP should enjoy the protection
accorded to innocent purchasers for value.60
We find merit in the petition.
I
Validity of Enrique’s affidavit and the sale to Marietta
We have consistently upheld the principle that "no one can give what one does not have."61 A
seller can only sell what he or she owns, or that which he or she does not own but has
authority to transfer, and a buyer can only acquire what the seller can legally transfer.62
This principle is incorporated in our Civil Code. It provides that in a contract of sale, the seller
binds himself to transfer the ownership of the thing sold, thus:
Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor a price
certain in money or its equivalent.
The seller cannot perform this obligation if he or she does not have a right to convey
ownership of the thing. Hence, Article 1459 of the Civil Code provides:
Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership
thereof at the time it is delivered.
Title or rights to a deceased person’s property are immediately passed to his or her heirs upon
death.63 The heirs’ rights become vested without need for them to be declared "heirs."64
Before the property is partitioned, the heirs are co-owners of the property.65
In this case, the rights to Gregoria Lopez’s property were automatically passed to her sons —
Teodoro, Francisco, and Carlos — when she died in 1922.66 Since only Teodoro was survived
by children, the rights to the property ultimately passed to them when Gregoria Lopez’s sons
died.67 The children entitled to the property were Gregorio, Simplicio, Severino, and Enrique.
Gregorio, Simplicio, Severino, and Enrique became co-owners of the property, with each of
them entitled toan undivided portion of only a quarter of the property. Upon their deaths, their
children became the co-owners of the property, who were entitled to their respective shares,
such that the heirs of Gregorio became entitled to Gregorio’s one-fourth share, and Simplicio’s
and Severino’s respective heirs became entitled to their corresponding onefourth shares in the
property.68 The heirs cannot alienate the shares that do not belong to them. Article 493 of the
Civil Code provides:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the co-ownership.
Since Enrique’s right to the property was limited to his one-fourth share, he had no right to sell
the undivided portions that belonged to his siblings or their respective heirs. Any sale by one
heir of the rest of the property will not affect the rights of the other heirs who did not consent to
the sale. Such sale is void with respect to the shares of the other heirs.
Regardless of their agreement, Enrique could only convey to Marietta his undivided one-fourth
share of the property, and Marietta could only acquire that share. This is because Marietta
obtained her rights from Enrique who, in the first place, had no title or interest over the rest of
the property that he could convey.
This is despite Enrique’s execution of the affidavit of self-adjudication wherein he declared
himself to be the only surviving heir of Gregoria Lopez. The affidavit of self-adjudication is
invalid for the simple reason that it was false. At the time of its execution, Enrique’s siblings
were still alive and entitled to the three-fourth undivided share of the property. The affidavit of
self-adjudication did not have the effect of vesting upon Enrique ownership or rights to the
property.
The issuance of the original certificate of title in favor of Marietta does not cure Enrique’s lack
of title or authority to convey his co-owners’ portions of the property. Issuance of a certificate of
title is not a grant of title over petitioners’ undivided portions of the property.69 The physical
certificate of title does not vest in a person ownership or right over a property.70 It is merely an
evidence of such ownership or right.71
Marietta could acquire valid title over the whole property if she were an innocent purchaser for
value. An innocent purchaser for value purchases a property without any notice of defect or
irregularity as to the right or interest of the seller.72 He or she is without notice that another
person holds claim to the property being purchased.73
As a rule, an ordinary buyer may rely on the certificate of title issued in the name of the
seller.74 He or she need not look "beyond what appears on the face [of the certificate of
title]."75 However, the ordinary buyer will not be considered an innocent purchaser for value if
there is anything on the certificate of title that arouses suspicion, and the buyer failed to inquire
or take steps to ensure that there is no cloud on the title, right, or ownership of the property
being sold.
Marietta cannot claim the protection accorded by law to innocent purchasers for value because
the circumstances do not make this available to her.
In this case, there was no certificate of title to rely on when she purchased the property from
Enrique. At the time of the sale, the property was still unregistered. What was available was
only a tax declaration issued under the name of "Heirs of Lopez."
"The defense of having purchased the property in good faith may be availed of only where
registered land is involved and the buyer had relied in good faith on the clear title of the
registered owner."76 It does not apply when the land is not yet registered with the Registry of
Deeds.
At the very least, the unregistered status of the property should have prompted Marietta to
inquire further as to Enrique’s right over the property. She did not. Hence, she was not an
innocent purchaser for value. She acquired no title over petitioners’ portions of the property.
II
Validity of the mortgage
One of the requisites of a valid mortgage contract is ownership of the property being
mortgaged.77 Article 2085 of the Civil Code enumerates the requisites of a mortgage contract:
Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfilment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the latter by pledging
or mortgaging their own property.
Applying this provision and having established that Marietta acquired no valid title or ownership
from Enrique over the undivided portions of the property, this court finds that no valid mortgage
was executed over the same property in favor of DBP. Without a valid mortgage, there was
also no valid foreclosure sale and no transfer of ownership of petitioners’ undivided portions to
DBP. In other words, DBP acquired no right over the undivided portions since its predecessor-
in-interest was not the owner and held no authority to convey the property.

As in sales, an exception to this rule is if the mortgagee is a "mortgagee in good faith."78 This
exception was explained in Torbela v. Rosario:

Under this doctrine, even if the mortgagor is not the owner of the mortgaged property, the
mortgage contract and any foreclosure sale arising therefrom are given effect by reason of
public policy. This principle is based on the rule that all persons dealing with property covered
by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what
appears on the face of the title. This is the same rule that underlies the principle of "innocent
purchasers for value." The prevailing jurisprudence is that a mortgagee has a right to rely in
good faith on the certificate of title of the mortgagor to the property given as security and in the
absence of any sign that might arouse suspicion, has no obligation to undertake further
investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid
title to, the mortgaged property, the mortgagee in good faith is, nonetheless, entitled to
protection.79

DBP claims that it is covered by this exception. DBP is mistaken. The exception applies when,
at the time of the mortgage, the mortgagor has already obtained a certificate of title under his
or her name.80 It does not apply when, as in this case, the mortgagor had yet to register the
property under her name.81

The facts show that DBP disregarded circumstances that should have aroused suspicion. For
instance, at the time of the mortgage with DBP, Marietta only had a tax declaration under her
name to show that she was the owner of the property. A tax declaration, by itself, neither
proves ownership of property nor grants title. Yet, DBP agreed to accept the property as
security even though Marietta’s claim was supported only by the tax declaration, and a
certificate of title was yet to be issued under her name.

Granting that Marietta was in possession of the property, DBP should have inquired further as
to Marietta’s rights over the property since no certificate of title was issued to her. DBP took
the risks attendant to the absence of a certificate of title. It should bear the burden of checking
the ownership as well as the validity of the deed of sale. This is despite the eventual issuance
of a certificate of title in favor of Marietta.

The rule on "innocent purchasers or [mortgagees] for value" is applied more strictly when the
purchaser or the mortgagee is a bank.1âwphi1 Banks are expected to exercise higher degree
of diligence in their dealings, including those involving lands. Banks may not rely simply on the
face of the certificate of title.

Thus, in Cruz v. Bancom Finance Corporation,82 this court ruled that:

Respondent . . . is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private

individuals, it is expected to exercise greater care and prudence in its dealings, including those
involving registered lands. A banking institution is expected to exercise due diligence before
entering into a mortgage contract. The ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and indispensable part of its
operations.83 (Citations omitted)

DBP failed to exercise the degree of diligence required of banks when it accepted the
unregistered property as security for Marietta’s loan despite circumstances that should have
aroused its suspicion.

Citing Blanco v. Esquierdo, DBP argued that since it did not participate in the dealings
between Enrique and Marietta, it should be considered as an innocent mortgagee for value.

Blanco involves an alleged widow of the deceased who adjudicated to herself the deceased’s
property and thereafter mortgaged the property to DBP.84 The brothers and sisters of the
deceased filed an action for the annulment of the affidavit executed by the alleged widow and
the cancellation of the certificate of title under her name.85 The trial court ordered the
cancellation of the certificate of title issued to the alleged widow, including the registration of
the mortgage deed.86

In Blanco, this court declared that DBP was a mortgagee in good faith, thus:

The trial court, in the decision complained of, made no finding that the defendant mortgagee
bank was a party to the fraudulent transfer of the land to Fructuosa Esquierdo. Indeed, there is
nothing alleged in the complaint which may implicate said defendant mortgagee in the fraud, or
justify a finding that it acted in bad faith. On the other hand, the certificate of title was in the
name of the mortgagor Fructuosa Esquierdo when the land was mortgaged by her to the
defendant bank. Such being the case, the said defendant bank, as mortgagee, had the right to
rely on what appeared in the certificate and, in the absence of anything to excite suspicion,
was under no obligation to look beyond the certificate and investigate the title of the mortgagor
appearing on the face of said certificate. (De Lara, et al. vs. Ayroso, 95 Phil., 185; 50 Off. Gaz.,
[10] 4838; Joaquin vs. Madrid, et al., 106 Phil., 1060). Being thus an innocent mortgagee for
value, its right or lien upon the land mortgaged must be respected and protected, even if the
mortgagor obtained her title thereto thru fraud.87

DBP's reliance on Blanco is misplaced. In Blanco, the certificate of title had already been
issued under the name of the mortgagor when the property was mortgaged to DBP. This is not
the situation in this case.

To reiterate, the protection accorded to mortgagees in good faith cannot be extended to

mortgagees of properties that are not yet registered or registered but not under the
mortgagor's name.

Therefore, the Regional Trial Court did not err in ordering the nullification of the documents of
sale and mortgage. Contracts involving the sale or mortgage of unregistered property by a
person who was not the owner or by an unauthorized person are void.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated May 8,
2009 and its resolution dated August 16, 2010 are reversed and SET ASIDE. The December
27, 2005 decision of the Regional Trial Court is REINSTATED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16544 March 30, 1921
LEONARDO OSORIO, plaintiff-appellee,
vs.
TOMASA OSORIO, administratrix of the estate of Petrona Reyes, and THE YNCHAUSTI
STEAMSHIP CO., defendants-appellants.
Fernandez and Ansaldo for appellants.
Carlos Ledesma for appellee.
VILLAMOR, J.:
The plaintiff seeks to recover 610 shares of stock of "Ynchausti Steamship Co." and the
dividends corresponding to them, which were included in the inventory of the properties of the
deceased Da. Maria Petrona Reyes, whose estate is administered by the defendant. The facts
of this case are:
D. Antonio Osorio had formed with Ynchausti & Co., a joint account association for the
exploitation of the shipping business, he being the owner of the one-third of the company's
capital. This capital amounted to P500,000, of which P166,666.66, that is, one-third belonged
to D. Antonio Osorio. Upon his death, his heirs agreed to authorize the defendant Da. Tomasa
Osorio, then administratrix of the estate of the deceased, to present a project of partition, and
said administratix inserted in the project with the consent of all the heirs, among the properties
which belonged to the widow Da. Petrona Reyes, the sum of P94,000 as her part in the "share
of the estate in the shipping business of Ynchausti & Co.," that is, a little over P166,666.66,
which was the share in said business of the deceased Osorio during his lifetime. The project of
partition was approved on May 10, 1915, with the consent of the heirs, by the Court of First
Instance of Cavite, which had cognizance of the testamentary and administration proceedings
of the state of the deceased Osorio.
On February 28, 1914, the widow of D. Antonio Osorio, Da. Petrona Reyes, now also
deceased, executed before the notary D. Florencio Gonzales Diez a document of gift in favor
of her son D. Leonardo Osorio, the plaintiff, giving to him one-half of her share in the one-third
part which belonged to her husband in the shipping business of Ynchausti & Co., a donation
which was duly accepted by the donee D. Leonardo Osorio, who signed said document with
the plaintiff. On that date, February 28, 1914, the estate of D. Antonio Osorio was not yet
distributed among his heirs, and the donor Da. Petrona Reyes in order to correct the error in
said document, wherein it was stated that said half was adjudicated to her as part of her
conjugal property, when the partition was yet being effected, executed another document
dated July 3, 1915, maintaining said donation in effect in the sense that she ceded and
donated to her son D. Leonardo Osorio, for the same reasons stated in the document of
February 28, 1914, al interest or participation in said shipping business of Ynchausti & Co.,
which was adjudicated to her in the division of the estate of D. Antonio Osorio, which division
was approved by the Court of First Instance of Cavite on May 10, 1915.
After the death of D. Antonio Osorio and before the distribution of the estate, Ynchausti & Co.
purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio as
having an interest to the extent of one-third in the ownership and business of said steamer. It
was agreed upon by all the interested parties that the share of Da. Petrona Reyes, widow of
Osorio, in the vessel Governor Forbes, at the time of the incorporation of "The Ynchausti
Steamship Co." was P61,000, equivalent to 610 shares of stock of said corporation. Said sum
was deposited with the Steamship Co. until the final settlement of the question that had arisen
between the heirs of Da. Petrona Reyes as to the ownership thereof for, while the plaintiff
alleges that, by virtue of the donation made in his favor by Da. Petrona Reyes, he is the owner
of said shares and of their value which is P61,000; the defendant on the other hand contends
that said shares are not included in the donation in question and belong to the heirs of Da.
Petrona Reyes. Such as the facts which gave rise to this litigation.
The trial court rendered judgment in the case, declaring that the 610 shares of stock in dispute
and their dividends belong to the plaintiff, and ordered the defendant Da. Tomasa Osorio,
administratrix of the estate of Da. Petrona Reyes, to exclude them from the inventory and her
accounts, and the other defendant "The Ynchausti Steamship Co." to inscribe them in the
name of the plaintiff D. Leonardo Osorio, delivering to him the dividends corresponding
thereto, and denied the counterclaim for the sum of P45,000, on the ground that said sum
represents the dividends corresponding to the P94,000 adjudicated to Da. Petrona Reyes, in
the partition of the estate of D. Antonio Osorio, and donated by her to the defendant in the
counterclaim.
The case having been appealed to this court, counsel for the defendant and appellant, in
summing up their arguments in support of the errors assigned in their brief, maintain the two
following propositions:
1. The donation made by Da. Petrona Reyes in favor of the plaintiff was of no value and effect;
and
2. That, supposing said donation valid, the 610 shares of stock, the value of which is P61,000,
cannot be considered as included among them.
The document of donation dated February 28, 1914, attacked by the appellant, is as follows:
Know all me by these presents: That I, Petrona Reyes, of age, widow of D. Antonio Osorio and
resident of the Province of Cavite, Philippine Islands, being in possession of all my senses,
freely and voluntarily state:
1. That my husband, the deceased D. Antonio Osorio, was a shareholder to the extent of one-
third in the joint account association "Ynchausti & Co." of this place, which is engaged in the
business of buying vessels and in the exploitation of six steam vessels acquired from the
Compañia Maritima, the article of association of said joint account association having been
executed in the city of Manila on July 3, 1906, before the notary public D. Florencio Gonzales
Diez.
2. That upon the death of my husband D. Antonio Osorio and upon the partition of his estate,
there was adjudicated to me as conjugal property, one-half of said one-third part in the
business referred to, the other half thereof going to our four surviving children, such being the
present condition of our interest in said company.
3. That in consideration of the continuous services and attention received by me from my son
D. Leonardo Osorio, of age, married and a resident of Cavite also, and because of the
affection he has always shown and still shows me, as well as because of the number of
children that he has, I make a free and expressed donation to my said son D. Leonardo Osorio
of all my interest and participation in said company "Ynchausti and Co." which is neither
transferred nor burdened in any manner whatever.
4. I also declare that the present donation does not in any way prejudice the right which may
accrue to my other children with respect to inheriting my property and that therefore I can
effect this donation, with all liberty, as I reserve for myself what is sufficient for me to live on in
the manner which corresponds to my social position and needs.
5. In turn, I, Leonardo Osorio, of age, married and a resident of the Province of Cavite, state
my conformity and acceptance of said donation which my dear mother makes to me, for which
I am greatly thankful to her.
In witness whereof we sign the present document in triplicate at Manila, Philippine Islands, this
twenty-eighth day of February, nineteen hundred and fourteen.
(Sgd.) PETRONA REYES.
LEONARDO OSORIO.
Signed in the presence of:
(Sgd.) EUSEBIO ALBA.
SALVADOR BARRIOS.
Acknowledged before the notary public D. Florencio Gonzales Diez on February 28, 1914.
The document rectifying the ratifying the preceding is literally as follows:
Know all men by these presents: That I, Petrona Reyes, of age, widow of D. Antonio Osorio
and resident of the Province of Cavite, Philippine Islands, being in the full possession of my
senses, freely and voluntarily declare:
1. That on February 28, 1914, before the notary public of Manila, D. Florencio Gonzales Diez, I
executed a document of donation in favor of my son D. Leonardo Osorio, of one-half of the
one-third part which my deceased husband had in certain shipping business of the association
"Ynchausti & Co."
2. That in said document I stated, through error, that said half of one-third part of the business
referred to was adjudicated to me as my part of the conjugal property in the partition of the
properties left by my deceased husband, when the truth was that said partition had not yet
been put in proper form or finished.
3. That in order to correct said error, I so state, declaring however in any event that I make
said donation subsisting in the sense that I cede and donate to my side son D. Leonardo
Osorio, in consideration of the same causes mentioned in said document of February 28,
1914, all interest or share in said shipping business of Ynchausti & Co. which was adjudicated
to me in the partition of the estate of my deceased husband, and approved by the Court of
First Instance of Cavite, on May 10, 1915.
In witness whereof I sign the present document in triplicate of Cavite on July 3, 1915.
(Sgd. by):
PETRONA REYES.
Signed in the presence of:
(Sgd.) CARLOS LEDESMA.
ISAURO GABALDON.
In support of the first proposition, the appellant invokes as the legal provision violated, article
635 of the Civil Code, which says:
A donation can not include future property.
By future property is understood that of which the donor can not dispose at the time of making
the donation.
Commenting on article 635 of the Civil Code, Manresa says, among other things:
To close these fundamental ideas which the spirit of articles 634 and 635 develops we must fix
our attention to the definition which the Code gives of future properties. They are those of
which the donor cannot dispose at the time of making the donation. This definition in reality
includes all properties which belong to others at the time of the donation, although they may or
may not later belong to the donor, thus connecting two ideas which, although lacking
apparently in relation, are merged in reality in the subject which we examine and which gives
assurance to their application. Article 635 refers to the properties of third persons but it may be
said that id does so in relation to a time to come; there can be properties which may latter
belong to the donor; but these properties cannot be donated, because they are not at present
his properties, because he cannot dispose of them at the moment of making the donation. The
usufructuary for life or for a determined number of years of a vineyard may donate said
usufruct to the whole extent that it belongs to him but never the property itself. The bare owner
of said vineyard may donate his right of course; but he may also donate the usufruct which
corresponds to the time that it will go back to him, because the case refers to a vested right of
which he may dispose at the time of the donation.
It is alleged that the donation made by Da. Petrona Reyes is void because she donated on
February 28, 1914, a future property, such as the share in the business of the deceased
Osorio, which was adjudicated to her on May 10, 1915, and because in 1914 she did not have
the right to all or part of the share which her deceased husband had in the shipping business
of Ynchausti & Co.
Carefully examining said article 635 of the Civil Code, in relation to the worthy opinion of the
commentator Manresa, we believe that the future properties, the donation of which is
prohibited by said article, are those belonging to other, which, as such, cannot be the object of
the disposal by the donor; but the properties of an existing inheritance as those of the case at
bar, cannot be considered as another's property with relation to the heirs who through a fiction
of law continue the personality of the owner. Nor do they have the character of future property
because the died before 1912, his heirs acquired a right to succeed him from the moment of
his death, because of the principle announced in article 657 and applied by article 661 of the
Civil Code, according to which the heirs succeed the deceased by the mere fact of his death.
More of less time may elapse before the heirs enter into the possession of the hereditary
property, but this is not an obstacle, for the acquisition of said property retroacts in any event
to the moment of death, according to article 989 of the Civil Code. The right is acquired
although subject to the adjudication of the corresponding hereditary portion.
Furthermore the Civil Code does not prohibit absolutely that future inheritance should be the
object of agreement, for there are certain cases (arts. 177, 827, 831, and 1331) in which
agreements may be made as to them, beside that indicated in article 1271, and it may be
deduced that an inheritance already existing, which is no longer future from the moment of
death of the predecessor, may legally be the object of contract. A donation being of a
contractual nature, inasmuch as for its efficacy the concurrence of two wills is required, that of
the donor and the donee, we believe that which may be the object of contract may also be the
object of a donation. Ubi eadem est ratio, ibi est eadem legis dispositio. We conclude that the
donor Da. Petrona Reyes, on February 28, 1912, and could legally dispose of her right through
an act of liberality, as she had done.
With respect to the point that Da. Petrona Reyes did not have in 1914 any right to all or part of
the share of her deceased husband in the shipping business of Ynchausti and Co., it must be
observed that in the project of partition of the property of D. Antonio Osorio the following
appears:
The widow of the testator, Maria Petrona Reyes, her children Feliza, Tomasa, and Leonardo
and her granddaugther Soledad Encarnacion Osorio y San Agustin are at present all living and
are the only heirs of the deceased.
The testator declares that all property left by him was acquired during his marriage with
Petrona Reyes.
The testator institutes as his only and universal heirs his said children and granddaugther,
designates the parts which each of them must receive as legitime, betterment, and legacy,
leaves to the disposition of his widow and amount equivalent to that set aside by him in
payment of one-half part of the conjugal property and orders that the remainder should be
equally distributed among his heirs.
We do not have before us the will of D. Antonio Osorio but supposing that he had left no
property but the share which he had in the shipping business of Ynchausti & Co., can it be
denied that the donor by law had the right to half of said share as her part of the conjugal
property? Clearly not. The defendant in her answer says:
That Da. Maria Petrona Reyes did not donate to the plaintiff more that her share in the
shipping business of the firm Ynchausti & Co. which was adjudicated to her in the partition of
the property of D. Antonio Osorio and that said share amounts to P94,000.
This admission of the defendant is conclusive, and makes it unnecessary for us to enter into
another discussion in order to deduce that Da. Petrona Reyes had in 1914 a right to a certain
part of the interest of the deceased Osorio in the shipping business of the firm Ynchausti &
Co., and could donate it, as she did, to her son D. Leonardo Osorio.

The allegation that the document of July 3, 1915, is void, because it does not show the
acceptance of the donee, is of no importance, because of the conclusion we have reached in
discussing the document of donation of February 28, 1914. In the second document, the donor
only tried to correct what she believed to be an error in the first, wherein it is stated that in the
partition of the property of her husband there was adjudicated to her the part of the interest in
the shipping business of Ynchausti & Co. which she donated to her son Leonardo, when in fact
said partition was yet pending. After its approval by the Court of First Instance of Cavite, the
donor executed the document of 1915, ratifying and correcting the document of donation. She
did not make a new donation. She executed a personal act which did not require the
concurrence of the donee. It is the duty of the donee, in order that the donation may produce
legal effect, to accept to the donation and notify the donor thereof. The acceptance is
necessary because nobody is obliged to receive a benefit against his will. And all this was
complied with in the document of 1914. The wills of the donor and of the donee having
concurred, the donation, as a mode of transferring ownership, becomes perfect, according to
article 623 of the Civil Code.

We will not pass to the second proposition of the appellant, that is, that the 610 shares, which
are the subject matter of the suit, cannot be considered as included in the donation made by
Da. Petrona Reyes in favor of the plaintiff, supposing that said donation was valied. The
reasons alleged by the appellant are: (1) That the steam vessel Governor Forbes was
purchased after the death of D. Antonio Osorio, with money borrowed and furnished by the
heirs individually and not by the estate, and (2) that the plaintiff appellee has recognized that
the capital used in the steamer Forbes is distinct from the money used in the purchase of other
vessels in which the deceased Osorio had an interest.

The question whether the streamer Governor Forbes was or was not purchased with money
furnished by Ynchausti and the heirs of Osorio, indepedently of that former partnership in
which the deceased Osorio had an interest, is one of the fact and must be resolved in view of
the evidence adduced at the trial.

D. Julio Gonzales, secretary and accountant of the firm Ynchausti, witness for the defendant,
states that the Forbes was purchased with money which the shipping business of Unchaisti &
Co. had. The appellant herself admits that his vessel took part in the general shipping business
of Ynchausti & Co. for no new partnership was constituted for the purchase thereof, and, after
its acquisition the Ynchausti firm accounted to the estate of D. Antonio Osorio for the profits
obtained and the dividends to be distributed and no separate account was made of the
earnings of the vessel, but only a general account, including the profits obtained in the
shipping business, in which the Governor Forbes was but one of several vessels. D. Joaquin
Elizalde, manager of the firm Ynchausti & Co., by agreement of the parties and with the
approval of the court, made a deposition before the notary public D. Florencio Gonzales Diez,
stating that when the steamer Forbes was acquired in 1912, the Ynchausti firm did not bring in
any new capital, but obtained money for its purchase by mortgaging the vessel itself and other
vesseles of the company; and that the heirs of D. Antonio Osorio did not bring in any new
capital for the purchase of the vessel, but signed jointly with Ynchausti & Co. with the others,
except Da. Soledad Osorio, the guaranty which the bank required.

In our opinion the evidence shows conclusively that the vessel Governor Forbes forms part of
the shipping business of Ynchausti & Co. in which D. Antonio Osorio and his estate had an
interest. It is no argument against this conclusion that the heirs of Osorio signed with Ynchausti
& Co. the guaranty required by the bank where the money used in the purchase of the Forbes
was taken: (1) Because the guaranty is for the purpose only for securing the payment of the
amount indebted and not for excluding the estate of Osorio from the result of that banking
operation; (2) because, besides said guaranty, the other vessels of the joint account
association of Osorio and Ynchausti & Co. were mortgage; (3) because no new partnership
was formed between Ynchausti & Co. and the heirs of Osorio for the purchase of the vessel
Forbes; and (4) because, when Unchausti & Co. agreed with the heirs of Osorio in that his
share in the steamer Forbes was P108,333.33, this sum was distributed among said heirs,
including Da. Soledad Osorio who did not sign the guaranty, the accruing to each P11, 833.33
and to the widow Da. Petrona Reyes P61,000, which is the object of this suit.

All of the above shows that the estate of Osorio had a one-third part of the steamer Forbes
represented by the capital which was distributed among the heirs, there accruing to the widow,
by agreement of the interested parties, the sum of P61,000. And this sum being part of the
one-half of one-third of the shipping business of Ynchausti & Co., which one-half part accrued
to the widow in the distribution of the properties of Osorio; and the widow Da. Petrona Reyes
having disposed of this half, donating it to her son D. Leonardo Osorio, it clearly results, in our
opinion, that the sum of 61,000, or the corresponding shares of the new corporation "The
Ynchausti Steamship Co." are included in said donation, and therefore belong to the plaintiff-
appellee.

The other reason alleged by the appellant in support of her contention is that the plaintiff has
recognized in his letter addressed to the defendant corporation, and inserted in the answer
presented by the latter that the Forbes was acquired with money different from that of the joint
account association theretofore mentioned. We have carefully read the letter in question and
what appears is that said plaintiff agreed that the P61,000 should be deposited with Ynchausti
& Co., as trustee, to be distributed with its accumulated dividends, when the question between
the heirs of Da. Petrona Reyes had already been terminated, that is to say, according to the
result of the present suit. There is nothing in said letter which indicates how the Governor
Forbes was acquired.

With respect to the counterclaim of P45,609,91, we are of the opinion that the evidence
justifies the conclusion of the trial court that they are the profits or dividends accruing to the
P94,000, which were adjudicated to the widow Da. Petrona Reyes in the distribution of the
estate of the deceased Osorio and which were donated by her to the plaintiff, and as such
profits they belong to the latter, upon the principle of law that ownership of property gives right
by accession to all that it produces, or is united or incorporated thereto, naturally or artificially.
(Art. 353 of the Civil Code.)

In view of what has been said, the judgment appealed from should be, as it is hereby, affirmed,
with costs against the appellant. So ordered.

Mapa, C.J., Araullo, Street and Malcolm, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-43082 June 18, 1937
PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, plaintiff-appellant,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.
Pablo Lorenzo and Delfin Joven for plaintiff-appellant.
Office of the Solicitor-General Hilado for defendant-appellant.
LAUREL, J.:
On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate of
Thomas Hanley, deceased, brought this action in the Court of First Instance of Zamboanga
against the defendant, Juan Posadas, Jr., then the Collector of Internal Revenue, for the
refund of the amount of P2,052.74, paid by the plaintiff as inheritance tax on the estate of the
deceased, and for the collection of interst thereon at the rate of 6 per cent per annum,
computed from September 15, 1932, the date when the aforesaid tax was [paid under protest.
The defendant set up a counterclaim for P1,191.27 alleged to be interest due on the tax in
question and which was not included in the original assessment. From the decision of the
Court of First Instance of Zamboanga dismissing both the plaintiff's complaint and the
defendant's counterclaim, both parties appealed to this court.
It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga,
leaving a will (Exhibit 5) and considerable amount of real and personal properties. On june 14,
1922, proceedings for the probate of his will and the settlement and distribution of his estate
were begun in the Court of First Instance of Zamboanga. The will was admitted to probate.
Said will provides, among other things, as follows:
4. I direct that any money left by me be given to my nephew Matthew Hanley.
5. I direct that all real estate owned by me at the time of my death be not sold or otherwise
disposed of for a period of ten (10) years after my death, and that the same be handled and
managed by the executors, and proceeds thereof to be given to my nephew, Matthew Hanley,
at Castlemore, Ballaghaderine, County of Rosecommon, Ireland, and that he be directed that
the same be used only for the education of my brother's children and their descendants.
6. I direct that ten (10) years after my death my property be given to the above mentioned
Matthew Hanley to be disposed of in the way he thinks most advantageous.
xxx xxx xxx
8. I state at this time I have one brother living, named Malachi Hanley, and that my nephew,
Matthew Hanley, is a son of my said brother, Malachi Hanley.
The Court of First Instance of Zamboanga considered it proper for the best interests of ther
estate to appoint a trustee to administer the real properties which, under the will, were to pass
to Matthew Hanley ten years after the two executors named in the will, was, on March 8, 1924,
appointed trustee. Moore took his oath of office and gave bond on March 10, 1924. He acted
as trustee until February 29, 1932, when he resigned and the plaintiff herein was appointed in
his stead.
During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue,
alleging that the estate left by the deceased at the time of his death consisted of realty valued
at P27,920 and personalty valued at P1,465, and allowing a deduction of P480.81, assessed
against the estate an inheritance tax in the amount of P1,434.24 which, together with the
penalties for deliquency in payment consisting of a 1 per cent monthly interest from July 1,
1931 to the date of payment and a surcharge of 25 per cent on the tax, amounted to
P2,052.74. On March 15, 1932, the defendant filed a motion in the testamentary proceedings
pending before the Court of First Instance of Zamboanga (Special proceedings No. 302)
praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of
P2,052.74. The motion was granted. On September 15, 1932, the plaintiff paid said amount
under protest, notifying the defendant at the same time that unless the amount was promptly
refunded suit would be brought for its recovery. The defendant overruled the plaintiff's protest
and refused to refund the said amount hausted, plaintiff went to court with the result herein
above indicated.
In his appeal, plaintiff contends that the lower court erred:
I. In holding that the real property of Thomas Hanley, deceased, passed to his instituted heir,
Matthew Hanley, from the moment of the death of the former, and that from the time, the latter
became the owner thereof.
II. In holding, in effect, that there was deliquency in the payment of inheritance tax due on the
estate of said deceased.
III. In holding that the inheritance tax in question be based upon the value of the estate upon
the death of the testator, and not, as it should have been held, upon the value thereof at the
expiration of the period of ten years after which, according to the testator's will, the property
could be and was to be delivered to the instituted heir.
IV. In not allowing as lawful deductions, in the determination of the net amount of the estate
subject to said tax, the amounts allowed by the court as compensation to the "trustees" and
paid to them from the decedent's estate.
V. In not rendering judgment in favor of the plaintiff and in denying his motion for new trial.
The defendant-appellant contradicts the theories of the plaintiff and assigns the following error
besides:
The lower court erred in not ordering the plaintiff to pay to the defendant the sum of P1,191.27,
representing part of the interest at the rate of 1 per cent per month from April 10, 1924, to June
30, 1931, which the plaintiff had failed to pay on the inheritance tax assessed by the defendant
against the estate of Thomas Hanley.
The following are the principal questions to be decided by this court in this appeal: (a) When
does the inheritance tax accrue and when must it be satisfied? (b) Should the inheritance tax
be computed on the basis of the value of the estate at the time of the testator's death, or on its
value ten years later? (c) In determining the net value of the estate subject to tax, is it proper to
deduct the compensation due to trustees? (d) What law governs the case at bar? Should the
provisions of Act No. 3606 favorable to the tax-payer be given retroactive effect? (e) Has there
been deliquency in the payment of the inheritance tax? If so, should the additional interest
claimed by the defendant in his appeal be paid by the estate? Other points of incidental
importance, raised by the parties in their briefs, will be touched upon in the course of this
opinion.
(a) The accrual of the inheritance tax is distinct from the obligation to pay the same. Section
1536 as amended, of the Administrative Code, imposes the tax upon "every transmission by
virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of
inheritance,devise, or bequest." The tax therefore is upon transmission or the transfer or
devolution of property of a decedent, made effective by his death. (61 C. J., p. 1592.) It is in
reality an excise or privilege tax imposed on the right to succeed to, receive, or take property
by or under a will or the intestacy law, or deed, grant, or gift to become operative at or after
death. Acording to article 657 of the Civil Code, "the rights to the succession of a person are
transmitted from the moment of his death." "In other words", said Arellano, C. J., ". . . the heirs
succeed immediately to all of the property of the deceased ancestor. The property belongs to
the heirs at the moment of the death of the ancestor as completely as if the ancestor had
executed and delivered to them a deed for the same before his death." (Bondad vs. Bondad,
34 Phil., 232. See also, Mijares vs. Nery, 3 Phil., 195; Suilong & Co., vs. Chio-Taysan, 12 Phil.,
13; Lubrico vs. Arbado, 12 Phil., 391; Innocencio vs. Gat-Pandan, 14 Phil., 491; Aliasas
vs.Alcantara, 16 Phil., 489; Ilustre vs. Alaras Frondosa, 17 Phil., 321; Malahacan vs. Ignacio,
19 Phil., 434; Bowa vs. Briones, 38 Phil., 27; Osario vs. Osario & Yuchausti Steamship Co., 41
Phil., 531; Fule vs. Fule, 46 Phil., 317; Dais vs. Court of First Instance of Capiz, 51 Phil., 396;
Baun vs. Heirs of Baun, 53 Phil., 654.) Plaintiff, however, asserts that while article 657 of the
Civil Code is applicable to testate as well as intestate succession, it operates only in so far as
forced heirs are concerned. But the language of article 657 of the Civil Code is broad and
makes no distinction between different classes of heirs. That article does not speak of forced
heirs; it does not even use the word "heir". It speaks of the rights of succession and the
transmission thereof from the moment of death. The provision of section 625 of the Code of
Civil Procedure regarding the authentication and probate of a will as a necessary condition to
effect transmission of property does not affect the general rule laid down in article 657 of the
Civil Code. The authentication of a will implies its due execution but once probated and
allowed the transmission is effective as of the death of the testator in accordance with article
657 of the Civil Code. Whatever may be the time when actual transmission of the inheritance
takes place, succession takes place in any event at the moment of the decedent's death. The
time when the heirs legally succeed to the inheritance may differ from the time when the heirs
actually receive such inheritance. "Poco importa", says Manresa commenting on article 657 of
the Civil Code, "que desde el falleimiento del causante, hasta que el heredero o legatario entre
en posesion de los bienes de la herencia o del legado, transcurra mucho o poco tiempo, pues
la adquisicion ha de retrotraerse al momento de la muerte, y asi lo ordena el articulo 989, que
debe considerarse como complemento del presente." (5 Manresa, 305; see also, art. 440, par.
1, Civil Code.) Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of
the date.
From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the
obligation to pay the tax arose as of the date. The time for the payment on inheritance tax is
clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No. 3031,
in relation to section 1543 of the same Code. The two sections follow:
SEC. 1543. Exemption of certain acquisitions and transmissions. — The following shall not be
taxed:
(a) The merger of the usufruct in the owner of the naked title.
(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to
the trustees.
(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in
accordance with the desire of the predecessor.
In the last two cases, if the scale of taxation appropriate to the new beneficiary is greater than
that paid by the first, the former must pay the difference.
SEC. 1544. When tax to be paid. — The tax fixed in this article shall be paid:
(a) In the second and third cases of the next preceding section, before entrance into
possession of the property.
(b) In other cases, within the six months subsequent to the death of the predecessor; but if
judicial testamentary or intestate proceedings shall be instituted prior to the expiration of said
period, the payment shall be made by the executor or administrator before delivering to each
beneficiary his share.
If the tax is not paid within the time hereinbefore prescribed, interest at the rate of twelve per
centum per annum shall be added as part of the tax; and to the tax and interest due and
unpaid within ten days after the date of notice and demand thereof by the collector, there shall
be further added a surcharge of twenty-five per centum.
A certified of all letters testamentary or of admisitration shall be furnished the Collector of
Internal Revenue by the Clerk of Court within thirty days after their issuance.
It should be observed in passing that the word "trustee", appearing in subsection (b) of section
1543, should read "fideicommissary" or "cestui que trust". There was an obvious mistake in
translation from the Spanish to the English version.
The instant case does fall under subsection (a), but under subsection (b), of section 1544
above-quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the
subsection, the tax should have been paid before the delivery of the properties in question to
P. J. M. Moore as trustee on March 10, 1924.
(b) The plaintiff contends that the estate of Thomas Hanley, in so far as the real properties are
concerned, did not and could not legally pass to the instituted heir, Matthew Hanley, until after
the expiration of ten years from the death of the testator on May 27, 1922 and, that the
inheritance tax should be based on the value of the estate in 1932, or ten years after the
testator's death. The plaintiff introduced evidence tending to show that in 1932 the real
properties in question had a reasonable value of only P5,787. This amount added to the value
of the personal property left by the deceased, which the plaintiff admits is P1,465, would
generate an inheritance tax which, excluding deductions, interest and surcharge, would
amount only to about P169.52.
If death is the generating source from which the power of the estate to impose inheritance
taxes takes its being and if, upon the death of the decedent, succession takes place and the
right of the estate to tax vests instantly, the tax should be measured by the vlaue of the estate
as it stood at the time of the decedent's death, regardless of any subsequent contingency
value of any subsequent increase or decrease in value. (61 C. J., pp. 1692, 1693; 26 R. C. L.,
p. 232; Blakemore and Bancroft, Inheritance Taxes, p. 137. See also Knowlton vs. Moore, 178
U.S., 41; 20 Sup. Ct. Rep., 747; 44 Law. ed., 969.) "The right of the state to an inheritance tax
accrues at the moment of death, and hence is ordinarily measured as to any beneficiary by the
value at that time of such property as passes to him. Subsequent appreciation or depriciation
is immaterial." (Ross, Inheritance Taxation, p. 72.)
Our attention is directed to the statement of the rule in Cyclopedia of Law of and Procedure
(vol. 37, pp. 1574, 1575) that, in the case of contingent remainders, taxation is postponed until
the estate vests in possession or the contingency is settled. This rule was formerly followed in
New York and has been adopted in Illinois, Minnesota, Massachusetts, Ohio, Pennsylvania
and Wisconsin. This rule, horever, is by no means entirely satisfactory either to the estate or to
those interested in the property (26 R. C. L., p. 231.). Realizing, perhaps, the defects of its
anterior system, we find upon examination of cases and authorities that New York has varied
and now requires the immediate appraisal of the postponed estate at its clear market value
and the payment forthwith of the tax on its out of the corpus of the estate transferred. (In re
Vanderbilt, 172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App. Div., 458; 83 N. Y. Supp.,
769; Estate of Tracy, 179 N. Y., 501; 72 N. Y., 519; Estate of Brez, 172 N. Y., 609; 64 N. E.,
958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp., 1079. Vide also, Saltoun vs. Lord
Advocate, 1 Peter. Sc. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas., 888.) California
adheres to this new rule (Stats. 1905, sec. 5, p. 343).
But whatever may be the rule in other jurisdictions, we hold that a transmission by inheritance
is taxable at the time of the predecessor's death, notwithstanding the postponement of the
actual possession or enjoyment of the estate by the beneficiary, and the tax measured by the
value of the property transmitted at that time regardless of its appreciation or depreciation.
(c) Certain items are required by law to be deducted from the appraised gross in arriving at the
net value of the estate on which the inheritance tax is to be computed (sec. 1539, Revised
Administrative Code). In the case at bar, the defendant and the trial court allowed a deduction
of only P480.81. This sum represents the expenses and disbursements of the executors until
March 10, 1924, among which were their fees and the proven debts of the deceased. The
plaintiff contends that the compensation and fees of the trustees, which aggregate P1,187.28
(Exhibits C, AA, EE, PP, HH, JJ, LL, NN, OO), should also be deducted under section 1539 of
the Revised Administrative Code which provides, in part, as follows: "In order to determine the
net sum which must bear the tax, when an inheritance is concerned, there shall be deducted,
in case of a resident, . . . the judicial expenses of the testamentary or intestate proceedings, . .
. ."
A trustee, no doubt, is entitled to receive a fair compensation for his services (Barney vs.
Saunders, 16 How., 535; 14 Law. ed., 1047). But from this it does not follow that the
compensation due him may lawfully be deducted in arriving at the net value of the estate
subject to tax. There is no statute in the Philippines which requires trustees' commissions to be
deducted in determining the net value of the estate subject to inheritance tax (61 C. J., p.
1705). Furthermore, though a testamentary trust has been created, it does not appear that the
testator intended that the duties of his executors and trustees should be separated. (Ibid.; In re
Vanneck's Estate, 161 N. Y. Supp., 893; 175 App. Div., 363; In re Collard's Estate, 161 N. Y.
Supp., 455.) On the contrary, in paragraph 5 of his will, the testator expressed the desire that
his real estate be handled and managed by his executors until the expiration of the period of
ten years therein provided. Judicial expenses are expenses of administration (61 C. J., p.
1705) but, in State vs. Hennepin County Probate Court (112 N. W., 878; 101 Minn., 485), it
was said: ". . . The compensation of a trustee, earned, not in the administration of the estate,
but in the management thereof for the benefit of the legatees or devises, does not come
properly within the class or reason for exempting administration expenses. . . . Service
rendered in that behalf have no reference to closing the estate for the purpose of a distribution
thereof to those entitled to it, and are not required or essential to the perfection of the rights of
the heirs or legatees. . . . Trusts . . . of the character of that here before the court, are created
for the the benefit of those to whom the property ultimately passes, are of voluntary creation,
and intended for the preservation of the estate. No sound reason is given to support the
contention that such expenses should be taken into consideration in fixing the value of the
estate for the purpose of this tax."
(d) The defendant levied and assessed the inheritance tax due from the estate of Thomas
Hanley under the provisions of section 1544 of the Revised Administrative Code, as amended
by section 3 of Act No. 3606. But Act No. 3606 went into effect on January 1, 1930. It,
therefore, was not the law in force when the testator died on May 27, 1922. The law at the time
was section 1544 above-mentioned, as amended by Act No. 3031, which took effect on March
9, 1922.
It is well-settled that inheritance taxation is governed by the statute in force at the time of the
death of the decedent (26 R. C. L., p. 206; 4 Cooley on Taxation, 4th ed., p. 3461). The
taxpayer can not foresee and ought not to be required to guess the outcome of pending
measures. Of course, a tax statute may be made retroactive in its operation. Liability for taxes
under retroactive legislation has been "one of the incidents of social life." (Seattle vs. Kelleher,
195 U. S., 360; 49 Law. ed., 232 Sup. Ct. Rep., 44.) But legislative intent that a tax statute
should operate retroactively should be perfectly clear. (Scwab vs. Doyle, 42 Sup. Ct. Rep.,
491; Smietanka vs. First Trust & Savings Bank, 257 U. S., 602; Stockdale vs. Insurance Co.,
20 Wall., 323; Lunch vs. Turrish, 247 U. S., 221.) "A statute should be considered as
prospective in its operation, whether it enacts, amends, or repeals an inheritance tax, unless
the language of the statute clearly demands or expresses that it shall have a retroactive effect,
. . . ." (61 C. J., P. 1602.) Though the last paragraph of section 5 of Regulations No. 65 of the
Department of Finance makes section 3 of Act No. 3606, amending section 1544 of the
Revised Administrative Code, applicable to all estates the inheritance taxes due from which
have not been paid, Act No. 3606 itself contains no provisions indicating legislative intent to
give it retroactive effect. No such effect can begiven the statute by this court.
The defendant Collector of Internal Revenue maintains, however, that certain provisions of Act
No. 3606 are more favorable to the taxpayer than those of Act No. 3031, that said provisions
are penal in nature and, therefore, should operate retroactively in conformity with the
provisions of article 22 of the Revised Penal Code. This is the reason why he applied Act No.
3606 instead of Act No. 3031. Indeed, under Act No. 3606, (1) the surcharge of 25 per cent is
based on the tax only, instead of on both the tax and the interest, as provided for in Act No.
3031, and (2) the taxpayer is allowed twenty days from notice and demand by rthe Collector of
Internal Revenue within which to pay the tax, instead of ten days only as required by the old
law.
Properly speaking, a statute is penal when it imposes punishment for an offense committed
against the state which, under the Constitution, the Executive has the power to pardon. In
common use, however, this sense has been enlarged to include within the term "penal
statutes" all status which command or prohibit certain acts, and establish penalties for their
violation, and even those which, without expressly prohibiting certain acts, impose a penalty
upon their commission (59 C. J., p. 1110). Revenue laws, generally, which impose taxes
collected by the means ordinarily resorted to for the collection of taxes are not classed as
penal laws, although there are authorities to the contrary. (See Sutherland, Statutory
Construction, 361; Twine Co. vs. Worthington, 141 U. S., 468; 12 Sup. Ct., 55; Rice vs. U. S.,
4 C. C. A., 104; 53 Fed., 910; Com. vs. Standard Oil Co., 101 Pa. St., 150; State vs. Wheeler,
44 P., 430; 25 Nev. 143.) Article 22 of the Revised Penal Code is not applicable to the case at
bar, and in the absence of clear legislative intent, we cannot give Act No. 3606 a retroactive
effect.
(e) The plaintiff correctly states that the liability to pay a tax may arise at a certain time and the
tax may be paid within another given time. As stated by this court, "the mere failure to pay
one's tax does not render one delinqent until and unless the entire period has eplased within
which the taxpayer is authorized by law to make such payment without being subjected to the
payment of penalties for fasilure to pay his taxes within the prescribed period." (U. S. vs.
Labadan, 26 Phil., 239.)
The defendant maintains that it was the duty of the executor to pay the inheritance tax before
the delivery of the decedent's property to the trustee. Stated otherwise, the defendant
contends that delivery to the trustee was delivery to the cestui que trust, the beneficiery in this
case, within the meaning of the first paragraph of subsection (b) of section 1544 of the Revised
Administrative Code. This contention is well taken and is sustained. The appointment of P. J.
M. Moore as trustee was made by the trial court in conformity with the wishes of the testator as
expressed in his will. It is true that the word "trust" is not mentioned or used in the will but the
intention to create one is clear. No particular or technical words are required to create a
testamentary trust (69 C. J., p. 711). The words "trust" and "trustee", though apt for the
purpose, are not necessary. In fact, the use of these two words is not conclusive on the
question that a trust is created (69 C. J., p. 714). "To create a trust by will the testator must
indicate in the will his intention so to do by using language sufficient to separate the legal from
the equitable estate, and with sufficient certainty designate the beneficiaries, their interest in
the ttrust, the purpose or object of the trust, and the property or subject matter thereof. Stated
otherwise, to constitute a valid testamentary trust there must be a concurrence of three
circumstances: (1) Sufficient words to raise a trust; (2) a definite subject; (3) a certain or
ascertain object; statutes in some jurisdictions expressly or in effect so providing." (69 C. J.,
pp. 705,706.) There is no doubt that the testator intended to create a trust. He ordered in his
will that certain of his properties be kept together undisposed during a fixed period, for a stated
purpose. The probate court certainly exercised sound judgment in appointment a trustee to
carry into effect the provisions of the will (see sec. 582, Code of Civil Procedure).
P. J. M. Moore became trustee on March 10, 1924. On that date trust estate vested in him
(sec. 582 in relation to sec. 590, Code of Civil Procedure). The mere fact that the estate of the
deceased was placed in trust did not remove it from the operation of our inheritance tax laws
or exempt it from the payment of the inheritance tax. The corresponding inheritance tax should
have been paid on or before March 10, 1924, to escape the penalties of the laws. This is so for
the reason already stated that the delivery of the estate to the trustee was in esse delivery of
the same estate to the cestui que trust, the beneficiary in this case. A trustee is but an
instrument or agent for the cestui que trust (Shelton vs. King, 299 U. S., 90; 33 Sup. Ct. Rep.,
689; 57 Law. ed., 1086). When Moore accepted the trust and took possesson of the trust
estate he thereby admitted that the estate belonged not to him but to his cestui que trust
(Tolentino vs. Vitug, 39 Phil.,126, cited in 65 C. J., p. 692, n. 63). He did not acquire any
beneficial interest in the estate. He took such legal estate only as the proper execution of the
trust required (65 C. J., p. 528) and, his estate ceased upon the fulfillment of the testator's
wishes. The estate then vested absolutely in the beneficiary (65 C. J., p. 542).
The highest considerations of public policy also justify the conclusion we have reached. Were
we to hold that the payment of the tax could be postponed or delayed by the creation of a trust
of the type at hand, the result would be plainly disastrous. Testators may provide, as Thomas
Hanley has provided, that their estates be not delivered to their beneficiaries until after the
lapse of a certain period of time. In the case at bar, the period is ten years. In other cases, the
trust may last for fifty years, or for a longer period which does not offend the rule against
petuities. The collection of the tax would then be left to the will of a private individual. The mere
suggestion of this result is a sufficient warning against the accpetance of the essential to the
very exeistence of government. (Dobbins vs. Erie Country, 16 Pet., 435; 10 Law. ed., 1022;
Kirkland vs. Hotchkiss, 100 U. S., 491; 25 Law. ed., 558; Lane County vs. Oregon, 7 Wall., 71;
19 Law. ed., 101; Union Refrigerator Transit Co. vs. Kentucky, 199 U. S., 194; 26 Sup. Ct.
Rep., 36; 50 Law. ed., 150; Charles River Bridge vs. Warren Bridge, 11 Pet., 420; 9 Law. ed.,
773.) The obligation to pay taxes rests not upon the privileges enjoyed by, or the protection
afforded to, a citizen by the government but upon the necessity of money for the support of the
state (Dobbins vs. Erie Country, supra). For this reason, no one is allowed to object to or resist
the payment of taxes solely because no personal benefit to him can be pointed out. (Thomas
vs. Gay, 169 U. S., 264; 18 Sup. Ct. Rep., 340; 43 Law. ed., 740.) While courts will not
enlarge, by construction, the government's power of taxation (Bromley vs. McCaughn, 280 U.
S., 124; 74 Law. ed., 226; 50 Sup. Ct. Rep., 46) they also will not place upon tax laws so loose
a construction as to permit evasions on merely fanciful and insubstantial distictions. (U. S. vs.
Watts, 1 Bond., 580; Fed. Cas. No. 16,653; U. S. vs. Wigglesirth, 2 Story, 369; Fed. Cas. No.
16,690, followed in Froelich & Kuttner vs. Collector of Customs, 18 Phil., 461, 481; Castle
Bros., Wolf & Sons vs. McCoy, 21 Phil., 300; Muñoz & Co. vs. Hord, 12 Phil., 624; Hongkong &
Shanghai Banking Corporation vs. Rafferty, 39 Phil., 145; Luzon Stevedoring Co. vs. Trinidad,
43 Phil., 803.) When proper, a tax statute should be construed to avoid the possibilities of tax
evasion. Construed this way, the statute, without resulting in injustice to the taxpayer, becomes
fair to the government.
That taxes must be collected promptly is a policy deeply intrenched in our tax system. Thus, no
court is allowed to grant injunction to restrain the collection of any internal revenue tax ( sec.
1578, Revised Administrative Code; Sarasola vs. Trinidad, 40 Phil., 252). In the case of Lim
Co Chui vs. Posadas (47 Phil., 461), this court had occassion to demonstrate trenchment
adherence to this policy of the law. It held that "the fact that on account of riots directed against
the Chinese on October 18, 19, and 20, 1924, they were prevented from praying their internal
revenue taxes on time and by mutual agreement closed their homes and stores and remained
therein, does not authorize the Collector of Internal Revenue to extend the time prescribed for
the payment of the taxes or to accept them without the additional penalty of twenty five per
cent." (Syllabus, No. 3.)
". . . It is of the utmost importance," said the Supreme Court of the United States, ". . . that the
modes adopted to enforce the taxes levied should be interfered with as little as possible. Any
delay in the proceedings of the officers, upon whom the duty is developed of collecting the
taxes, may derange the operations of government, and thereby, cause serious detriment to the
public." (Dows vs. Chicago, 11 Wall., 108; 20 Law. ed., 65, 66; Churchill and Tait vs. Rafferty,
32 Phil., 580.)
It results that the estate which plaintiff represents has been delinquent in the payment of
inheritance tax and, therefore, liable for the payment of interest and surcharge provided by law
in such cases.
The delinquency in payment occurred on March 10, 1924, the date when Moore became
trustee. The interest due should be computed from that date and it is error on the part of the
defendant to compute it one month later. The provisions cases is mandatory (see and cf. Lim
Co Chui vs. Posadas, supra), and neither the Collector of Internal Revenuen or this court may
remit or decrease such interest, no matter how heavily it may burden the taxpayer.
To the tax and interest due and unpaid within ten days after the date of notice and demand
thereof by the Collector of Internal Revenue, a surcharge of twenty-five per centum should be
added (sec. 1544, subsec. (b), par. 2, Revised Administrative Code). Demand was made by
the Deputy Collector of Internal Revenue upon Moore in a communiction dated October 16,
1931 (Exhibit 29). The date fixed for the payment of the tax and interest was November 30,
1931. November 30 being an official holiday, the tenth day fell on December 1, 1931. As the
tax and interest due were not paid on that date, the estate became liable for the payment of
the surcharge.
In view of the foregoing, it becomes unnecessary for us to discuss the fifth error assigned by
the plaintiff in his brief.
We shall now compute the tax, together with the interest and surcharge due from the estate of
Thomas Hanley inaccordance with the conclusions we have reached.
At the time of his death, the deceased left real properties valued at P27,920 and personal
properties worth P1,465, or a total of P29,385. Deducting from this amount the sum of
P480.81, representing allowable deductions under secftion 1539 of the Revised Administrative
Code, we have P28,904.19 as the net value of the estate subject to inheritance tax.
The primary tax, according to section 1536, subsection (c), of the Revised Administrative
Code, should be imposed at the rate of one per centum upon the first ten thousand pesos and
two per centum upon the amount by which the share exceed thirty thousand pesos, plus an
additional two hundred per centum. One per centum of ten thousand pesos is P100. Two per
centum of P18,904.19 is P378.08. Adding to these two sums an additional two hundred per
centum, or P965.16, we have as primary tax, correctly computed by the defendant, the sum of
P1,434.24.
To the primary tax thus computed should be added the sums collectible under section 1544 of
the Revised Administrative Code. First should be added P1,465.31 which stands for interest at
the rate of twelve per centum per annum from March 10, 1924, the date of delinquency, to
September 15, 1932, the date of payment under protest, a period covering 8 years, 6 months
and 5 days. To the tax and interest thus computed should be added the sum of P724.88,
representing a surhcarge of 25 per cent on both the tax and interest, and also P10, the
compromise sum fixed by the defendant (Exh. 29), giving a grand total of P3,634.43.
As the plaintiff has already paid the sum of P2,052.74, only the sums of P1,581.69 is legally
due from the estate. This last sum is P390.42 more than the amount demanded by the
defendant in his counterclaim. But, as we cannot give the defendant more than what he claims,
we must hold that the plaintiff is liable only in the sum of P1,191.27 the amount stated in the
counterclaim.
The judgment of the lower court is accordingly modified, with costs against the plaintiff in both
instances. So ordered.
Avanceña, C.J., Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.
Villa-Real, J., concurs.
Republic of the Philippines That the interest of an heir in the estate of a deceased person may be attached for purposes of
SUPREME COURT execution, even if the estate is in the process of settlement before the courts, is already a
Manila settled matter in this jurisdiction. 9

EN BANC It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on
May 25, 1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the
G.R. No. L-24434 January 17, 1968 entire estate of the decedent — provided all the requisites for its validity are fulfilled 10 — even
without the approval of the court. Therefore, the estate for all practical purposes have been
HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIA REGANON, JOSEFA settled. The heirs are at full liberty to withdraw the residuary estate from the Philippine National
REGANON, VIOLETA REGANON, and FLORA REGANON, plaintiffs-appellees, Bank-Dipolog Branch and divide it among themselves. The only reason they have not done so
vs. is because of the alleged illegal withdrawal from said estate of the amount of P1,080.00 by one
RUFINO IMPERIAL, defendant-appellant. Gloria Gomez by authority of Branch I of the Court of First Instance of Zamboanga del Norte,
which incident is now on appeal before the Court of Appeals. This appeal, however, does not
Torcuato L. Galon for plaintiffs-appellees. detract any from the fact that the guardianship proceedings is closed and terminated and the
V. Lacaya for defendant-appellant. residuary estate no longer under custodia legis.

BENGZON, J.P., J.:
This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964,
respectively, of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).
The facts of the case are admitted by both parties.
On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership
and possession of about one-hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952,
situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of
7.9954 hectares), with damages, against Rufino Imperial.
Finally, it is defendant-appellant's position that the residuary estate of Eulogio Imperial, a
former U.S. veteran, having been set aside from the monthly allowances given him by the
United States Veterans Administration (USVA) during his lifetime, is exempt from execution.
Any pension, annuity, or gratuity granted by a Government to its officers or employees in
recognition of past services rendered, is primordially aimed at tiding them over during their old
age and/or disability. This is therefore a right personalissima, purely personal because founded
on necessity. It requires no argument to show that where the recipient dies, the necessity
motivating or underlying its grant necessarily ceases to be. Even more so in this case where
the law 11 providing for the exemption is calculated to benefit U.S. veterans residing here, and
is therefore merely a manifestation of comity.

Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have
1963 filed a motion to declare the former in default. The trial court granted the motion in its already executed a Deed of Extrajudicial Partition — the end result of which is that the property
order dated April 10, 1963. is no longer the property of the estate but of the individual heirs. And it is settled that:

On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court When the heirs by mutual agreement have divided the estate among themselves, one of the
acting as Commissioner. The court a quo on May 6, 1963, rendered a decision declaring the heirs can not therefore secure the appointment of an administrator to take charge of and
plaintiffs lawful owners of the land in question and entitled to its peaceful possession and administer the estate or a part thereof. The property is no longer the property of the estate, but
enjoyment; ordering defendant immediately to vacate the portion occupied by him and to of the individual heirs, whether it remains undivided or not. 12
restore the peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs
the amount of P1,929.20 and the costs. WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-
appellant. So ordered.1äwphï1.ñët
On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This
was granted by the trial court in its order of December 9, 1963. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.
The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff's return of proceedings
reporting the garnishment and sale of a carabao and goat belonging to defendant for P153.00,
and the attachment and sale of defendant's parcel of land covered by Tax Declaration No.
4694, situated in Sicet, Polanco, Zamboanga del Norte, for P500.00 — both sales having been
made to the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-
Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of
P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del
Norte in Sp. Proc. No. R-145.

On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a
Deed of Extrajudicial Partition of the residuary estate, wherein was apportioned P1,471.97 as
defendant Rufino Imperial's share.

Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for
issuance of an alias writ of execution and of an order directing the manager, or the
representative, of the Philippine National Bank-Dipolog Branch, to hold the share of defendant
and deliver the same to the provincial sheriff of the province to be applied to the satisfaction of
the balance of the money judgment. This was granted by the trial court (Branch II) in its order
dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy
addressed to defendant, giving notice of the garnishment of the rights, interests, shares and
participation that defendant may have over the residuary estate of the late Eulogio Imperial,
consisting of the money deposited in the Philippine National Bank-Dipolog Branch.

Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964
filed a motion for reconsideration of the order dated June 9, 1964, and to quash the alias writ
of execution issued pursuant to it, to which plaintiffs filed their opposition on July 6, 1964. On
July 14, 1964, the trial court denied defendant's aforesaid motion.

Defendant's second motion for reconsideration likewise having denied by the trial court in its
order of August 11, 1964, defendant appealed to Us, raising the following issues:

(1) Upon the death of a ward, is the money accumulated in his guardianship proceedings and
deposited in a bank, still considered in custodia legis and therefore cannot be attached?

(2) Is the residuary estate of a U.S. veteran, which consists in the aggregate accumulated sum
from the monthly allowances given him by the United States Veterans Administration (USVA)
during his lifetime, exempt from execution?

Defendant-appellant argues that the property of an incompetent under guardianship is in

custodia legis and therefore can not be attached.

It is true that in a former case 1 it was held that property under custodia legis can not be
attached. But this was under the old Rules of Court. The new Rules of Court 2 now specifically
provides for the procedure to be followed in case what is attached is in custodia legis. 3 The
clear import of this new provision is that property under custodia legis is now attachable,
subject to the mode set forth in said rule.

Besides, the ward having died, the guardianship proceedings no longer subsist:

The death of the ward necessarily terminates the guardianship, and thereupon all powers and
duties of the guardian cease, except the duty, which remains, to make a proper accounting
and settlement in the probate court. 4

As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I
of the Court of First Instance of Zamboanga del Norte in which it was pending, in its order of
February 8, 1964, where it stated —

In the meantime, the guardian Philippine National Bank is hereby directed to deposit the
residuary estate of said ward with its bank agency in Dipolog, this province, in the name of the
estate of the deceased ward Eulogio Imperial, preparatory to the eventual distribution of the
same to the heirs when the latter shall be known, and upon proof of deposit of said residuary
estate, the guardian Philippine National Bank shall forthwith be relieved from any responsibility
as such, and this proceeding shall be considered closed and terminated. 5

And the condition has long been fulfilled, because on March 13, 1964 the Philippine National
Bank-Manila deposited the residuary estate of the ward with the Philippine National Bank-
Dipolog Branch, evidenced by a receipt attached to the records in Sp. Proc. No. R-145. 6

When Eulogio Imperial died on September 13, 1962, the rights to his succession — from the
moment of his death — were transmitted to his heirs, one of whom is his son and heir,
defendant-appellant herein. 7 This automatic transmission can not but proceed with greater
ease and certainty than in this case where the parties agree that the residuary estate is not
burdened with any debt. For,

The rights to the succession of a person are transmitted from the moment of death, and where,
as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir
immediately succeeds, by force of law, to the dominion, ownership, and possession of the
properties of his predecessor and consequently stands legally in the shoes of the latter. 8
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-4963 January 29, 1953

MARIA USON, plaintiff-appellee,

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

Priscilo Evangelista for appellee.

Brigido G. Estrada for appellant.

BAUTISTA ANGELO, J.:

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

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

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

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

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda,
former owner of the five parcels of lands litigated in the present case. There is likewise no
dispute that Maria del Rosario, one of the defendants-appellants, was merely a common-law
wife of the late Faustino Nebreda with whom she had four illegitimate children, her now co-
defendants. It likewise appears that Faustino Nebreda died in 1945 much prior to the effectivity
of the new Civil Code. With this background, it is evident that when Faustino Nebreda died in
1945 the five parcels of land he was seized of at the time passed from the moment of his death
to his only heir, his widow Maria Uson (Article 657, old Civil Code).As this Court aptly said,
"The property belongs to the heirs at the moment of the death of the ancestor as completely as
if the ancestor had executed and delivered to them a deed for the same before his death"
(Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the rights of
inheritance of Maria Uson over the lands in question became vested.

The claim of the defendants that Maria Uson had relinquished her right over the lands in
question because she expressly renounced to inherit any future property that her husband may
acquire and leave upon his death in the deed of separation they had entered into on February
21, 1931, cannot be entertained for the simple reason that future inheritance cannot be the
subject of a contract nor can it be renounced (1 Manresa, 123, sixth edition; Tolentino on Civil
Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).

But defendants contend that, while it is true that the four minor defendants are illegitimate
children of the late Faustino Nebreda and under the old Civil Code are not entitled to any
successional rights, however, under the new Civil Code which became in force in June, 1950,
they are given the status and rights of natural children and are entitled to the successional
rights which the law accords to the latter (article 2264 and article 287, new Civil Code), and
because these successional rights were declared for the first time in the new code, they shall
be given retroactive effect even though the event which gave rise to them may have occurred
under the prior legislation (Article 2253, new Civil Code).

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

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

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

THIRD DIVISION
LORDITO ARROGANTE, JOHNSTON ARROGANTE, ARME ARROGANTE, and FE D.
ARROGANTE,
Petitioners,
- versus -
BEETHOVEN DELIARTE, Joined by SPOUSE LEONORA DUENAS,
Respondents.
G.R. No. 152132
Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
Promulgated:
July 24, 2007
DECISION
NACHURA, J.:
This Petition for Review on Certiorari assails the Decision[1] dated August 28, 2001 of the
Court of Appeals (CA) in CA-G.R. CV No. 58493 which affirmed the Decision[2] dated
February 18, 1997 of the Regional Trial Court (RTC), Branch 10, of Cebu City in an action for
quieting of title and damages.
It appears that the lot in controversy, Lot No. 472-A (subject lot), is situated in Poblacion
Daanbantayan, Cebu, and was originally conjugal property of the spouses Bernabe Deliarte,
Sr. and Gregoria Placencia who had nine children, including herein respondent Beethoven
Deliarte and petitioner Fe Deliarte Arrogante. The other petitioners, Lordito, Johnston, and
Arme, Jr., all surnamed Arrogante, are the children of Fe and, thus, nephews of Beethoven.
Respondent Leonora Duenas is the wife of Beethoven.
A series of misfortunes struck the Deliarte family. The first tragedy occurred when a brother of
Beethoven and Fe was hospitalized and eventually died in Davao. Beethoven shouldered the
hospitalization and other related expenses, including the transport of the body from Davao to
Cebu and then to Daanbantayan.
The next occurrence took place a year after, when Gregoria was likewise hospitalized and
subsequently died on July 29, 1978. Once again, Beethoven paid for all necessary expenses.
Soon thereafter, it was Bernabe, the parties ailing father, who died on November 7, 1980. Not
surprisingly, it was Beethoven who spent for their fathers hospitalization and burial.
In between the deaths of Gregoria and Bernabe, on November 16, 1978, the Deliarte siblings
agreed to waive and convey in favor of Beethoven all their rights, interests, and claims to the
subject lot in consideration of P15,000.00.[3] At the signing of the deed of absolute sale, the
siblings who failed to attend the family gathering, either because they were dead or were
simply unable to, were represented by their respective spouses who signed the document on
their behalf.[4] Bernabe, who was already blind at that time, was likewise present and knew of
the sale that took place among his children.
Thus, from then on, Beethoven occupied and possessed the subject lot openly, peacefully, and
in the concept of owner. He exercised full ownership and control over the subject lot without
any objection from all his siblings, or their heirs, until 1993 when the controversy arose.[5] In
fact, on March 26, 1986, all of Beethovens siblings, except Fe, signed a deed of confirmation
of sale in favor of Beethoven to ratify the 1978 private deed of sale.
Sometime in August 1993, petitioner Lordito Arrogante installed placards on the fence erected
by respondents, claiming that the subject lot was illegally acquired by the latter.[6] The
placards depicted Beethoven as a land grabber who had unconscionably taken the subject lot
from Lordito who claimed that the lot is a devise from his grandfather.[7] Allegedly, the
bequeathal was made in Bernabes last will and testament which was, unfortunately, torn up
and destroyed by Beethoven.[8]
Thus, on November 10, 1993, respondents filed an action for quieting of title and damages
against the petitioners.
In their answer, the petitioners averred that Beethoven does not own the whole of the subject
lot because Bernabe was still alive in 1978 when Beethovens siblings sold to him all their
rights and claims to and interests in that lot. Thus, the siblings could sell only their respective
inheritance from one-half of the subject lot, representing Gregorias share in the conjugal
property. Corollarily, the petitioners claimed that Fe continues to own 1/9 of one-half of the
subject lot, comprising Bernabes share of the property, which allegedly was not contemplated
in the conveyance in 1978. According to petitioners, this contention is supported by Fes failure
to sign the deed of confirmation of sale in 1986.
As regards the damaging placards, the petitioners asseverated that Lordito acted on his own
when he installed the same, and that this was resorted to merely to air his grievance against
his uncle, Beethoven, for claiming ownership of the entire lot.
After trial, the RTC rendered a Decision quieting title on the subject lot in favor of respondents
and directing petitioners, jointly and severally, to pay the respondents P150,000.00 as moral
damages, P25,000.00 as attorneys fees, and P10,000.00 as litigation expenses.
On appeal, the CA affirmed the trial courts decision but deleted the award of attorneys fees
and litigation expenses. In ruling for the respondents, both the trial and appellate courts upheld
the validity of the 1978 sale as between the parties. Considering that petitioner Fe signed the
document and consented to the transaction, she is now barred from repudiating the terms
thereof. In this regard, the RTC and the CA applied the parole evidence rule and allowed the
introduction of evidence on the additional consideration for the conveyance, namely, the
expenses incurred by Beethoven during the three tragedies that had befallen the Deliarte
family. Both courts found that the sale was already completely executed, thus removing it from
the ambit of the Statute of Frauds.[9]
As for the award of moral damages, the trial and appellate courts held that the other petitioners
failure to prevent Lordito from putting up, or at least, removing the placards, amounted to the
defamation and opprobrium of Beethoven with their knowledge and acquiescence. Thus, the
assessment of moral damages was appropriate, given the humiliation and embarrassment
suffered by Beethoven considering his stature and reputation in the community as an electrical
engineer handling several big projects.
However, petitioners insist that the lower courts erred in their rulings. They maintain that the
1978 sale did not contemplate the alienation of Bernabes share in the conjugal partnership as
he failed to sign the private document. As such, the courts application of the parole evidence
rule and the Statute of Frauds were erroneous. In the same vein, the petitioners posit that both
courts ruling that they are jointly and severally liable for moral damages is inconsistent with the
evidence on record that Lordito was the sole author of the damaging placards.
In this appeal, the issues for the resolution of this Court are:
I.
WHETHER OR NOT THE PRIVATE DEED OF SALE EXECUTED IN 1978 IS A VALID
CONVEYANCE OF THE ENTIRE LOT 472-A TO PETITIONER BEETHOVEN DELIARTE.
II.
WHETHER OR NOT THE PAROLE EVIDENCE RULE IS APPLICABLE TO THIS CASE.
III.
WHETHER OR NOT THE STATUTE OF FRAUDS IS APPLICABLE TO THIS CASE.
IV.
WHETHER OR NOT THE PETITIONERS ARE JOINTLY AND SEVERALLY LIABLE FOR
MORAL DAMAGES.
At the outset, we note that both the lower and the appellate courts failed to identify the
applicable law.
First. The 1978 private deed of sale, insofar as it disposed of Bernabes share in the conjugal
partnership prior to his death, is void for being a conveyance of the Deliarte siblings future
inheritance.
Article 1347, paragraph 2 of the Civil Code characterizes a contract entered into upon future
inheritance as void.[10] The law applies when the following requisites concur: (1) the
succession has not yet been opened; (2) the object of the contract forms part of the
inheritance; and (3) the promissor has, with respect to the object, an expectancy of a right
which is purely hereditary in nature.[11]
In this case, at the time the contract was entered into, succession to Bernabes estate had yet
to be opened, and the object thereof, i.e., Bernabes share in the subject lot, formed part of his
childrens inheritance, and the children merely had an inchoate hereditary right thereto.
True, the prohibition on contracts respecting future inheritance admits of exceptions, as when
a person partitions his estate by an act inter vivos under Article 1080 of the Civil Code.[12]
However, the private deed of sale does not purport to be a partition of Bernabes estate as
would exempt it from the application of Article 1347. Nowhere in the said document does
Bernabe separate, divide, and assign to his children his share in the subject lot effective only
upon his death.[13] Indeed, the document does not even bear the signature of Bernabe.
Neither did the parties demonstrate that Bernabe undertook an oral partition of his estate.
Although we have held on several occasions that an oral or parole partition is valid, our
holdings thereon were confined to instances wherein the partition had actually been
consummated, enforced, and recognized by the parties.[14] Absent a showing of an overt act
by Bernabe indicative of an unequivocal intent to partition his estate among his children, his
knowledge and ostensible acquiescence to the private deed of sale does not equate to an oral
partition by an act inter vivos. Besides, partition of property representing future inheritance
cannot be made effective during the lifetime of its owner.[15]
Considering the foregoing, it follows that the 1986 deed of confirmation of sale which sought to
ratify the 1978 sale likewise suffers from the same infirmity.[16] In short, the 1986 deed is also
void.
Nevertheless, it is apparent that Bernabe treated his share[17] in the subject lot as his
childrens present inheritance, and he relinquished all his rights and claim thereon in their favor
subject to Beethovens compensation for the expenses he initially shouldered for the family.
The records reveal that Bernabe, prior to his hospitalization and death, wanted to ensure that
his children attended to the expenditure relating thereto, and even articulated his desire that
such surpass the provision for both his son and wife, Beethovens and Fes brother and mother,
respectively.[18] Their arrangement contemplated the Deliarte siblings equal responsibility for
the familys incurred expenses.
We take judicial notice of this collective sense of responsibility towards family. As with most
nuclear Filipino families, the Deliarte siblings endeavored to provide for their parents or any
member of their family in need. This was evident in Florenda Deliarte Nacuas, the youngest
Deliarte siblings, remittance to her parents of her salary for two years so they could redeem
the subject lot.[19]
Florenda corroborated the testimony of Beethoven that their father was present during, and
was aware of, the transaction that took place among his children.[20] The 1978 deed of sale,
albeit void, evidenced the consent and acquiescence of each Deliarte sibling to said
transaction. They raised no objection even after Beethoven forthwith possessed and occupied
the subject lot.
The foregoing arrangement, vaguely reflected in the void deed of sale, points to a meeting of
the minds among the parties constitutive of an innominate contract, akin to both an onerous
and a remuneratory donation.[21] In this regard, Bernabes waiver and relinquishment of his
share in the subject lot is effectively a donation inter vivos to his children. However, the
gratuitous act is coupled with an onerous cause equal accountability of the Deliarte siblings for
the hospitalization and death expenses of deceased family members to be taken from their
shares in the subject lot. In turn, the remunerative cause pertains to Beethovens recompense
for the family expenses he initially shouldered.
During his lifetime, Bernabe remained the absolute owner of his undivided interest in the
subject lot. Accordingly, he could have validly disposed of his interest therein. His consent to
the disposition of the subject lot in favor of Beethoven, agreed upon among his children, is
evident, considering his presence in, knowledge of, and acquiescence to the transaction.
Further, the arrangement was immediately effected by the parties with no objection from
Bernabe or any of the Deliarte siblings, including herein petitioner Fe. Ineluctably, the actual
arrangement between the parties included Bernabe, and the object thereof did not constitute
future inheritance.
 held solely liable to respondents for moral damages in the amount of P150,000.00. The
quieting of title in favor of respondents is hereby AFFIRMED. No costs.
Second. The parole evidence rule is applicable. While the application thereof presupposes the
existence of a valid agreement, the innominate contract between the parties has been directly
put in issue by the respondents. Verily, the failure of the deed of sale to express the true intent SO ORDERED.
and agreement of the parties supports the application of the parole evidence rule.[22]

Contrary to petitioners contention, the absence of Bernabes signature in the 1978 deed of sale
is not necessarily conclusive of his dissent or opposition to the effected arrangement. As
previously adverted to, the agreement had multiple causes or consideration, apart from the
P15,000.00 stated in the deed of sale. To repeat, the agreement between the parties had both
an onerous and a remunerative cause. Also worthy of note is the moral consideration for the
agreement given the relationship between the parties.

Third. We agree with both the lower and the appellate courts that the Statute of Frauds is not
applicable to the instant case.

The general rule is that contracts are valid in whatever form they may be.[23] One exception
thereto is the Statute of Frauds which requires a written instrument for the enforceability of a
contract.[24] However, jurisprudence dictates that the Statute of Frauds only applies to
executory, not to completed, executed, or partially consummated, contracts.[25]

In the case at bench, we find that all requisites for a valid contract are present, specifically: (1)
consent of the parties; (2) object or subject matter, comprised of the parties respective shares
in the subject lot; and (3) the consideration, over and above the P15,000.00 stipulated price.
We note that the agreement between the parties had long been consummated and completed.
In fact, the agreement clearly contemplated immediate execution by the parties. More
importantly, the parties, including petitioner Fe, ratified the agreement by the acceptance of
benefits thereunder.[26]

One other thing militates against Fes claim of ownership - silence and palpable failure to object
to the execution of the agreement. Fe insists that she only intended to sell her share of the lot
inherited from her mothers estate, exclusive of her fathers share therein.

We are not persuaded by the belated claim. This afterthought is belied by the express
stipulations in the 1978 deed of sale that the heirs of Bernabe and Gregoria, absolutely sell,
quitclaim, and transfer the subject lot in favor of Beethoven. Although a void contract is not a
source of rights and obligations between the parties, the provisions in the written agreement
and their signature thereon are equivalent to an express waiver of all their rights and interests
in the entire lot in favor of Beethoven, regardless of which part pertained to their mothers or
fathers estate.

Truly significant is the fact that in all the years that Beethoven occupied the subject lot, Fe
never disturbed the former in his possession. Neither did she present her other siblings to
buttress her contradicting claim over the subject lot. Likewise, she never asked for a partition
of the property even after the death of their father, Bernabe, to settle his estate, or when her
other siblings executed the deed of confirmation of sale in 1986. Fe also does not pretend to
share in the payment of realty taxes thereon, but merely advances the claim that Priscillana,
one of their siblings, had already paid said taxes.[27] Ultimately, petitioner Fe is estopped from
staking a claim on the subject lot and wresting ownership therein from Beethoven.

Our holding in the case of Tinsay v. Yusay[28] is still good law, thus:

Juana Servando not being a party to the partition agreement Exhibit 1, the agreement standing
alone was, of course, ineffective as against her. The attempt to partition her land among her
heirs, constituting a partition of future inheritance was invalid under the second paragraph of
Article 1271 of the Civil Code and for the same reason the renunciation of all interest in the
land which now constitutes lots Nos. 241 and 713 made by the appellants in favor of the
children of Jovito Yusay would likewise be of no binding force as to the undivided portion which
belonged to Juan Servando. But if the parties entered into the partition agreement in good faith
and treated all of the land as a present inheritance, and if the appellants on the strength of the
agreement obtained their Torrens title to the land allotted to them therein, and if Perpetua Sian
in reliance on the appellants renunciation of all interest claimed by her on behalf of her children
in the cadastral case refrained from presenting any opposition to the appellants claim to the
entire fee in the land assigned to them in the partition agreement and if the appellants after the
death of Juana Servando continued to enjoy the benefits of the agreement refusing to
compensate the heirs of Jovito Yusay for the latters loss of their interest in lots Nos. 2 and 744
through the registration of the lots in the name of the appellants and the subsequent alienation
of the same to innocent third parties, said appellants are now estopped from repudiating the
partition agreement of 1911 and from claiming any further interest in lots Nos. 241 and 713.
There is, however, no reason why they should not be allowed to share in the distribution of the
other property left by Juana Servando.

Fourth. As to the lower courts award of moral damages, we sustain respondents entitlement
thereto. Undeniably, respondents suffered besmirched reputation, wounded feelings, and
social humiliation due to the damaging placards.[29] The injury is aggravated because of the
relationship among the parties. Respondent Beethoven was able to prove that his nephews,
petitioners Lordito, Johnston, and Arme, Jr., stayed with him at some point, and that he
financially supported and trained them to be electricians.[30]

Yet, Lordito denies malice in the aforesaid act. He argues that his only quarrel with Beethoven
stems from the latters claim of ownership over the subject lot which was, supposedly, already
bequeathed to him by his grandfather, Bernabe. Lordito maintains that his claim is valid,
supported by a will Beethoven had torn up, which allegedly negates malice in his act of putting
up the placards.

We are not convinced.

To begin with, the supposed devise to Lordito appears to be void. Considering that Bernabes
estate consisted merely of his conjugal share in the subject lot, the bequeathal infringes on his
compulsory heirs legitimes, including that of Lorditos mother, Fe.[31] Lorditos claim, therefore,
is only subordinate to Beethovens claim as a compulsory heir, even without delving into the
innominate contract between the parties. In all, the ascription of malice and Lorditos
corresponding liability for moral damages is correct given the words he employed in the
placards.

However, we agree with petitioners that there is a dearth of evidence pointing to their collective
responsibility for Lorditos act.

Corollary thereto, Lordito admits and claims sole responsibility for putting up the placards. The
other petitioners specific participation in the tortious act was not proven. Failure to prevent
Lordito or command him to remove the placards, alone, does not justify the finding that all the
petitioners are jointly and severally liable. It does not suffice that all the petitioners were moved
by a common desire to acquire the subject property, absent any proof that they individually
concurred in Lorditos act.

Entrenched is the rule that the rights of a party cannot be prejudiced by an act, declaration, or
omission of another.[32] The exception under Section 32, Rule 130 of the Rules of Court does
not obtain in this instance. The other petitioners acquiescence to and apparent concurrence in
Lorditos act cannot be inferred merely from their failure to remove the placards or reprimand
Lordito. While the placards indeed defamed Beethoven, there is nothing that directly links the
other petitioners to this dastardly act.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The August 28,
2001 Decision of the Court of Appeals is hereby MODIFIED. Petitioner Lordito Arrogante is
G.R. No. 141882 March 11, 2005
J.L.T. AGRO, INC., represented by its Manager, JULIAN L. TEVES, Petitioner,
vs.
ANTONIO BALANSAG and HILARIA CADAYDAY, respondents.
DECISION
TINGA, J.:
Once again, the Court is faced with the perennial conflict of property claims between two sets
of heirs, a conflict ironically made grievous by the fact that the decedent in this case had
resorted to great lengths to allocate which properties should go to which set of heirs.
This is a Rule 45 petition assailing the Decision1 dated 30 September 1999 of the Court of
Appeals which reversed the Decision2 dated 7 May 1993 of the Regional Trial Court (RTC),
Branch 45, of Bais City, Negros Oriental.
The factual antecedents follow.
Don Julian L. Teves (Don Julian) contracted two marriages, first with Antonia Baena (Antonia),
and after her death, with Milagros Donio Teves (Milagros Donio). Don Julian had two children
with Antonia, namely: Josefa Teves Escaño (Josefa) and Emilio Teves (Emilio). He had also
four (4) children with Milagros Donio, namely: Maria Evelyn Donio Teves (Maria Evelyn), Jose
Catalino Donio Teves (Jose Catalino), Milagros Reyes Teves (Milagros Reyes) and Pedro
Reyes Teves (Pedro).3
The present controversy involves a parcel of land covering nine hundred and fifty-four (954)
square meters, known as Lot No. 63 of the Bais Cadastre, which was originally registered in
the name of the conjugal partnership of Don Julian and Antonia under Original Certificate of
Title (OCT) No. 5203 of the Registry of Deeds of Bais City. When Antonia died, the land was
among the properties involved in an action for partition and damages docketed as Civil Case
No. 3443 entitled "Josefa Teves Escaño v. Julian Teves, Emilio B. Teves, et al."4 Milagros
Donio, the second wife of Don Julian, participated as an intervenor. Thereafter, the parties to
the case entered into a Compromise Agreement5 which embodied the partition of all the
properties of Don Julian.
On the basis of the compromise agreement and approving the same, the Court of First
Instance (CFI) of Negros Oriental, 12th Judicial District, rendered a Decision6 dated 31
January 1964. The CFI decision declared a tract of land known as Hacienda Medalla
Milagrosa as property owned in common by Don Julian and his two (2) children of the first
marriage. The property was to remain undivided during the lifetime of Don Julian.7 Josefa and
Emilio likewise were given other properties at Bais, including the electric plant, the "movie
property," the commercial areas, and the house where Don Julian was living. The remainder of
the properties was retained by Don Julian, including Lot No. 63.
Paragraph 13 of the Compromise Agreement, at the heart of the present dispute, lays down
the effect of the eventual death of Don Julian vis-à-vis his heirs:
13. That in the event of death of Julian L. Teves, the properties hereinafter adjudicated to
Josefa Teves Escaňo and Emilio B. Teves, (excluding the properties comprised as Hacienda
Medalla Milagrosa together with all its accessories and accessions) shall be understood as
including not only their one-half share which they inherited from their mother but also the
legitimes and other successional rights which would correspond to them of the other half
belonging to their father, Julian L. Teves. In other words, the properties now selected and
adjudicated to Julian L. Teves (not including his share in the Hacienda Medalla Milagrosa)
shall exclusively be adjudicated to the wife in second marriage of Julian L. Teves and his four
minor children, namely, Milagros Donio Teves, his two acknowledged natural children Milagros
Reyes Teves and Pedro Reyes Teves and his two legitimated children Maria Evelyn Donio
Teves and Jose Catalino Donio Teves. (Emphasis supplied)
On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of Assignment of
Assets with Assumption of Liabilities8 in favor of J.L.T. Agro, Inc. (petitioner). Less than a year
later, Don Julian, Josefa and Emilio also executed an instrument entitled Supplemental to the
Deed of Assignment of Assets with the Assumption of Liabilities (Supplemental Deed)9 dated
31 July 1973. This instrument which constitutes a supplement to the earlier deed of
assignment transferred ownership over Lot No. 63, among other properties, in favor of
petitioner.10 On 14 April 1974, Don Julian died intestate.
On the strength of the Supplemental Deed in its favor, petitioner sought the registration of the
subject lot in its name. A court, so it appeared, issued an order11 cancelling OCT No. 5203 in
the name of spouses Don Julian and Antonia on 12 November 1979, and on the same date
TCT No. T-375 was issued in the name of petitioner.12 Since then, petitioner has been paying
taxes assessed on the subject lot.13
Meanwhile, Milagros Donio and her children had immediately taken possession over the
subject lot after the execution of the Compromise Agreement. In 1974, they entered into a
yearly lease agreement with spouses Antonio Balansag and Hilaria Cadayday, respondents
herein.14 On Lot No. 63, respondents temporarily established their home and constructed a
lumber yard. Subsequently, Milagros Donio and her children executed a Deed of Extrajudicial
Partition of Real Estate15 dated 18 March 1980. In the deed of partition, Lot No. 63 was
allotted to Milagros Donio and her two (2) children, Maria Evelyn and Jose Catalino. Unaware
that the subject lot was already registered in the name of petitioner in 1979, respondents
bought Lot No. 63 from Milagros Donio as evidenced by the Deed of Absolute Sale of Real
Estate16 dated 9 November 1983.
At the Register of Deeds while trying to register the deed of absolute sale, respondents
discovered that the lot was already titled in the name of petitioner. Thus, they failed to register
the deed.17
Respondents, as vendees of Lot No. 63, filed a complaint before the RTC Branch 45 of Bais
City, seeking the declaration of nullity and cancellation of TCT No. T-375 in the name of
petitioner and the transfer of the title to Lot No. 63 in their names, plus damages.18
After hearing, the trial court dismissed the complaint filed by respondents. The dispositive
portion of the decision reads:
WHEREFORE, premises considered, by preponderance of evidence, this Court finds judgment
in favor of the defendant and against the plaintiff, and thus hereby orders:
(1) That complaint be dismissed;
(2) That plaintiffs vacate the subject land, particularly identified as Lot No. 63 registered under
Transfer Certificate of Title No. T-375;
(3) That plaintiffs pay costs.
Finding no basis on the counterclaim by defendant, the same is hereby ordered dismissed.19
The trial court ruled that the resolution of the case specifically hinged on the interpretation of
paragraph 13 of the Compromise Agreement.20 It added that the direct adjudication of the
properties listed in the Compromise Agreement was only in favor of Don Julian and his two
children by the first marriage, Josefa and Emilio.21 Paragraph 13 served only as an
amplification of the terms of the adjudication in favor of Don Julian and his two children by the
first marriage.
According to the trial court, the properties adjudicated in favor of Josefa and Emilio comprised
their shares in the estate of their deceased mother Antonia, as well as their potential share in
the estate of Don Julian upon the latter’s death. Thus, upon Don Julian’s death, Josefa and
Emilio could not claim any share in his estate, except their proper share in the Hacienda
Medalla Milagrosa which was adjudicated in favor of Don Julian in the Compromise
Agreement. As such, the properties adjudicated in favor of Don Julian, except Hacienda
Medalla Milagrosa, were free from the forced legitimary rights of Josefa and Emilio, and Don
Julian was under no impediment to allocate the subject lot, among his other properties, to
Milagros Donio and her four (4) children.22
The trial court further stressed that with the use of the words "shall be," the adjudication in
favor of Milagros Donio and her four (4) children was not final and operative, as the lot was still
subject to future disposition by Don Julian during his lifetime.23 It cited paragraph 1424 of the
Compromise Agreement in support of his conclusion.25 With Lot No. 63 being the conjugal
property of Don Julian and Antonia, the trial court also declared that Milagros Donio and her
children had no hereditary rights thereto except as to the conjugal share of Don Julian, which
they could claim only upon the death of the latter.26
The trial court ruled that at the time of Don Julian’s death on 14 April 1974, Lot No. 63 was no
longer a part of his estate since he had earlier assigned it to petitioner on 31 July 1973.
Consequently, the lot could not be a proper subject of extrajudicial partition by Milagros Donio
and her children, and not being the owners they could not have sold it. Had respondents
exercised prudence before buying the subject lot by investigating the registration of the same
with the Registry of Deeds, they would have discovered that five (5) years earlier, OCT No.
5203 had already been cancelled and replaced by TCT No. T-375 in the name of petitioner,
the trial court added.27
The Court of Appeals, however, reversed the trial court’s decision. The decretal part of the
appellate decision reads:
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and
SET ASIDE and a new one is entered declaring the Transfer Certificate of Title No. T-375
registered in the name of J.L.T. Agro, Inc. as null and void.
With costs against defendant J.L.T. Agro, Inc. represented by its Manager, Julian L. Teves.
SO ORDERED.28
Per the appellate court, the Compromise Agreement incorporated in CFI decision dated 31
January 1964, particularly paragraph 13 thereof, determined, adjudicated and reserved to Don
Julian’s two sets of heirs their future legitimes in his estate except as regards his (Don Julian’s)
share in Hacienda Medalla Milagrosa.29 The two sets of heirs acquired full ownership and
possession of the properties respectively adjudicated to them in the CFI decision and Don
Julian himself could no longer dispose of the same, including Lot No. 63. The disposition in the
CFI decision constitutes res judicata.30 Don Julian could have disposed of only his conjugal
share in the Hacienda Medalla Milagrosa.31
The appellate court likewise emphasized that nobody in his right judgment would preterit his
legal heirs by simply executing a document like the Supplemental Deed which practically
covers all properties which Don Julian had reserved in favor of his heirs from the second
marriage. It also found out that the blanks reserved for the Book No. and Page No. at the
upper right corner of TCT No. T-375, "to identify the exact location where the said title was
registered or transferred," were not filled up, thereby indicating that the TCT is "spurious and of
dubious origin."32
Aggrieved by the appellate court’s decision, petitioner elevated it to this Court via a petition for
review on certiorari, raising pure questions of law.
Before this Court, petitioner assigns as errors the following rulings of the appellate court, to wit:
(a) that future legitime can be determined, adjudicated and reserved prior to the death of Don
Julian; (b) that Don Julian had no right to dispose of or assign Lot No. 63 to petitioner because
he reserved the same for his heirs from the second marriage pursuant to the Compromise
Agreement; (c) that the Supplemental Deed was tantamount to a preterition of his heirs from
the second marriage; and (d) that TCT No. T-375 in the name of petitioner is spurious for not
containing entries on the Book No. and Page No.33
While most of petitioner’s legal arguments have merit, the application of the appropriate
provisions of law to the facts borne out by the evidence on record nonetheless warrants the
affirmance of the result reached by the Court of Appeals in favor of respondents.
Being the key adjudicative provision, paragraph 13 of the Compromise Agreement has to be
quoted again:
13. That in the event of death of Julian L. Teves, the properties herein adjudicated to Josefa
Teves Escaño and Emilio B. Teves, (excluding the properties comprised as Hacienda Medalla
Milagrosa together with all its accessories and accessions) shall be understood as including
not only their one-half share which they inherited from their mother but also the legitimes and
other successional rights which would correspond to them of the other half belonging to their
father, Julian L.Teves. In other words, the properties now selected and adjudicated to Julian L.
Teves (not including his share in the Hacienda Medalla Milagrosa) shall exclusively be
adjudicated to the wife in second marriage of Julian L. Teves and his four minor children,
namely, Milagros Donio Teves, his two acknowledged natural children Milagros Reyes Teves
and Pedro Reyes Teves and his two legitimated children Maria Evelyn Donio Teves and Jose
Catalino Donio Teves." (Emphasis supplied)
With the quoted paragraph as basis, the Court of Appeals ruled that the adjudication in favor of
the heirs of Don Julian from the second marriage became automatically operative upon the
approval of the Compromise Agreement, thereby vesting on them the right to validly dispose of
Lot No. 63 in favor of respondents.
Petitioner argues that the appellate court erred in holding that future legitime can be
determined, adjudicated and reserved prior to the death of Don Julian. The Court agrees. Our
declaration in Blas v. Santos34 is relevant, where we defined future inheritance as any
property or right not in existence or capable of determination at the time of the contract, that a
person may in the future acquire by succession. Article 1347 of the New Civil Code explicitly
provides:
ART. 1347. All things which are not outside the commerce of men, including future things, may
be the object of a contract. All rights which are not intransmissible may also be the object of
contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized
by law.
All services which are not contrary to law, morals, good customs, public order or public policy
may likewise be the object of a contract.
Well-entrenched is the rule that all things, even future ones, which are not outside the
commerce of man may be the object of a contract. The exception is that no contract may be
entered into with respect to future inheritance, and the exception to the exception is the
partition inter vivos referred to in Article 1080.35
For the inheritance to be considered "future," the succession must not have been opened at
the time of the contract.36 A contract may be classified as a contract upon future inheritance,
prohibited under the second paragraph of Article 1347, where the following requisites concur:
(1) That the succession has not yet been opened;
(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a right which is purely
hereditary in nature.37
The first paragraph of Article 1080, which provides the exception to the exception and
therefore aligns with the general rule on future things, reads:
ART. 1080. Should a person make a partition of his estate by an act inter vivos, or by will, such
partition shall be respected, insofar as it does not prejudice the legitime of the compulsory
heirs.
....
In interpreting this provision, Justice Edgardo Paras advanced the opinion that if the partition is
made by an act inter vivos, no formalities are prescribed by the Article.38 The partition will of
course be effective only after death. It does not necessarily require the formalities of a will for
after all it is not the partition that is the mode of acquiring ownership. Neither will the formalities
of a donation be required since donation will not be the mode of acquiring the ownership here
after death; since no will has been made it follows that the mode will be succession (intestate
succession). Besides, the partition here is merely the physical determination of the part to be
given to each heir.39
The historical antecedent of Article 1080 of the New Civil Code is Article 105640 of the old Civil
Code. The only change in the provision is that Article 1080 now permits any person (not a
testator, as under the old law) to partition his estate by act inter vivos. This was intended to
abrogate the then prevailing doctrine that for a testator to partition his estate by an act inter
vivos, he must first make a will with all the formalities provided by law.41
Article 1056 of the old Civil Code (now Article 1080) authorizes a testator to partition inter vivos
his property, and distribute them among his heirs, and this partition is neither a donation nor a
testament, but an instrument of a special character, sui generis, which is revocable at any time
by the causante during his lifetime, and does not operate as a conveyance of title until his
death. It derives its binding force on the heirs from the respect due to the will of the owner of
the property, limited only by his creditors and the intangibility of the legitime of the forced
heirs.42
The partition inter vivos of the properties of Don Julian is undoubtedly valid pursuant to Article
1347. However, considering that it would become legally operative only upon the death of Don
Julian, the right of his heirs from the second marriage to the properties adjudicated to him
under the compromise agreement was but a mere expectancy. It was a bare hope of
succession to the property of their father. Being the prospect of a future acquisition, the
interest by its nature was inchoate. It had no attribute of property, and the interest to which it
related was at the time nonexistent and might never exist.43
Evidently, at the time of the execution of the deed of assignment covering Lot No. 63 in favor
of petitioner, Don Julian remained the owner of the property since ownership over the subject
lot would only pass to his heirs from the second marriage at the time of his death. Thus, as the
owner of the subject lot, Don Julian retained the absolute right to dispose of it during his
lifetime. His right cannot be challenged by Milagros Donio and her children on the ground that
it had already been adjudicated to them by virtue of the compromise agreement.
Emerging as the crucial question in this case is whether Don Julian had validly transferred
ownership of the subject lot during his lifetime. The lower court ruled that he had done so
through the Supplemental Deed. The appellate court disagreed, holding that the Supplemental
Deed is not valid, containing as it does a prohibited preterition of Don Julian’s heirs from the
second marriage. Petitioner contends that the ruling of the Court of Appeals is erroneous. The
contention is well-founded.
Article 854 provides that the preterition or omission of one, some, or all of the compulsory heirs
in the direct line, whether living at the time of the execution of the will or born after the death of
the testator, shall annul the institution of heir; but the devises and legacies shall be valid
insofar as they are not inofficious. Manresa defines preterition as the omission of the heir in the
will, either by not naming him at all or, while mentioning him as father, son, etc., by not
instituting him as heir without disinheriting him expressly, nor assigning to him some part of the
properties.44 It is the total omission of a compulsory heir in the direct line from inheritance.45 It
consists in the silence of the testator with regard to a compulsory heir, omitting him in the
testament, either by not mentioning him at all, or by not giving him anything in the hereditary
property but without expressly disinheriting him, even if he is mentioned in the will in the latter
case.46 But there is no preterition where the testator allotted to a descendant a share less
than the legitime, since there was no total omission of a forced heir.47
In the case at bar, Don Julian did not execute a will since what he resorted to was a partition
inter vivos of his properties, as evidenced by the court approved Compromise Agreement.
Thus, it is premature if not irrelevant to speak of preterition prior to the death of Don Julian in
the absence of a will depriving a legal heir of his legitime. Besides, there are other properties
which the heirs from the second marriage could inherit from Don Julian upon his death. A
couple of provisions in the Compromise Agreement are indicative of Don Julian’s desire along
this line.48 Hence, the total omission from inheritance of Don Julian’s heirs from the second
marriage, a requirement for preterition to exist, is hardly imaginable as it is unfounded.
Despite the debunking of respondents’ argument on preterition, still the petition would
ultimately rise or fall on whether there was a valid transfer effected by Don Julian to petitioner.
Notably, Don Julian was also the president and director of petitioner, and his daughter from the
first marriage, Josefa, was the treasurer thereof. There is of course no legal prohibition against
such a transfer to a family corporation. Yet close scrutiny is in order, especially considering
that such transfer would remove Lot No. 63 from the estate from which Milagros and her
children could inherit. Both the alleged transfer deed and the title which necessarily must have
emanated from it have to be subjected to incisive and detailed examination.
Well-settled, of course, is the rule that a certificate of title serves as evidence of an
indefeasible title to the property in favor of the person whose name appears therein.49 A
certificate of title accumulates in one document a precise and correct statement of the exact
status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of
title and shows exactly the real interest of its owner.50
To successfully assail the juristic value of what a Torrens title establishes, a sufficient and
convincing quantum of evidence on the defect of the title must be adduced to overcome the
predisposition in law in favor of a holder of a Torrens title. Thus, contrary to the appellate
court’s ruling, the appearance of a mere thumbmark of Don Julian instead of his signature in
the Supplemental Deed would not affect the validity of petitioner’s title for this Court has ruled
that a thumbmark is a recognized mode of signature.51
The truth, however, is that the replacement of OCT No. 5203 in the name of Julian by T.C.T.
No. T-375 is marred by a grave irregularity which is also an illegality, as it contravenes the
orthodox, conventional and normal process established by law. And, worse still, the illegality is
reflected on the face of both titles. Where, as in this case, the transferee relies on a voluntary
instrument to secure the issuance of a new title in his name such instrument has to be
presented to the Registry of Deeds. This is evident from Sections 53 and 57 of Presidential
Decree (P.D.) No. 1529 or the Property Registration Decree. The sections read, thus:
SEC. 53. Presentation of owner’s duplicate upon entry of new certificate. – No voluntary
instrument shall be registered by the Register of Deeds unless the owner’s duplicate certificate
is presented with such instrument, except in cases expressly provided for in this Decree or
upon order of the court, for cause shown. (Emphasis supplied)
....
SEC. 57. Procedure in registration of conveyances. – An owner desiring to convey his
registered land in fee simple shall execute and register a deed of conveyance in a form
sufficient in law. The Register of Deeds shall thereafter make out in the registration book a new
certificate of title to the grantee and shall prepare and deliver to him an owner’s duplicate
certificate. The Register of Deeds shall note upon the original and duplicate certificate the date
of transfer, the volume and page of the registration book in which the new certificate is
registered and a reference by number to the last preceding certificate. The original and the
owner’s duplicate of the grantor’s certificate shall be stamped "cancelled." The deed of
conveyance shall be filed and endorsed with the number and the place of registration of the
certificate of title of the land conveyed. (Emphasis supplied)
As petitioner bases its right to the subject lot on the Supplemental Deed, it should have
presented it to the Register of Deeds to secure the transfer of the title in its name. Apparently,
it had not done so. There is nothing on OCT No. 5203 or on the succeeding TCT No. T-375
either which shows that it had presented the Supplemental Deed. In fact, there is absolutely no
mention of a reference to said document in the original and transfer certificates of title. It is in
this regard that the finding of the Court of Appeals concerning the absence of entries on the
blanks intended for the Book No. and Page No. gains significant relevance. Indeed, this aspect
fortifies the conclusion that the cancellation of OCT No. 5203 and the consequent issuance of
TCT No. T-375 in its place are not predicated on a valid transaction.
What appears instead on OCT No. 5203 is the following pertinent entry:
Entry No. 1374: Kind: Order: Executed in favor of J.L.T. AGRO, INC.
CONDITIONS: Lost owner’s duplicate is hereby cancelled, and null and void and a new
Certificate of Title No. 375 is issued per Order of the Court of First Instance on file in this office.
Date of Instrument: November 12, 1979
Date of Inscription: Nov. 12, 1979 4:00 P.M.
(SGD) MANUEL C. MONTESA
Acting Deputy Register of Deeds II
(Emphasis supplied)52
What the entry indicates is that the owner’s duplicate of OCT No. 5203 was lost, a petition for
the reconstitution of the said owner’s duplicate was filed in court, and the court issued an order
for the reconstitution of the owner’s duplicate and its replacement with a new one. But if the
entry is to be believed, the court concerned (CFI, according to the entry) issued an order for
the issuance of a new title which is TCT No. T-375 although the original of OCT No. 5203 on
file with the Registry of Deeds had not been lost.
Going by the legal, accepted and normal process, the reconstitution court may order the
reconstitution and replacement of the lost title only, nothing else. Since what was lost is the
owner’s copy of OCT No. 5203, only that owner’s copy could be ordered replaced. Thus, the
Register of Deeds exceeded his authority in issuing not just a reconstituted owner’s copy of the
original certificate of title but a new transfer certificate of title in place of the original certificate
of title. But if the court order, as the entry intimates, directed the issuance of a new transfer
certificate of title—even designating the very number of the new transfer certificate of title
itself—the order would be patently unlawful. A court cannot legally order the cancellation and
replacement of the original of the O.C.T. which has not been lost,53 as the petition for
reconstitution is premised on the loss merely of the owner’s duplicate of the OCT
Apparently, petitioner had resorted to the court order as a convenient contrivance to effect the
transfer of title to the subject lot in its name, instead of the Supplemental Deed which should
be its proper course of action. It was so constrained to do because the Supplemental Deed
does not constitute a deed of conveyance of the "registered land in fee simple" "in a form
sufficient in law," as required by Section 57 of P.D. No. 1529.
A plain reading of the pertinent provisions of the Supplemental Deed discloses that the
assignment is not supported by any consideration. The provision reads:
....
WHEREAS, in the Deed of Assignment of Assets with the Assumption of Liabilities executed
by Julian L. Teves, Emilio B. Teves and Josefa T. Escaño at Dumaguete City on 16th day of
November 1972 and ratified in the City of Dumaguete before Notary Public Lenin Victoriano,
and entered in the latter’s notarial register as Doc. No. 367; Page No. 17; Book No. V; series of
1972, Julian L. Teves, Emilio B. Teves and Josefa T. Escaño, transferred, conveyed and
assigned unto J.L.T. AGRO, INC., all its assets and liabilities as reflected in the Balance Sheet
of the former as of December 31, 1971.
WHEREAS, on the compromise agreement, as mentioned in the Decision made in the Court of
First Instance of Negros Oriental, 12th Judicial District Branch II, on Dec. 31, 1964 pertaining
to Civil Case No. 3443 the following properties were adjudicated to Don Julian L. Teves. We
quote.
From the properties at Bais
Adjudicated to Don Julian L.Teves
....
Lot No. 63, Tax Dec. No. 33, Certificate of Title No. 5203, together with all improvements.
Assessed value - P2,720.00
....
WHEREAS, this Deed of Assignment is executed by the parties herein in order to effect the
registration of the transfer of the above corporation.
NOW, THEREFORE, for and in consideration of the above premises the ASSIGNOR hereby
transfers, conveys, and assigns unto J.L.T. AGRO, INC., the above described parcel of land[s]
with a fair market value of EIGHTY-FOUR THOUSAND PESOS (P84,000.00), Philippine
Currency, and which transfer, conveyance and assignment shall become absolute upon
signing.54 (Emphasis supplied)
The amount of P84,000.00 adverted to in the dispositive portion of the instrument does not
represent the consideration for the assignment made by Don Julian. Rather, it is a mere
statement of the fair market value of all the nineteen (19) properties enumerated in the
instrument, of which Lot No. 63 is just one, that were transferred by Don Julian in favor of
petitioner. Consequently, the testimony55 of petitioner’s accountant that the assignment is
supported by consideration cannot prevail over the clear provision to the contrary in the
Supplemental Deed.
The Court of Appeals, on the other hand, apparently considered the 1948 mortgage which is
annotated on the back of the TCT No. T-375 as the consideration for the assignment.56
However, the said annotation57 shows that the mortgage was actually executed in favor of
Rehabilitation Finance Corporation, not of petitioner.58 Clearly, said mortgage, executed as it
was in favor of the Rehabilitation Finance Corporation and there being no showing that
petitioner itself paid off the mortgate obligation, could not have been the consideration for the
assignment to petitioner.
Article 1318 of the New Civil Code enumerates the requisites of a valid contract, namely: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract;
and (3) Cause of the obligation which is established.
Thus, Article 1352 declares that contracts without cause, or with unlawful cause produce no
effect whatsoever. Those contracts lack an essential element and they are not only voidable
but void or inexistent pursuant to Article 1409, paragraph (2).59 The absence of the usual
recital of consideration in a transaction which normally should be supported by a consideration
such as the assignment made by Don Julian of all nineteen (19) lots he still had at the time,
coupled with the fact that the assignee is a corporation of which Don Julian himself was also
the President and Director, forecloses the application of the presumption of existence of
consideration established by law.60
Neither could the Supplemental Deed validly operate as a donation. Article 749 of the New
Civil Code is clear on the point, thus:
Art. 749. In order that the donation of the immovable may be valid, it must be made in a public
document, specifying therein the property donated and the value of the charges which the
donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document,
but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments.
In Sumipat, et al v. Banga, et al.,61 this Court declared that title to immovable property does
not pass from the donor to the donee by virtue of a deed of donation until and unless it has
been accepted in a public instrument and the donor duly notified thereof. The acceptance may
be made in the very same instrument of donation. If the acceptance does not appear in the
same document, it must be made in another. Where the deed of donation fails to show the
acceptance, or where the formal notice of the acceptance, made in a separate instrument, is
either not given to the donor or else not noted in the deed of donation and in the separate
acceptance, the donation is null and void.
In the case at bar, although the Supplemental Deed appears in a public document,62 the
absence of acceptance by the donee in the same deed or even in a separate document is a
glaring violation of the requirement.

One final note. From the substantive and procedural standpoints, the cardinal objectives to
write finis to a protracted litigation and avoid multiplicity of suits are worth pursuing at all
times.63 Thus, this Court has ruled that appellate courts have ample authority to rule on
specific matters not assigned as errors or otherwise not raised in an appeal, if these are
indispensable or necessary to the just resolution of the pleaded issues.64 Specifically, matters
not assigned as errors on appeal but consideration of which are necessary in arriving at a just
decision and complete resolution of the case, or to serve the interest of justice or to avoid
dispensing piecemeal justice.65

In the instant case, the correct characterization of the Supplemental Deed, i.e., whether it is
valid or void, is unmistakably determinative of the underlying controversy. In other words, the
issue of validity or nullity of the instrument which is at the core of the controversy is interwoven
with the issues adopted by the parties and the rulings of the trial court and the appellate
court.66 Thus, this Court is also resolute in striking down the alleged deed in this case,
especially as it appears on its face to be a blatant nullity.

WHEREFORE, foregoing premises considered, the Decision dated 30 September 1999 of the
Court of Appeals is hereby AFFIRMED. Costs against petitioner J.L.T. Agro, Inc.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 165300 April 23, 2010
ATTY. PEDRO M. FERRER, Petitioner,
vs.
SPOUSES ALFREDO DIAZ and IMELDA DIAZ, REINA COMANDANTE and SPOUSES
BIENVENIDO PANGAN and ELIZABETH PANGAN, Respondents.
DECISION
DEL CASTILLO, J.:
The basic questions to be resolved in this case are: Is a waiver of hereditary rights in favor of
another executed by a future heir while the parents are still living valid? Is an adverse claim
annotated on the title of a property on the basis of such waiver likewise valid and effective as
to bind the subsequent owners and hold them liable to the claimant?
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the
December 12, 2003 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 70888.3 Said
Decision modified the June 14, 2001 Summary Judgment4 of the Regional Trial Court (RTC)
of Quezon City in Civil Case No. Q-99-38876 by holding respondents Spouses Bienvenido and
Elizabeth Pangan (the Pangans) not solidarily liable with the other respondents, Spouses
Alfredo and Imelda Diaz (the Diazes) and Reina Comandante (Comandante), to petitioner Atty.
Pedro M. Ferrer (Atty. Ferrer). Likewise assailed is the CA Resolution5 dated September 10,
2004 which denied petitioner’s as well as respondents Spouses Diaz and Comandante’s
respective motions for reconsideration.
The parties’ respective versions of the factual antecedents are as follows:
Version of the Petitioner
Petitioner Atty. Ferrer claimed in his original Complaint6 that on May 7, 1999, the Diazes, as
represented by their daughter Comandante, through a Special Power of Attorney (SPA),7
obtained from him a loan of ₱1,118,228.00. The loan was secured by a Real Estate Mortgage
Contract8 by way of second mortgage over Transfer Certificate of Title (TCT) No. RT-66049
and a Promissory Note10 payable within six months or up to November 7, 1999. Comandante
also issued to petitioner postdated checks to secure payment of said loan.
Petitioner further claimed that prior to this or on May 29, 1998, Comandante, for a valuable
consideration of ₱600,000.00, which amount formed part of the abovementioned secured loan,
executed in his favor an instrument entitled Waiver of Hereditary Rights and Interests Over a
Real Property (Still Undivided),11 the pertinent portions of which read:
I, REINA D. COMANDANTE, of legal age, Filipino, married, with residence and postal address
at No. 6, Road 20, Project 8, Quezon City, Metro Manila, Philippines, for a valuable
consideration of SIX HUNDRED THOUSAND PESOS (₱600,000.00) which constitutes my
legal obligation/loan to Pedro M. Ferrer, likewise of legal age, Filipino, married to Erlinda B.
Ferrer, with residence and postal address at No. 9, Lot 4, Puerto Rico Street, Loyola Grand
Villas, Quezon City, Metro Manila, Philippines, by virtue of these presents, do hereby WAIVE,
and/or REPUDIATE all my hereditary rights and interests as a legitimate heir/daughter of Sps.
Alfredo T. Diaz and Imelda G. Diaz in favor of said Pedro M. Ferrer, his heirs and assigns over
a certain parcel of land together with all the improvements found thereon and which property is
more particularly described as follows:
TRANSFER CERTIFICATE OF TITLE
NO. RT-6604 (82020) PR-18887
xxxx
and which property is titled and registered in the name of my parents Alfredo T. Diaz and
Imelda G. Diaz, as evidenced by Transfer Certificate of Title No. RT 6604 (82020) PR-18887.
(sgd.)
REINA D. COMANDANTE
Affiant
On the basis of said waiver, petitioner executed an Affidavit of Adverse Claim12 which he
caused to be annotated at the back of TCT No. RT-6604 on May 26, 1999.
The Diazes, however, reneged on their obligation as the checks issued by Comandante were
dishonored upon presentment. Despite repeated demands, said respondents still failed and
refused to settle the loan. Thus, petitioner filed on September 29, 1999 a Complaint13 for
Collection of Sum of Money Secured by Real Estate Mortgage Contract against the Diazes
and Comandante docketed as Civil Case No. Q-99-38876 and raffled to Branch 224 of RTC,
Quezon City.
Petitioner twice amended his complaint. First, by including as an alternative relief the Judicial
Foreclosure of Mortgage14 and, second, by impleading as additional defendants the Pangans
as the mortgaged property covered by TCT No. RT-6604 was already transferred under their
names in TCT No. N-209049. Petitioner prayed in his second amended complaint that all the
respondents be ordered to jointly and solidarily pay him the sum of ₱1,118,228.00, exclusive of
interests, and/or for the judicial foreclosure of the property pursuant to the Real Estate
Mortgage Contract.
Version of the Respondents
In her Answer15 to petitioner’s original complaint, Comandante alleged that petitioner and his
wife were her fellow members in the Couples for Christ Movement. Sometime in 1998, she
sought the help of petitioner with regard to the mortgage with a bank of her parents’ lot located
at No. 6, Rd. 20, Project 8, Quezon City and covered by TCT No. RT-6604. She also sought
financial accommodations from the couple on several occasions which totaled ₱500,000.00.
Comandante, however, claimed that these loans were secured by chattel mortgages over her
taxi units in addition to several postdated checks she issued in favor of petitioner.
As she could not practically comply with her obligation, petitioner and his wife, presented to
Comandante sometime in May 1998 a document denominated as Waiver of Hereditary Rights
and Interests Over a Real Property (Still Undivided) pertaining to a waiver of her hereditary
share over her parents’ abovementioned property. Purportedly, the execution of said waiver
was to secure Comandante’s loan with the couple which at that time had already ballooned to
₱600,000.00 due to interests.
A year later, the couple again required Comandante to sign the following documents: (1) a
Real Estate Mortgage Contract over her parents’ property; and, (2) an undated Promissory
Note, both corresponding to the amount of ₱1,118,228.00, which petitioner claimed to be the
total amount of Comandante’s monetary obligation to him exclusive of charges and interests.
Comandante alleged that she reminded petitioner that she was not the registered owner of the
subject property and that although her parents granted her SPA, same only pertains to her
authority to mortgage the property to banks and other financial institutions and not to
individuals. Petitioner nonetheless assured Comandante that the SPA was also applicable to
their transaction. As Comandante was still hesitant, petitioner and his wife threatened to
foreclose the former’s taxi units and present the postdated checks she issued to the bank for
payment. For fear of losing her taxi units which were the only source of her livelihood,
Comandante was thus constrained to sign the mortgage agreement as well as the promissory
note. Petitioner, however, did not furnish her with copies of said documents on the pretext that
they still have to be notarized, but, as can be gleaned from the records, the documents were
never notarized. Moreover, Comandante claimed that the SPA alluded to by petitioner in his
complaint was not the same SPA under which she thought she derived the authority to execute
the mortgage contract.
Comandante likewise alleged that on September 29, 1999 at 10:00 o‘ clock in the morning, she
executed an Affidavit of Repudiation/Revocation of Waiver of Hereditary Rights and Interests
Over A (Still Undivided) Real Property,16 which she caused to be annotated on the title of the
subject property with the Registry of Deeds of Quezon City on the same day. Interestingly,
petitioner filed his complaint later that day too.
By way of special and affirmative defenses, Comandante asserted in her Answer to the
amended complaint17 that said complaint states no cause of action against her because the
Real Estate Mortgage Contract and the waiver referred to by petitioner in his complaint were
not duly, knowingly and validly executed by her; that the Waiver of Hereditary Rights and
Interests Over a Real Property (Still Undivided) is a useless document as its execution is
prohibited by Article 1347 of the Civil Code,18 hence, it cannot be the source of any right or
obligation in petitioner’s favor; that the Real Estate Mortgage was of doubtful validity as she
executed the same without valid authority from her parents; and, that the prayer for collection
and/or judicial foreclosure was irregular as petitioner cannot seek said remedies at the same
time.
Apart from executing the affidavit of repudiation, Comandante also filed on October 4, 1999 a
Petition for Cancellation of Adverse Claim (P.E. 2468) Under The Memorandum of
Encumbrances of TCT No. RT-6604 (82020) PR-1888719 docketed as LRC Case No. Q-
12009 (99) and raffled to Branch 220 of RTC, Quezon City. Petitioner who was impleaded as
respondent therein moved for the consolidation of said case20 with Civil Case No. Q-99-
38876. On June 24, 2000, Branch 220 of RTC, Quezon City ordered the consolidation of LRC
Case No. Q-12009 (99) with Civil Case No. Q-99-38876. Accordingly, the records of the former
case was forwarded to Branch 224.
For their part, the Diazes asserted that petitioner has no cause of action against them. They
claimed that they do not even know petitioner and that they did not execute any SPA in favor
of Comandante authorizing her to mortgage for the second time the subject property. They
also contested the due execution of the SPA as it was neither authenticated before the
Philippine Consulate in the United States nor notarized before a notary public in the State of
New York where the Diazes have been residing for 16 years. They claimed that they do not
owe petitioner anything. The Diazes also pointed out that the complaint merely refers to
Comandante’s personal obligation to petitioner with which they had nothing to do. They thus
prayed that the complaint against them be dismissed.21
At the Pangans’ end, they alleged that they acquired the subject property by purchase in good
faith and for a consideration of ₱3,000,000.00 on November 11, 1999 from the Diazes through
the latter’s daughter Comandante who was clothed with SPA acknowledged before the Consul
of New York. The Pangans immediately took actual possession of the property without anyone
complaining or protesting. Soon thereafter, they were issued TCT No. N-209049 in lieu of TCT
No. RT-6604 which was cancelled. 22
However, on December 21, 1999, they were surprised upon being informed by petitioner that
the subject land had been mortgaged to him by the Diazes. Upon inquiry from Comandante,
the latter readily admitted that she has a personal loan with petitioner for which the mortgage
of the property in petitioner’s favor was executed. She admitted, though, that her parents were
not aware of such mortgage and that they did not authorize her to enter into such contract.
Comandante also informed the Pangans that the signatures of her parents appearing on the
SPA are fictitious and that it was petitioner who prepared such document.
As affirmative defense, the Pangans asserted that the annotation of petitioner’s adverse claim
on TCT No. RT-6604 cannot impair their rights as new owners of the subject property. They
claimed that the Waiver of Hereditary Rights and Interests Over a Real Property (Still
Undivided) upon which petitioner’s adverse claim is anchored cannot be the source of any right
or interest over the property considering that it is null and void under paragraph 2 of Article
1347 of the Civil Code.
Moreover, the Pangans asserted that the Real Estate Mortgage Contract cannot bind them nor
in any way impair their ownership of subject property because it was not registered before the
Register of Deeds.23
All the respondents interposed their respective counterclaims and prayed for moral and
exemplary damages and attorney’s fees in varying amounts.
After the parties have submitted their respective pre-trial briefs, the Diazes filed on March 29,
2001 a Motion for Summary Judgment24 alleging that: first, since the documents alluded to by
petitioner in his complaint were defective, he was not entitled to any legal right or relief; and,
second, it was clear from the pleadings that it is Comandante who has an outstanding
obligation with petitioner which the latter never denied. With these, the Diazes believed that
there is no genuine issue as to any material fact against them and, hence, they were entitled to
summary judgment.
On May 7, 2001, petitioner also filed a Motion for Summary Judgment,25 claiming that his suit
against the respondents is meritorious and well-founded and that same is documented and
supported by law and jurisprudence. He averred that his adverse claim annotated at the back
of TCT No. RT-6604, which was carried over in TCT No. 209049 under the names of the
Pangans, is not merely anchored on the Waiver of Hereditary Rights and Interests Over a Real
Property (Still Undivided) executed by Comandante, but also on the Real Estate Mortgage
likewise executed by her in representation of her parents and in favor of petitioner. Petitioner
insisted that said adverse claim is not frivolous and invalid and is registrable under Section 70
of Presidential Decree (PD) No. 1529. In fact, the Registrar of Deeds of Quezon City had
already determined the sufficiency and/or validity of such registration by annotating said claim,
and this, respondents failed to question. Petitioner further averred that even before the sale
and transfer to the Pangans of the subject property, the latter were already aware of the
existence of his adverse claim. In view of these, petitioner prayed that his Motion for Summary
Judgment be granted.
Ruling of the Regional Trial Court
After the filing of the parties’ respective Oppositions to the said motions for summary judgment,
the trial court, in an Order dated May 31, 2001,26 deemed both motions for summary judgment
submitted for resolution. Quoting substantially petitioner’s allegations in his Motion for
Summary Judgment, it thereafter rendered on June 14, 2001 a Summary Judgment27 in favor
of petitioner, the dispositive portion of which reads:
WHEREFORE, premises considered, summary judgment is hereby rendered in favor of
plaintiff and against defendants by:
a) ORDERING all defendants jointly and solidarily to pay plaintiff the sum of ONE MILLION
ONE HUNDRED EIGHTEEN THOUSAND TWO HUNDRED TWENTY EIGHT PESOS
(₱1,118,228.00) which is blood money of plaintiff;
b) ORDERING the Honorable Registrar of Deeds of Quezon City that the rights and interest of
the plaintiff over subject property be annotated at the back of T.C.T. No. N-209049;
c) SENTENCING all defendants to pay plaintiff’s expenses of TEN THOUSAND PESOS
(₱10,000.00) and to pay the costs of suit.
IT IS SO ORDERED.28
The Pangans, the Diazes, and Comandante appealed to the CA.29 The Pangans faulted the
trial court in holding them jointly and severally liable with the Diazes and Comandante for the
satisfaction of the latter’s personal obligation to petitioner in the total amount of ₱1,118,228.00.
The Diazes and Comandante, on the other hand, imputed error upon the trial court in
rendering summary judgment in favor of petitioner. They averred that assuming the summary
judgment was proper, the trial court should not have considered the Real Estate Mortgage
Contract and the Promissory Note as they were defective, as well as petitioner’s frivolous and
non-registrable adverse claim.
In its Decision30 dated December 12, 2003, the CA declared Comandante’s waiver of
hereditary rights null and void. However, it found the Real Estate Mortgage executed by
Comandante on behalf of her parents as binding between the parties thereto.
As regards the Pangans, the CA ruled that the mortgage contract was not binding upon them
as they were purchasers in good faith and for value. The property was free from the mortgage
encumbrance of petitioner when they acquired it as they only came to know of the adverse
claim through petitioner’s phone call which came right after the former’s acquisition of the
property. The CA further ruled that as Comandante’s waiver of hereditary rights and interests
upon which petitioner’s adverse claim was based is a nullity, it could not be a source of any
right in his favor. Hence, the Pangans were not bound to take notice of such claim and are
thus not liable to petitioner.
Noticeably, the appellate court did not rule on the propriety of the issuance of the Summary
Judgment as raised by the Diazes and Comandante. In the ultimate, the CA merely modified
the assailed Summary Judgment of the trial court by excluding the Pangans among those
solidarily liable to petitioner, in effect affirming in all other respects the assailed summary
judgment, viz:
WHEREFORE, foregoing premises considered, the Decision of the Regional Trial Court of
Quezon City, Branch 224 in Civil Case No. Q-99-38876 is hereby MODIFIED, as follows:
1. Ordering defendants-appellants Comandante and Spouses Diaz to jointly and severally pay
plaintiff the sum of Php 1,118, 228.00; and
2. Ordering defendants-appellants Comandante and Spouses Diaz to jointly and severally pay
plaintiff the amount of Php10,000.00 plus cost of suit.
SO ORDERED.31
Petitioner’s Motion for Reconsideration32 having been denied by the CA in its Resolution33
dated September 10, 2004, he now comes to us through this petition for review on certiorari
insisting that the Pangans should, together with the other respondents, be held solidarily liable
to him for the amount of ₱1,118,228.00.
Our Ruling
The petition lacks merit.
Petitioner merely reiterates his contentions in the Motion for Summary Judgment he filed
before the trial court. He insists that his Adverse Claim annotated at the back of TCT No. RT-
6604 is not merely anchored on Comandante’s Waiver of Hereditary Rights and Interests Over
A Real Property (Still Undivided) but also on her being the attorney-in-fact of the Diazes when
she executed the mortgage contract in favor of petitioner. He avers that his adverse claim is
not frivolous or invalid and is registrable as the Registrar of Deeds of Quezon City even
allowed its annotation. He also claims that even prior to the sale of subject property to the
Pangans, the latter already knew of his valid and existing adverse claim thereon and are,
therefore, not purchasers in good faith. Thus, petitioner maintains that the Pangans should be
held, together with the Diazes and Comandante, jointly and severally liable to him in the total
amount of ₱1,118,228.00.
Petitioner’s contentions are untenable.
The Affidavit of Adverse Claim executed by petitioner reads in part:
xxxx
1. That I am the Recipient/Benefactor of compulsory heir’s share over an undivided certain
parcel of land together with all the improvements found therein x x x as evidenced by Waiver of
Hereditary Rights and Interests Over A Real Property, executed by REINA D. COMANDANTE
(a compulsory/legitimate heir of Sps. Alfredo T. Diaz and Imelda G. Diaz), x x x.
2. That in order to protect my interest over said property as a Recipient/Benefactor, for the
registered owners/parents might dispose (of) and/or encumber the same in a fraudulent
manner without my knowledge and consent, for the owner’s duplicate title was not surrendered
to me, it is petitioned that this Affidavit of Adverse Claim be ANNOTATED at the back of the
said title particularly on the original copy of Transfer Certificate of Title No. RT-6604 (82020)
PR-18887 which is on file with the Register of Deeds of Quezon City.
3. That I am executing this Affidavit in order to attest (to) the truth of the foregoing facts and to
petition the Honorable Registrar of Deeds, Quezon City, to annotate this Affidavit of Adverse
Claim at the back of the said title particularly the original copy of Transfer Certificate of Title
No. RT-6604 (82020) PR-18887 which is on file with the said office, so that my interest as
Recipient/Benefactor of the said property will be protected especially the registered
owner/parents, in a fraudulent manner might dispose (of) and/or encumber the same without
my knowledge and consent. (Emphasis ours)
Clearly, petitioner’s Affidavit of Adverse Claim was based solely on the waiver of hereditary
interest executed by Comandante. This fact cannot be any clearer especially so when the
inscription of his adverse claim at the back of TCT No. RT-6604 reads as follows:
P.E. 2468/T-(82020)RT-6604 - - AFFIDAVIT OF ADVERSE CLAIM - - Executed under oath by
PEDRO M. FERRER, married to Erlinda B. Ferrer, claiming among others that they have a
claim, the interest over said property as Recipient/Benefactor, by virtue of a waiver of
Hereditary Rights and Interest over a real property x x x34 (Emphasis ours)
Therefore, there is no basis for petitioner’s assertion that the adverse claim was also anchored
on the mortgage contract allegedly executed by Comandante on behalf of her parents.
The questions next to be resolved are: Is Comandante’s waiver of hereditary rights valid? Is
petitioner’s adverse claim based on such waiver likewise valid and effective?
We note at the outset that the validity of petitioner’s adverse claim should have been
determined by the trial court after the petition for cancellation of petitioner’s adverse claim filed
by Comandante was consolidated with Civil Case No. Q-99-38876.35 This is in consonance
with Section 70 of PD 1529 which provides:
Section 70. Adverse Claim. -– Whoever claims any part or interest in registered land adverse
to the registered owner, arising subsequent to the date of the original registration, may, if no
other provision is made in this Decree for registering the same, make a statement in writing
setting forth fully his alleged right or interest, and how or under whom acquired, a reference to
the number of the certificate of title of the registered owner, the name of the registered owner,
and a description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant’s residence,
and a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective
for a period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the
party in interest: Provided, however, That after cancellation, no second adverse claim based
on the same ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of
First Instance where the land is situated for the cancellation of the adverse claim, and the court
shall grant a speedy hearing upon the question of validity of such adverse claim, and shall
render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid,
the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and
hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant
in an amount not less than one thousand pesos nor more than five thousand pesos, in its
discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by
filing with the Register of Deeds a sworn petition to that effect. (Emphasis ours)
Pursuant to the third paragraph of the afore-quoted provision, it has been held that the validity
or efficaciousness of an adverse claim may only be determined by the Court upon petition by
an interested party, in which event, the Court shall order the immediate hearing thereof and
make the proper adjudication as justice and equity may warrant. And, it is only when such
claim is found unmeritorious that the registration of the adverse claim may be cancelled.36
As correctly pointed out by respondents, the records is bereft of any showing that the trial court
conducted any hearing on the matter. Instead, what the trial court did was to include this
material issue among those for which it has rendered its summary judgment as shown by the
following portion of the judgment:
x x x it will be NOTED that subject Adverse Claim annotated at the back of Transfer Certificate
of Title No. RT-6604 (82020) PR-18887, and carried over to defendants-Sps. Pangan’s Title
No. N-20909, is not merely anchored on defendant Reina Comandante’s "Waiver of Hereditary
Rights and Interest Over a Real Property" but also on her being the Attorney-In-Fact of the
previous registered owners/parents/defendants Sps. Alfredo and Imelda Diaz about the Real
Estate Mortgage Contract for a loan of ₱1,118,228.00 which is a blood money of the plaintiff.
Moreover, subject Adverse Claim in LRC Case No. Q-12009 (99) is NOT frivolous and invalid
and consequently, REGISTRABLE by virtue of Section 110 of the Land Registration Act (now
Section 70 of Presidential Decree No. 1529). 37 (Emphasis ours)
It does not escape our attention that the trial court merely echoed the claim of petitioner that
his adverse claim subject of LRC Case No. Q-12009 (99) is not frivolous, invalid and is
consequently registrable. We likewise lament the apparent lack of effort on the part of said
court to make even a short ratiocination as to how it came up with said conclusion. In fact,
what followed the above-quoted portion of the summary judgment are mere recitals of the
arguments raised by petitioner in his motion for summary judgment. And in the dispositive
portion, the trial court merely casually ordered that petitioner’s adverse claim be inscribed at
the back of the title of the Pangans. What is worse is that despite this glaring defect, the CA
manifestly overlooked the matter even if respondents vigorously raised the same before it.
Be that as it may, respondents’ efforts of pointing out this flaw, which we find significant, have
not gone to naught as will be hereinafter discussed.
All the respondents contend that the Waiver of Hereditary Rights and Interest Over a Real
Property (Still Undivided) executed by Comandante is null and void for being violative of Article
1347 of the Civil Code, hence, petitioner’s adverse claim which was based upon such waiver is
likewise void and cannot confer upon the latter any right or interest over the property.
We agree with the respondents.
Pursuant to the second paragraph of Article 1347 of the Civil Code, no contract may be
entered into upon a future inheritance except in cases expressly authorized by law. For the
inheritance to be considered "future", the succession must not have been opened at the time
of the contract. A contract may be classified as a contract upon future inheritance, prohibited
under the second paragraph of Article 1347, where the following requisites concur:
(1) That the succession has not yet been opened.
(2) That the object of the contract forms part of the inheritance; and,
(3) That the promissor has, with respect to the object, an expectancy of a right which is purely
hereditary in nature.38
In this case, there is no question that at the time of execution of Comandante’s Waiver of
Hereditary Rights and Interest Over a Real Property (Still Undivided), succession to either of
her parent’s properties has not yet been opened since both of them are still living. With respect
to the other two requisites, both are likewise present considering that the property subject
matter of Comandante’s waiver concededly forms part of the properties that she expect to
inherit from her parents upon their death and, such expectancy of a right, as shown by the
facts, is undoubtedly purely hereditary in nature.
From the foregoing, it is clear that Comandante and petitioner entered into a contract involving
the former’s future inheritance as embodied in the Waiver of Hereditary Rights and Interest
Over a Real Property (Still Undivided) executed by her in petitioner’s favor.
In Tañedo v. Court of Appeals,39 we invalidated the contract of sale between Lazaro Tañedo
and therein private respondents since the subject matter thereof was a "one hectare of
whatever share the former shall have over Lot 191 of the cadastral survey of Gerona, Province
of Tarlac and covered by Title T-13829 of the Register of Deeds of Tarlac." It constitutes a part
of Tañedo’s future inheritance from his parents, which cannot be the source of any right nor
the creator of any obligation between the parties.
Guided by the above discussions, we similarly declare in this case that the Waiver of
Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by Comandante
in favor of petitioner as not valid and that same cannot be the source of any right or create any
obligation between them for being violative of the second paragraph of Article 1347 of the Civil
Code.
Anent the validity and effectivity of petitioner’s adverse claim, it is provided in Section 70 of PD
1529, that it is necessary that the claimant has a right or interest in the registered land adverse
to the registered owner and that it must arise subsequent to registration. Here, as no right or
interest on the subject property flows from Comandante’s invalid waiver of hereditary rights
upon petitioner, the latter is thus not entitled to the registration of his adverse claim. Therefore,
petitioner’s adverse claim is without any basis and must consequently be adjudged invalid and
ineffective and perforce be cancelled.
Albeit we have already resolved the issues raised by petitioner, we shall not stop here as the
Diazes and Comandante in their Comment40 call our attention to the failure of the CA to pass
upon the issue of the propriety of the issuance by the trial court of the Summary Judgment in
favor of petitioner despite the fact that they have raised this issue before the appellate court.
They argue that summary judgment is proper only when there is clearly no genuine issue as to
any material fact in the action. Thus, where the defendant presented defenses tendering
factual issue which call for presentation of evidence, as when he specifically denies the
material allegations in the complaint, summary judgment cannot be rendered.
The Diazes and Comandante then enumerate the genuine issues in the case which they claim
should have precluded the trial court from issuing a summary judgment in petitioner’s favor.
First, the execution of the SPA in favor of Comandante referred to by petitioner in his complaint
was never admitted by the Diazes. They assert that as such fact is disputed, trial should have
been conducted to determine the truth of the matter, same being a genuine issue. Despite this,
the trial court merely took the word of the plaintiff and assumed that said document was indeed
executed by them. Second, although Comandante acknowledges that she has a personal
obligation with petitioner, she nevertheless, did not admit that it was in the amount of
₱1,118,228.00. Instead, she claims only the amount of ₱500,000.00 or ₱600,000.00 (if
inclusive of interest) as her obligation. Moreover, the Diazes deny borrowing any money from
petitioner and neither did the Pangans owe him a single centavo. Thus, the true amount of the
obligation due the petitioner and how each of the respondents are responsible for such amount
are genuine issues which need formal presentation of evidence. Lastly, they aver that the trial
court ignored factual and material issues such as the lack of probative value of Comandante’s
waiver of hereditary rights as well as of the SPA; the fact that Comandante signed the
mortgage contract and promissory note in her personal capacity; and, that all such documents
were prepared by petitioner who acted as a lawyer and the creditor of Comandante at the
same time.
Rule 35 of the Rules of Court provides for summary judgment, the pertinent provisions of
which are the following:
Section 1. Summary Judgment for claimant. A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading
in answer thereto has been served, move with supporting affidavits, depositions or admissions
for a summary judgment in his favor upon all or any part thereof.
Section 2. Summary Judgment for the defending party. A party against whom a claim,
counterclaim or cross-claim is asserted or a declaratory relief is sought may, at any time, move
with supporting affidavits, depositions or admissions for a summary judgment in his favor as to
all or any part thereof.
Section 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days
before the time specified for the hearing. The adverse party may serve opposing affidavits,
depositions, or admissions at least three (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings, supporting affidavits, depositions
and admissions on file, show that, except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of
law.

As can be deduced from the above provisions, summary judgment is a procedural devise
resorted to in order to avoid long drawn out litigations and useless delays. When the pleadings
on file show that there are no genuine issues of facts to be tried, the Rules of Court allows a
party to obtain immediate relief by way of summary judgment. That is, when the facts are not in
dispute, the court is allowed to decide the case summarily by applying the law to the material
facts. Conversely, where the pleadings tender a genuine issue, summary judgment is not
proper. A genuine issue is such fact which requires the presentation of evidence as
distinguished from a sham, fictitious, contrived or false claim.41

Here, we find the existence of genuine issues which removes the case from the coverage of
summary judgment. The variance in the allegations of the parties in their pleadings is evident.

Petitioner anchors his complaint for sum of money and/or judicial foreclosure on the alleged
real estate mortgage over the subject property allegedly entered into by Comandante in behalf
of her parents to secure payment of a loan amounting to ₱1,118,228.00. To support this claim,
petitioner attached to his complaint (1) the SPA alleged to have been executed by the Diazes;
(2) the Real Estate Mortgage Contract pertaining to the amount of ₱1,118,228.00; and, (3) a
Promissory Note.

Comandante, in her Answer to petitioner’s Amended Complaint, assailed the validity and due
execution of the abovementioned documents. She asserted that the same were not duly,
knowingly and validly executed by her and that it was petitioner who prepared all of them. Also,
although she admitted owing petitioner, same was not an absolute admission as she limited
herself to an obligation amounting only to ₱600,000.00 inclusive of charges and interests. She
likewise claimed that such obligation is her personal obligation and not of her parents.

The Diazes, for their part, also denied that they executed the SPA authorizing their daughter to
mortgage their property to petitioner as well as having any obligation to the latter.

Clearly, there are genuine issues in this case which require the presentation of evidence. For
one, it is necessary to ascertain in a full blown trial the validity and due execution of the SPA,
the Real Estate Mortgage and the Promissory Notes because the determination of the
following equally significant questions depends on them, to wit: (1) Are the Diazes obligated to
petitioner or is the obligation a purely personal obligation of Comandante? and, (2) Is the sum
of ₱1,118,228.00 as shown in the Real Estate Mortgage and the Promissory Note, the amount
which is really due the petitioner?

To stress, trial courts have limited authority to render summary judgments and may do so only
when there is clearly no genuine issue as to any material fact. When the facts as pleaded by
the parties are disputed or contested, proceedings for summary judgment cannot take the
place of trial.42 From the foregoing, it is apparent that the trial court should have refrained from
issuing the summary judgment but instead proceeded to conduct a full blown trial of the case.
In view of this, the present case should be remanded to the trial court for further proceedings
and proper disposition according to the rudiments of a regular trial on the merits and not
through an abbreviated termination of the case by summary judgment.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
December 12, 2003 insofar as it excluded the respondents Spouses Bienvenido Pangan and
Elizabeth Pangan from among those solidarily liable to petitioner Atty. Pedro M. Ferrer, is
AFFIRMED. The inscription of the adverse claim of petitioner Atty. Pedro M. Ferrer on T.C.T.
No. N-209049 is hereby ordered CANCELLED. Insofar as its other aspects are concerned, the
assailed Decision is SET ASIDE and VACATED. The case is REMANDED to the Regional
Trial Court of Quezon City, Branch 224 for further proceedings in accordance with this
Decision.

SO ORDERED
G.R. No. 139868 June 8, 2006
ALONZO Q. ANCHETA, Petitioner,
vs.
CANDELARIA GUERSEY-DALAYGON, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Spouses Audrey O’Neill (Audrey) and W. Richard Guersey (Richard) were American citizens
who have resided in the Philippines for 30 years. They have an adopted daughter, Kyle
Guersey Hill (Kyle). On July 29, 1979, Audrey died, leaving a will. In it, she bequeathed her
entire estate to Richard, who was also designated as executor.1 The will was admitted to
probate before the Orphan’s Court of Baltimore, Maryland, U.S.A, which named James N.
Phillips as executor due to Richard’s renunciation of his appointment.2 The court also named
Atty. Alonzo Q. Ancheta (petitioner) of the Quasha Asperilla Ancheta Pena & Nolasco Law
Offices as ancillary administrator.3
In 1981, Richard married Candelaria Guersey-Dalaygon (respondent) with whom he has two
children, namely, Kimberly and Kevin.
On October 12, 1982, Audrey’s will was also admitted to probate by the then Court of First
Instance of Rizal, Branch 25, Seventh Judicial District, Pasig, in Special Proceeding No.
9625.4 As administrator of Audrey’s estate in the Philippines, petitioner filed an inventory and
appraisal of the following properties: (1) Audrey’s conjugal share in real estate with
improvements located at 28 Pili Avenue, Forbes Park, Makati, Metro Manila, valued at
P764,865.00 (Makati property); (2) a current account in Audrey’s name with a cash balance of
P12,417.97; and (3) 64,444 shares of stock in A/G Interiors, Inc. worth P64,444.00.5
On July 20, 1984, Richard died, leaving a will, wherein he bequeathed his entire estate to
respondent, save for his rights and interests over the A/G Interiors, Inc. shares, which he left to
Kyle.6 The will was also admitted to probate by the Orphan’s Court of Ann Arundel, Maryland,
U.S.A, and James N. Phillips was likewise appointed as executor, who in turn, designated Atty.
William Quasha or any member of the Quasha Asperilla Ancheta Pena & Nolasco Law Offices,
as ancillary administrator.
Richard’s will was then submitted for probate before the Regional Trial Court of Makati, Branch
138, docketed as Special Proceeding No. M-888.7 Atty. Quasha was appointed as ancillary
administrator on July 24, 1986.8
On October 19, 1987, petitioner filed in Special Proceeding No. 9625, a motion to declare
Richard and Kyle as heirs of Audrey.9 Petitioner also filed on October 23, 1987, a project of
partition of Audrey’s estate, with Richard being apportioned the ¾ undivided interest in the
Makati property, 48.333 shares in A/G Interiors, Inc., and P9,313.48 from the Citibank current
account; and Kyle, the ¼ undivided interest in the Makati property, 16,111 shares in A/G
Interiors, Inc., and P3,104.49 in cash.10
The motion and project of partition was granted and approved by the trial court in its Order
dated February 12, 1988.11 The trial court also issued an Order on April 7, 1988, directing the
Register of Deeds of Makati to cancel TCT No. 69792 in the name of Richard and to issue a
new title in the joint names of the Estate of W. Richard Guersey (¾ undivided interest) and
Kyle (¼ undivided interest); directing the Secretary of A/G Interiors, Inc. to transfer 48.333
shares to the Estate of W. Richard Guersey and 16.111 shares to Kyle; and directing the
Citibank to release the amount of P12,417.97 to the ancillary administrator for distribution to
the heirs.12
Consequently, the Register of Deeds of Makati issued on June 23, 1988, TCT No. 155823 in
the names of the Estate of W. Richard Guersey and Kyle.13
Meanwhile, the ancillary administrator in Special Proceeding No. M-888 also filed a project of
partition wherein 2/5 of Richard’s ¾ undivided interest in the Makati property was allocated to
respondent, while 3/5 thereof were allocated to Richard’s three children. This was opposed by
respondent on the ground that under the law of the State of Maryland, "a legacy passes to the
legatee the entire interest of the testator in the property subject of the legacy."14 Since Richard
left his entire estate to respondent, except for his rights and interests over the A/G Interiors,
Inc, shares, then his entire ¾ undivided interest in the Makati property should be given to
respondent.
The trial court found merit in respondent’s opposition, and in its Order dated December 6,
1991, disapproved the project of partition insofar as it affects the Makati property. The trial
court also adjudicated Richard’s entire ¾ undivided interest in the Makati property to
respondent.15
On October 20, 1993, respondent filed with the Court of Appeals (CA) an amended complaint
for the annulment of the trial court’s Orders dated February 12, 1988 and April 7, 1988, issued
in Special Proceeding No. 9625.16 Respondent contended that petitioner willfully breached his
fiduciary duty when he disregarded the laws of the State of Maryland on the distribution of
Audrey’s estate in accordance with her will. Respondent argued that since Audrey devised her
entire estate to Richard, then the Makati property should be wholly adjudicated to him, and not
merely ¾ thereof, and since Richard left his entire estate, except for his rights and interests
over the A/G Interiors, Inc., to respondent, then the entire Makati property should now pertain
to respondent.
Petitioner filed his Answer denying respondent’s allegations. Petitioner contended that he
acted in good faith in submitting the project of partition before the trial court in Special
Proceeding No. 9625, as he had no knowledge of the State of Maryland’s laws on testate and
intestate succession. Petitioner alleged that he believed that it is to the "best interests of the
surviving children that Philippine law be applied as they would receive their just shares."
Petitioner also alleged that the orders sought to be annulled are already final and executory,
and cannot be set aside.
On March 18, 1999, the CA rendered the assailed Decision annulling the trial court’s Orders
dated February 12, 1988 and April 7, 1988, in Special Proceeding No. 9625.17 The dispositive
portion of the assailed Decision provides:
WHEREFORE, the assailed Orders of February 12, 1998 and April 7, 1988 are hereby
ANNULLED and, in lieu thereof, a new one is entered ordering:
(a) The adjudication of the entire estate of Audrey O’Neill Guersey in favor of the estate of W.
Richard Guersey; and
(b) The cancellation of Transfer Certificate of Title No. 15583 of the Makati City Registry and
the issuance of a new title in the name of the estate of W. Richard Guersey.
SO ORDERED.18
Petitioner filed a motion for reconsideration, but this was denied by the CA per Resolution
dated August 27, 1999.19
Hence, the herein petition for review on certiorari under Rule 45 of the Rules of Court alleging
that the CA gravely erred in not holding that:
A) THE ORDERS OF 12 FEBRUARY 1988 AND 07 APRIL 1988 IN SPECIAL
PROCEEDINGS NO. 9625 "IN THE MATTER OF THE PETITION FOR PROBATE OF THE
WILL OF THE DECEASED AUDREY GUERSEY, ALONZO Q. ANCHETA, ANCILLARY
ADMINISTRATOR", ARE VALID AND BINDING AND HAVE LONG BECOME FINAL AND
HAVE BEEN FULLY IMPLEMENTED AND EXECUTED AND CAN NO LONGER BE
ANNULLED.
B) THE ANCILLARY ADMINISTRATOR HAVING ACTED IN GOOD FAITH, DID NOT
COMMIT FRAUD, EITHER EXTRINSIC OR INTRINSIC, IN THE PERFORMANCE OF HIS
DUTIES AS ANCILLARY ADMINISTRATOR OF AUDREY O’NEIL GUERSEY’S ESTATE IN
THE PHILIPPINES, AND THAT NO FRAUD, EITHER EXTRINSIC OR INTRINSIC, WAS
EMPLOYED BY [HIM] IN PROCURING SAID ORDERS.20
Petitioner reiterates his arguments before the CA that the Orders dated February 12, 1988 and
April 7, 1988 can no longer be annulled because it is a final judgment, which is "conclusive
upon the administration as to all matters involved in such judgment or order, and will determine
for all time and in all courts, as far as the parties to the proceedings are concerned, all matters
therein determined," and the same has already been executed.21
Petitioner also contends that that he acted in good faith in performing his duties as an ancillary
administrator. He maintains that at the time of the filing of the project of partition, he was not
aware of the relevant laws of the State of Maryland, such that the partition was made in
accordance with Philippine laws. Petitioner also imputes knowledge on the part of respondent
with regard to the terms of Aubrey’s will, stating that as early as 1984, he already apprised
respondent of the contents of the will and how the estate will be divided.22
Respondent argues that petitioner’s breach of his fiduciary duty as ancillary administrator of
Aubrey’s estate amounted to extrinsic fraud. According to respondent, petitioner was duty-
bound to follow the express terms of Aubrey’s will, and his denial of knowledge of the laws of
Maryland cannot stand because petitioner is a senior partner in a prestigious law firm and it
was his duty to know the relevant laws.
Respondent also states that she was not able to file any opposition to the project of partition
because she was not a party thereto and she learned of the provision of Aubrey’s will
bequeathing entirely her estate to Richard only after Atty. Ancheta filed a project of partition in
Special Proceeding No. M-888 for the settlement of Richard’s estate.
A decree of distribution of the estate of a deceased person vests the title to the land of the
estate in the distributees, which, if erroneous may be corrected by a timely appeal. Once it
becomes final, its binding effect is like any other judgment in rem.23 However, in exceptional
cases, a final decree of distribution of the estate may be set aside for lack of jurisdiction or
fraud.24 Further, in Ramon v. Ortuzar,25 the Court ruled that a party interested in a probate
proceeding may have a final liquidation set aside when he is left out by reason of
circumstances beyond his control or through mistake or inadvertence not imputable to
negligence.26
The petition for annulment was filed before the CA on October 20, 1993, before the issuance
of the 1997 Rules of Civil Procedure; hence, the applicable law is Batas Pambansa Blg. 129
(B.P. 129) or the Judiciary Reorganization Act of 1980. An annulment of judgment filed under
B.P. 129 may be based on the ground that a judgment is void for want of jurisdiction or that the
judgment was obtained by extrinsic fraud.27 For fraud to become a basis for annulment of
judgment, it has to be extrinsic or actual,28 and must be brought within four years from the
discovery of the fraud.29
In the present case, respondent alleged extrinsic fraud as basis for the annulment of the RTC
Orders dated February 12, 1988 and April 7, 1988. The CA found merit in respondent’s cause
and found that petitioner’s failure to follow the terms of Audrey’s will, despite the latter’s
declaration of good faith, amounted to extrinsic fraud. The CA ruled that under Article 16 of the
Civil Code, it is the national law of the decedent that is applicable, hence, petitioner should
have distributed Aubrey’s estate in accordance with the terms of her will. The CA also found
that petitioner was prompted to distribute Audrey’s estate in accordance with Philippine laws in
order to equally benefit Audrey and Richard Guersey’s adopted daughter, Kyle Guersey Hill.
Petitioner contends that respondent’s cause of action had already prescribed because as early
as 1984, respondent was already well aware of the terms of Audrey’s will,30 and the complaint
was filed only in 1993. Respondent, on the other hand, justified her lack of immediate action by
saying that she had no opportunity to question petitioner’s acts since she was not a party to
Special Proceeding No. 9625, and it was only after Atty. Ancheta filed the project of partition in
Special Proceeding No. M-888, reducing her inheritance in the estate of Richard that she was
prompted to seek another counsel to protect her interest.31
It should be pointed out that the prescriptive period for annulment of judgment based on
extrinsic fraud commences to run from the discovery of the fraud or fraudulent act/s.
Respondent’s knowledge of the terms of Audrey’s will is immaterial in this case since it is not
the fraud complained of. Rather, it is petitioner’s failure to introduce in evidence the pertinent
law of the State of Maryland that is the fraudulent act, or in this case, omission, alleged to have
been committed against respondent, and therefore, the four-year period should be counted
from the time of respondent’s discovery thereof.
Records bear the fact that the filing of the project of partition of Richard’s estate, the opposition
thereto, and the order of the trial court disallowing the project of partition in Special Proceeding
No. M-888 were all done in 1991.32 Respondent cannot be faulted for letting the assailed
orders to lapse into finality since it was only through Special Proceeding No. M-888 that she
came to comprehend the ramifications of petitioner’s acts. Obviously, respondent had no other
recourse under the circumstances but to file the annulment case. Since the action for
annulment was filed in 1993, clearly, the same has not yet prescribed.
Fraud takes on different shapes and faces. In Cosmic Lumber Corporation v. Court of
Appeals,33 the Court stated that "man in his ingenuity and fertile imagination will always
contrive new schemes to fool the unwary."
There is extrinsic fraud within the meaning of Sec. 9 par. (2), of B.P. Blg. 129, where it is one
the effect of which prevents a party from hearing a trial, or real contest, or from presenting all
of his case to the court, or where it operates upon matters, not pertaining to the judgment itself,
but to the manner in which it was procured so that there is not a fair submission of the
controversy. In other words, extrinsic fraud refers to any fraudulent act of the prevailing party in
the litigation which is committed outside of the trial of the case, whereby the defeated party has
been prevented from exhibiting fully his side of the case by fraud or deception practiced on him
by his opponent. Fraud is extrinsic where the unsuccessful party has been prevented from
exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping
him away from court, a false promise of a compromise; or where the defendant never had any
knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney
fraudulently or without authority connives at his defeat; these and similar cases which show
that there has never been a real contest in the trial or hearing of the case are reasons for
which a new suit may be sustained to set aside and annul the former judgment and open the
case for a new and fair hearing.34
The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of
the prevailing litigant prevented a party from having his day in court.35
Petitioner is the ancillary administrator of Audrey’s estate. As such, he occupies a position of
the highest trust and confidence, and he is required to exercise reasonable diligence and act in
entire good faith in the performance of that trust. Although he is not a guarantor or insurer of
the safety of the estate nor is he expected to be infallible, yet the same degree of prudence,
care and judgment which a person of a fair average capacity and ability exercises in similar
transactions of his own, serves as the standard by which his conduct is to be judged.36
Petitioner’s failure to proficiently manage the distribution of Audrey’s estate according to the
terms of her will and as dictated by the applicable law amounted to extrinsic fraud. Hence the
CA Decision annulling the RTC Orders dated February 12, 1988 and April 7, 1988, must be
upheld.
It is undisputed that Audrey Guersey was an American citizen domiciled in Maryland, U.S.A.
During the reprobate of her will in Special Proceeding No. 9625, it was shown, among others,
that at the time of Audrey’s death, she was residing in the Philippines but is domiciled in
Maryland, U.S.A.; her Last Will and Testament dated August 18, 1972 was executed and
probated before the Orphan’s Court in Baltimore, Maryland, U.S.A., which was duly
authenticated and certified by the Register of Wills of Baltimore City and attested by the Chief
Judge of said court; the will was admitted by the Orphan’s Court of Baltimore City on
September 7, 1979; and the will was authenticated by the Secretary of State of Maryland and
the Vice Consul of the Philippine Embassy.
Being a foreign national, the intrinsic validity of Audrey’s will, especially with regard as to who
are her heirs, is governed by her national law, i.e., the law of the State of Maryland, as
provided in Article 16 of the Civil Code, to wit:
Art. 16. Real property as well as personal property is subject to the law of the country where it
is situated.
However, intestate and testamentary succession, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country wherein said
property may be found. (Emphasis supplied)
Article 1039 of the Civil Code further provides that "capacity to succeed is governed by the law
of the nation of the decedent."
As a corollary rule, Section 4, Rule 77 of the Rules of Court on Allowance of Will Proved
Outside the Philippines and Administration of Estate Thereunder, states:
SEC. 4. Estate, how administered.—When a will is thus allowed, the court shall grant letters
testamentary, or letters of administration with the will annexed, and such letters testamentary
or of administration, shall extend to all the estate of the testator in the Philippines. Such estate,
after the payment of just debts and expenses of administration, shall be disposed of according
to such will, so far as such will may operate upon it; and the residue, if any, shall be disposed
of as is provided by law in cases of estates in the Philippines belonging to persons who are
inhabitants of another state or country. (Emphasis supplied)
While foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them;37 however, petitioner, as ancillary administrator of
Audrey’s estate, was duty-bound to introduce in evidence the pertinent law of the State of
Maryland.38
Petitioner admitted that he failed to introduce in evidence the law of the State of Maryland on
Estates and Trusts, and merely relied on the presumption that such law is the same as the
Philippine law on wills and succession. Thus, the trial court peremptorily applied Philippine
laws and totally disregarded the terms of Audrey’s will. The obvious result was that there was
no fair submission of the case before the trial court or a judicious appreciation of the evidence
presented.
Petitioner insists that his application of Philippine laws was made in good faith. The Court
cannot accept petitioner’s protestation. How can petitioner honestly presume that Philippine
laws apply when as early as the reprobate of Audrey’s will before the trial court in 1982, it was
already brought to fore that Audrey was a U.S. citizen, domiciled in the State of Maryland. As
asserted by respondent, petitioner is a senior partner in a prestigious law firm, with a "big legal
staff and a large library."39 He had all the legal resources to determine the applicable law. It
was incumbent upon him to exercise his functions as ancillary administrator with reasonable
diligence, and to discharge the trust reposed on him faithfully. Unfortunately, petitioner failed to
perform his fiduciary duties.
Moreover, whether his omission was intentional or not, the fact remains that the trial court
failed to consider said law when it issued the assailed RTC Orders dated February 12, 1988
and April 7, 1988, declaring Richard and Kyle as Audrey’s heirs, and distributing Audrey’s
estate according to the project of partition submitted by petitioner. This eventually prejudiced
respondent and deprived her of her full successional right to the Makati property.
In GSIS v. Bengson Commercial Bldgs., Inc.,40 the Court held that when the rule that the
negligence or mistake of counsel binds the client deserts its proper office as an aid to justice
and becomes a great hindrance and chief enemy, its rigors must be relaxed to admit
exceptions thereto and to prevent a miscarriage of justice, and the court has the power to
except a particular case from the operation of the rule whenever the purposes of justice require
it.
The CA aptly noted that petitioner was remiss in his responsibilities as ancillary administrator
of Audrey’s estate. The CA likewise observed that the distribution made by petitioner was
prompted by his concern over Kyle, whom petitioner believed should equally benefit from the
Makati property. The CA correctly stated, which the Court adopts, thus:
In claiming good faith in the performance of his duties and responsibilities, defendant Alonzo
H. Ancheta invokes the principle which presumes the law of the forum to be the same as the
foreign law (Beam vs. Yatco, 82 Phil. 30, 38) in the absence of evidence adduced to prove the
latter law (Slade Perkins vs. Perkins, 57 Phil. 205, 210). In defending his actions in the light of
the foregoing principle, however, it appears that the defendant lost sight of the fact that his
primary responsibility as ancillary administrator was to distribute the subject estate in
accordance with the will of Audrey O’Neill Guersey. Considering the principle established
under Article 16 of the Civil Code of the Philippines, as well as the citizenship and the avowed
domicile of the decedent, it goes without saying that the defendant was also duty-bound to
prove the pertinent laws of Maryland on the matter.
The record reveals, however, that no clear effort was made to prove the national law of Audrey
O’Neill Guersey during the proceedings before the court a quo. While there is claim of good
faith in distributing the subject estate in accordance with the Philippine laws, the defendant
appears to put his actuations in a different light as indicated in a portion of his direct
examination, to wit:
xxx
It would seem, therefore, that the eventual distribution of the estate of Audrey O’Neill Guersey
was prompted by defendant Alonzo H. Ancheta’s concern that the subject realty equally benefit
the plaintiff’s adopted daughter Kyle Guersey.
on to respondent. This, of course, assumes the proposition that the law of the State of
Maryland which allows "a legacy to pass to the legatee the entire estate of the testator in the
property which is the subject of the legacy," was sufficiently proven in Special Proceeding No.
9625. Nevertheless, the Court may take judicial notice thereof in view of the ruling in Bohanan
v. Bohanan.44 Therein, the Court took judicial notice of the law of Nevada despite failure to
prove the same. The Court held, viz.:
We have, however, consulted the records of the case in the court below and we have found
that during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for
withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled
Nevada Laws, was introduced in evidence by appellants' (herein) counsel as Exhibit "2" (See
pp. 77-79, Vol. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again said law was
presented by the counsel for the executor and admitted by the Court as Exhibit "B" during the
hearing of the case on January 23, 1950 before Judge Rafael Amparo (see Records, Court of
First Instance, Vol. 1).
In addition, the other appellants, children of the testator, do not dispute the above-quoted
provision of the laws of the State of Nevada. Under all the above circumstances, we are
constrained to hold that the pertinent law of Nevada, especially Section 9905 of the Compiled
Nevada Laws of 1925, can be taken judicial notice of by us, without proof of such law having
been offered at the hearing of the project of partition.
In this case, given that the pertinent law of the State of Maryland has been brought to record
before the CA, and the trial court in Special Proceeding No. M-888 appropriately took note of
the same in disapproving the proposed project of partition of Richard’s estate, not to mention
that petitioner or any other interested person for that matter, does not dispute the existence or
validity of said law, then Audrey’s and Richard’s estate should be distributed according to their
respective wills, and not according to the project of partition submitted by petitioner.
Consequently, the entire Makati property belongs to respondent.
Decades ago, Justice Moreland, in his dissenting opinion in Santos v. Manarang,45 wrote:
A will is the testator speaking after death. Its provisions have substantially the same force and
effect in the probate court as if the testator stood before the court in full life making the
declarations by word of mouth as they appear in the will. That was the special purpose of the
law in the creation of the instrument known as the last will and testament. Men wished to
speak after they were dead and the law, by the creation of that instrument, permitted them to
do so x x x All doubts must be resolved in favor of the testator's having meant just what he
said.
Honorable as it seems, petitioner’s motive in equitably distributing Audrey’s estate cannot
prevail over Audrey’s and Richard’s wishes. As stated in Bellis v. Bellis:46
x x x whatever public policy or good customs may be involved in our system of legitimes,
Congress has not intended to extend the same to the succession of foreign nationals. For it
has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's
national Law. Specific provisions must prevail over general ones.47
Before concluding, the Court notes the fact that Audrey and Richard Guersey were American
citizens who owned real property in the Philippines, although records do not show when and
how the Guerseys acquired the Makati property.
Under Article XIII, Sections 1 and 4 of the 1935 Constitution, the privilege to acquire and
exploit lands of the public domain, and other natural resources of the Philippines, and to
operate public utilities, were reserved to Filipinos and entities owned or controlled by them. In
Republic v. Quasha,48 the Court clarified that the Parity Rights Amendment of 1946, which re-
opened to American citizens and business enterprises the right in the acquisition of lands of
the public domain, the disposition, exploitation, development and utilization of natural
resources of the Philippines, does not include the acquisition or exploitation of private
agricultural lands. The prohibition against acquisition of private lands by aliens was carried on
to the 1973 Constitution under Article XIV, Section 14, with the exception of private lands
acquired by hereditary succession and when the transfer was made to a former natural-born
citizen, as provided in Section 15, Article XIV. As it now stands, Article XII, Sections 7 and 8 of
the 1986 Constitution explicitly prohibits non-Filipinos from acquiring or holding title to private
lands or to lands of the public domain, except only by way of legal succession or if the
acquisition was made by a former natural-born citizen.
In any case, the Court has also ruled that if land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is
considered cured and the title of the transferee is rendered valid.49 In this case, since the
Makati property had already passed on to respondent who is a Filipino, then whatever flaw, if
any, that attended the acquisition by the Guerseys of the Makati property is now
inconsequential, as the objective of the constitutional provision to keep our lands in Filipino
hands has been achieved.
WHEREFORE, the petition is denied. The Decision dated March 18, 1999 and the Resolution
dated August 27, 1999 of the Court of Appeals are AFFIRMED.
Petitioner is ADMONISHED to be more circumspect in the performance of his duties as an
official of the court.
No pronouncement as to costs.
SO ORDERED.

Well-intentioned though it may be, defendant Alonzo H. Ancheta’s action appears to have
breached his duties and responsibilities as ancillary administrator of the subject estate. While
such breach of duty admittedly cannot be considered extrinsic fraud under ordinary
circumstances, the fiduciary nature of the said defendant’s position, as well as the resultant
frustration of the decedent’s last will, combine to create a circumstance that is tantamount to
extrinsic fraud. Defendant Alonzo H. Ancheta’s omission to prove the national laws of the
decedent and to follow the latter’s last will, in sum, resulted in the procurement of the subject
orders without a fair submission of the real issues involved in the case.41 (Emphasis supplied)

This is not a simple case of error of judgment or grave abuse of discretion, but a total disregard
of the law as a result of petitioner’s abject failure to discharge his fiduciary duties. It does not
rest upon petitioner’s pleasure as to which law should be made applicable under the
circumstances. His onus is clear. Respondent was thus excluded from enjoying full rights to
the Makati property through no fault or negligence of her own, as petitioner’s omission was
beyond her control. She was in no position to analyze the legal implications of petitioner’s
omission and it was belatedly that she realized the adverse consequence of the same. The
end result was a miscarriage of justice. In cases like this, the courts have the legal and moral
duty to provide judicial aid to parties who are deprived of their rights.42

The trial court in its Order dated December 6, 1991 in Special Proceeding No. M-888 noted the
law of the State of Maryland on Estates and Trusts, as follows:

Under Section 1-301, Title 3, Sub-Title 3 of the Annotated Code of the Public General Laws of
Maryland on Estates and Trusts, "all property of a decedent shall be subject to the estate of
decedents law, and upon his death shall pass directly to the personal representative, who shall
hold the legal title for administration and distribution," while Section 4-408 expressly provides
that "unless a contrary intent is expressly indicated in the will, a legacy passes to the legatee
the entire interest of the testator in the property which is the subject of the legacy". Section 7-
101, Title 7, Sub-Title 1, on the other hand, declares that "a personal representative is a
fiduciary" and as such he is "under the general duty to settle and distribute the estate of the
decedent in accordance with the terms of the will and the estate of decedents law as
expeditiously and with as little sacrifice of value as is reasonable under the circumstances".43

In her will, Audrey devised to Richard her entire estate, consisting of the following: (1) Audrey’s
conjugal share in the Makati property; (2) the cash amount of P12,417.97; and (3) 64,444
shares of stock in A/G Interiors, Inc. worth P64,444.00. All these properties passed on to
Richard upon Audrey’s death. Meanwhile, Richard, in his will, bequeathed his entire estate to
respondent, except for his rights and interests over the A/G Interiors, Inc. shares, which he left
to Kyle. When Richard subsequently died, the entire Makati property should have then passed
Republic of the Philippines the old Civil Code as Art. 16 in the new. It must have been their purpose to make the second
SUPREME COURT paragraph of Art. 16 a specific provision in itself which must be applied in testate and intestate
Manila succession. As further indication of this legislative intent, Congress added a new provision,
under Art. 1039, which decrees that capacity to succeed is to be governed by the national law
EN BANC of the decedent.

G.R. No. L-23678 June 6, 1967 It is therefore evident that whatever public policy or good customs may be involved in our
System of legitimes, Congress has not intended to extend the same to the succession of
TESTATE ESTATE OF AMOS G. BELLIS, deceased. foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional
PEOPLE'S BANK and TRUST COMPANY, executor. rights, to the decedent's national law. Specific provisions must prevail over general ones.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs. Appellants would also point out that the decedent executed two wills — one to govern his
EDWARD A. BELLIS, ET AL., heirs-appellees. Texas estate and the other his Philippine estate — arguing from this that he intended
Philippine law to govern his Philippine estate. Assuming that such was the decedent's intention
Vicente R. Macasaet and Jose D. Villena for oppositors appellants. in executing a separate Philippine will, it would not alter the law, for as this Court ruled in
Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al. Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect that his
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al. properties shall be distributed in accordance with Philippine law and not with his national law,
J. R. Balonkita for appellee People's Bank & Trust Company. is illegal and void, for his national law cannot be ignored in regard to those matters that Article
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman. 10 — now Article 16 — of the Civil Code states said national law should govern.

BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First
Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor
in Civil Case No. 37089 therein.1äwphï1.ñët
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas,
U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly,
since the intrinsic validity of the provision of the will and the amount of successional rights are
to be determined under Texas law, the Philippine law on legitimes cannot be applied to the
testacy of Amos G. Bellis.

The facts of the case are as follows: Wherefore, the order of the probate court is hereby affirmed in toto, with costs against
appellants. So ordered.
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States."
By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ.,
Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and concur.
Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three
legitimate children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had
three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.

On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that
after all taxes, obligations, and expenses of administration are paid for, his distributable estate
should be divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife,
Mary E. Mallen; (b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria
Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two items
have been satisfied, the remainder shall go to his seven surviving children by his first and
second wives, namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares.1äwphï1.ñët

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas,
U.S.A. His will was admitted to probate in the Court of First Instance of Manila on September
15, 1958.

The People's Bank and Trust Company, as executor of the will, paid all the bequests therein
including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to
the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma
Bellis, various amounts totalling P40,000.00 each in satisfaction of their respective legacies, or
a total of P120,000.00, which it released from time to time according as the lower court
approved and allowed the various motions or petitions filed by the latter three requesting
partial advances on account of their respective legacies.

On January 8, 1964, preparatory to closing its administration, the executor submitted and filed
its "Executor's Final Account, Report of Administration and Project of Partition" wherein it
reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of
shares of stock amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina
Bellis and Miriam Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In
the project of partition, the executor — pursuant to the "Twelfth" clause of the testator's Last
Will and Testament — divided the residuary estate into seven equal portions for the benefit of
the testator's seven legitimate children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective
oppositions to the project of partition on the ground that they were deprived of their legitimes
as illegitimate children and, therefore, compulsory heirs of the deceased.

Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
evidenced by the registry receipt submitted on April 27, 1964 by the executor.1

After the parties filed their respective memoranda and other pertinent pleadings, the lower
court, on April 30, 1964, issued an order overruling the oppositions and approving the
executor's final account, report and administration and project of partition. Relying upon Art. 16
of the Civil Code, it applied the national law of the decedent, which in this case is Texas law,
which did not provide for legitimes.

Their respective motions for reconsideration having been denied by the lower court on June
11, 1964, oppositors-appellants appealed to this Court to raise the issue of which law must
apply — Texas law or Philippine law.

In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi,
applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine
is usually pertinent where the decedent is a national of one country, and a domicile of another.
In the present case, it is not disputed that the decedent was both a national of Texas and a
domicile thereof at the time of his death.2 So that even assuming Texas has a conflict of law
rule providing that the domiciliary system (law of the domicile) should govern, the same would
not result in a reference back (renvoi) to Philippine law, but would still refer to Texas law.
Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae) calling for the
application of the law of the place where the properties are situated, renvoi would arise, since
the properties here involved are found in the Philippines. In the absence, however, of proof as
to the conflict of law rule of Texas, it should not be presumed different from ours.3 Appellants'
position is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor
even mentioned it in their arguments. Rather, they argue that their case falls under the
circumstances mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil
Code.

Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the
decedent, in intestate or testamentary successions, with regard to four items: (a) the order of
succession; (b) the amount of successional rights; (e) the intrinsic validity of the provisions of
the will; and (d) the capacity to succeed. They provide that —

ART. 16. Real property as well as personal property is subject to the law of the country where
it is situated.

However, intestate and testamentary successions, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may he the nature of the property and regardless of the country wherein said
property may be found.

ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.

Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that
—

Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new
Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor
and Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi,
Jr., presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949,
approving among things the final accounts of the executor, directing the executor to reimburse
Maria Lucy Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her
legacy, and declaring Maria Lucy Christensen entitled to the residue of the property to be
enjoyed during her lifetime, and in case of death without issue, one-half of said residue to be
payable to Mrs. Carrie Louise C. Borton, etc., in accordance with the provisions of the will of
the testator Edward E. Christensen. The will was executed in Manila on March 5, 1951 and
contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs.
Bernard Daney), who was born in the Philippines about twenty-eight years ago, and who is
now residing at No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants except my above
named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo
Garcia, about eighteen years of age and who, notwithstanding the fact that she was baptized
Christensen, is not in any way related to me, nor has she been at any time adopted by me, and
who, from all information I have now resides in Egpit, Digos, Davao, Philippines, the sum of
THREE THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine Currency the same to be
deposited in trust for the said Maria Helen Christensen with the Davao Branch of the Philippine
National Bank, and paid to her at the rate of One Hundred Pesos (P100.00), Philippine
Currency per month until the principal thereof as well as any interest which may have accrued
thereon, is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY
CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No. 665 Rodger
Young Village, Los Angeles, California, U.S.A., all the income from the rest, remainder, and
residue of my property and estate, real, personal and/or mixed, of whatsoever kind or
character, and wheresoever situated, of which I may be possessed at my death and which
may have come to me from any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account and
project of partition ratified the payment of only P3,600 to Helen Christensen Garcia and
proposed that the residue of the estate be transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia,
insofar as it deprives her (Helen) of her legitime as an acknowledged natural child, she having
been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased
Edward E. Christensen. The legal grounds of opposition are (a) that the distribution should be
governed by the laws of the Philippines, and (b) that said order of distribution is contrary
thereto insofar as it denies to Helen Christensen, one of two acknowledged natural children,
one-half of the estate in full ownership. In amplification of the above grounds it was alleged
that the law that should govern the estate of the deceased Christensen should not be the
internal law of California alone, but the entire law thereof because several foreign elements are
involved, that the forum is the Philippines and even if the case were decided in California,
Section 946 of the California Civil Code, which requires that the domicile of the decedent
should apply, should be applicable. It was also alleged that Maria Helen Christensen having
been declared an acknowledged natural child of the decedent, she is deemed for all purposes
legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of
the State of California at the time of his death, the successional rights and intrinsic validity of
the provisions in his will are to be governed by the law of California, in accordance with which
a testator has the right to dispose of his property in the way he desires, because the right of
absolute dominion over his property is sacred and inviolable (In re McDaniel's Estate, 77 Cal.
Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179,
Record on Appeal). Oppositor Maria Helen Christensen, through counsel, filed various motions
for reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I property? The decision of the court below, sustains the contention of the executor-appellee
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE
SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF
EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST
SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE
THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING
FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL
LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF
THE TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE
DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE
PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF
DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE
LAWS.
V On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS
HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN
FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the
State of California at the time of his death. But there is also no question that at the time of his
death he was domiciled in the Philippines, as witness the following facts admitted by the
executor himself in appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show that the
deceased Edward E. Christensen was born on November 29, 1875 in New York City, N.Y.,
U.S.A.; his first arrival in the Philippines, as an appointed school teacher, was on July 1, 1901,
on board the U.S. Army Transport "Sheridan" with Port of Embarkation as the City of San
Francisco, in the State of California, U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and stayed there for the
following nine years until 1913, during which time he resided in, and was teaching school in
Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in
1928, he again departed the Philippines for the United States and came back here the
following year, 1929. Some nine years later, in 1938, he again returned to his own country, and
came back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in
the Philippines during World War II. Upon liberation, in April 1945, he left for the United States
but returned to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI
Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-
Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly after the making
of his last will and testament (now in question herein) which he executed at his lawyers' offices
in Manila on March 5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30,
1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are
persuaded by the fact that he was born in New York, migrated to California and resided there
for nine years, and since he came to the Philippines in 1913 he returned to California very
rarely and only for short visits (perhaps to relatives), and considering that he appears never to
have owned or acquired a home or properties in that state, which would indicate that he would
ultimately abandon the Philippines and make home in the State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere temporary
presence to the most permanent abode. Generally, however, it is used to denote something
more than mere physical presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California when
he resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the
Philippines, for the latter was a territory of the United States (not a state) until 1946 and the
deceased appears to have considered himself as a citizen of California by the fact that when
he executed his will in 1951 he declared that he was a citizen of that State; so that he appears
never to have intended to abandon his California citizenship by acquiring another. This
conclusion is in accordance with the following principle expounded by Goodrich in his Conflict
of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of
permanent abode. But domicile, as has been shown, has acquired a technical meaning. Thus
one may be domiciled in a place where he has never been. And he may reside in a place
where he has no domicile. The man with two homes, between which he divides his time,
certainly resides in each one, while living in it. But if he went on business which would require
his presence for several weeks or months, he might properly be said to have sufficient
connection with the place to be called a resident. It is clear, however, that, if he treated his
settlement as continuing only for the particular business in hand, not giving up his former
"home," he could not be a domiciled New Yorker. Acquisition of a domicile of choice requires
the exercise of intention as well as physical presence. "Residence simply requires bodily
presence of an inhabitant in a given place, while domicile requires bodily presence in that
place and also an intention to make it one's domicile." Residence, however, is a term used with
many shades of meaning, from the merest temporary presence to the most permanent abode,
and it is not safe to insist that any one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the
Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the country where
it is situated.
However, intestate and testamentary successions, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country where said property
may be found.
The application of this article in the case at bar requires the determination of the meaning of
the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United
States, each state of the Union having its own private law applicable to its citizens only and in
force only within the state. The "national law" indicated in Article 16 of the Civil Code above
quoted can not, therefore, possibly mean or apply to any general American law. So it can refer
to no other than the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal
that under the California Probate Code, a testator may dispose of his property by will in the
form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176
P. 2d 952. But appellant invokes the provisions of Article 946 of the Civil Code of California,
which is as follows:
If there is no law to the contrary, in the place where personal property is situated, it is deemed
to follow the person of its owner, and is governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We have
checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on the
case cited in the decision and testified to by a witness. (Only the case of Kaufman is correctly
cited.) It is argued on executor's behalf that as the deceased Christensen was a citizen of the
State of California, the internal law thereof, which is that given in the abovecited case, should
govern the determination of the validity of the testamentary provisions of Christensen's will,
such law being in force in the State of California of which Christensen was a citizen. Appellant,
on the other hand, insists that Article 946 should be applicable, and in accordance therewith
and following the doctrine of the renvoi, the question of the validity of the testamentary
provision in question should be referred back to the law of the decedent's domicile, which is
the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a
jural matter to a foreign law for decision, is the reference to the purely internal rules of law of
the foreign system; i.e., to the totality of the foreign law minus its Conflict of Laws rules?"
is, applied the Conflict of Laws rule of Illinois which referred the matter back to Michigan law.
But once having determined the the Conflict of Laws principle is the rule looked to, it is difficult
to see why the reference back should not have been to Michigan Conflict of Laws. This would
have resulted in the "endless chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the internal law of Illinois,
thus rejecting the renvoi or the reference back. Yet there seems no compelling logical reason
why the original reference should be the internal law rather than to the Conflict of Laws rule. It
is true that such a solution avoids going on a merry-go-round, but those who have accepted
the renvoi theory avoid this inextricabilis circulas by getting off at the second reference and at
that point applying internal law. Perhaps the opponents of the renvoi are a bit more consistent
for they look always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that greater
uniformity will result from adoption of their respective views. And still more strange is the fact
that the only way to achieve uniformity in this choice-of-law problem is if in the dispute the two
states whose laws form the legal basis of the litigation disagree as to whether the renvoi
should be accepted. If both reject, or both accept the doctrine, the result of the litigation will
vary with the choice of the forum. In the case stated above, had the Michigan court rejected
the renvoi, judgment would have been against the woman; if the suit had been brought in the
Illinois courts, and they too rejected the renvoi, judgment would be for the woman. The same
result would happen, though the courts would switch with respect to which would hold liability,
if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land is in
question, and where the validity of a decree of divorce is challenged. In these cases the
Conflict of Laws rule of the situs of the land, or the domicile of the parties in the divorce case,
is applied by the forum, but any further reference goes only to the internal law. Thus, a
person's title to land, recognized by the situs, will be recognized by every court; and every
divorce, valid by the domicile of the parties, will be valid everywhere. (Goodrich, Conflict of
Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in
Massachusetts, England, and France. The question arises as to how this property is to be
distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of
laws as to intestate succession to movables calls for an application of the law of the
deceased's last domicile. Since by hypothesis X's last domicile was France, the natural thing
for the Massachusetts court to do would be to turn to French statute of distributions, or
whatever corresponds thereto in French law, and decree a distribution accordingly. An
examination of French law, however, would show that if a French court were called upon to
determine how this property should be distributed, it would refer the distribution to the national
law of the deceased, thus applying the Massachusetts statute of distributions. So on the
surface of things the Massachusetts court has open to it alternative course of action: (a) either
to apply the French law is to intestate succession, or (b) to resolve itself into a French court
and apply the Massachusetts statute of distributions, on the assumption that this is what a
French court would do. If it accepts the so-called renvoi doctrine, it will follow the latter course,
thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the
forum refers to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter back
again to the law of the forum. This is renvoi in the narrower sense. The German term for this
judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as governing a
particular case, the further question may arise: Are the rules as to the conflict of laws
contained in such foreign law also to be resorted to? This is a question which, while it has
been considered by the courts in but a few instances, has been the subject of frequent
discussion by textwriters and essayists; and the doctrine involved has been descriptively
designated by them as the "Renvoyer" to send back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative answer to the question postulated and the operation
of the adoption of the foreign law in toto would in many cases result in returning the main
controversy to be decided according to the law of the forum. ... (16 C.J.S. 872.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the
national law is the internal law of California. But as above explained the laws of California have
prescribed two sets of laws for its citizens, one for residents therein and another for those
domiciled in other jurisdictions. Reason demands that We should enforce the California
internal law prescribed for its citizens residing therein, and enforce the conflict of laws rules for
the citizens domiciled abroad. If we must enforce the law of California as in comity we are
bound to go, as so declared in Article 16 of our Civil Code, then we must enforce the law of
California in accordance with the express mandate thereof and as above explained, i.e., apply
the internal law for residents therein, and its conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place
where the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of
the Civil Code of the Philippines and that the law to the contrary in the Philippines is the
provision in said Article 16 that the national law of the deceased should govern. This
contention can not be sustained. As explained in the various authorities cited above the
national law mentioned in Article 16 of our Civil Code is the law on conflict of laws in the
California Civil Code, i.e., Article 946, which authorizes the reference or return of the question
to the law of the testator's domicile. The conflict of laws rule in California, Article 946, Civil
Code, precisely refers back the case, when a decedent is not domiciled in California, to the law
of his domicile, the Philippines in the case at bar. The court of the domicile can not and should
not refer the case back to California; such action would leave the issue incapable of
determination because the case will then be like a football, tossed back and forth between the
two states, between the country of which the decedent was a citizen and the country of his
domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of
the state of the decedent, if the question has to be decided, especially as the application of the
internal law of California provides no legitime for children while the Philippine law, Arts. 887(4)
and 894, Civil Code of the Philippines, makes natural children legally acknowledged forced
heirs of the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105;
Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and
Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision can not
possibly apply in the case at bar, for two important reasons, i.e., the subject in each case does
not appear to be a citizen of a state in the United States but with domicile in the Philippines,
and it does not appear in each case that there exists in the state of which the subject is a
citizen, a law similar to or identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is
the Philippines, the validity of the provisions of his will depriving his acknowledged natural
child, the appellant, should be governed by the Philippine Law, the domicile, pursuant to Art.
946 of the Civil Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the
lower court with instructions that the partition be made as the Philippine law on succession
provides. Judgment reversed, with costs against appellees.
Padilla, Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and Makalintal,
JJ., concur.
Bengzon, C.J., took no part.

Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the
doctrine of renvoi is that the court of the forum, in determining the question before it, must take
into account the whole law of the other jurisdiction, but also its rules as to conflict of laws, and
then apply the law to the actual question which the rules of the other jurisdiction prescribe. This
may be the law of the forum. The doctrine of the renvoi has generally been repudiated by the
American authorities. (2 Am. Jur. 296)

The scope of the theory of renvoi has also been defined and the reasons for its application in a
country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918,
pp. 529-531. The pertinent parts of the article are quoted herein below:

The recognition of the renvoi theory implies that the rules of the conflict of laws are to be
understood as incorporating not only the ordinary or internal law of the foreign state or country,
but its rules of the conflict of laws as well. According to this theory 'the law of a country' means
the whole of its law.

xxx xxx xxx

Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel,
in 1900, in the form of the following theses:

(1) Every court shall observe the law of its country as regards the application of foreign laws.

(2) Provided that no express provision to the contrary exists, the court shall respect:

(a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as
regards their personal statute, and desires that said personal statute shall be determined by
the law of the domicile, or even by the law of the place where the act in question occurred.

(b) The decision of two or more foreign systems of law, provided it be certain that one of them
is necessarily competent, which agree in attributing the determination of a question to the
same system of law.

xxx xxx xxx

If, for example, the English law directs its judge to distribute the personal estate of an
Englishman who has died domiciled in Belgium in accordance with the law of his domicile, he
must first inquire whether the law of Belgium would distribute personal property upon death in
accordance with the law of domicile, and if he finds that the Belgian law would make the
distribution in accordance with the law of nationality — that is the English law — he must
accept this reference back to his own law.

We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule
applied in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of
laws rules of California are to be enforced jointly, each in its own intended and appropriate
sphere, the principle cited In re Kaufman should apply to citizens living in the State, but Article
946 should apply to such of its citizens as are not domiciled in California but in other
jurisdictions. The rule laid down of resorting to the law of the domicile in the determination of
matters with foreign element involved is in accord with the general principle of American law
that the domiciliary law should govern in most matters or rights which follow the person of the
owner.

When a man dies leaving personal property in one or more states, and leaves a will directing
the manner of distribution of the property, the law of the state where he was domiciled at the
time of his death will be looked to in deciding legal questions about the will, almost as
completely as the law of situs is consulted in questions about the devise of land. It is logical
that, since the domiciliary rules control devolution of the personal estate in case of intestate
succession, the same rules should determine the validity of an attempted testamentary
dispostion of the property. Here, also, it is not that the domiciliary has effect beyond the
borders of the domiciliary state. The rules of the domicile are recognized as controlling by the
Conflict of Laws rules at the situs property, and the reason for the recognition as in the case of
intestate succession, is the general convenience of the doctrine. The New York court has said
on the point: 'The general principle that a dispostiton of a personal property, valid at the
domicile of the owner, is valid anywhere, is one of the universal application. It had its origin in
that international comity which was one of the first fruits of civilization, and it this age, when
business intercourse and the process of accumulating property take but little notice of
boundary lines, the practical wisdom and justice of the rule is more apparent than ever.
(Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-54919 May 30, 1984
POLLY CAYETANO, petitioner,
vs.
HON. TOMAS T. LEONIDAS, in his capacity as the Presiding Judge of Branch XXXVIII, Court
of First Instance of Manila and NENITA CAMPOS PAGUIA, respondents.
Ermelo P. Guzman for petitioner.
Armando Z. Gonzales for private respondent.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari, seeking to annul the order of the respondent judge of
the Court of First Instance of Manila, Branch XXXVIII, which admitted to and allowed the
probate of the last will and testament of Adoracion C. Campos, after an ex-parte presentation
of evidence by herein private respondent.
On January 31, 1977, Adoracion C. Campos died, leaving her father, petitioner Hermogenes
Campos and her sisters, private respondent Nenita C. Paguia, Remedios C. Lopez and
Marieta C. Medina as the surviving heirs. As Hermogenes Campos was the only compulsory
heir, he executed an Affidavit of Adjudication under Rule 74, Section I of the Rules of Court
whereby he adjudicated unto himself the ownership of the entire estate of the deceased
Adoracion Campos.
Eleven months after, on November 25, 1977, Nenita C. Paguia filed a petition for the reprobate
of a will of the deceased, Adoracion Campos, which was allegedly executed in the United
States and for her appointment as administratrix of the estate of the deceased testatrix.
In her petition, Nenita alleged that the testatrix was an American citizen at the time of her
death and was a permanent resident of 4633 Ditman Street, Philadelphia, Pennsylvania,
U.S.A.; that the testatrix died in Manila on January 31, 1977 while temporarily residing with her
sister at 2167 Leveriza, Malate, Manila; that during her lifetime, the testatrix made her last wig
and testament on July 10, 1975, according to the laws of Pennsylvania, U.S.A., nominating
Wilfredo Barzaga of New Jersey as executor; that after the testatrix death, her last will and
testament was presented, probated, allowed, and registered with the Registry of Wins at the
County of Philadelphia, U.S.A., that Clement L. McLaughlin, the administrator who was
appointed after Dr. Barzaga had declined and waived his appointment as executor in favor of
the former, is also a resident of Philadelphia, U.S.A., and that therefore, there is an urgent
need for the appointment of an administratrix to administer and eventually distribute the
properties of the estate located in the Philippines.
On January 11, 1978, an opposition to the reprobate of the will was filed by herein petitioner
alleging among other things, that he has every reason to believe that the will in question is a
forgery; that the intrinsic provisions of the will are null and void; and that even if pertinent
American laws on intrinsic provisions are invoked, the same could not apply inasmuch as they
would work injustice and injury to him.
On December 1, 1978, however, the petitioner through his counsel, Atty. Franco Loyola, filed a
Motion to Dismiss Opposition (With Waiver of Rights or Interests) stating that he "has been
able to verify the veracity thereof (of the will) and now confirms the same to be truly the
probated will of his daughter Adoracion." Hence, an ex-parte presentation of evidence for the
reprobate of the questioned will was made.
On January 10, 1979, the respondent judge issued an order, to wit:
At the hearing, it has been satisfactorily established that Adoracion C. Campos, in her lifetime,
was a citizen of the United States of America with a permanent residence at 4633 Ditman
Street, Philadelphia, PA 19124, (Exhibit D) that when alive, Adoracion C. Campos executed a
Last Will and Testament in the county of Philadelphia, Pennsylvania, U.S.A., according to the
laws thereat (Exhibits E-3 to E-3-b) that while in temporary sojourn in the Philippines,
Adoracion C. Campos died in the City of Manila (Exhibit C) leaving property both in the
Philippines and in the United States of America; that the Last Will and Testament of the late
Adoracion C. Campos was admitted and granted probate by the Orphan's Court Division of the
Court of Common Pleas, the probate court of the Commonwealth of Pennsylvania, County of
Philadelphia, U.S.A., and letters of administration were issued in favor of Clement J.
McLaughlin all in accordance with the laws of the said foreign country on procedure and
allowance of wills (Exhibits E to E-10); and that the petitioner is not suffering from any
disqualification which would render her unfit as administratrix of the estate in the Philippines of
the late Adoracion C. Campos.
WHEREFORE, the Last Will and Testament of the late Adoracion C. Campos is hereby
admitted to and allowed probate in the Philippines, and Nenita Campos Paguia is hereby
appointed Administratrix of the estate of said decedent; let Letters of Administration with the
Will annexed issue in favor of said Administratrix upon her filing of a bond in the amount of
P5,000.00 conditioned under the provisions of Section I, Rule 81 of the Rules of Court.
Another manifestation was filed by the petitioner on April 14, 1979, confirming the withdrawal
of his opposition, acknowledging the same to be his voluntary act and deed.
On May 25, 1979, Hermogenes Campos filed a petition for relief, praying that the order
allowing the will be set aside on the ground that the withdrawal of his opposition to the same
was secured through fraudulent means. According to him, the "Motion to Dismiss Opposition"
was inserted among the papers which he signed in connection with two Deeds of Conditional
Sales which he executed with the Construction and Development Corporation of the
Philippines (CDCP). He also alleged that the lawyer who filed the withdrawal of the opposition
was not his counsel-of-record in the special proceedings case.
The petition for relief was set for hearing but the petitioner failed to appear. He made several
motions for postponement until the hearing was set on May 29, 1980.
On May 18, 1980, petitioner filed another motion entitled "Motion to Vacate and/or Set Aside
the Order of January 10, 1979, and/or dismiss the case for lack of jurisdiction. In this motion,
the notice of hearing provided:
Please include this motion in your calendar for hearing on May 29, 1980 at 8:30 in the morning
for submission for reconsideration and resolution of the Honorable Court. Until this Motion is
resolved, may I also request for the future setting of the case for hearing on the Oppositor's
motion to set aside previously filed.
The hearing of May 29, 1980 was re-set by the court for June 19, 1980. When the case was
called for hearing on this date, the counsel for petitioner tried to argue his motion to vacate
instead of adducing evidence in support of the petition for relief. Thus, the respondent judge
issued an order dismissing the petition for relief for failure to present evidence in support
thereof. Petitioner filed a motion for reconsideration but the same was denied. In the same
order, respondent judge also denied the motion to vacate for lack of merit. Hence, this petition.
Meanwhile, on June 6,1982, petitioner Hermogenes Campos died and left a will, which,
incidentally has been questioned by the respondent, his children and forced heirs as, on its
face, patently null and void, and a fabrication, appointing Polly Cayetano as the executrix of his
last will and testament. Cayetano, therefore, filed a motion to substitute herself as petitioner in
the instant case which was granted by the court on September 13, 1982.
A motion to dismiss the petition on the ground that the rights of the petitioner Hermogenes
Campos merged upon his death with the rights of the respondent and her sisters, only
remaining children and forced heirs was denied on September 12, 1983.
Petitioner Cayetano persists with the allegations that the respondent judge acted without or in
excess of his jurisdiction when:
1) He ruled the petitioner lost his standing in court deprived the Right to Notice (sic)
upon the filing of the Motion to Dismiss opposition with waiver of rights or interests against the
estate of deceased Adoracion C. Campos, thus, paving the way for the hearing ex-parte of the
petition for the probate of decedent will.
2) He ruled that petitioner can waive, renounce or repudiate (not made in a public or
authenticated instrument), or by way of a petition presented to the court but by way of a motion
presented prior to an order for the distribution of the estate-the law especially providing that
repudiation of an inheritance must be presented, within 30 days after it has issued an order for
the distribution of the estate in accordance with the rules of Court.
3) He ruled that the right of a forced heir to his legitime can be divested by a decree
admitting a will to probate in which no provision is made for the forced heir in complete
disregard of Law of Succession
4) He denied petitioner's petition for Relief on the ground that no evidence was
adduced to support the Petition for Relief when no Notice nor hearing was set to afford
petitioner to prove the merit of his petition — a denial of the due process and a grave abuse of
discretion amounting to lack of jurisdiction.
5) He acquired no jurisdiction over the testate case, the fact that the Testator at the
time of death was a usual resident of Dasmariñas, Cavite, consequently Cavite Court of First
Instance has exclusive jurisdiction over the case (De Borja vs. Tan, G.R. No. L-7792, July
1955).
The first two issues raised by the petitioner are anchored on the allegation that the respondent
judge acted with grave abuse of discretion when he allowed the withdrawal of the petitioner's
opposition to the reprobate of the will.
We find no grave abuse of discretion on the part of the respondent judge. No proof was
adduced to support petitioner's contention that the motion to withdraw was secured through
fraudulent means and that Atty. Franco Loyola was not his counsel of record. The records
show that after the firing of the contested motion, the petitioner at a later date, filed a
manifestation wherein he confirmed that the Motion to Dismiss Opposition was his voluntary
act and deed. Moreover, at the time the motion was filed, the petitioner's former counsel, Atty.
Jose P. Lagrosa had long withdrawn from the case and had been substituted by Atty. Franco
Loyola who in turn filed the motion. The present petitioner cannot, therefore, maintain that the
old man's attorney of record was Atty. Lagrosa at the time of filing the motion. Since the
withdrawal was in order, the respondent judge acted correctly in hearing the probate of the will
ex-parte, there being no other opposition to the same.
The third issue raised deals with the validity of the provisions of the will. As a general rule, the
probate court's authority is limited only to the extrinsic validity of the will, the due execution
thereof, the testatrix's testamentary capacity and the compliance with the requisites or
solemnities prescribed by law. The intrinsic validity of the will normally comes only after the
court has declared that the will has been duly authenticated. However, where practical
considerations demand that the intrinsic validity of the will be passed upon, even before it is
probated, the court should meet the issue. (Maninang vs. Court of Appeals, 114 SCRA 478).
In the case at bar, the petitioner maintains that since the respondent judge allowed the
reprobate of Adoracion's will, Hermogenes C. Campos was divested of his legitime which was
reserved by the law for him.
This contention is without merit.
Although on its face, the will appeared to have preterited the petitioner and thus, the
respondent judge should have denied its reprobate outright, the private respondents have
sufficiently established that Adoracion was, at the time of her death, an American citizen and a
permanent resident of Philadelphia, Pennsylvania, U.S.A. Therefore, under Article 16 par. (2)
and 1039 of the Civil Code which respectively provide:
Art. 16 par. (2).
xxx xxx xxx
However, intestate and testamentary successions, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country wherein said
property may be found.
Art. 1039.
Capacity to succeed is governed by the law of the nation of the decedent.
the law which governs Adoracion Campo's will is the law of Pennsylvania, U.S.A., which is the
national law of the decedent. Although the parties admit that the Pennsylvania law does not
provide for legitimes and that all the estate may be given away by the testatrix to a complete
stranger, the petitioner argues that such law should not apply because it would be contrary to
the sound and established public policy and would run counter to the specific provisions of
Philippine Law.
It is a settled rule that as regards the intrinsic validity of the provisions of the will, as provided
for by Article 16(2) and 1039 of the Civil Code, the national law of the decedent must apply.
This was squarely applied in the case of Bellis v. Bellis (20 SCRA 358) wherein we ruled:
It is therefore evident that whatever public policy or good customs may be involved in our
system of legitimes, Congress has not intended to extend the same to the succession of
foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional
rights, to the decedent's national law. Specific provisions must prevail over general ones.
xxx xxx xxx
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas,
U.S.A., and under the law of Texas, there are no forced heirs or legitimes. Accordingly, since
the intrinsic validity of the provision of the will and the amount of successional rights are to be
determined under Texas law, the Philippine Law on legitimes cannot be applied to the testacy
of Amos G. Bellis.
As regards the alleged absence of notice of hearing for the petition for relief, the records wig
bear the fact that what was repeatedly scheduled for hearing on separate dates until June 19,
1980 was the petitioner's petition for relief and not his motion to vacate the order of January
10, 1979. There is no reason why the petitioner should have been led to believe otherwise.
The court even admonished the petitioner's failing to adduce evidence when his petition for
relief was repeatedly set for hearing. There was no denial of due process. The fact that he
requested "for the future setting of the case for hearing . . ." did not mean that at the next
hearing, the motion to vacate would be heard and given preference in lieu of the petition for
relief. Furthermore, such request should be embodied in a motion and not in a mere notice of
hearing.
Finally, we find the contention of the petition as to the issue of jurisdiction utterly devoid of
merit. Under Rule 73, Section 1, of the Rules of Court, it is provided that:
SECTION 1. Where estate of deceased persons settled. — If the decedent is an inhabitant of
the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or
letters of administration granted, and his estate settled, in the Court of First Instance in the
province in which he resided at the time of his death, and if he is an inhabitant of a foreign
country, the Court of First Instance of any province in which he had estate. The court first
taking cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to
the exclusion of all other courts. The jurisdiction assumed by a court, so far as it depends on
the place of residence of the decedent, or of the location of his estate, shall not be contested in
a suit or proceeding, except in an appeal from that court, in the original case, or when the want
of jurisdiction appears on the record.

Therefore, the settlement of the estate of Adoracion Campos was correctly filed with the Court
of First Instance of Manila where she had an estate since it was alleged and proven that
Adoracion at the time of her death was a citizen and permanent resident of Pennsylvania,
United States of America and not a "usual resident of Cavite" as alleged by the petitioner.
Moreover, petitioner is now estopped from questioning the jurisdiction of the probate court in
the petition for relief. It is a settled rule that a party cannot invoke the jurisdiction of a court to
secure affirmative relief, against his opponent and after failing to obtain such relief, repudiate
or question that same jurisdiction. (See Saulog Transit, Inc. vs. Hon. Manuel Lazaro, et al., G.
R. No. 63 284, April 4, 1984).

WHEREFORE, the petition for certiorari and prohibition is hereby dismissed for lack of merit.

SO ORDERED.
G.R. No. 124371 November 23, 2000
PAULA T. LLORENTE, petitioner,
vs.
COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals1 modifying that of the
Regional Trial Court, Camarines Sur, Branch 35, Iriga City2 declaring respondent Alicia F.
Llorente (herinafter referred to as "Alicia"), as co-owners of whatever property she and the
deceased Lorenzo N. Llorente (hereinafter referred to as "Lorenzo") may have acquired during
the twenty-five (25) years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from
March 10, 1927 to September 30, 1957.3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as
"Paula") were married before a parish priest, Roman Catholic Church, in Nabua, Camarines
Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula
stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.5
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of
Naturalization No. 5579816 was issued in his favor by the United States District Court,
Southern District of New York.6
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an
accrued leave by the U. S. Navy, to visit his wife and he visited the Philippines.7 He
discovered that his wife Paula was pregnant and was "living in" and having an adulterous
relationship with his brother, Ceferino Llorente.8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of
Nabua as "Crisologo Llorente," with the certificate stating that the child was not legitimate and
the line for the father’s name was left blank.9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple
drew a written agreement to the effect that (1) all the family allowances allotted by the United
States Navy as part of Lorenzo’s salary and all other obligations for Paula’s daily maintenance
and support would be suspended; (2) they would dissolve their marital union in accordance
with judicial proceedings; (3) they would make a separate agreement regarding their conjugal
property acquired during their marital life; and (4) Lorenzo would not prosecute Paula for her
adulterous act since she voluntarily admitted her fault and agreed to separate from Lorenzo
peacefully. The agreement was signed by both Lorenzo and Paula and was witnessed by
Paula’s father and stepmother. The agreement was notarized by Notary Public Pedro
Osabel.10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the
Superior Court of the State of California in and for the County of San Diego. Paula was
represented by counsel, John Riley, and actively participated in the proceedings. On
November 27, 1951, the Superior Court of the State of California, for the County of San Diego
found all factual allegations to be true and issued an interlocutory judgment of divorce.11
On December 4, 1952, the divorce decree became final.12
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.13 Apparently, Alicia had no
knowledge of the first marriage even if they resided in the same town as Paula, who did not
oppose the marriage or cohabitation.14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife.15 Their twenty-five
(25) year union produced three children, Raul, Luz and Beverly, all surnamed Llorente.16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by
Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco
Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to
Alicia and their three children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and
lot, located at San Francisco, Nabua, Camarines Sur, Philippines, including ALL the personal
properties and other movables or belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F.
Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real properties
whatsoever and wheresoever located, specifically my real properties located at Barangay Aro-
Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras,
Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua,
Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my
children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real
properties located in Quezon City Philippines, and covered by Transfer Certificate of Title No.
188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title
Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal, Philippines;
"(4) That their respective shares in the above-mentioned properties, whether real or personal
properties, shall not be disposed of, ceded, sold and conveyed to any other persons, but could
only be sold, ceded, conveyed and disposed of by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and
Testament, and in her default or incapacity of the latter to act, any of my children in the order
of age, if of age;
"(6) I hereby direct that the executor named herein or her lawful substitute should served (sic)
without bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore
executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the
Llorente’s Side should ever bother and disturb in any manner whatsoever my wife Alicia R.
Fortunato and my children with respect to any real or personal properties I gave and
bequeathed respectively to each one of them by virtue of this Last Will and Testament."17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a
petition for the probate and allowance of his last will and testament wherein Lorenzo moved
that Alicia be appointed Special Administratrix of his estate.18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo
was still alive.19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to
probate.20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.21
On September 4, 1985, Paula filed with the same court a petition22 for letters of administration
over Lorenzo’s estate in her favor. Paula contended (1) that she was Lorenzo’s surviving
spouse, (2) that the various property were acquired during their marriage, (3) that Lorenzo’s
will disposed of all his property in favor of Alicia and her children, encroaching on her legitime
and 1/2 share in the conjugal property.23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition
for the issuance of letters testamentary.24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due
course to Paula’s petition in Sp. Proc. No. IR-888.25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star".26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
"Wherefore, considering that this court has so found that the divorce decree granted to the late
Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he
contracted with Alicia Fortunato on January 16, 1958 at Manila is likewise void. This being so
the petition of Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise,
she is not entitled to receive any share from the estate even if the will especially said so her
relationship with Lorenzo having gained the status of paramour which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so
declares the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void
and declares her entitled as conjugal partner and entitled to one-half of their conjugal
properties, and as primary compulsory heir, Paula T. Llorente is also entitled to one-third of the
estate and then one-third should go to the illegitimate children, Raul, Luz and Beverly, all
surname (sic) Llorente, for them to partition in equal shares and also entitled to the remaining
free portion in equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased,
Lorenzo Llorente. As such let the corresponding letters of administration issue in her favor
upon her filing a bond in the amount (sic) of P100,000.00 conditioned for her to make a return
to the court within three (3) months a true and complete inventory of all goods, chattels, rights,
and credits, and estate which shall at any time come to her possession or to the possession of
any other person for her, and from the proceeds to pay and discharge all debts, legacies and
charges on the same, or such dividends thereon as shall be decreed or required by this court;
to render a true and just account of her administration to the court within one (1) year, and at
any other time when required by the court and to perform all orders of this court by her to be
performed.
"On the other matters prayed for in respective petitions for want of evidence could not be
granted.
"SO ORDERED."27
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted
decision.28
On September 14, 1987, the trial court denied Alicia’s motion for reconsideration but modified
its earlier decision, stating that Raul and Luz Llorente are not children "legitimate or otherwise"
of Lorenzo since they were not legally adopted by him.29 Amending its decision of May 18,
1987, the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling
her to one-third (1/3) of the estate and one-third (1/3) of the free portion of the estate.30
On September 28, 1987, respondent appealed to the Court of Appeals.31
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification
the decision of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION
that Alicia is declared as co-owner of whatever properties she and the deceased may have
acquired during the twenty-five (25) years of cohabitation.
"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of
the decision.33
On March 21, 1996, the Court of Appeals,34 denied the motion for lack of merit.
Hence, this petition.35
The Issue
Stripping the petition of its legalese and sorting through the various arguments raised,36 the
issue is simple. Who are entitled to inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial
court for ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long before and at the
time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4)
death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
The Civil Code clearly provides:
"Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity
of persons are binding upon citizens of the Philippines, even though living abroad.
"Art. 16. Real property as well as personal property is subject to the law of the country where it
is situated.
"However, intestate and testamentary succession, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country wherein said
property may be found." (emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized
to take judicial notice of them. Like any other fact, they must be alleged and proved.37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the
foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine,
where the case was "referred back" to the law of the decedent’s domicile, in this case,
Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in
the same breath it made the categorical, albeit equally unproven statement that "American law
follows the ‘domiciliary theory’ hence, Philippine law applies when determining the validity of
Lorenzo’s will.38
First, there is no such thing as one American law.1ªwph!1 The "national law" indicated in
Article 16 of the Civil Code cannot possibly apply to general American law. There is no such
law governing the validity of testamentary provisions in the United States. Each State of the
union has its own law applicable to its citizens and in force only within the State. It can
therefore refer to no other than the law of the State of which the decedent was a resident.39
Second, there is no showing that the application of the renvoi doctrine is called for or required
by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in favor
of Alice, who in the trial court’s opinion was a mere paramour. The trial court threw the will out,
leaving Alice, and her two children, Raul and Luz, with nothing.

The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of
whatever property she and Lorenzo acquired during their cohabitation, applying Article 144 of
the Civil Code of the Philippines.

The hasty application of Philippine law and the complete disregard of the will, already probated
as duly executed in accordance with the formalities of Philippine law, is fatal, especially in light
of the factual and legal circumstances here obtaining.

Validity of the Foreign Divorce

In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle embodied in Article
15 of the Civil Code, only Philippine nationals are covered by the policy against absolute
divorces, the same being considered contrary to our concept of public policy and morality. In
the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid
according to their national law.

Citing this landmark case, the Court held in Quita v. Court of Appeals,41 that once proven that
respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the
ruling in Van Dorn would become applicable and petitioner could "very well lose her right to
inherit" from him.

In Pilapil v. Ibay-Somera,42 we recognized the divorce obtained by the respondent in his

country, the Federal Republic of Germany. There, we stated that divorce and its legal effects
may be recognized in the Philippines insofar as respondent is concerned in view of the
nationality principle in our civil law on the status of persons.

For failing to apply these doctrines, the decision of the Court of Appeals must be reversed.43
We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid
and recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to
the succession to the estate of the decedent) are matters best left to the determination of the
trial court.

Validity of the Will

The Civil Code provides:

"Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be
governed by the laws of the country in which they are executed.

"When the acts referred to are executed before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the solemnities established by Philippine laws
shall be observed in their execution." (underscoring ours)

The clear intent of Lorenzo to bequeath his property to his second wife and children by her is
glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a
foreigner, not covered by our laws on "family rights and duties, status, condition and legal
capacity."44

Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved
by foreign law which must be pleaded and proved. Whether the will was executed in
accordance with the formalities required is answered by referring to Philippine law. In fact, the
will was duly probated.

As a guide however, the trial court should note that whatever public policy or good customs
may be involved in our system of legitimes, Congress did not intend to extend the same to the
succession of foreign nationals. Congress specifically left the amount of successional rights to
the decedent's national law.45

Having thus ruled, we find it unnecessary to pass upon the other issues raised.

The Fallo

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP
No. 17446 promulgated on July 31, 1995 is SET ASIDE.

In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and
RECOGNIZES as VALID the decree of divorce granted in favor of the deceased Lorenzo N.
Llorente by the Superior Court of the State of California in and for the County of San Diego,
made final on December 4, 1952.

Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic
validity of Lorenzo N. Llorente’s will and determination of the parties’ successional rights
allowing proof of foreign law with instructions that the trial court shall proceed with all
deliberate dispatch to settle the estate of the deceased within the framework of the Rules of
Court.

No costs.

SO ORDERED.