INTRODUCTION After Celestina's death, Ursulina had been sharing the
produce of the donated properties with private
G.R. No. 123968 April 24, 2003
URSULINA GANUELAS, METODIO GANUELAS and
ANTONIO GANUELAS, petitioners,
vs.
HON. ROBERT T. CAWED, Judge of the Regional
Trial Court of San Fernando, La Union (Branch
29), LEOCADIA G. FLORES, FELICITACION G.
AGTARAP, CORAZON G. SIPALAY and ESTATE OF
ROMANA GANUELAS DE LA ROSA, represented by
GREGORIO DELA ROSA,
Administrator, respondents.
CARPIO MORALES, J.:
The present petition for review under Rule 45 of the Rules
of Court assails, on a question of law, the February 22,
1996 decision 1 of the Regional Trial Court of San
Fernando, La Union, Branch 29, in Civil Case No. 3947, an
action for declaration of nullity of a deed of donation.
The facts, as culled from the records of the case, are as
follows:
On April 11, 1958, Celestina Ganuelas Vda. de Valin
(Celestina) executed a Deed of Donation of Real Property
2 covering seven parcels of land in favor of her niece
Ursulina Ganuelas (Ursulina), one of herein petitioners.
The pertinent provision of the deed of donation reads,
quoted verbatim:
xxx xxx xxx
That, for and in consideration of the love and
affection which the DONOR has for the DONEE,
and of the faithful services the latter has rendered
in the past to the former, the said DONOR does
by these presents transfer and convey, by way of
DONATION, unto the DONEE the property above,
described, to become effective upon the death of
the DONOR; but in the event that the DONEE
should die before the DONOR, the present
donation shall be deemed rescinded and of no
further force and effect.
xxx xxx xxx.3
On June 10, 1967, Celestina executed a document
denominated as Revocation of Donation 4 purporting to
set aside the deed of donation. More than a month later
or on August 18, 1967, Celestina died without issue and
any surviving ascendants and siblings.
respondents Leocadia G. Flores, et al., nieces of Celestina.
In 1982, or twenty-four years after the execution of the
Deed of Donation, Ursulina secured the corresponding tax
declarations, in her name, over the donated properties, to
wit: Tax Declarations Nos. 18108, 18109, 18110, 18111,
18112, 18113 and 18114, and since then, she refused to
give private respondents any share in the produce of the
properties despite repeated demands.
Private respondents were thus prompted to file on May
26, 1986 with the RTC of San Fernando, La Union a
complaint5 against Ursulina, along with Metodio Ganuelas
and Antonio Ganuelas who were alleged to be unwilling
plaintiffs. The complaint alleged that the Deed of
Donation executed by Celestina in favor of Ursulina was
void for lack of acknowledgment by the attesting
witnesses thereto before notary public Atty. Henry
Valmonte, and the donation was a disposition mortis
causa which failed to comply with the provisions of the
Civil Code regarding formalities of wills and testaments,
hence, it was void. The plaintiffs-herein private
respondents thus prayed that judgment be rendered
ordering Ursulina to return to them as intestate heirs the
possession and ownership of the properties. They likewise
prayed for the cancellation of the tax declarations secured
in the name of Ursulina, the partition of the properties
among the intestate heirs of Celestina, and the rendering
by Ursulina of an accounting of all the fruits of the
properties since 1982 and for her to return or pay the
value of their shares.
The defendants-herein petitioners alleged in their
Answer6 that the donation in favor of Ursulina was inter
vivos as contemplated under Article 729 of the Civil
Code,7 hence, the deed did not have to comply with the
requirements for the execution of a valid will; the
Revocation of Donation is null and void as the ground
mentioned therein is not among those provided by law to
be the basis thereof; and at any rate, the revocation could
only be legally enforced upon filing of the appropriate
complaint in court within the prescriptive period provided
by law, which period had, at the time the complaint was
filed, already lapsed.
By Decision of February 22, 1996, the trial court, holding
that the provision in the Deed of Donation that in the
event that the DONEE should predecease the DONOR, the
"donation shall be deemed rescinded and of no further
force and effect" is an explicit indication that the deed is
a donation mortis causa,8 found for the plaintiffs-herein
private respondents, thus:
WHEREFORE the Court renders judgment
declaring null and void the Deed of Donation of
Real Property executed by Celestina Ganuelas,
 and orders the partition of the estate of Celestina
among the intestate heirs.
SO ORDERED.9
The trial court also held that the absence of a reservation
clause in the deed implied that Celestina retained
complete dominion over her properties, thus supporting
the conclusion that the donation is mortis causa,10 and
that while the deed contained an attestation clause and
an acknowledgment showing the intent of the donor to
effect a postmortem disposition, the acknowledgment
was defective as only the donor and donee appear to have
acknowledged the deed before the notary public, thereby
rendering the entire document void.11
Lastly, the trial court held that the subsequent execution
by Celestina of the Revocation of Donation showed that
the donor intended the revocability of the donation ad
nutum, thus sustaining its finding that the conveyance
was mortis causa.12
On herein petitioners' argument that the Revocation of
Donation was void as the ground mentioned therein is not
one of those allowed by law to be a basis for revocation,
the trial court held that the legal grounds for such
revocation as provided under the Civil Code arise only in
cases of donations inter vivos, but not in donations mortis
causa which are revocable at will during the lifetime of
the donor. The trial court held, in any event, that given
the nullity of the disposition mortis causa in view of a
failure to comply with the formalities required therefor,
the Deed of Revocation was a superfluity.13
Hence, the instant petition for review, petitioners
contending that the trial court erred:
I. . . . WHEN IT DECLARED NULL AND VOID THE
DONATION EXECUTED BY CELESTINA
GANUELAS;
II. . . . WHEN IT UPHELD THE REVOCATION OF
DONATION;
III. . . . IN RENDERING ITS DECISION ADVERSE
TO PETITIONER URSULINA GANUELAS.14
Petitioners argue that the donation contained in the deed
is inter vivos as the main consideration for its execution
was the donor's affection for the donee rather than the
donor's death;15 that the provision on the effectivity of the
donation — after the donor's death — simply meant that
absolute ownership would pertain to the donee on the
donor's death;16 and that since the donation is inter vivos,
it may be revoked only for the reasons provided in Articles
760,17 76418 and 76519 of the Civil Code.
In a letter of March 16, 1998,20 private respondent
Corazon Sipalay, reacting to this Court's January 28, 1998
Resolution requiring private respondents "to SHOW
CAUSE why they should not be disciplinarily dealt with or
held in contempt" for failure to submit the name and
address of their new counsel, explains that they are no
longer interested in pursuing the case and are "willing and
ready to waive whatever rights" they have over the
properties subject of the donation. Petitioners, who were
required to comment on the letter, by Comment of
October 28, 1998,21 welcome private respondents'
gesture but pray that "for the sake of enriching
jurisprudence, their [p]etition be given due course and
resolved."
The issue is thus whether the donation is inter
vivos or mortis causa.
Crucial in the resolution of the issue is the determination
of whether the donor intended to transfer the ownership
over the properties upon the execution of the deed.22
Donation inter vivos differs from donation mortis causa in
that in the former, the act is immediately operative even
if the actual execution may be deferred until the death of
the donor, while in the latter, nothing is conveyed to or
acquired by the donee until the death of the donor-
testator.23 The following ruling of this Court in Alejandro
v. Geraldez is illuminating:24
If the donation is made in contemplation of the
donor's death, meaning that the full or naked
ownership of the donated properties will pass to
the donee only because of the donor's death,
then it is at that time that the donation takes
effect, and it is a donation mortis causa which
should be embodied in a last will and testament.
But if the donation takes effect during the donor's
lifetime or independently of the donor's death,
meaning that the full or naked ownership (nuda
proprietas) of the donated properties passes to
the donee during the donor's lifetime, not by
reason of his death but because of the deed of
donation, then the donation is inter vivos.
The distinction between a transfer inter vivos and mortis
causa is important as the validity or revocation of the
donation depends upon its nature. If the donation is inter
vivos, it must be executed and accepted with the
formalities prescribed by Articles 74825 and 74926 of the
Civil Code, except when it is onerous in which case the
rules on contracts will apply. If it is mortis causa, the
donation must be in the form of a will, with all the
formalities for the validity of wills, otherwise it is void and
cannot transfer ownership.27
The distinguishing characteristics of a donation mortis
causa are the following:
1. It conveys no title or ownership to the
transferee before the death of the transferor; or,
what amounts to the same thing, that the
transferor should retain the ownership (full or
naked) and control of the property while alive;
2. That before his death, the transfer should be
revocable by the transferor at will, ad nutum; but
revocability may be provided for indirectly by
means of a reserved power in the donor to
dispose of the properties conveyed;
3. That the transfer should be void if the
transferor should survive the transferee.28
In the donation subject of the present case, there is
nothing therein which indicates that any right, title or
interest in the donated properties was to be transferred
to Ursulina prior to the death of Celestina.
The phrase "to become effective upon the death of the
DONOR" admits of no other interpretation but that
Celestina intended to transfer the ownership of the
properties to Ursulina on her death, not during her
lifetime.29
More importantly, the provision in the deed stating that if
the donee should die before the donor, the donation shall
be deemed rescinded and of no further force and effect
shows that the donation is a postmortem disposition.
As stated in a long line of cases, one of the decisive
characteristics of a donation mortis causa is that the
transfer should be considered void if the donor should
survive the donee.30
More. The deed contains an attestation clause expressly
confirming the donation as mortis causa:
SIGNED by the above-named donor, Celestina
Ganuelas, at the foot of this deed of donation
mortis causa, consisting of two (2) pages and on
the left margin of each and every page thereof in
the joint presence of all of us who at her request
and in her presence and that of each other have
in like manner subscribed our names as
witnesses.31 (Emphasis supplied)
To classify the donation as inter vivos simply because it is
founded on considerations of love and affection is
erroneous. That the donation was prompted by the
affection of the donor for the donee and the services
rendered by the latter is of no particular significance in
determining whether the deed constitutes a transfer inter
vivos or not, because a legacy may have an identical
motivation.32 In other words, love and affection may also
underline transfers mortis causa.33
In Maglasang v. Heirs of Cabatingan,34 the deeds of
donation contained provisions almost identical to those
found in the deed subject of the present case:
That for and in consideration of the love and
affection of the DONOR for the DONEE, x x x. the
DONOR does hereby, by these presents, transfer,
convey, by way of donation, unto the DONEE the
above-described property, together with the
buildings and all improvements existing
thereon, to become effective upon the death of
the DONOR; PROVIDED, HOWEVER, that in the
event that the DONEE should die before the
DONOR, the present donation shall be deemed
automatically rescinded and of no further force
and effect. (Emphasis supplied)
In that case, this Court held that the donations
were mortis causa, for the above-quoted provision
conclusively establishes the donor's intention to transfer
the ownership and possession of the donated property to
the donee only after the former's death. Like in the
present case, the deeds therein did not contain any clear
provision that purports to pass proprietary rights to the
donee prior to the donor's death.
As the subject deed then is in the nature of a mortis causa
disposition, the formalities of a will under Article 728 of
the Civil Code should have been complied with, failing
which the donation is void and produces no effect.35
As noted by the trial court, the attesting witnesses failed
to acknowledge the deed before the notary public, thus
violating Article 806 of the Civil Code which provides:
Art. 806. Every will must be acknowledged before
a notary public by the testator and the witnesses.
The notary public shall not be required to retain
a copy of the will, or file another with the office
of the Clerk of Court. (Emphasis supplied)
The trial court did not thus commit any reversible error in
declaring the Deed of Donation to be mortis causa.
WHEREFORE, the petition is hereby DENIED for lack of
merit.
SO ORDERED.
 INTRODUCTION
G.R. No. 172804 January 24, 2011
GONZALO VILLANUEVA, represented by his
heirs, Petitioner,
vs.
SPOUSES FROILAN and LEONILA
BRANOCO, Respondents.
DECISION
CARPIO, J.:
The Case
This resolves the petition for review1 of the ruling2 of the
Court of Appeals dismissing a suit to recover a realty.
The Facts
Petitioner Gonzalo Villanueva (petitioner), here
represented by his heirs,3 sued respondents, spouses
Froilan and Leonila Branoco (respondents), in the
Regional Trial Court of Naval, Biliran (trial court) to
recover a 3,492 square-meter parcel of land in
Amambajag, Culaba, Leyte (Property) and collect
damages. Petitioner claimed ownership over the Property
through purchase in July 1971 from Casimiro Vere (Vere),
who, in turn, bought the Property from Alvegia Rodrigo
(Rodrigo) in August 1970. Petitioner declared the Property
in his name for tax purposes soon after acquiring it.
In their Answer, respondents similarly claimed ownership
over the Property through purchase in July 1983 from
Eufracia Rodriguez (Rodriguez) to whom Rodrigo donated
the Property in May 1965. The two-page deed of donation
(Deed), signed at the bottom by the parties and two
witnesses, reads in full:
KNOW ALL MEN BY THESE PRESENTS:
That I, ALVEGIA RODRIGO, Filipino, of legal age, widow
of the late Juan Arcillas, a resident of Barrio Bool,
municipality of Culaba, subprovince of Biliran, Leyte del
Norte, Philippines, hereby depose and say:
That as we live[d] together as husband and wife with
Juan Arcillas, we begot children, namely: LUCIO,
VICENTA, SEGUNDINA, and ADELAIDA, all surnamed
ARCILLAS, and by reason of poverty which I suffered
while our children were still young; and because my
husband Juan Arcillas aware as he was with our
destitution separated us [sic] and left for Cebu; and from
then on never cared what happened to his family; and
because of that one EUFRACIA RODRIGUEZ, one of my
nieces who also suffered with our poverty, obedient as
she was to all the works in our house, and because of the
love and affection which I feel [for] her, I have one parcel
of land located at Sitio Amambajag, Culaba, Leyte bearing
Tax Decl. No. 1878 declared in the name of Alvegia
Rodrigo, I give (devise) said land in favor of EUFRACIA
RODRIGUEZ, her heirs, successors, and assigns together
with all the improvements existing thereon, which parcel
of land is more or less described and bounded as follows:
1. Bounded North by Amambajag River; East, Benito
Picao; South, Teofilo Uyvico; and West, by Public land; 2.
It has an area of 3,492 square meters more or less; 3. It
is planted to coconuts now bearing fruits; 4. Having an
assessed value of ₱240.00; 5. It is now in the possession
of EUFRACIA RODRIGUEZ since May 21, 1962 in the
concept of an owner, but the Deed of Donation or that
ownership be vested on her upon my demise.
That I FURTHER DECLARE, and I reiterate that the land
above described, I already devise in favor of EUFRACIA
RODRIGUEZ since May 21, 1962, her heirs, assigns, and
that if the herein Donee predeceases me, the same land
will not be reverted to the Donor, but will be inherited by
the heirs of EUFRACIA RODRIGUEZ;
That I EUFRACIA RODRIGUEZ, hereby accept the land
above described from Inay Alvegia Rodrigo and I am
much grateful to her and praying further for a longer life;
however, I will give one half (1/2) of the produce of the
land to Apoy Alve during her lifetime.4
Respondents entered the Property in 1983 and paid taxes
afterwards.
The Ruling of the Trial Court
The trial court ruled for petitioner, declared him owner of
the Property, and ordered respondents to surrender
possession to petitioner, and to pay damages, the value
of the Property’s produce since 1982 until petitioner’s
repossession and the costs.5 The trial court rejected
respondents’ claim of ownership after treating the Deed
as a donation mortis causa which Rodrigo effectively
cancelled by selling the Property to Vere in 1970. 6 Thus,
by the time Rodriguez sold the Property to respondents in
1983, she had no title to transfer.
Respondents appealed to the Court of Appeals (CA),
imputing error in the trial court’s interpretation of the
Deed as a testamentary disposition instead of an inter
vivos donation, passing title to Rodriguez upon its
execution.
Ruling of the Court of Appeals
The CA granted respondents’ appeal and set aside the
trial court’s ruling. While conceding that the "language of
the [Deed is] x x x confusing and which could admit of
possible different interpretations,"7 the CA found the
following factors pivotal to its reading of the Deed as
donation inter vivos: (1) Rodriguez had been in
possession of the Property as owner since 21 May 1962,
subject to the delivery of part of the produce to Apoy Alve;
(2) the Deed’s consideration was not Rodrigo’s death but
her "love and affection" for Rodriguez, considering the
services the latter rendered; (3) Rodrigo waived dominion
over the Property in case Rodriguez predeceases her,
implying its inclusion in Rodriguez’s estate; and (4)
Rodriguez accepted the donation in the Deed itself, an act
necessary to effectuate donations inter vivos, not
devises.8 Accordingly, the CA upheld the sale between
Rodriguez and respondents, and, conversely found the
sale between Rodrigo and petitioner’s predecessor-in-
interest, Vere, void for Rodrigo’s lack of title.
In this petition, petitioner seeks the reinstatement of the
trial court’s ruling. Alternatively, petitioner claims
ownership over the Property through acquisitive
prescription, having allegedly occupied it for more than
10 years.9
Respondents see no reversible error in the CA’s ruling and
pray for its affirmance.
The Issue
The threshold question is whether petitioner’s title over
the Property is superior to respondents’. The resolution of
this issue rests, in turn, on whether the contract between
the parties’ predecessors-in-interest, Rodrigo and
Rodriguez, was a donation or a devise. If the former,
respondents hold superior title, having bought the
Property from Rodriguez. If the latter, petitioner prevails,
having obtained title from Rodrigo under a deed of sale
the execution of which impliedly revoked the earlier
devise to Rodriguez.
The Ruling of the Court
We find respondents’ title superior, and thus, affirm the
CA.
Naked Title Passed from Rodrigo to Rodriguez
Under a Perfected Donation
We examine the juridical nature of the Deed – whether it
passed title to Rodriguez upon its execution or is effective
only upon Rodrigo’s death – using principles distilled from
relevant jurisprudence. Post-mortem dispositions typically
–
(1) Convey no title or ownership to the transferee
before the death of the transferor; or, what
amounts to the same thing, that the transferor
should retain the ownership (full or naked) and
control of the property while alive;
(2) That before the [donor’s] death, the transfer
should be revocable by the transferor at will, ad
nutum; but revocability may be provided for
indirectly by means of a reserved power in the
donor to dispose of the properties conveyed;
(3) That the transfer should be void if the
transferor should survive the transferee.10
Further –
[4] [T]he specification in a deed of the causes
whereby the act may be revoked by the donor
indicates that the donation is inter vivos, rather
than a disposition mortis causa[;]
[5] That the designation of the donation as mortis
causa, or a provision in the deed to the effect that
the donation is "to take effect at the death of the
donor" are not controlling criteria; such
statements are to be construed together with the
rest of the instrument, in order to give effect to
the real intent of the transferor[;] [and]
(6) That in case of doubt, the conveyance should
be deemed donation inter vivos rather
than mortis causa, in order to avoid uncertainty
as to the ownership of the property subject of the
deed.11
It is immediately apparent that Rodrigo passed naked title
to Rodriguez under a perfected donation inter vivos.
First. Rodrigo stipulated that "if the herein Donee
predeceases me, the [Property] will not be reverted to the
Donor, but will be inherited by the heirs of x x x
Rodriguez," signaling the irrevocability of the passage of
title to Rodriguez’s estate, waiving Rodrigo’s right to
reclaim title. This transfer of title was perfected the
moment Rodrigo learned of Rodriguez’s acceptance of the
disposition12 which, being reflected in the Deed, took
place on the day of its execution on 3 May 1965. Rodrigo’s
acceptance of the transfer underscores its essence as a
gift in presenti, not in futuro, as only donations inter
vivos need acceptance by the recipient.13 Indeed, had
Rodrigo wished to retain full title over the Property, she
could have easily stipulated, as the testator did in another
case, that "the donor, may transfer, sell, or encumber to
any person or entity the properties here donated x x
x"14 or used words to that effect. Instead, Rodrigo
expressly waived title over the Property in case Rodriguez
predeceases her.
In a bid to diffuse the non-reversion stipulation’s damning
effect on his case, petitioner tries to profit from it,
contending it is a fideicommissary substitution
clause.15 Petitioner assumes the fact he is laboring to
prove. The question of the Deed’s juridical nature,
whether it is a will or a donation, is the crux of the present
controversy. By treating the clause in question as
mandating fideicommissary substitution, a mode of
testamentary disposition by which the first heir instituted
is entrusted with the obligation to preserve and to
transmit to a second heir the whole or part of the
inheritance,16 petitioner assumes that the Deed is a will.
Neither the Deed’s text nor the import of the contested
clause supports petitioner’s theory.
Second. What Rodrigo reserved for herself was only the
beneficial title to the Property, evident from Rodriguez’s
undertaking to "give one [half] x x x of the produce of the
land to Apoy Alve during her lifetime."17 Thus, the Deed’s
stipulation that "the ownership shall be vested on
[Rodriguez] upon my demise," taking into account the
non-reversion clause, could only refer to Rodrigo’s
beneficial title. We arrived at the same conclusion
in Balaqui v. Dongso18 where, as here, the donor, while
"b[inding] herself to answer to the [donor] and her heirs
x x x that none shall question or disturb [the donee’s]
right," also stipulated that the donation "does not pass
title to [the donee] during my lifetime; but when I die,
[the donee] shall be the true owner" of the donated
parcels of land. In finding the disposition as a gift inter
vivos, the Court reasoned:
Taking the deed x x x as a whole, x x x x it is noted that
in the same deed [the donor] guaranteed to [the donee]
and her heirs and successors, the right to said property
thus conferred. From the moment [the donor] guaranteed
the right granted by her to [the donee] to the two parcels
of land by virtue of the deed of gift, she surrendered such
right; otherwise there would be no need to guarantee said
right. Therefore, when [the donor] used the words upon
which the appellants base their contention that the gift in
question is a donation mortis causa [that the gift "does
not pass title during my lifetime; but when I die, she shall
be the true owner of the two aforementioned
parcels"] the donor meant nothing else than that
she reserved of herself the possession and
usufruct of said two parcels of land until her death,
at which time the donee would be able to dispose
of them freely.19 (Emphasis supplied)
Indeed, if Rodrigo still retained full ownership over the
Property, it was unnecessary for her to reserve partial
usufructuary right over it.20
Third. The existence of consideration other than the
donor’s death, such as the donor’s love and affection to
the donee and the services the latter rendered, while also
true of devises, nevertheless "corroborates the express
irrevocability of x x x [inter vivos] transfers."21 Thus, the
CA committed no error in giving weight to Rodrigo’s
statement of "love and affection" for Rodriguez, her niece,
as consideration for the gift, to underscore its finding.
It will not do, therefore, for petitioner to cherry-pick
stipulations from the Deed tending to serve his cause
(e.g. "the ownership shall be vested on [Rodriguez] upon
my demise" and "devise"). Dispositions bearing
contradictory stipulations are interpreted wholistically, to
give effect to the donor’s intent. In no less than seven
cases featuring deeds of donations styled as "mortis
causa" dispositions, the Court, after going over the deeds,
eventually considered the transfers inter
vivos,22 consistent with the principle that "the designation
of the donation as mortis causa, or a provision in the deed
to the effect that the donation is ‘to take effect at the
death of the donor’ are not controlling criteria [but] x x x
are to be construed together with the rest of the
instrument, in order to give effect to the real intent of the
transferor."23 Indeed, doubts on the nature of dispositions
are resolved to favor inter vivos transfers "to avoid
uncertainty as to the ownership of the property subject of
the deed."24
Nor can petitioner capitalize on Rodrigo’s post-donation
transfer of the Property to Vere as proof of her retention
of ownership. If such were the barometer in interpreting
deeds of donation, not only will great legal uncertainty be
visited on gratuitous dispositions, this will give license to
rogue property owners to set at naught perfected
transfers of titles, which, while founded on liberality, is a
valid mode of passing ownership. The interest of settled
property dispositions counsels against licensing such
practice.25
Accordingly, having irrevocably transferred naked title
over the Property to Rodriguez in 1965, Rodrigo "cannot
afterwards revoke the donation nor dispose of the said
property in favor of another."26 Thus, Rodrigo’s post-
donation sale of the Property vested no title to Vere. As
Vere’s successor-in-interest, petitioner acquired no better
right than him. On the other hand, respondents bought
the Property from Rodriguez, thus acquiring the latter’s
title which they may invoke against all adverse claimants,
including petitioner.
Petitioner Acquired No Title Over the Property
Alternatively, petitioner grounds his claim of ownership
over the Property through his and Vere’s combined
possession of the Property for more than ten years,
counted from Vere’s purchase of the Property from
Rodrigo in 1970 until petitioner initiated his suit in the trial
court in February 1986.27 Petitioner anchors his
contention on an unfounded legal assumption. The ten
year ordinary prescriptive period to acquire title through
possession of real property in the concept of an owner
requires uninterrupted possession coupled with just
title and good faith.28 There is just title when the adverse
claimant came into possession of the property through
one of the modes recognized by law for the acquisition of
ownership or other real rights, but the grantor was not
the owner or could not transmit any right. 29 Good faith,
on the other hand, consists in the reasonable belief that
the person from whom the possessor received the thing
was the owner thereof, and could transmit his
ownership.30

Although Vere and petitioner arguably had just title

having successively acquired the Property through sale,
neither was a good faith possessor. As Rodrigo herself
disclosed in the Deed, Rodriguez already occupied and
possessed the Property "in the concept of an owner"
("como tag-iya"31) since 21 May 1962, nearly three years
before Rodrigo’s donation in 3 May 1965 and seven years
before Vere bought the Property from Rodrigo. This
admission against interest binds Rodrigo and all those
tracing title to the Property through her, including Vere
and petitioner. Indeed, petitioner’s insistent claim that
Rodriguez occupied the Property only in 1982, when she
started paying taxes, finds no basis in the records. In
short, when Vere bought the Property from Rodrigo in
1970, Rodriguez was in possession of the Property, a fact
that prevented Vere from being a buyer in good faith.

Lacking good faith possession, petitioner’s only other

recourse to maintain his claim of ownership by
prescription is to show open, continuous and adverse
possession of the Property for 30 years. 32 Undeniably,
petitioner is unable to meet this requirement. 1avvphil

Ancillary Matters Petitioner Raises Irrelevant

Petitioner brings to the Court’s attention facts which,

according to him, support his theory that Rodrigo never
passed ownership over the Property to Rodriguez,
namely, that Rodriguez registered the Deed and paid
taxes on the Property only in 1982 and Rodriguez
obtained from Vere in 1981 a waiver of the latter’s "right
of ownership" over the Property. None of these facts
detract from our conclusion that under the text of the
Deed and based on the contemporaneous acts of Rodrigo
and Rodriguez, the latter, already in possession of the
Property since 1962 as Rodrigo admitted, obtained naked
title over it upon the Deed’s execution in 1965. Neither
registration nor tax payment is required to perfect
donations. On the relevance of the waiver agreement,
suffice it to say that Vere had nothing to waive to
Rodriguez, having obtained no title from Rodrigo.
Irrespective of Rodriguez’s motivation in obtaining the
waiver, that document, legally a scrap of paper, added
nothing to the title Rodriguez obtained from Rodrigo
under the Deed.

WHEREFORE, we DENY the petition. We AFFIRM the

Decision dated 6 June 2005 and the Resolution dated 5
May 2006 of the Court of Appeals.

SO ORDERED.
ARTICLE 774-776
G.R. No. 149926 February 23, 2005
UNION BANK OF THE PHILIPPINES, petitioner,
vs.
EDMUND SANTIBAÑEZ and FLORENCE
SANTIBAÑEZ ARIOLA, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule
45 of the Revised Rules of Court which seeks the reversal
of the Decision1 of the Court of Appeals dated May 30,
2001 in CA-G.R. CV No. 48831 affirming the dismissal2 of
the petitioner’s complaint in Civil Case No. 18909 by the
Regional Trial Court (RTC) of Makati City, Branch 63.
The antecedent facts are as follows:
On May 31, 1980, the First Countryside Credit Corporation
(FCCC) and Efraim M. Santibañez entered into a loan
agreement3 in the amount of ₱128,000.00. The amount
was intended for the payment of the purchase price of
one (1) unit Ford 6600 Agricultural All-Purpose Diesel
Tractor. In view thereof, Efraim and his son, Edmund,
executed a promissory note in favor of the FCCC, the
principal sum payable in five equal annual amortizations
of ₱43,745.96 due on May 31, 1981 and every May 31st
thereafter up to May 31, 1985.
On December 13, 1980, the FCCC and Efraim entered into
another loan agreement,4 this time in the amount of
₱123,156.00. It was intended to pay the balance of the
purchase price of another unit of Ford 6600 Agricultural
All-Purpose Diesel Tractor, with accessories, and one (1)
unit Howard Rotamotor Model AR 60K. Again, Efraim and
his son, Edmund, executed a promissory note for the said
amount in favor of the FCCC. Aside from such promissory
note, they also signed a Continuing Guaranty
Agreement5 for the loan dated December 13, 1980.
Sometime in February 1981, Efraim died, leaving a
holographic will.6 Subsequently in March 1981, testate
proceedings commenced before the RTC of Iloilo City,
Branch 7, docketed as Special Proceedings No. 2706. On
April 9, 1981, Edmund, as one of the heirs, was appointed
as the special administrator of the estate of the
decedent.7 During the pendency of the testate
proceedings, the surviving heirs, Edmund and his sister
Florence Santibañez Ariola, executed a Joint
Agreement8 dated July 22, 1981, wherein they agreed to
divide between themselves and take possession of the
three (3) tractors; that is, two (2) tractors for Edmund
and one (1) tractor for Florence. Each of them was to
assume the indebtedness of their late father to FCCC,
corresponding to the tractor respectively taken by them.
On August 20, 1981, a Deed of Assignment with
Assumption of Liabilities9 was executed by and between
FCCC and Union Savings and Mortgage Bank, wherein the
FCCC as the assignor, among others, assigned all its
assets and liabilities to Union Savings and Mortgage Bank.
Demand letters10 for the settlement of his account were
sent by petitioner Union Bank of the Philippines (UBP) to
Edmund, but the latter failed to heed the same and
refused to pay. Thus, on February 5, 1988, the petitioner
filed a Complaint11 for sum of money against the heirs of
Efraim Santibañez, Edmund and Florence, before the RTC
of Makati City, Branch 150, docketed as Civil Case No.
18909. Summonses were issued against both, but the one
intended for Edmund was not served since he was in the
United States and there was no information on his
address or the date of his return to the
Philippines.12 Accordingly, the complaint was narrowed
down to respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed
her Answer13 and alleged that the loan documents did not
bind her since she was not a party thereto. Considering
that the joint agreement signed by her and her brother
Edmund was not approved by the probate court, it was
null and void; hence, she was not liable to the petitioner
under the joint agreement.
On January 29, 1990, the case was unloaded and re-
raffled to the RTC of Makati City, Branch
63.14 Consequently, trial on the merits ensued and a
decision was subsequently rendered by the court
dismissing the complaint for lack of merit. The decretal
portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered DISMISSING
the complaint for lack of merit.15
The trial court found that the claim of the petitioner
should have been filed with the probate court before
which the testate estate of the late Efraim Santibañez was
pending, as the sum of money being claimed was an
obligation incurred by the said decedent. The trial court
also found that the Joint Agreement apparently executed
by his heirs, Edmund and Florence, on July 22, 1981, was,
in effect, a partition of the estate of the decedent.
However, the said agreement was void, considering that
it had not been approved by the probate court, and that
there can be no valid partition until after the will has been
probated. The trial court further declared that petitioner
failed to prove that it was the now defunct Union Savings
and Mortgage Bank to which the FCCC had assigned its
assets and liabilities. The court also agreed to the
contention of respondent Florence S. Ariola that the list of
assets and liabilities of the FCCC assigned to Union
Savings and Mortgage Bank did not clearly refer to the
decedent’s account. Ruling that the joint agreement
executed by the heirs was null and void, the trial court
held that the petitioner’s cause of action against
respondent Florence S. Ariola must necessarily fail.
The petitioner appealed from the RTC decision and
elevated its case to the Court of Appeals (CA), assigning
the following as errors of the trial court:
1. THE COURT A QUO ERRED IN FINDING THAT
THE JOINT AGREEMENT (EXHIBIT A) SHOULD BE
APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT
THERE CAN BE NO VALID PARTITION AMONG
THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING
THAT THE DEFENDANT HAD WAIVED HER
RIGHT TO HAVE THE CLAIM RE-LITIGATED IN
THE ESTATE PROCEEDING.16
The petitioner asserted before the CA that the obligation
of the deceased had passed to his legitimate children and
heirs, in this case, Edmund and Florence; the
unconditional signing of the joint agreement marked as
Exhibit "A" estopped respondent Florence S. Ariola, and
that she cannot deny her liability under the said
document; as the agreement had been signed by both
heirs in their personal capacity, it was no longer necessary
to present the same before the probate court for
approval; the property partitioned in the agreement was
not one of those enumerated in the holographic will made
by the deceased; and the active participation of the heirs,
particularly respondent Florence S. Ariola, in the present
ordinary civil action was tantamount to a waiver to re-
litigate the claim in the estate proceedings.
On the other hand, respondent Florence S. Ariola
maintained that the money claim of the petitioner should
have been presented before the probate court. 17
The appellate court found that the appeal was not
meritorious and held that the petitioner should have filed
its claim with the probate court as provided under
Sections 1 and 5, Rule 86 of the Rules of Court. It further
held that the partition made in the agreement was null
and void, since no valid partition may be had until after
the will has been probated. According to the CA, page 2,
paragraph (e) of the holographic will covered the subject
properties (tractors) in generic terms when the deceased
referred to them as "all other properties." Moreover, the
active participation of respondent Florence S. Ariola in the
case did not amount to a waiver. Thus, the CA affirmed
the RTC decision, viz.:
WHEREFORE, premises considered, the appealed
Decision of the Regional Trial Court of Makati City, Branch
63, is hereby AFFIRMED in toto.
SO ORDERED.18
In the present recourse, the petitioner ascribes the
following errors to the CA:
I.
THE HONORABLE COURT OF APPEALS ERRED IN
FINDING THAT THE JOINT AGREEMENT SHOULD BE
APPROVED BY THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT
THERE CAN BE NO VALID PARTITION AMONG THE HEIRS
OF THE LATE EFRAIM SANTIBAÑEZ UNTIL AFTER THE
WILL HAS BEEN PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE RESPONDENT HAD WAIVED HER RIGHT TO HAVE
THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND
SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE
LATE EFRAIM SANTIBAÑEZ ON THE STRENGTH OF THE
CONTINUING GUARANTY AGREEMENT EXECUTED IN
FAVOR OF PETITIONER-APPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE
SUM OF ₱128,000.00 AND DECEMBER 13, 1980 IN THE
AMOUNT OF ₱123,000.00 CATEGORICALLY
ESTABLISHED THE FACT THAT THE RESPONDENTS
BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE
WITH THE LATE DEBTOR EFRAIM SANTIBAÑEZ IN
FAVOR OF PETITIONER UNION BANK.19
The petitioner claims that the obligations of the deceased
were transmitted to the heirs as provided in Article 774 of
the Civil Code; there was thus no need for the probate
court to approve the joint agreement where the heirs
partitioned the tractors owned by the deceased and
assumed the obligations related thereto. Since
respondent Florence S. Ariola signed the joint agreement
without any condition, she is now estopped from asserting
any position contrary thereto. The petitioner also points
out that the holographic will of the deceased did not
include nor mention any of the tractors subject of the
complaint, and, as such was beyond the ambit of the said
will. The active participation and resistance of respondent
Florence S. Ariola in the ordinary civil action against the
petitioner’s claim amounts to a waiver of the right to have
the claim presented in the probate proceedings, and to
allow any one of the heirs who executed the joint
agreement to escape liability to pay the value of the
tractors under consideration would be equivalent to
allowing the said heirs to enrich themselves to the
damage and prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both
the trial and appellate courts failed to consider the fact
that respondent Florence S. Ariola and her brother
Edmund executed loan documents, all establishing
the vinculum jurisor the legal bond between the late
Efraim Santibañez and his heirs to be in the nature of a
solidary obligation. Furthermore, the Promissory Notes
dated May 31, 1980 and December 13, 1980 executed by
the late Efraim Santibañez, together with his heirs,
Edmund and respondent Florence, made the obligation
solidary as far as the said heirs are concerned. The
petitioner also proffers that, considering the express
provisions of the continuing guaranty agreement and the
promissory notes executed by the named respondents,
the latter must be held liable jointly and severally liable
thereon. Thus, there was no need for the petitioner to file
its money claim before the probate court. Finally, the
petitioner stresses that both surviving heirs are being
sued in their respective personal capacities, not as heirs
of the deceased.
In her comment to the petition, respondent Florence S.
Ariola maintains that the petitioner is trying to recover a
sum of money from the deceased Efraim Santibañez; thus
the claim should have been filed with the probate court.
She points out that at the time of the execution of the
joint agreement there was already an existing probate
proceedings of which the petitioner knew about.
However, to avoid a claim in the probate court which
might delay payment of the obligation, the petitioner
opted to require them to execute the said
agreement.1a\^/phi1.net
According to the respondent, the trial court and the CA
did not err in declaring that the agreement was null and
void. She asserts that even if the agreement was
voluntarily executed by her and her brother Edmund, it
should still have been subjected to the approval of the
court as it may prejudice the estate, the heirs or third
parties. Furthermore, she had not waived any rights, as
she even stated in her answer in the court a quo that the
claim should be filed with the probate court. Thus, the
petitioner could not invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had
not signed any continuing guaranty agreement, nor was
there any document presented as evidence to show that
she had caused herself to be bound by the obligation of
her late father.
The petition is bereft of merit.
The Court is posed to resolve the following issues: a)
whether or not the partition in the Agreement executed
by the heirs is valid; b) whether or not the heirs’
assumption of the indebtedness of the deceased is valid;
and c) whether the petitioner can hold the heirs liable on
the obligation of the deceased.1awphi1.nét
At the outset, well-settled is the rule that a probate court
has the jurisdiction to determine all the properties of the
deceased, to determine whether they should or should
not be included in the inventory or list of properties to be
administered.20 The said court is primarily concerned with
the administration, liquidation and distribution of the
estate.21
In our jurisdiction, the rule is that there can be no valid
partition among the heirs until after the will has been
probated:
In testate succession, there can be no valid partition
among the heirs until after the will has been probated.
The law enjoins the probate of a will and the public
requires it, because unless a will is probated and notice
thereof given to the whole world, the right of a person to
dispose of his property by will may be rendered nugatory.
The authentication of a will decides no other question
than such as touch upon the capacity of the testator and
the compliance with those requirements or solemnities
which the law prescribes for the validity of a will.22
This, of course, presupposes that the properties to be
partitioned are the same properties embraced in the
will.23 In the present case, the deceased, Efraim
Santibañez, left a holographic will24 which contained, inter
alia, the provision which reads as follows:
(e) All other properties, real or personal, which I own and
may be discovered later after my demise, shall be
distributed in the proportion indicated in the immediately
preceding paragraph in favor of Edmund and Florence,
my children.
We agree with the appellate court that the above-quoted
is an all-encompassing provision embracing all the
properties left by the decedent which might have escaped
his mind at that time he was making his will, and other
properties he may acquire thereafter. Included therein
are the three (3) subject tractors. This being so, any
partition involving the said tractors among the heirs is not
valid. The joint agreement25 executed by Edmund and
Florence, partitioning the tractors among themselves, is
invalid, specially so since at the time of its execution,
there was already a pending proceeding for the probate
of their late father’s holographic will covering the said
tractors.
It must be stressed that the probate proceeding had
already acquired jurisdiction over all the properties of the
deceased, including the three (3) tractors. To dispose of
them in any way without the probate court’s approval is
tantamount to divesting it with jurisdiction which the
Court cannot allow.26 Every act intended to put an end to
indivision among co-heirs and legatees or devisees is
deemed to be a partition, although it should purport to be
a sale, an exchange, a compromise, or any other
transaction.27 Thus, in executing any joint agreement
which appears to be in the nature of an extra-judicial
partition, as in the case at bar, court approval is
imperative, and the heirs cannot just divest the court of
its jurisdiction over that part of the estate. Moreover, it is
within the jurisdiction of the probate court to determine
the identity of the heirs of the decedent. 28 In the instant
case, there is no showing that the signatories in the joint
agreement were the only heirs of the decedent. When it
was executed, the probate of the will was still pending
before the court and the latter had yet to determine who
the heirs of the decedent were. Thus, for Edmund and
respondent Florence S. Ariola to adjudicate unto
themselves the three (3) tractors was a premature act,
and prejudicial to the other possible heirs and creditors
who may have a valid claim against the estate of the
deceased.
The question that now comes to fore is whether the heirs’
assumption of the indebtedness of the decedent is
binding. We rule in the negative. Perusing the joint
agreement, it provides that the heirs as parties thereto
"have agreed to divide between themselves and take
possession and use the above-described chattel and each
of them to assume the indebtedness corresponding to the
chattel taken as herein after stated which is in favor of
First Countryside Credit Corp."29 The assumption of
liability was conditioned upon the happening of an event,
that is, that each heir shall take possession and use of
their respective share under the agreement. It was made
dependent on the validity of the partition, and that they
were to assume the indebtedness corresponding to the
chattel that they were each to receive. The partition being
invalid as earlier discussed, the heirs in effect did not
receive any such tractor. It follows then that the
assumption of liability cannot be given any force and
effect.
The Court notes that the loan was contracted by the
decedent.l^vvphi1.net The petitioner, purportedly a
creditor of the late Efraim Santibañez, should have thus
filed its money claim with the probate court in accordance
with Section 5, Rule 86 of the Revised Rules of Court,
which provides:
Section 5. Claims which must be filed under the notice. If
not filed barred; exceptions. — All claims for money
against the decedent, arising from contract, express or
implied, whether the same be due, not due, or contingent,
all claims for funeral expenses for the last sickness of the
decedent, and judgment for money against the decedent,
must be filed within the time limited in the notice;
otherwise they are barred forever, except that they may
be set forth as counterclaims in any action that the
executor or administrator may bring against the
claimants. Where an executor or administrator
commences an action, or prosecutes an action already
commenced by the deceased in his lifetime, the debtor
may set forth by answer the claims he has against the
decedent, instead of presenting them independently to
the court as herein provided, and mutual claims may be
set off against each other in such action; and if final
judgment is rendered in favor of the defendant, the
amount so determined shall be considered the true
balance against the estate, as though the claim had been
presented directly before the court in the administration
proceedings. Claims not yet due, or contingent, may be
approved at their present value.
The filing of a money claim against the decedent’s estate
in the probate court is mandatory.30 As we held in the
vintage case of Py Eng Chong v. Herrera:31
… This requirement is for the purpose of protecting the
estate of the deceased by informing the executor or
administrator of the claims against it, thus enabling him
to examine each claim and to determine whether it is a
proper one which should be allowed. The plain and
obvious design of the rule is the speedy settlement of the
affairs of the deceased and the early delivery of the
property to the distributees, legatees, or heirs. `The law
strictly requires the prompt presentation and disposition
of the claims against the decedent's estate in order to
settle the affairs of the estate as soon as possible, pay off
its debts and distribute the residue.32
Perusing the records of the case, nothing therein could
hold private respondent Florence S. Ariola accountable for
any liability incurred by her late father. The documentary
evidence presented, particularly the promissory notes and
the continuing guaranty agreement, were executed and
signed only by the late Efraim Santibañez and his son
Edmund. As the petitioner failed to file its money claim
with the probate court, at most, it may only go after
Edmund as co-maker of the decedent under the said
promissory notes and continuing guaranty, of course,
subject to any defenses Edmund may have as against the
petitioner. As the court had not acquired jurisdiction over
the person of Edmund, we find it unnecessary to delve
into the matter further.
We agree with the finding of the trial court that the
petitioner had not sufficiently shown that it is the
successor-in-interest of the Union Savings and Mortgage
Bank to which the FCCC assigned its assets and
liabilities.33 The petitioner in its complaint alleged that " by
virtue of the Deed of Assignment dated August 20, 1981
executed by and between First Countryside Credit
Corporation and Union Bank of the
Philippines…"34 However, the documentary
evidence35 clearly reflects that the parties in the deed of
assignment with assumption of liabilities were the FCCC,
and the Union Savings and Mortgage Bank, with the
conformity of Bancom Philippine Holdings, Inc. Nowhere
can the petitioner’s participation therein as a party be
found. Furthermore, no documentary or testimonial
evidence was presented during trial to show that Union
Savings and Mortgage Bank is now, in fact, petitioner
Union Bank of the Philippines. As the trial court declared
in its decision:

… [T]he court also finds merit to the contention of

defendant that plaintiff failed to prove or did not present
evidence to prove that Union Savings and Mortgage Bank
is now the Union Bank of the Philippines. Judicial notice
does not apply here. "The power to take judicial notice is
to [be] exercised by the courts with caution; care must
be taken that the requisite notoriety exists; and every
reasonable doubt upon the subject should be promptly
resolved in the negative." (Republic vs. Court of Appeals,
107 SCRA 504).36

This being the case, the petitioner’s personality to file the

complaint is wanting. Consequently, it failed to establish
its cause of action. Thus, the trial court did not err in
dismissing the complaint, and the CA in affirming the
same.

IN LIGHT OF ALL THE FOREGOING, the petition is

hereby DENIED. The assailed Court of Appeals Decision is
AFFIRMED. No costs.

SO ORDERED.
ARTICLE 774-776
[G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON
SURETY CO., INC., claimant-Appellant.
DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the
Court of First Instance of Rizal, presided by Judge
Hermogenes Caluag, dismissing its claim against the
Estate of K. H. Hemady (Special Proceeding No. Q-293)
for failure to state a cause of action.
The Luzon Surety Co. had filed a claim against the Estate
based on twenty different indemnity agreements, or
counter bonds, each subscribed by a distinct principal
and by the deceased K. H. Hemady, a surety solidary
guarantor) in all of them, in consideration of the Luzon
Surety Co.’s of having guaranteed, the various principals
in favor of different creditors. The twenty counterbonds,
or indemnity agreements, all contained the following
stipulations:
chanroblesvirtuallawlibrary
“Premiums. — As consideration for this suretyship, the
undersigned jointly and severally, agree to pay the
COMPANY the sum of ________________ (P______)
pesos, Philippines Currency, in advance as premium
there of for every __________ months or fractions
thereof, this ________ or any renewal or substitution
thereof is in effect.
Indemnity. — The undersigned, jointly and severally,
agree at all times to indemnify the COMPANY and keep
it indemnified and hold and save it harmless from and
against any and all damages, losses, costs, stamps, taxes,
penalties, charges, and expenses of whatsoever kind and
nature which the COMPANY shall or may, at any time
sustain or incur in consequence of having become surety
upon this bond or any extension, renewal, substitution
or alteration thereof made at the instance of the
undersigned or any of them or any order executed on
behalf of the undersigned or any of them; and to pay, chan roble svirtualawlibrary
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: (1) that the chanroble svirtuallawlibrary
premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a
part of the undertaking of the guarantor (Hemady), since
they were not liabilities incurred after the execution of
the counterbonds; and (2) that “whatever losses may
chan roblesvirtualawlibrary
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: integrity. As correctly pointed out by the
chanroble svirtuallawlibrary
Administratrix, integrity is something purely personal
and is not transmissible. Upon the death of Hemady, his
integrity was not transmitted to his estate or successors.
Whatever loss therefore, may occur after Hemady’s
death, are not chargeable to his estate because upon his
death he ceased to be a guarantor.
Another clear and strong indication that the surety
company has exclusively relied on the personality,
character, honesty and integrity of the now deceased K.
H. Hemady, was the fact that in the printed form of the
indemnity agreement there is a paragraph entitled
‘Security by way of first mortgage, which was expressly
waived and renounced by the security company. The
security company has not demanded from K. H. Hemady
to comply with this requirement of giving security by way
of first mortgage. In the supporting papers of the claim
presented by Luzon Surety Company, no real property
was mentioned in the list of properties mortgaged which
appears at the back of the indemnity agreement.” (Rec.
App., pp. 407-408).
We find this reasoning untenable. Under the present Civil
Code (Article 1311), as well as under the Civil Code of
1889 (Article 1257), the rule is that —
“Contracts take effect only as between the parties, their
assigns and heirs, except in the case where the rights and
obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law.”
While in our successional system the responsibility of the
heirs for the debts of their decedent cannot exceed the
value of the inheritance they receive from him, the
principle remains intact that these heirs succeed not only
to the rights of the deceased but also to his obligations.
Articles 774 and 776 of the New Civil Code (and Articles
659 and 661 of the preceding one) expressly so provide,
thereby confirming Article 1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by
virtue of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are
transmitted through his death to another or others
either by his will or by operation of law.”
“ART. 776. — The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
ruled:chanroble svirtuallawlibrary
“Under the Civil Code the heirs, by virtue of the rights of
succession are subrogated to all the rights and
obligations of the deceased (Article 661) and cannot be
regarded as third parties with respect to a contract to
which the deceased was a party, touching the estate of
the deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not
affected by the provisions of the new Code of Civil
Procedure, and, in accordance with that principle, the
heirs of a deceased person cannot be held to be “third
persons” in relation to any contracts touching the real
estate of their decedent which comes in to their hands
by right of inheritance; they take such property
chan roblesvirtualawlibrary
subject to all the obligations resting thereon in the hands
of him from whom they derive their rights.”
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p.
2874 and de Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision in our
Rules of Court that money debts of a deceased must be
liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the estate is
ultimately a payment by the heirs and distributees, since
the amount of the paid claim in fact diminishes or
reduces the shares that the heirs would have been
entitled to receive.
Under our law, therefore, the general rule is that a
party’s contractual rights and obligations are
transmissible to the successors. The rule is a
consequence of the progressive “depersonalization” of
patrimonial rights and duties that, as observed by
Victorio Polacco, has characterized the history of these
institutions. From the Roman concept of a relation from
person to person, the obligation has evolved into a
relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those
rare cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its
performance by a specific person and by no other. The
transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature
of the obligation of the surety or guarantor does not
warrant the conclusion that his peculiar individual
qualities are contemplated as a principal inducement for
the contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the latter as
surety in the counterbonds? Nothing but the
reimbursement of the moneys that the Luzon Surety Co.
might have to disburse on account of the obligations of
the principal debtors. This reimbursement is a payment
of a sum of money, resulting from an obligation to give;
and to the Luzon Surety Co., it was indifferent that the
roblesvirtualawlibrary
reimbursement should be made by Hemady himself or
by some one else in his behalf, so long as the money was
paid to it.
The second exception of Article 1311, p. 1, is
intransmissibility by stipulation of the parties. Being
exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must
be expressly established, or at the very least, clearly
inferable from the provisions of the contract itself, and
the text of the agreements sued upon nowhere indicate
that they are non-transferable.
“(b) Intransmisibilidad por pacto. — Lo general es la
transmisibilidad de darechos y obligaciones; le
chan
excepcion, la intransmisibilidad. Mientras nada se diga
en contrario impera el principio de la transmision, como
elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester
el pacto expreso, porque si no, lo convenido entre partes
trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del
causante, sobre ellos recaen los efectos de los vinculos
juridicos creados por sus antecesores, y para evitarlo, si
asi se quiere, es indespensable convension terminante
en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir más
allá de las personas que les dieron vida, y a ejercer
presion sobre los sucesores de esa persona; cuando no
chan roblesvirtualawlibrary
se quiera esto, se impone una estipulacion limitativa
expresamente de la transmisibilidad o de cuyos tirminos
claramente se deduzca la concresion del concreto a las
mismas personas que lo otorgon.” (Scaevola, Codigo
Civil, Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who
enters into a contract is deemed to have contracted for
himself and his heirs and assigns, it is unnecessary for
him to expressly stipulate to that effect; hence, his chan roblesvirtualawlibrary
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
chan 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-
roblesvirtualawlibrary
evident that once the contract has become perfected
and binding, the supervening incapacity of the guarantor
would not operate to exonerate him of the eventual
liability he has contracted; and if that be true of his
chan roblesvirtualawlibrary
capacity to bind himself, it should also be true of his
integrity, which is a quality mentioned in the article
alongside the capacity.
The foregoing concept is confirmed by the next Article
2057, that runs as follows:
chanroblesv irtuallawlibrary
“ART. 2057. — If the guarantor should be convicted in
first instance of a crime involving dishonesty or should
become insolvent, the creditor may demand another
who has all the qualifications required in the preceding
article. The case is excepted where the creditor has
required and stipulated that a specified person should be
guarantor.”
From this article it should be immediately apparent that
the supervening dishonesty of the guarantor (that is to
say, the disappearance of his integrity after he has
become bound) does not terminate the contract but
merely entitles the creditor to demand a replacement of
the guarantor. But the step remains optional in the
creditor: it is his right, not his duty; he may waive it
chanroblesvirtuallawlibrary
if he chooses, and hold the guarantor to his bargain.
Hence Article 2057 of the present Civil Code is
incompatible with the trial court’s stand that the
requirement of integrity in the guarantor or surety
makes the latter’s undertaking strictly personal, so linked
to his individuality that the guaranty automatically
terminates upon his death.
The contracts of suretyship entered into by K. H. Hemady
in favor of Luzon Surety Co. not being rendered
intransmissible due to the nature of the undertaking, nor
by the stipulations of the contracts themselves, nor by
provision of law, his eventual liability thereunder
necessarily passed upon his death to his heirs. The
contracts, therefore, give rise to contingent claims
provable against his estate under section 5, Rule 87 (2
Moran, 1952 ed., p. 437; Gaskell & Co. vs. Tan Sit, 43
chan roblesvirtualawlibrary 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.
chan roblesvirtuala wlibrary

Phil. 810, 814). Paras, C.J., Bengzon, Padilla, Montemayor, Bautista

Angelo, Labrador, Concepcion, Endencia and Felix, JJ.,
“The most common example of the contigent claim is
concur.
that which arises when a person is bound as surety or
guarantor for a principal who is insolvent or dead. Under
the ordinary contract of suretyship the surety has no
claim whatever against his principal until he himself pays
something by way of satisfaction upon the obligation
which is secured. When he does this, there instantly
arises in favor of the surety the right to compel the
principal to exonerate the surety. But until the surety has
contributed something to the payment of the debt, or
has performed the secured obligation in whole or in part,
he has no right of action against anybody — no claim that
could be reduced to judgment. (May vs. Vann, 15 Pla.,
553; Gibson vs. Mithell, 16 Pla., 519; Maxey vs.
chan roblesvirtualawlibrary chan roblesvirtualawlibrary

Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt.

[Tenn.], 119; Ernst vs. Nou, 63 Wis., 134.)” chan roblesvirtualawlibrary

For Defendant administratrix it is averred that the above

doctrine refers to a case where the surety files claims
against the estate of the principal debtor; and it is chan roblesvirtualawlibrary

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.
ARTICLE 774-776
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 SO ORDERED.
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.
ARTICLE 774-776
G.R. No. 103577 October 7, 1996
ROMULO A. CORONEL, ALARICO A. CORONEL,
ANNETTE A. CORONEL, ANNABELLE C.
GONZALES (for herself and on behalf of Florida C.
Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and
CATALINA BALAIS MABANAG, petitioners,
vs.
THE COURT OF APPEALS, CONCEPCION D.
ALCARAZ, and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-
fact, respondents.
MELO, J.:p
The petition before us has its roots in a complaint for specific performance to
compel herein petitioners (except the last named, Catalina Balais Mabanag)
to consummate the sale of a parcel of land with its improvements located
along Roosevelt Avenue in Quezon City entered into by the parties sometime
in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by
respondent court in this wise:
On January 19, 1985, defendants-
appellants Romulo Coronel, et al.
(hereinafter referred to as Coronels)
executed a document entitled "Receipt
of Down Payment" (Exh. "A") in favor of
plaintiff Ramona Patricia Alcaraz
(hereinafter referred to as Ramona)
which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 — Total amount
50,000 — Down payment
———————————
P1,190,000.00 — Balance
Received from Miss Ramona Patricia
Alcaraz of 146 Timog, Quezon City, the
sum of Fifty Thousand Pesos purchase
price of our inherited house and lot,
covered by TCT No. 119627 of the
Registry of Deeds of Quezon City, in
the total amount of P1,240,000.00.
We bind ourselves to effect the transfer
in our names from our deceased father,
Constancio P. Coronel, the transfer
certificate of title immediately upon
receipt of the down payment above-
stated.
On our presentation of the TCT already
in or name, We will immediately
execute the deed of absolute sale of
said property and Miss Ramona
Patricia Alcaraz shall immediately pay
the balance of the P1,190,000.00.
Clearly, the conditions appurtenant to
the sale are the following:
1. Ramona will make a down payment
of Fifty Thousand (P50,000.00) Pesos
upon execution of the document
aforestated;
2. The Coronels will cause the transfer
in their names of the title of the property
registered in the name of their
deceased father upon receipt of the
Fifty Thousand (P50,000.00) Pesos
down payment;
3. Upon the transfer in their names of
the subject property, the Coronels will
execute the deed of absolute sale in
favor of Ramona and the latter will pay
the former the whole balance of One
Million One Hundred Ninety Thousand
(P1,190,000.00) Pesos.
On the same date (January 15, 1985),
plaintiff-appellee Concepcion D.
Alcaraz (hereinafter referred to as
Concepcion), mother of Ramona, paid
the down payment of Fifty Thousand
(P50,000.00) Pesos (Exh. "B", Exh.
"2").
On February 6, 1985, the property
originally registered in the name of the
Coronels' father was transferred in their
names under TCT
No. 327043 (Exh. "D"; Exh. "4")
On February 18, 1985, the Coronels
sold the property covered by TCT No.
327043 to intervenor-appellant
Catalina B. Mabanag (hereinafter
referred to as Catalina) for One Million
Five Hundred Eighty Thousand
(P1,580,000.00) Pesos after the latter
has paid Three Hundred Thousand
(P300,000.00) Pesos (Exhs. "F-3";
Exh. "6-C")
 For this reason, Coronels canceled and
rescinded the contract (Exh. "A") with
Ramona by depositing the down
payment paid by Concepcion in the
bank in trust for Ramona Patricia
Alcaraz.
On February 22, 1985, Concepcion, et
al., filed a complaint for specific
performance against the Coronels and
caused the annotation of a notice of lis
pendens at the back of TCT No.
327403 (Exh. "E"; Exh. "5").
On April 2, 1985, Catalina caused the
annotation of a notice of adverse claim
covering the same property with the
Registry of Deeds of Quezon City (Exh.
"F"; Exh. "6").
On April 25, 1985, the Coronels
executed a Deed of Absolute Sale over
the subject property in favor of Catalina
(Exh. "G"; Exh. "7").
On June 5, 1985, a new title over the
subject property was issued in the
name of Catalina under TCT No.
351582 (Exh. "H"; Exh. "8").
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court
(Branch 83, RTC, Quezon City) the parties agreed to
submit the case for decision solely on the basis of
documentary exhibits. Thus, plaintiffs therein (now
private respondents) proffered their documentary
evidence accordingly marked as Exhibits "A" through
"J", inclusive of their corresponding submarkings.
Adopting these same exhibits as their own, then
defendants (now petitioners) accordingly offered and
marked them as Exhibits "1" through "10", likewise
inclusive of their corresponding submarkings. Upon
motion of the parties, the trial court gave them thirty
(30) days within which to simultaneously submit their
respective memoranda, and an additional 15 days
within which to submit their corresponding comment or
reply thereof, after which, the case would be deemed
submitted for resolution.
On April 14, 1988, the case was submitted for
resolution before Judge Reynaldo Roura, who was
then temporarily detailed to preside over Branch 82 of
the RTC of Quezon City. On March 1, 1989, judgment
was handed down by Judge Roura from his regular
bench at Macabebe, Pampanga for the Quezon City
branch, disposing as follows:
WHEREFORE, judgment for specific
performance is hereby rendered
ordering defendant to execute in favor
of plaintiffs a deed of absolute sale
covering that parcel of land embraced
in and covered by Transfer Certificate
of Title No. 327403 (now TCT No.
331582) of the Registry of Deeds for
Quezon City, together with all the
improvements existing thereon free
from all liens and encumbrances, and
once accomplished, to immediately
deliver the said document of sale to
plaintiffs and upon receipt thereof, the
said document of sale to plaintiffs and
upon receipt thereof, the plaintiffs are
ordered to pay defendants the whole
balance of the purchase price
amounting to P1,190,000.00 in cash.
Transfer Certificate of Title No. 331582
of the Registry of Deeds for Quezon
City in the name of intervenor is hereby
canceled and declared to be without
force and effect. Defendants and
intervenor and all other persons
claiming under them are hereby
ordered to vacate the subject property
and deliver possession thereof to
plaintiffs. Plaintiffs' claim for damages
and attorney's fees, as well as the
counterclaims of defendants and
intervenors are hereby dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon
City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioner
before the new presiding judge of the Quezon City RTC
but the same was denied by Judge Estrella T. Estrada,
thusly:
The prayer contained in the instant
motion, i.e., to annul the decision and
to render anew decision by the
undersigned Presiding Judge should
be denied for the following reasons: (1)
The instant case became submitted for
decision as of April 14, 1988 when the
parties terminated the presentation of
their respective documentary evidence
and when the Presiding Judge at that
time was Judge Reynaldo Roura. The
fact that they were allowed to file
memoranda at some future date did not
change the fact that the hearing of the
case was terminated before Judge
Roura and therefore the same should
be submitted to him for decision; (2)
When the defendants and intervenor
did not object to the authority of Judge
Reynaldo Roura to decide the case
prior to the rendition of the decision,
when they met for the first time before
the undersigned Presiding Judge at the
hearing of a pending incident in Civil
Case No. Q-46145 on November 11,
1988, they were deemed to have
acquiesced thereto and they are now
estopped from questioning said
authority of Judge Roura after they
received the decision in question which
happens to be adverse to them; (3)
While it is true that Judge Reynaldo
Roura was merely a Judge-on-detail at
this Branch of the Court, he was in all
respects the Presiding Judge with full
authority to act on any pending incident
submitted before this Court during his
incumbency. When he returned to his
Official Station at Macabebe,
Pampanga, he did not lose his
authority to decide or resolve such
cases submitted to him for decision or
resolution because he continued as
Judge of the Regional Trial Court and
is of co-equal rank with the
undersigned Presiding Judge. The
standing rule and supported by
jurisprudence is that a Judge to whom
a case is submitted for decision has the
authority to decide the case
notwithstanding his transfer to another
branch or region of the same court
(Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for
reconsideration of the Decision dated
March 1, 1989 rendered in the instant
case, resolution of which now pertains
to the undersigned Presiding Judge,
after a meticulous examination of the
documentary evidence presented by
the parties, she is convinced that the
Decision of March 1, 1989 is supported
by evidence and, therefore, should not
be disturbed.
IN VIEW OF THE FOREGOING, the
"Motion for Reconsideration and/or to
Annul Decision and Render Anew
Decision by the Incumbent Presiding
Judge" dated March 20, 1989 is hereby
DENIED.
SO ORDERED.
Quezon City, Philippines, July 12,
1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on
December 16, 1991, the Court of Appeals (Buena,
Gonzaga-Reyes, Abad Santos (P), JJ.) rendered its
decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5,
1992. The last pleading, private respondents' Reply
Memorandum, was filed on September 15, 1993. The
case was, however, re-raffled to
undersigned ponente only on August 28, 1996, due to
the voluntary inhibition of the Justice to whom the case
was last assigned.
While we deem it necessary to introduce certain
refinements in the disquisition of respondent court in
the affirmance of the trial court's decision, we definitely
find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key
in the resolution of the other issues in the case at bar
is the precise determination of the legal significance of
the document entitled "Receipt of Down Payment"
which was offered in evidence by both parties. There is
no dispute as to the fact that said document embodied
the binding contract between Ramona Patricia Alcaraz
on the one hand, and the heirs of Constancio P.
Coronel on the other, pertaining to a particular house
and lot covered by TCT No. 119627, as defined in
Article 1305 of the Civil Code of the Philippines which
reads as follows:
Art. 1305. A contract is a meeting of
minds between two persons whereby
one binds himself, with respect to the
other, to give something or to render
some service.
While, it is the position of private respondents that the
"Receipt of Down Payment" embodied a perfected
contract of sale, which perforce, they seek to enforce
by means of an action for specific performance,
petitioners on their part insist that what the document
signified was a mere executory contract to sell, subject
to certain suspensive conditions, and because of the
absence of Ramona P. Alcaraz, who left for the United
States of America, said contract could not possibly
ripen into a contract absolute sale.
Plainly, such variance in the contending parties'
contentions is brought about by the way each interprets
the terms and/or conditions set forth in said private
instrument. Withal, based on whatever relevant and
admissible evidence may be available on record, this,
Court, as were the courts below, is now called upon to
adjudge what the real intent of the parties was at the
time the said document was executed.
The Civil Code defines a contract of sale, 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.
Sale, by its very nature, is a consensual contract
because it is perfected by mere consent. The essential
elements of a contract of sale are the following:
a) Consent or meeting of the minds,
that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its
equivalent.
Under this definition, a Contract to Sell may not be
considered as a Contract of Sale because the first
essential element is lacking. In a contract to sell, the
prospective seller explicity reserves the transfer of title
to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell
until the happening of an event, which for present
purposes we shall take as the full payment of the
purchase price. What the seller agrees or obliges
himself to do is to fulfill is promise to sell the subject
property when the entire amount of the purchase price
is delivered to him. In other words the full payment of
the purchase price partakes of a suspensive condition,
the non-fulfillment of which prevents the obligation to
sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the
prospective buyer. In Roque vs. Lapuz (96 SCRA 741
[1980]), this Court had occasion to rule:
Hence, We hold that the contract
between the petitioner and the
respondent was a contract to sell
where the ownership or title is retained
by the seller and is not to pass until the
full payment of the price, such payment
being a positive suspensive condition
and failure of which is not a breach,
casual or serious, but simply an event
that prevented the obligation of the
vendor to convey title from acquiring
binding force.
Stated positively, upon the fulfillment of the suspensive
condition which is the full payment of the purchase
price, the prospective seller's obligation to sell the
subject property by entering into a contract of sale with
the prospective buyer becomes demandable as
provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy
or to sell a determinate thing for a price
certain is binding upon the promissor if
the promise is supported by a
consideration distinct from the price.
A contract to sell may thus be defined as a bilateral
contract whereby the prospective seller, while
expressly reserving the ownership of the subject
property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of
the condition agreed upon, that is, full payment of the
purchase price.
A contract to sell as defined hereinabove, may not
even be considered as a conditional contract of sale
where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a
suspensive condition, because in a conditional contract
of sale, the first element of consent is present, although
it is conditioned upon the happening of a contingent
event which may or may not occur. If the suspensive
condition is not fulfilled, the perfection of the contract
of sale is completely abated (cf. Homesite and housing
Corp. vs. Court of Appeals, 133 SCRA 777 [1984]).
However, if the suspensive condition is fulfilled, the
contract of sale is thereby perfected, such that if there
had already been previous delivery of the property
subject of the sale to the buyer, ownership thereto
automatically transfers to the buyer by operation of law
without any further act having to be performed by the
seller.
In a contract to sell, upon the fulfillment of the
suspensive condition which is the full payment of the
purchase price, ownership will not automatically
transfer to the buyer although the property may have
been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer
by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell
and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to
the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell,
there being no previous sale of the property, a third
person buying such property despite the fulfillment of
the suspensive condition such as the full payment of
the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property. There
is no double sale in such case. Title to the property will
transfer to the buyer after registration because there is
no defect in the owner-seller's title per se, but the latter,
of course, may be used for damages by the intending
buyer.
In a conditional contract of sale, however, upon the
fulfillment of the suspensive condition, the sale
becomes absolute and this will definitely affect the
seller's title thereto. In fact, if there had been previous
delivery of the subject property, the seller's ownership
or title to the property is automatically transferred to the
buyer such that, the seller will no longer have any title
to transfer to any third person. Applying Article 1544 of
the Civil Code, such second buyer of the property who
may have had actual or constructive knowledge of
such defect in the seller's title, or at least was charged
with the obligation to discover such defect, cannot be a
registrant in good faith. Such second buyer cannot
defeat the first buyer's title. In case a title is issued to
the second buyer, the first buyer may seek
reconveyance of the property subject of the sale.
With the above postulates as guidelines, we now
proceed to the task of deciphering the real nature of the
contract entered into by petitioners and private
respondents.
It is a canon in the interpretation of contracts that the
words used therein should be given their natural and
ordinary meaning unless a technical meaning was
intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said
"Receipt of Down Payment" that they —
Received from Miss Ramona Patricia
Alcaraz of 146 Timog, Quezon City, the
sum of Fifty Thousand Pesos purchase
price of our inherited house and lot,
covered by TCT No. 1199627 of the
Registry of Deeds of Quezon City, in
the total amount of P1,240,000.00.
without any reservation of title until full payment
of the entire purchase price, the natural and
ordinary idea conveyed is that they sold their
property.
When the "Receipt of Down Payment" is considered in
its entirety, it becomes more manifest that there was a
clear intent on the part of petitioners to transfer title to
the buyer, but since the transfer certificate of title was
still in the name of petitioner's father, they could not
fully effect such transfer although the buyer was then
willing and able to immediately pay the purchase price.
Therefore, petitioners-sellers undertook upon receipt of
the down payment from private respondent Ramona P.
Alcaraz, to cause the issuance of a new certificate of
title in their names from that of their father, after which,
they promised to present said title, now in their names,
to the latter and to execute the deed of absolute sale
whereupon, the latter shall, in turn, pay the entire
balance of the purchase price.
The agreement could not have been a contract to sell
because the sellers herein made no express
reservation of ownership or title to the subject parcel of
land. Furthermore, the circumstance which prevented
the parties from entering into an absolute contract of
sale pertained to the sellers themselves (the certificate
of title was not in their names) and not the full payment
of the purchase price. Under the established facts and
circumstances of the case, the Court may safely
presume that, had the certificate of title been in the
names of petitioners-sellers at that time, there would
have been no reason why an absolute contract of sale
could not have been executed and consummated right
there and then.
Moreover, unlike in a contract to sell, petitioners in the
case at bar did not merely promise to sell the properly
to private respondent upon the fulfillment of the
suspensive condition. On the contrary, having already
agreed to sell the subject property, they undertook to
have the certificate of title changed to their names and
immediately thereafter, to execute the written deed of
absolute sale.
Thus, the parties did not merely enter into a contract to
sell where the sellers, after compliance by the buyer
with certain terms and conditions, promised to sell the
property to the latter. What may be perceived from the
respective undertakings of the parties to the contract is
that petitioners had already agreed to sell the house
and lot they inherited from their father, completely
willing to transfer full ownership of the subject house
and lot to the buyer if the documents were then in
order. It just happened, however, that the transfer
certificate of title was then still in the name of their
father. It was more expedient to first effect the change
in the certificate of title so as to bear their names. That
is why they undertook to cause the issuance of a new
transfer of the certificate of title in their names upon
receipt of the down payment in the amount of
P50,000.00. As soon as the new certificate of title is
issued in their names, petitioners were committed to
immediately execute the deed of absolute sale. Only
then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which
is most commonly entered into so as to protect the
seller against a buyer who intends to buy the property
in installment by withholding ownership over the
property until the buyer effects full payment therefor, in
the contract entered into in the case at bar, the sellers
were the one who were unable to enter into a contract
of absolute sale by reason of the fact that the certificate
of title to the property was still in the name of their
father. It was the sellers in this case who, as it were,
had the impediment which prevented, so to speak, the
execution of an contract of absolute sale.
What is clearly established by the plain language of the
subject document is that when the said "Receipt of
Down Payment" was prepared and signed by
petitioners Romeo A. Coronel, et al., the parties had
agreed to a conditional contract of sale, consummation
of which is subject only to the successful transfer of the
certificate of title from the name of petitioners' father,
Constancio P. Coronel, to their names.
The Court significantly notes this suspensive condition
was, in fact, fulfilled on February 6, 1985 (Exh. "D";
Exh. "4"). Thus, on said date, the conditional contract
of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act
required for the consummation thereof being the
delivery of the property by means of the execution of
the deed of absolute sale in a public instrument, which
petitioners unequivocally committed themselves to do
as evidenced by the "Receipt of Down Payment."
Article 1475, in correlation with Article 1181, both of the
Civil Code, plainly applies to the case at bench. Thus,
Art. 1475. The contract of sale is
perfected at the moment there is a
meeting of minds upon the thing which
is the object of the contract and upon
the price.
From the moment, the parties may
reciprocally demand performance,
subject to the provisions of the law
governing the form of contracts.
Art. 1181. In conditional obligations,
the acquisition of rights, as well as the
extinguishment or loss of those already
acquired, shall depend upon the
happening of the event which
constitutes the condition.
Since the condition contemplated by the parties which
is the issuance of a certificate of title in petitioners'
names was fulfilled on February 6, 1985, the respective
obligations of the parties under the contract of sale
became mutually demandable, that is, petitioners, as
sellers, were obliged to present the transfer certificate
of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately
execute the deed of absolute sale, while the buyer on
her part, was obliged to forthwith pay the balance of the
purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in
page 9 of their petition, petitioners conclusively
admitted that:
3. The petitioners-sellers Coronel
bound themselves "to effect the
transfer in our names from our
deceased father Constancio P.
Coronel, the transfer certificate of title
immediately upon receipt of the
downpayment above-stated". The sale
was still subject to this suspensive
condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered
into a contract of sale subject to a suspensive
condition. Only, they contend, continuing in the same
paragraph, that:
. . . Had petitioners-sellers not
complied with this condition of first
transferring the title to the property
under their names, there could be no
perfected contract of sale. (Emphasis
supplied.)
(Ibid.)
not aware that they set their own trap for
themselves, for Article 1186 of the Civil Code
expressly provides that:
Art. 1186. The condition shall be
deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Besides, it should be stressed and emphasized that
what is more controlling than these mere hypothetical
arguments is the fact that the condition herein referred
to was actually and indisputably fulfilled on February 6,
1985, when a new title was issued in the names of
petitioners as evidenced by TCT No. 327403 (Exh. "D";
Exh. "4").
The inevitable conclusion is that on January 19, 1985,
as evidenced by the document denominated as
"Receipt of Down Payment" (Exh. "A"; Exh. "1"), the
parties entered into a contract of sale subject only to
the suspensive condition that the sellers shall effect the
issuance of new certificate title from that of their
father's name to their names and that, on February 6,
1985, this condition was fulfilled (Exh. "D"; Exh. "4").
We, therefore, hold that, in accordance with Article
1187 which pertinently provides —
Art. 1187. The effects of conditional
obligation to give, once the condition
has been fulfilled, shall retroact to the
day of the constitution of the obligation
...
In obligation to do or not to do, the
courts shall determine, in each case,
the retroactive effect of the condition
that has been complied with.
the rights and obligations of the parties with
respect to the perfected contract of sale
became mutually due and demandable as of
the time of fulfillment or occurrence of the
suspensive condition on February 6, 1985. As
of that point in time, reciprocal obligations of
both seller and buyer arose.
Petitioners also argue there could been no perfected
contract on January 19, 1985 because they were then
not yet the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a
mode of transferring ownership as follows:
Art. 774. Succession is a mode of
acquisition by virtue of which the
property, rights and obligations to be
extent and value of the inheritance of a
person are transmitted through his
death to another or others by his will or
by operation of law.
Petitioners-sellers in the case at bar being the
sons and daughters of the decedent
Constancio P. Coronel are compulsory heirs
who were called to succession by operation of
law. Thus, at the point their father drew his last
breath, petitioners stepped into his shoes
insofar as the subject property is concerned,
such that any rights or obligations pertaining
thereto became binding and enforceable upon
them. It is expressly provided that rights to the
succession are transmitted from the moment of
death of the decedent (Article 777, Civil Code;
Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners' claim that succession
may not be declared unless the creditors have been
paid is rendered moot by the fact that they were able
to effect the transfer of the title to the property from the
decedent's name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising
their supposed lack of capacity to enter into an
agreement at that time and they cannot be allowed to
now take a posture contrary to that which they took
when they entered into the agreement with private
respondent Ramona P. Alcaraz. The Civil Code
expressly states that:
Art. 1431. Through estoppel an
admission or representation is
rendered conclusive upon the person
making it, and cannot be denied or
disproved as against the person relying
thereon.
Having represented themselves as the true
owners of the subject property at the time of
sale, petitioners cannot claim now that they
were not yet the absolute owners thereof at that
time.
Petitioners also contend that although there was in fact
a perfected contract of sale between them and
Ramona P. Alcaraz, the latter breached her reciprocal
obligation when she rendered impossible the
consummation thereof by going to the United States of
America, without leaving her address, telephone
number, and Special Power of Attorney (Paragraphs
14 and 15, Answer with Compulsory Counterclaim to
the Amended Complaint, p. 2; Rollo, p. 43), for which
reason, so petitioners conclude, they were correct in
unilaterally rescinding rescinding the contract of sale.
We do not agree with petitioners that there was a valid
rescission of the contract of sale in the instant case.
We note that these supposed grounds for petitioners'
rescission, are mere allegations found only in their
responsive pleadings, which by express provision of
the rules, are deemed controverted even if no reply is
filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any
supporting evidence to substantiate petitioners'
allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng
Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs.
Embisan, 2 SCRA 598 [1961]. Mere allegation is not
an evidence (Lagasca vs. De Vera, 79 Phil. 376
[1947]).
Even assuming arguendo that Ramona P. Alcaraz was
in the United States of America on February 6, 1985,
we cannot justify petitioner-sellers' act of unilaterally
and extradicially rescinding the contract of sale, there
being no express stipulation authorizing the sellers to
extarjudicially rescind the contract of sale. (cf. Dignos
vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. de
Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the
alleged absence of Ramona P. Alcaraz because
although the evidence on record shows that the sale
was in the name of Ramona P. Alcaraz as the buyer,
the sellers had been dealing with Concepcion D.
Alcaraz, Ramona's mother, who had acted for and in
behalf of her daughter, if not also in her own behalf.
Indeed, the down payment was made by Concepcion
D. Alcaraz with her own personal check (Exh. "B"; Exh.
"2") for and in behalf of Ramona P. Alcaraz. There is
no evidence showing that petitioners ever questioned
Concepcion's authority to represent Ramona P.
Alcaraz when they accepted her personal check.
Neither did they raise any objection as regards
payment being effected by a third person. Accordingly,
as far as petitioners are concerned, the physical
absence of Ramona P. Alcaraz is not a ground to
rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be
deemed to be in default, insofar as her obligation to pay
the full purchase price is concerned. Petitioners who
are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-
explained offered no proof whatsoever to show that
they actually presented the new transfer certificate of
title in their names and signified their willingness and
readiness to execute the deed of absolute sale in
accordance with their agreement. Ramona's
corresponding obligation to pay the balance of the
purchase price in the amount of P1,190,000.00 (as
buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in
default.
Article 1169 of the Civil Code defines when a party in a
contract involving reciprocal obligations may be
considered in default, to wit:
Art. 1169. Those obliged to deliver or to
do something, incur in delay from the
time the obligee judicially or
extrajudicially demands from them the
fulfillment of their obligation.
xxx xxx xxx
In reciprocal obligations, neither party
incurs in delay if the other does not
comply or is not ready to comply in a
proper manner with what is incumbent
upon him. From the moment one of the
parties fulfill his obligation, delay by the
other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind
the contract of sale between petitioners and
respondents.
With the foregoing conclusions, the sale to the other
petitioner, Catalina B. Mabanag, gave rise to a case of
double sale where Article 1544 of the Civil Code will
apply, to wit:
Art. 1544. If the same thing should
have been sold to different vendees,
the ownership shall be transferred to
the person who may have first taken
possession thereof in good faith, if it
should be movable property.
Should if be immovable property, the
ownership shall belong to the person
acquiring it who in good faith first
recorded it in Registry of Property.
Should there be no inscription, the
ownership shall pertain to the person
who in good faith was first in the
possession; and, in the absence
thereof to the person who presents the
oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute
Sale dated April 25, 1985 as proof of the second
contract of sale was registered with the Registry of
Deeds of Quezon City giving rise to the issuance of a
new certificate of title in the name of Catalina B.
Mabanag on June 5, 1985. Thus, the second
paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes
title or ownership to pass to the first buyer, the
exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two
buyers, when the second buyer, in good faith, acquires
possession of the property ahead of the first buyer.
Unless, the second buyer satisfies these requirements,
title or ownership will not transfer to him to the prejudice
of the first buyer.
In his commentaries on the Civil Code, an accepted
authority on the subject, now a distinguished member
of the Court, Justice Jose C. Vitug, explains:
 The governing principle is prius
tempore, potior jure (first in time,
stronger in right). Knowledge by the
first buyer of the second sale cannot
defeat the first buyer's rights except
when the second buyer first registers in
good faith the second sale (Olivares vs.
Gonzales, 159 SCRA 33). Conversely,
knowledge gained by the second buyer
of the first sale defeats his rights even
if he is first to register, since knowledge
taints his registration with bad faith
(see also Astorga vs. Court of Appeals,
G.R. No. 58530, 26 December 1984).
In Cruz vs. Cabana (G.R. No. 56232,
22 June 1984, 129 SCRA 656), it has
held that it is essential, to merit the
protection of Art. 1544, second
paragraph, that the second realty buyer
must act in good faith in registering his
deed of sale (citing Carbonell vs. Court
of Appeals, 69 SCRA 99, Crisostomo
vs. CA, G.R. No. 95843, 02 September
1992).
(J. Vitug Compendium of Civil Law and
Jurisprudence, 1993 Edition, p. 604).
Petitioner point out that the notice of lis pendens in the
case at bar was annoted on the title of the subject
property only on February 22, 1985, whereas, the
second sale between petitioners Coronels and
petitioner Mabanag was supposedly perfected prior
thereto or on February 18, 1985. The idea conveyed is
that at the time petitioner Mabanag, the second buyer,
bought the property under a clean title, she was
unaware of any adverse claim or previous sale, for
which reason she is buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and
materiality is not whether or not the second buyer was
a buyer in good faith but whether or not said second
buyer registers such second sale in good faith, that is,
without knowledge of any defect in the title of the
property sold.
buyer is claiming title to the same property. Petitioner
Mabanag cannot close her eyes to the defect in
petitioners' title to the property at the time of the
registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers
that sale after he has acquired
knowledge that there was a previous
sale of the same property to a third
party or that another person claims
said property in a pervious sale, the
registration will constitute a registration
in bad faith and will not confer upon him
any right. (Salvoro vs. Tanega, 87
SCRA 349 [1978]; citing Palarca vs.
Director of Land, 43 Phil. 146;
Cagaoan vs. Cagaoan, 43 Phil. 554;
Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between
petitioners and Ramona P. Alcaraz, perfected on
February 6, 1985, prior to that between petitioners and
Catalina B. Mabanag on February 18, 1985, was
correctly upheld by both the courts below.
Although there may be ample indications that there
was in fact an agency between Ramona as principal
and Concepcion, her mother, as agent insofar as the
subject contract of sale is concerned, the issue of
whether or not Concepcion was also acting in her own
behalf as a co-buyer is not squarely raised in the
instant petition, nor in such assumption disputed
between mother and daughter. Thus, We will not touch
this issue and no longer disturb the lower courts' ruling
on this point.
WHEREFORE, premises considered, the instant
petition is hereby DISMISSED and the appealed
judgment AFFIRMED.
SO ORDERED.

As clearly borne out by the evidence in this case,

petitioner Mabanag could not have in good faith,
registered the sale entered into on February 18, 1985
because as early as February 22, 1985, a notice of lis
pendens had been annotated on the transfer certificate
of title in the names of petitioners, whereas petitioner
Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner
Mabanag knew that the same property had already
been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous
ARTICLE 774-776
G.R. No. 168970 January 15, 2010
CELESTINO BALUS, Petitioner,
vs.
SATURNINO BALUS and LEONARDA BALUS
VDA. DE CALUNOD, Respondents.
DECISION
PERALTA, J.:
Assailed in the present petition for review
on certiorari under Rule 45 of the Rules of Court is the
Decision1 of the Court of Appeals (CA) dated May 31,
2005 in CA-G.R. CV No. 58041 which set aside the
February 7, 1997 Decision of the Regional Trial Court
(RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
The facts of the case are as follows:
Herein petitioner and respondents are the children of the
spouses Rufo and Sebastiana Balus. Sebastiana died on
September 6, 1978, while Rufo died on July 6, 1984.
On January 3, 1979, Rufo mortgaged a parcel of land,
which he owns, as security for a loan he obtained from
the Rural Bank of Maigo, Lanao del Norte (Bank). The said
property was originally covered by Original Certificate of
Title No. P-439(788) and more particularly described as
follows:
A parcel of land with all the improvements thereon,
containing an area of 3.0740 hectares, more or less,
situated in the Barrio of Lagundang, Bunawan, Iligan City,
and bounded as follows: Bounded on the NE., along line
1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan
River; along line 12-13 by Lot 4649, Csd-292; and along
line 12-1, by Lot 4661, Csd-292. x x x 2
Rufo failed to pay his loan. As a result, the mortgaged
property was foreclosed and was subsequently sold to the
Bank as the sole bidder at a public auction held for that
purpose. On November 20, 1981, a Certificate of
Sale3 was executed by the sheriff in favor of the Bank.
The property was not redeemed within the period allowed
by law. More than two years after the auction, or on
January 25, 1984, the sheriff executed a Definite Deed of
Sale4 in the Bank's favor. Thereafter, a new title was
issued in the name of the Bank.
On October 10, 1989, herein petitioner and respondents
executed an Extrajudicial Settlement of
Estate5adjudicating to each of them a specific one-third
portion of the subject property consisting of 10,246
square meters. The Extrajudicial Settlement also
contained provisions wherein the parties admitted
knowledge of the fact that their father mortgaged the
subject property to the Bank and that they intended to
redeem the same at the soonest possible time.
Three years after the execution of the Extrajudicial
Settlement, herein respondents bought the subject
property from the Bank. On October 12, 1992, a Deed of
Sale of Registered Land6 was executed by the Bank in
favor of respondents. Subsequently, Transfer Certificate
of Title (TCT) No. T-39,484(a.f.)7 was issued in the name
of respondents. Meanwhile, petitioner continued
possession of the subject lot.
On June 27, 1995, respondents filed a Complaint 8 for
Recovery of Possession and Damages against petitioner,
contending that they had already informed petitioner of
the fact that they were the new owners of the disputed
property, but the petitioner still refused to surrender
possession of the same to them. Respondents claimed
that they had exhausted all remedies for the amicable
settlement of the case, but to no avail.
On February 7, 1997, the RTC rendered a
Decision9 disposing as follows:
WHEREFORE, judgment is hereby rendered, ordering the
plaintiffs to execute a Deed of Sale in favor of the
defendant, the one-third share of the property in
question, presently possessed by him, and described in
the deed of partition, as follows:
A one-third portion of Transfer Certificate of Title No. T-
39,484 (a.f.), formerly Original Certificate of Title No. P-
788, now in the name of Saturnino Balus and Leonarda B.
Vda. de Calunod, situated at Lagundang, Bunawan, Iligan
City, bounded on the North by Lot 5122; East by shares
of Saturnino Balus and Leonarda Balus-Calunod; South by
Lot 4649, Dodiongan River; West by Lot 4661, consisting
of 10,246 square meters, including improvements
thereon.
and dismissing all other claims of the parties.
The amount of ₱6,733.33 consigned by the defendant
with the Clerk of Court is hereby ordered delivered to the
plaintiffs, as purchase price of the one-third portion of the
land in question.
Plaintiffs are ordered to pay the costs.
SO ORDERED.10
The RTC held that the right of petitioner to purchase from
the respondents his share in the disputed property was
recognized by the provisions of the Extrajudicial
Settlement of Estate, which the parties had executed
before the respondents bought the subject lot from the
Bank.
Aggrieved by the Decision of the RTC, herein respondents
filed an appeal with the CA.
On May 31, 2005, the CA promulgated the presently
assailed Decision, reversing and setting aside the Decision
of the RTC and ordering petitioner to immediately
surrender possession of the subject property to the
respondents. The CA ruled that when petitioner and
respondents did not redeem the subject property within
the redemption period and allowed the consolidation of
ownership and the issuance of a new title in the name of
the Bank, their co-ownership was extinguished.
Hence, the instant petition raising a sole issue, to wit:
WHETHER OR NOT CO-OWNERSHIP AMONG THE
PETITIONER AND THE RESPONDENTS OVER THE
PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN
AFTER THE TRANSFER OF TITLE TO THE BANK) BY
VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE
REPURCHASE THEREOF BY THE RESPONDENTS; THUS,
WARRANTING THE PETITIONER'S ACT OF ENFORCING
THE AGREEMENT BY REIMBURSING THE RESPONDENTS
OF HIS (PETITIONER'S) JUST SHARE OF THE
REPURCHASE PRICE.11
The main issue raised by petitioner is whether co-
ownership by him and respondents over the subject
property persisted even after the lot was purchased by
the Bank and title thereto transferred to its name, and
even after it was eventually bought back by the
respondents from the Bank.
Petitioner insists that despite respondents' full knowledge
of the fact that the title over the disputed property was
already in the name of the Bank, they still proceeded to
execute the subject Extrajudicial Settlement, having in
mind the intention of purchasing back the property
together with petitioner and of continuing their co-
ownership thereof.
Petitioner posits that the subject Extrajudicial Settlement
is, in and by itself, a contract between him and
respondents, because it contains a provision whereby the
parties agreed to continue their co-ownership of the
subject property by "redeeming" or "repurchasing" the
same from the Bank. This agreement, petitioner
contends, is the law between the parties and, as such,
binds the respondents. As a result, petitioner asserts that
respondents' act of buying the disputed property from the
Bank without notifying him inures to his benefit as to give
him the right to claim his rightful portion of the property,
comprising 1/3 thereof, by reimbursing respondents the
equivalent 1/3 of the sum they paid to the Bank.
The Court is not persuaded.
Petitioner and respondents are arguing on the wrong
premise that, at the time of the execution of the
Extrajudicial Settlement, the subject property formed part
of the estate of their deceased father to which they may
lay claim as his heirs.
At the outset, it bears to emphasize that there is no
dispute with respect to the fact that the subject property
was exclusively owned by petitioner and respondents'
father, Rufo, at the time that it was mortgaged in 1979.
This was stipulated by the parties during the hearing
conducted by the trial court on October 28,
1996.12 Evidence shows that a Definite Deed of Sale13 was
issued in favor of the Bank on January 25, 1984, after the
period of redemption expired. There is neither any dispute
that a new title was issued in the Bank's name before Rufo
died on July 6, 1984. Hence, there is no question that the
Bank acquired exclusive ownership of the contested lot
during the lifetime of Rufo.
The rights to a person's succession are transmitted from
the moment of his death.14 In addition, the inheritance of
a person consists of the property and transmissible rights
and obligations existing at the time of his death, as well
as those which have accrued thereto since the opening of
the succession.15 In the present case, since Rufo lost
ownership of the subject property during his lifetime, it
only follows that at the time of his death, the disputed
parcel of land no longer formed part of his estate to which
his heirs may lay claim. Stated differently, petitioner and
respondents never inherited the subject lot from their
father.
Petitioner and respondents, therefore, were wrong in
assuming that they became co-owners of the subject lot.
Thus, any issue arising from the supposed right of
petitioner as co-owner of the contested parcel of land is
negated by the fact that, in the eyes of the law, the
disputed lot did not pass into the hands of petitioner and
respondents as compulsory heirs of Rufo at any given
point in time.
The foregoing notwithstanding, the Court finds a
necessity for a complete determination of the issues
raised in the instant case to look into petitioner's
argument that the Extrajudicial Settlement is an
independent contract which gives him the right to enforce
his right to claim a portion of the disputed lot bought by
respondents.1avvphi1
It is true that under Article 1315 of the Civil Code of the
Philippines, contracts are perfected by mere consent; and
from that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also
to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Article 1306 of the same Code also provides that the
contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem
convenient, provided these are not contrary to law,
morals, good customs, public order or public policy.
In the present case, however, there is nothing in the
subject Extrajudicial Settlement to indicate any express
stipulation for petitioner and respondents to continue with
their supposed co-ownership of the contested lot.
On the contrary, a plain reading of the provisions of the
Extrajudicial Settlement would not, in any way, support
petitioner's contention that it was his and his sibling's
intention to buy the subject property from the Bank and
continue what they believed to be co-ownership thereof.
It is a cardinal rule in the interpretation of contracts that
the intention of the parties shall be accorded primordial
consideration.16 It is the duty of the courts to place a
practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and
the purpose which it is intended to serve.17 Such intention
is determined from the express terms of their agreement,
as well as their contemporaneous and subsequent
acts.18 Absurd and illogical interpretations should also be
avoided.19
For petitioner to claim that the Extrajudicial Settlement is
an agreement between him and his siblings to continue
what they thought was their ownership of the subject
property, even after the same had been bought by the
Bank, is stretching the interpretation of the said
Extrajudicial Settlement too far.
and title to the property was already transferred to the
Bank does not give them the right or the authority to
unilaterally declare themselves as co-owners of the
disputed property; otherwise, the disposition of the case
would be made to depend on the belief and conviction of
the party-litigants and not on the evidence adduced and
the law and jurisprudence applicable thereto.
Furthermore, petitioner's contention that he and his
siblings intended to continue their supposed co-ownership
of the subject property contradicts the provisions of the
subject Extrajudicial Settlement where they clearly
manifested their intention of having the subject property
divided or partitioned by assigning to each of the
petitioner and respondents a specific 1/3 portion of the
same. Partition calls for the segregation and conveyance
of a determinate portion of the property owned in
common. It seeks a severance of the individual interests
of each co-owner, vesting in each of them a sole estate
in a specific property and giving each one a right to enjoy
his estate without supervision or interference from the
other.20 In other words, the purpose of partition is to put
an end to co-ownership,21 an objective which negates
petitioner's claims in the present case.
WHEREFORE, the instant petition is DENIED. The
assailed Decision of the Court of Appeals, dated May 31,
2005 in CA-G.R. CV No. 58041, is AFFIRMED.
SO ORDERED

In the first place, as earlier discussed, there is no co-

ownership to talk about and no property to partition, as
the disputed lot never formed part of the estate of their
deceased father.

Moreover, petitioner's asseveration of his and

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

In addition, it appears from the recitals in the Extrajudicial

Settlement that, at the time of the execution thereof, the
parties were not yet aware that the subject property was
already exclusively owned by the Bank. Nonetheless, the
lack of knowledge on the part of petitioner and
respondents that the mortgage was already foreclosed
G.R. No. 125888 August 13, 1998
SPOUSES ERNESTO and EVELYN
SICAD, petitioners,
vs.
COURT OF APPEALS, CATALINO VALDERRAMA,
JUDY CRISTINA M. VALDERRAMA and JESUS
ANTONIO VALDERRAMA, respondents.
NARVASA, C.J.:
The issue raised in the appeal by certiorari at bar
centers on the character of a deed of donation
executed by the late Aurora Virto DA. de Motinola of
the City of Iloilo — as either inter vivos or mortis
causa. That deed, entitled "DEED OF DONATION
INTER VIVOS," 1 was executed by Montinola on
December 11, 1979. It named as donees her
grandchildren, namely: Catalino Valderrama, Judy
Cristina Valderrama and Jesus Antonio Valderrama:
and treated of a parcel of land, Lot 3231 of the
Cadastral Survey of Panay, located at Brgy. Pawa,
Panay, Capiz, covered by Transfer Certificate of Title
No. T-16105 in the name of Montinola. The deed also
contained the signatures of the donees in
acknowledgment of their acceptance of the donation.
Montinola's Secretary, Gloria Salvilla, afterwards
presented the deed for recording in the Property
Registry, and the Register of Deeds cancelled TCT
No. T-16105 (the donor's title) and, in its place, issued
TCT No. T-16622 on February 7, 1980, in the names
of the donees.2 Montinola however retained the
owner's duplicate copy of the new title (No. T-16622),
as well as the property itself, until she transferred the
same ten (10) years later, on July 10, 1990, to the
spouses, Ernesto and Evelyn Sicad.
On March 12, 1987, Aurora Montinola drew up a deed
of revocation of the donation, 3 and caused it to be
annotated as an adverse claim on TCT No. T-16622
(issued, as aforestated, in her grandchildren's
names). Then, on August 24, 1990, she filed a
petition with the Regional Trial Court in Roxas City for
the cancellation of said TCT No. T-16622 and the
reinstatement of TCT No. T- 16105 (in her name), the
case being docketed as Special Proceeding No.
3311. Her petition was founded on the theory that the
donation to her three (3) grandchildren was
one mortis causa which thus had to comply with the
formalities of a will; and since it had not, the donation
was void and could not effectively serve as basis for
the cancellation of TCT No. T-16105 and the issuance
in its place of TCT No. T-16622.
The donees (Montinola's grandchildren) opposed the
petition. In their opposition dated August 29, 1990,
they averred that the donation in their favor was
one inter vivos which, having fully complied with the
requirements therefor set out in Article 729 of the Civil
Code, was perfectly valid and efficacious. They also
expressed doubt about the sincerity of their
grandmother's intention to recover the donated
property, since she had not pursued the matter of its
revocation after having it annotated as an adverse
claim.
The case, originally treated as a special proceeding,
was subsequently considered by the lower Court as
an ordinary civil action in view of the allegations and
issues raised in the pleadings. Pre-trial was had,
followed by trial on the merits which was concluded
with the filing of the parties' memoranda. The Trial
Court then rendered judgment on March 27, 1991,
holding that the donation was indeed one inter vivos,
and dismissing Aurora Montinola's petition for lack of
merit. 4 The matter of its revocation was not passed
upon.
Montinola elevated the case to the Court of Appeals,
her appeal being docketed as CA-G.R. CV No.
33202. She however died on March 10, 1993, 5 while
the appeal was pending.
Shortly after Montinola's demise, a "Manifestation and
Motion" dated March 31, 1993 was filed by Ernesto
Sicad and Evelyn Bofill-Sicad, herein petitioners, 6 in
which they (a) alleged that they had become the
owners of the property covered by TCT No. T-16622
in virtue of a "deed of definite sale dated May 25,
1992" accomplished by Montinola in their favor, which
was confirmed by "an affidavit dated November 26,
1997 also executed by the latter, and (b) prayed that
they be substituted as appellants and allowed to
prosecute the case in their own behalf.
Another motion was subsequently presented under
date of April 7, 1993, this time by the legal heirs of
Aurora Montinola, namely: Ofelia M. de Leon, Estela
M. Jaen and Teresita M. Valderama. They declared
that they were not interested in pursuing the case,
and asked that the appeal be withdrawn. Montinola's
counsel opposed the motion.
On June 21, 1993, the Court of Appeals issued a
Resolution: (a) ordering the substitution of the
persons above mentioned — Ofelia de Leon, Estela
M, Jaen, and Teresita M. Valderama — as plaintiffs-
appellants in place of the late Aurora Montinola, as
well as the joinder of the spouses Ernesto and Evelyn
Bofill-Sicad as additional appellants; 7 and (b) denying
the motion for the withdrawal of the appeal.
On June 30, 1995, the Eighth Division of the Court of
Appeals promulgated its Decision on the case
affirming the judgment of the Regional Trial
Court; 8 and on July 31, 1996, it denied the separate
motions for reconsideration filed by Ofelia M. de Leon,
Estela M. Jaen, and Teresita M. Valderrama, on the
one hand, and by the spouses, Ernest and Evelyn
Sicad, on the other. 9
The Sicad Spouses have appealed to this Court; and
here, they contend that the following errors were
committed by the Appellate Tribunal, to wit:
1) ** in ruling that the
donation was inter
vivos and in not giving
due weight to the
revocation of the
donation; and
2) ** in not ordering
that the case be
remanded for further
reception of
evidence. 10
The Comment filed for private respondents (the
donees) under date of December 19, 1996 deals with
what they consider the "principal issue in this
case ** (i.e.) whether the donation is mortis
causa or inter vivos," and sets forth the argument that
the "donor clearly intended to effect the immediate
transfer of ownership to the donees." that the
prohibition in the deed of donation "against selling the
property within ten (10) years after the death of the
donor does not indicate that the donation is mortis
causa," that the donor's "alleged act of physically
keeping the title does not suggest any intention to
defer the effectivity of the donation," that the
"payment of real property taxes is consistent with the
donor's' reservation of the right of usufruct," that the
donor's intent "is not determined by ** (her) self-
serving post-execution declarations," the "donation
was never effectively revoked," and petitioners "have
waived their right to question the proceedings in the
trial court." 11
The Reply of the Sicad Spouses dated March 14,
1997 reiterates their thesis that the donation
was mortis causa, that "the provisions of the deed of
donation indicate that it was intended to take effect
upon the death of the donor," that "the circumstances
surrounding the execution of the deed, and the
subsequent actions of the donor incontrovertibly
signify the donor's intent to transfer the property only
after her death," that the donor "did not intend to give
effect to the donation," and that the procedure
adopted by the Trial Court in the case was fatally
defective. 12A "Rejoinder" dated April 3, 1997 was then
submitted by the Valderramas, traversing the
assertions of the Reply. 13
Considering the focus of the opposing parties, and
their conflicting theories, on the intention of Aurora
Montinola in executing the document entitled "Deed of
Donation Inter Vivos," it is needful to review the
circumstances of the signing of that document by
Montinola, as ostensible donor, and her
grandchildren, as ostensible donees.
The evidence establishes that on December 11, 1979,
when the deed of donation prepared by Montinola's
lawyer (Atty. Treñas) was read and explained by the
latter to the parties, Montinola expressed her wish
that the donation take effect only after ten (10) years
from her death, and that the deed include a
prohibition on the sale of the property for such period.
Accordingly, a new proviso was inserted in the deed
reading: "however, the donees shall not sell or
encumber the properties herein donated within 10
years after the death of the donor." 14 The actuality of
the subsequent insertion of this new proviso is
apparent on the face of the instrument: the
intercalation is easily perceived and identified — it
was clearly typed on a different machine, and is
crammed into the space between the penultimate
paragraph of the deed and that immediately
preceding it. 15
Not only did Aurora Montinola order the insertion in
the deed of that restrictive proviso, but also, after
recordation of the deed of donation, she never
stopped treating the property as her own. She
continued, as explicity authorized in the deed itself, to
possess the property, enjoy its fruits and otherwise
exercise the rights of dominion, paying the property
taxes as they fell due — all these she did until she
transferred the Property to the Sicad Spouses on July
10, 1990. She did not give the new certificate of title
to the ostensible donees but retained it, too, until she
delivered it to the Sicads on the occasion of the sale
of the property to them. In any event, the delivery of
the title to the donees would have served no useful
purpose since, as just stated, they were prohibited to
effect any sale or encumbrance thereof for a period of
ten (10) years after the ostensible donor's decease.
And consistent with these acts denoting retention of
ownership of the property was Montinola's openly
expressed view that the donation was ineffectual and
could not be given effect even after ten (10) years
from her death. For this view she sought to obtain
judicial approval. She brought suit on August 24, 1990
to cancel TCT No. T-16622 (issued to her
grandchildren) premised precisely on the invalidity of
the donation for failure to comply with the requisites of
testamentary dispositions. Before that, she attempted
to undo the conveyance to her grandchildren by
executing a deed of revocation of the donation on
March 12, 1987, and causing annotation thereof as an
adverse claim on said TCT No. T-16622. She also
exercised indisputable acts of ownership over said
property by executing, as just stated, deeds intended
to pass title over it to third parties — petitioners
herein. 16
As already intimated, the real nature of a deed is to
be ascertained by both its language and the intention
of the parties as demonstrated by the circumstances
attendant upon its execution. In this respect, case law
has laid down significant parameters. Thus, in a
decision handed down in 1946, 17 this Court construed
a deed purporting to be a donation inter vivos to be in
truth one mortis causa because it stipulated (like the
one now being inquired into) "that all rents, proceeds,
fruits, of the donated properties shall remain for the
exclusive benefit and disposal of the donor, Margarita
David, during her lifetime; and that, without the
knowledge and consent of the donor, the donated
properties could not be disposed of in any way,
whether by sale, mortgage, barter, or in any other way
possible," On these essential premises, the Court
said, such a donation must be deemed one "mortis
causa, because the combined effect of the
circumstances surrounding the execution of the deed
of donation and of the above-quoted clauses
thereof ** (was that) the most essential elements of
ownership — the right to dispose of the donated
properties and the right to enjoy the products, profits,
possession — remained with Margarita David during
her lifetime, and would accrue to the donees only
after Margarita David's death." So, too, in the case at
bar, did these rights remain with Aurora Montinola
during her lifetime, and could not pass to the donees
until ten (10) years after her death.
In another case decided in 1954 involving a similar
issue, Bonsato v. Court of Appeals, 18 this Court
emphasized that the decisive characteristics of a
donation mortis causa, which it had taken into
account in David v. Sison, were that "the donor not
only reserved for herself all the fruits of the property
allegedly conveyed, but what is even more important,
specially provided that "without the knowledge and
consent of the donor, the donated properties could
not be disposed of in any way,; thereby denying to the
transferees the most essential attribute of ownership,
the power to dispose of the properties."
A donation which purports to be one inter vivos but
withholds from the donee the right to dispose of the
donated property during the donor's lifetime is in truth
one mortis causa. In a donation mortis causa "the
right of disposition is not transferred to the donee
while the donor is still alive." 19
In the instant case, nothing of any consequence was
transferred by the deed of donation in question to
Montinola's grandchildren, the ostensible donees.
They did not get possession of the property donated.
They did not acquire the right to the fruits thereof, or
any other right of dominion over the property. More
importantly, they did not acquire the right to dispose
of the property — this would accrue to them only after
ten (10) years from Montinola's death. Indeed, they
never even laid hands on the certificate of title to the
same. They were therefore simply "paper owners" of
the donated property. All these circumstances,
including, to repeat, the explicit provisions of the deed
of donation — reserving the exercise of rights of
ownership to the donee and prohibiting the sale or
encumbrance of the property until ten (10) years after
her death — ineluctably lead to the conclusion that
the donation in question was a donation mortis causa,
contemplating a transfer of ownership to the donees
only after the donor's demise.
The case of Alejandro v. Geraldez 20 cited by the Court
of Appeals in support of its challenged judgment is not
quite relevant. For in the deed of donation there in
issue, there was a partial relinquishment of the right to
dispose of the property, in the event only that this
became necessary "to defray the expenses and
support of the donors." That limited right to dispose of
the donated lots, said this Court, "implies that
ownership had passed to ** (the donees) by means of
the donation and **, therefore, the donation was
already effective during the donors' lifetime. That is a
characteristic of a donation inter vivos." On the other
hand, in the case at bar, the donees were expressly
prohibited to make any disposition of any nature or for
any purpose whatever during the donor's lifetime, and
until ten (10) years after her death — a prohibition
which, it may be added, makes inapplicable the ruling
in Castro v. Court of Appeals, 21 where no such
prohibition was imposed, and the donor retained only
the usufruct over the property.
The Valderramas' argument that the donation is inter
vivos in character and that the prohibition against their
disposition of the donated property is merely a
condition which, if violated, would give cause for its
revocation, begs the question. It assumes that they
have the right to make a disposition of the property,
which they do not. The argument also makes no
sense, because if they had the right to dispose of the
property and did in fact dispose of it to a third person,
the revocation of the donation they speak of would be
of no utility or benefit to the donor, since such a
revocation would not necessarily result in the
restoration of the donor's ownership and enjoyment of
the property.
It is also error to suppose that the donation under
review should be deemed one inter vivos simply
because founded on considerations of love and
affection. In Alejandro v. Geraldez, supra, 22 this Court
also observed that "the fact that the donation is given
in consideration of love and affection ** is not a
characteristic of donations inter vivos(solely) because
transfers mortis causa may also be made for the
same reason." Similarly, in Bonsato v. Court of
Appeals, supra, this Court opined that the fact "that
the conveyance was due to the affection of the donor
for the donees and the services rendered by the
latter, is of no particular significance in determining
whether the deeds, Exhs. "1" and "2," constitute
transfers inter vivos or not, because a legacy may
have identical motivation." 23

Finally, it is germane to advert to the legal principle in

Article 1378 of the Civil Code to the effect that in case
of doubt relative to a gratuitous contract, the
construction must be that entailing "the least
transmission of rights and
interests," 24

The donation in question, though denominated inter

vivos, is in truth one mortis causa; it is void because
the essential requisites for its validity have not been
complied with.

WHEREFORE, the Decision of the Court of Appeals

in CA-G.R. CV No. 33202 dated June 30, 1995 as
well as the Resolution denying reconsideration
thereof, and the Decision of the Regional Trial Court
in Special Case No. 3311 are SET ASIDE. The Deed
of Donation Inter Vivos (Exh. "A") executed by Aurora
Virto Vda. de Montinola on December 11, 1979 in
favor of Catalino M. Valderrama, Judy Cristina M.
Valderrama and Jesus Antonio M. Valderrama is
declared null and void. The Register of Deeds of
Roxas City is directed to cancel Transfer Certificate of
Title No. T-16622, revive and reinstate Transfer
Certificate of Title No. T-16105.

SO ORDERED.