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

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.
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- Before answer was filed, and upon motion of the administratrix of Hemady’s estate, the lower court, by order of
293) for failure to state a cause of action. September 23, 1953, dismissed the claims of Luzon Surety Co., on two grounds: (1) that the premiums due and cost
of documentary stamps were not contemplated under the indemnity agreements to be a part of the undertaking of the
The Luzon Surety Co. had filed a claim against the Estate based on twenty different indemnity agreements, guarantor (Hemady), since they were not liabilities incurred after the execution of the counterbonds; and (2) that
or counter bonds, each subscribed by a distinct principal and by the deceased K. H. Hemady, a surety “whatever losses may occur after Hemady’s death, are not chargeable to his estate, because upon his death he ceased
solidary guarantor) in all of them, in consideration of the Luzon Surety Co.’s of having guaranteed, the to be guarantor.”
various principals in favor of different creditors. The twenty counterbonds, or indemnity agreements, all
contained the following stipulations: 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:
“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 “The administratrix further contends that upon the death of Hemady, his liability as a guarantor terminated, and
premium there of for every __________ months or fractions thereof, this ________ or any renewal or therefore, in the absence of a showing that a loss or damage was suffered, the claim cannot be considered contingent.
substitution thereof is in effect. 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
Indemnity. — The undersigned, jointly and severally, agree at all times to indemnify the COMPANY and correctly pointed out by the Administratrix, integrity is something purely personal and is not transmissible. Upon
keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, the death of Hemady, his integrity was not transmitted to his estate or successors. Whatever loss therefore, may occur
stamps, taxes, penalties, charges, and expenses of whatsoever kind and nature which the COMPANY shall after Hemady’s death, are not chargeable to his estate because upon his death he ceased to be a guarantor.
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 Another clear and strong indication that the surety company has exclusively relied on the personality, character,
them or any order executed on behalf of the undersigned or any of them; and to pay, reimburse and make honesty and integrity of the now deceased K. H. Hemady, was the fact that in the printed form of the indemnity
good to the COMPANY, its successors and assigns, all sums and amount of money which it or its agreement there is a paragraph entitled ‘Security by way of first mortgage, which was expressly waived and
representatives shall pay or cause to be paid, or become liable to pay, on account of the undersigned or renounced by the security company. The security company has not demanded from K. H. Hemady to comply with
any of them, of whatsoever kind and nature, including 15% of the amount involved in the litigation or this requirement of giving security by way of first mortgage. In the supporting papers of the claim presented by
other matters growing out of or connected therewith for counsel or attorney’s fees, but in no case less than Luzon Surety Company, no real property was mentioned in the list of properties mortgaged which appears at the
P25. It is hereby further agreed that in case of extension or renewal of this ________ we equally bind back of the indemnity agreement.” (Rec. App., pp. 407-408).
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 We find this reasoning untenable. Under the present Civil Code (Article 1311), as well as under the Civil Code of
right to be notified of any renewal or extension of this ________ which may be granted under this 1889 (Article 1257), the rule is that —
indemnity agreement.
“Contracts take effect only as between the parties, their assigns and heirs, except in the case where the rights and
Interest on amount paid by the Company. — Any and all sums of money so paid by the company shall obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.”
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 While in our successional system the responsibility of the heirs for the debts of their decedent cannot exceed the
and interest, shall be paid to the COMPANY as soon as the COMPANY shall have become liable value of the inheritance they receive from him, the principle remains intact that these heirs succeed not only to the
therefore, whether it shall have paid out such sums of money or any part thereof or not. 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.
xxx xxx xxx
“ART. 774. — Succession is a mode of acquisition by virtue of which the property, rights and obligations to the
Waiver. — It is hereby agreed upon by and between the undersigned that any question which may arise extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his
between them by reason of this document and which has to be submitted for decision to Courts of Justice will or by operation of law.”
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 “ART. 776. — The inheritance includes all the property, rights and obligations of a person which are not extinguished
hereby likewise waived. by his death.”

xxx xxx xxx In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:

Our Liability Hereunder. — It shall not be necessary for the COMPANY to bring suit against the principal “Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all the rights and obligations
upon his default, or to exhaust the property of the principal, but the liability hereunder of the undersigned of the deceased (Article 661) and cannot be regarded as third parties with respect to a contract to which the deceased
indemnitor shall be jointly and severally, a primary one, the same as that of the principal, and shall be was a party, touching the estate of the deceased (Barrios vs. Dolor, 2 Phil. 44).
exigible immediately upon the occurrence of such default.” (Rec. App. pp. 98- 102.)
xxx xxx xxx
“The principle on which these decisions rest is not affected by the provisions of the new Code of Civil the company’s faith and confidence in the financial stability of the surety, but not that his obligation was strictly
Procedure, and, in accordance with that principle, the heirs of a deceased person cannot be held to be personal.
“third persons” in relation to any contracts touching the real estate of their decedent which comes in to
their hands by right of inheritance; they take such property subject to all the obligations resting thereon The third exception to the transmissibility of obligations under Article 1311 exists when they are “not transmissible
in the hands of him from whom they derive their rights.” by operation of law”. The provision makes reference to those cases where the law expresses that the rights or
obligations are extinguished by death, as is the case in legal support (Article 300), parental authority (Article 327),
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman vs. Salak, 91 Phil., 265). 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
The binding effect of contracts upon the heirs of the deceased party is not altered by the provision in our no provision that the guaranty is extinguished upon the death of the guarantor or the surety.
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 lower court sought to infer such a limitation from Art. 2056, to the effect that “one who is obliged to furnish a
the estate is ultimately a payment by the heirs and distributees, since the amount of the paid claim in fact guarantor must present a person who possesses integrity, capacity to bind himself, and sufficient property to answer
diminishes or reduces the shares that the heirs would have been entitled to receive. for the obligation which he guarantees”. It will be noted, however, that the law requires these qualities to be present
only at the time of the perfection of the contract of guaranty. It is self-evident that once the contract has become
Under our law, therefore, the general rule is that a party’s contractual rights and obligations are perfected and binding, the supervening incapacity of the guarantor would not operate to exonerate him of the eventual
transmissible to the successors. The rule is a consequence of the progressive “depersonalization” of liability he has contracted; and if that be true of his capacity to bind himself, it should also be true of his integrity,
patrimonial rights and duties that, as observed by Victorio Polacco, has characterized the history of these which is a quality mentioned in the article alongside the capacity.
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 The foregoing concept is confirmed by the next Article 2057, that runs as follows:
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 “ART. 2057. — If the guarantor should be convicted in first instance of a crime involving dishonesty or should
disappearance of the imprisonment for debt. 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.”
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 From this article it should be immediately apparent that the supervening dishonesty of the guarantor (that is to say,
for the contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady when it accepted the the disappearance of his integrity after he has become bound) does not terminate the contract but merely entitles the
latter as surety in the counterbonds? Nothing but the reimbursement of the moneys that the Luzon Surety creditor to demand a replacement of the guarantor. But the step remains optional in the creditor: it is his right, not
Co. might have to disburse on account of the obligations of the principal debtors. This reimbursement is a his duty; he may waive it if he chooses, and hold the guarantor to his bargain. Hence Article 2057 of the present
payment of a sum of money, resulting from an obligation to give; and to the Luzon Surety Co., it was Civil Code is incompatible with the trial court’s stand that the requirement of integrity in the guarantor or surety
indifferent that the reimbursement should be made by Hemady himself or by some one else in his behalf, makes the latter’s undertaking strictly personal, so linked to his individuality that the guaranty automatically
so long as the money was paid to it. terminates upon his death.

The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the parties. Being The contracts of suretyship entered into by K. H. Hemady in favor of Luzon Surety Co. not being rendered
exceptional and contrary to the general rule, this intransmissibility should not be easily implied, but must intransmissible due to the nature of the undertaking, nor by the stipulations of the contracts themselves, nor by
be expressly established, or at the very least, clearly inferable from the provisions of the contract itself, provision of law, his eventual liability thereunder necessarily passed upon his death to his heirs. The contracts,
and the text of the agreements sued upon nowhere indicate that they are non-transferable. therefore, give rise to contingent claims provable against his estate under section 5, Rule 87 (2 Moran, 1952 ed., p.
437; Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).
“(b) Intransmisibilidad por pacto. — Lo general es la transmisibilidad de darechos y obligaciones; le
excepcion, la intransmisibilidad. Mientras nada se diga en contrario impera el principio de la transmision, “The most common example of the contigent claim is that which arises when a person is bound as surety or guarantor
como elemento natural a toda relacion juridica, salvo las personalisimas. Asi, para la no transmision, es for a principal who is insolvent or dead. Under the ordinary contract of suretyship the surety has no claim whatever
menester el pacto expreso, porque si no, lo convenido entre partes trasciende a sus herederos. 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
Siendo estos los continuadores de la personalidad del causante, sobre ellos recaen los efectos de los surety. But until the surety has contributed something to the payment of the debt, or has performed the secured
vinculos juridicos creados por sus antecesores, y para evitarlo, si asi se quiere, es indespensable obligation in whole or in part, he has no right of action against anybody — no claim that could be reduced to
convension terminante en tal sentido. judgment. (May vs. Vann, 15 Pla., 553; Gibson vs. Mithell, 16 Pla., 519; Maxey vs. Carter, 10 Yarg. [Tenn.], 521
Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; Ernst vs. Nou, 63 Wis., 134.)”
Por su esencia, el derecho y la obligacion tienden a ir más allá de las personas que les dieron vida, y a
ejercer presion sobre los sucesores de esa persona; cuando no se quiera esto, se impone una estipulacion For Defendant administratrix it is averred that the above doctrine refers to a case where the surety files claims against
limitativa expresamente de la transmisibilidad o de cuyos tirminos claramente se deduzca la concresion the estate of the principal debtor; and it is urged that the rule does not apply to the case before us, where the late
del concreto a las mismas personas que lo otorgon.” (Scaevola, Codigo Civil, Tomo XX, p. 541-542) Hemady was a surety, not a principal debtor. The argument evinces a superficial view of the relations between
(Emphasis supplied.) 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
Because under the law (Article 1311), a person who enters into a contract is deemed to have contracted against the estate of Hemady, since Hemady is a solidary co-debtor of his principals. What the Luzon Surety Co.
for himself and his heirs and assigns, it is unnecessary for him to expressly stipulate to that effect; hence, may claim from the estate of a principal debtor it may equally claim from the estate of Hemady, since, in view of
his failure to do so is no sign that he intended his bargain to terminate upon his death. Similarly, that the the existing solidarity, the latter does not even enjoy the benefit of exhaustion of the assets of the principal debtor.
Luzon Surety Co., did not require bondsman Hemady to execute a mortgage indicates nothing more than
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. 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
Our conclusion is that the solidary guarantor’s liability is not extinguished by his death, and that in such a certification to the effect that Lot 773-B was originally registered under OCT No. 8804.
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 On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of
irrespective of the solution to this question, the Luzon Surety’s claim did state a cause of action, and its P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuentebella's
dismissal was erroneous. name. 6

Wherefore, the order appealed from is reversed, and the records are ordered remanded to the court of After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R. Vda. de
origin, with instructions to proceed in accordance with law. Costs against the Administratrix- Appellee. Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a
SO ORDERED. 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,
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia and Felix, 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to Rosendo Alvarez.
JJ., concur. 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,
LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return" of the
vs. ownership and possession of Lots 773 and 823. They also prayed that an accounting of the produce of the land from
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA 1944 up to the filing of the complaint be made by the defendants, that after court approval of said accounting, the
YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, respondents. 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
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 During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B and another
"Jesus Yanes et al. v. Dr. Rodolfo Siason et al." affirming the decision dated July 8, 1974 of the Court of lot for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13
First Instance of Negros Occidental insofar as it ordered the petitioners to pay jointly and severally the who thereafter, declared the two lots in his name for assessment purposes. 14
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 Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other plaintiffs, and assisted
the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, by their counsel, filed a manifestation in Civil Case No. 5022 stating that the therein plaintiffs "renounce, forfeit and
respectively and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for quitclaims (sic) any claim, monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection
reconsideration of its decision. with the above-entitled case." 15

The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were On October 11, 1963, a decision was rendered by the Court of First Instance of Negros Occidental in Civil Case No.
originally known as Lot 773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area 5022, the dispositive portion of which reads:
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 WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to reconvey to the plaintiffs lots Nos.
Negros (Exh. A). 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
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, plaintiffs. No special pronouncement as to costs.
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 SO ORDERED. 16
(Jovito) Alib. 1 It is not clear why the latter is not included as a party in this case.
It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in the aforesaid decision.
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 However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of service dated
record does not show whether the children of Felipe also cultivated some portions of the lots but it is October 20, 1965, the sheriff stated that he discovered that Lot 773 had been subdivided into Lots 773-A and 773-
established that Rufino and his children left the province to settle in other places as a result of the outbreak B; that they were "in the name" of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could
of World War II. According to Estelita, from the "Japanese time up to peace time", they did not visit the not be delivered to the plaintiffs as Siason was "not a party per writ of execution." 17
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 The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private respondents (the
in possession of Lot 773. 2 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.
It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. 18 Thereafter, the court required Rodolfo Siason to produce the certificates of title covering Lots 773 and 823.
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 Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823,
OCT No. 8804. "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 The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed
not a party thereto; and that the decision in Civil Case No. 5022 could neither be enforced against him not the lower court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-
only because he was not a party-litigant therein but also because it had long become final and executory. appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey
20 Finding said manifestation to be well-founded, the cadastral court, in its order of September 4, 1965, of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00
nullified its previous order requiring Siason to surrender the certificates of title mentioned therein. 21 as actual damages, moral damages and attorney's fees, respectively." 31 The dispositive portion of said decision
reads:
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 WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to pay jointly and
court, noting that the Yaneses had instituted another action for the recovery of the land in question, ruled severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-
that at the judgment therein could not be enforced against Siason as he was not a party in the case. 23 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.
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 SO ORDERED. 32
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 Finding no cogent reason to grant appellants motion for reconsideration, said appellate court denied the same.
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, Hence, the instant petition. ln their memorandum petitioners raised the following issues:
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 1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and raised
773 from November 13, 1961 until the filing of the complaint; and that the defendants jointly and severally by the petitioners in the lower court.
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 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
In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and 773-B, supra, are forever barred by statute of limitation and/or prescription of action and estoppel.
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 3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the
that the Yaneses' cause of action had been "barred by res judicata, statute of limitation and estoppel." 27 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
In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of Murcia Cadastre as appearing in their
in question thru an agent as he was then in Mexico pursuing further medical studies, was a buyer in good written manifestation dated November 6, 1962 (Exhibits "4" Siason) which had not been controverted or even
faith for a valuable consideration. Although the Yaneses were negligent in their failure to place a notice impliedly or indirectly denied by them.
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 4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A
land because the sale thereof executed between Alvarez and Siason was without court approval. 28 The and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or transmitted by
dispositive portion of the decision states: operations (sic) of law to the petitioners without violation of law and due process . 33

IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the following The petition is devoid of merit.
manner:
As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the Supreme Court, to review the
A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic) hereby decision in Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said
dismmissed, 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
B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate Alvarez or his heirs failed to appeal the decision against them. 34
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, Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent
Negros Occidental; the sum of P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00 jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties and those in privity with them
representing moral damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from in law or estate. 35 As consistently ruled by this Court, every litigation must come to an end. Access to the court is
date of the filing of this complaint up to final payment. 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
C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora not be harassed by subsequent suits. For, if endless litigation were to be allowed, unscrupulous litigations will
and Raymundo, all surnamed Alvarez is hereby dismissed. multiply in number to the detriment of the administration of justice. 36

D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to pay the There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil
costs of this suit. 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
SO ORDERED. 29 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, The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as observed
it was also settled beyond question that Dr. Siason is a purchaser in good faith. 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
Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason only a representative position, barring those rare cases where the obligation is strictly personal, i.e., is contracted
on November 11, 1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who intuitu personae, in consideration of its performance by a specific person and by no other.
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 xxx xxx xxx
said amount. 38
Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's
As to the propriety of the present case, it has long been established that the sole remedy of the landowner transaction, which gave rise to the present claim for damages. That petitioners did not inherit the property involved
whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary herein is of no moment because by legal fiction, the monetary equivalent thereof devolved into the mass of their
action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an father's hereditary estate, and we have ruled that the hereditary assets are always liable in their totality for the
innocent purchaser for value, for damages. 39 "It is one thing to protect an innocent third party; it is payment of the debts of the estate. 42
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 It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With
decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded this clarification and considering petitioners' admission that there are other properties left by the deceased which are
against." 40 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.
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 WHEREFORE, subject to the clarification herein above stated, the assailed decision of the Court of Appeals is
defenses of prescription and estoppel have not been properly considered by the lower court. Petitioners hereby AFFIRMED. Costs against 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 SO ORDERED.
judgment which has longing become final and executory.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
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 Bidin J., took no part.
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 UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND SANTIBAEZ and FLORENCE
pertinent provisions of the Civil Code state: SANTIBAEZ ARIOLA, respondents.

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks the reversal
the extent of the value of the inheritance, of a person are transmitted through his death to another or others of the Decision[1] of the Court of Appeals dated May 30, 2001 in CA-G.R. CV No. 48831 affirming the dismissal[2]
either by his will or by operation of law. of the petitioners complaint in Civil Case No. 18909 by the Regional Trial Court (RTC) of Makati City, Branch 63.

Art. 776. The inheritance includes all the property, rights and obligations of a person which are not The antecedent facts are as follows:
extinguished by his death.
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibaez entered into a loan
Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where the agreement[3] in the amount of P128,000.00. The amount was intended for the payment of the purchase price of one
rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim and his son, Edmund, executed
by provision of law. The heir is not liable beyond the value of the property received from the decedent. a promissory note in favor of the FCCC, the principal sum payable in five equal annual amortizations of P43,745.96
due on May 31, 1981 and every May 31st thereafter up to May 31, 1985.
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 On December 13, 1980, the FCCC and Efraim entered into another loan agreement,[4] this time in the amount of
P123,156.00. It was intended to pay the balance of the purchase price of another unit of Ford 6600 Agricultural All-
The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Purpose Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor Model AR 60K. Again, Efraim and
Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the his son, Edmund, executed a promissory note for the said amount in favor of the FCCC. Aside from such promissory
residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from note, they also signed a Continuing Guaranty Agreement[5] for the loan dated December 13, 1980.
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. 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
Under our law, therefore. the general rule is that a party's contractual rights and obligations are April 9, 1981, Edmund, as one of the heirs, was appointed as the special administrator of the estate of the decedent.[7]
transmissible to the successors. During the pendency of the testate proceedings, the surviving heirs, Edmund and his sister Florence Santibaez Ariola,
executed a Joint Agreement[8] dated July 22, 1981, wherein they agreed to divide between themselves and take
possession of the three (3) tractors; that is, two (2) tractors for Edmund and one (1) tractor for Florence. Each of
them was to assume the indebtedness of their late father to FCCC, corresponding to the tractor respectively participation of the heirs, particularly respondent Florence S. Ariola, in the present ordinary civil action was
taken by them. tantamount to a waiver to re-litigate the claim in the estate proceedings.

On August 20, 1981, a Deed of Assignment with Assumption of Liabilities[9] was executed by and On the other hand, respondent Florence S. Ariola maintained that the money claim of the petitioner should have been
between FCCC and Union Savings and Mortgage Bank, wherein the FCCC as the assignor, among others, presented before the probate court.[17]
assigned all its assets and liabilities to Union Savings and Mortgage Bank.
The appellate court found that the appeal was not meritorious and held that the petitioner should have filed its claim
Demand letters[10] for the settlement of his account were sent by petitioner Union Bank of the Philippines with the probate court as provided under Sections 1 and 5, Rule 86 of the Rules of Court. It further held that the
(UBP) to Edmund, but the latter failed to heed the same and refused to pay. Thus, on February 5, 1988, partition made in the agreement was null and void, since no valid partition may be had until after the will has been
the petitioner filed a Complaint[11] for sum of money against the heirs of Efraim Santibaez, Edmund and probated. According to the CA, page 2, paragraph (e) of the holographic will covered the subject properties (tractors)
Florence, before the RTC of Makati City, Branch 150, docketed as Civil Case No. 18909. Summonses in generic terms when the deceased referred to them as all other properties. Moreover, the active participation of
were issued against both, but the one intended for Edmund was not served since he was in the United respondent Florence S. Ariola in the case did not amount to a waiver. Thus, the CA affirmed the RTC decision, viz.:
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. WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Makati City, Branch 63,
is hereby AFFIRMED in toto.
On December 7, 1988, respondent Florence S. Ariola filed her Answer[13] and alleged that the loan
documents did not bind her since she was not a party thereto. Considering that the joint agreement signed SO ORDERED.[18]
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. In the present recourse, the petitioner ascribes the following errors to the CA:

On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati City, Branch 63.[14] I.
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: THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT AGREEMENT SHOULD
BE APPROVED BY THE PROBATE COURT.
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit.[15]
II.
The trial court found that the claim of the petitioner should have been filed with the probate court before
which the testate estate of the late Efraim Santibaez was pending, as the sum of money being claimed was THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG
an obligation incurred by the said decedent. The trial court also found that the Joint Agreement apparently THE HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL AFTER THE WILL HAS BEEN PROBATED.
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 III.
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 THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD WAIVED HER
Bank to which the FCCC had assigned its assets and liabilities. The court also agreed to the contention of RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.
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 decedents account. Ruling that the joint agreement executed IV.
by the heirs was null and void, the trial court held that the petitioners cause of action against respondent
Florence S. Ariola must necessarily fail. RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE PRINCIPAL
DEBTOR THE LATE EFRAIM SANTIBAEZ ON THE STRENGTH OF THE CONTINUING GUARANTY
The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals (CA), AGREEMENT EXECUTED IN FAVOR OF PETITIONER-APPELLANT UNION BANK.
assigning the following as errors of the trial court:
V.
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT (EXHIBIT A)
SHOULD BE APPROVED BY THE PROBATE COURT. THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00 AND DECEMBER 13, 1980
IN THE AMOUNT OF P123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT THE
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION RESPONDENTS BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE DEBTOR
AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN PROBATED. EFRAIM SANTIBAEZ IN FAVOR OF PETITIONER UNION BANK.[19]

3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD WAIVED HER The petitioner claims that the obligations of the deceased were transmitted to the heirs as provided in Article 774 of
RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.[16] 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
The petitioner asserted before the CA that the obligation of the deceased had passed to his legitimate signed the joint agreement without any condition, she is now estopped from asserting any position contrary thereto.
children and heirs, in this case, Edmund and Florence; the unconditional signing of the joint agreement The petitioner also points out that the holographic will of the deceased did not include nor mention any of the tractors
marked as Exhibit A estopped respondent Florence S. Ariola, and that she cannot deny her liability under subject of the complaint, and, as such was beyond the ambit of the said will. The active participation and resistance
the said document; as the agreement had been signed by both heirs in their personal capacity, it was no of respondent Florence S. Ariola in the ordinary civil action against the petitioners claim amounts to a waiver of the
longer necessary to present the same before the probate court for approval; the property partitioned in the right to have the claim presented in the probate proceedings, and to allow any one of the heirs who executed the joint
agreement was not one of those enumerated in the holographic will made by the deceased; and the active
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. (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
The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to consider children.
the fact that respondent Florence S. Ariola and her brother Edmund executed loan documents, all
establishing the vinculum juris or the legal bond between the late Efraim Santibaez and his heirs to be in We agree with the appellate court that the above-quoted is an all-encompassing provision embracing all the
the nature of a solidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and December properties left by the decedent which might have escaped his mind at that time he was making his will, and other
13, 1980 executed by the late Efraim Santibaez, together with his heirs, Edmund and respondent Florence, properties he may acquire thereafter. Included therein are the three (3) subject tractors. This being so, any partition
made the obligation solidary as far as the said heirs are concerned. The petitioner also proffers that, involving the said tractors among the heirs is not valid. The joint agreement[25] executed by Edmund and Florence,
considering the express provisions of the continuing guaranty agreement and the promissory notes partitioning the tractors among themselves, is invalid, specially so since at the time of its execution, there was already
executed by the named respondents, the latter must be held liable jointly and severally liable thereon. a pending proceeding for the probate of their late fathers holographic will covering the said tractors.
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 It must be stressed that the probate proceeding had already acquired jurisdiction over all the properties of the
heirs of the deceased. deceased, including the three (3) tractors. To dispose of them in any way without the probate courts approval is
tantamount to divesting it with jurisdiction which the Court cannot allow.[26] Every act intended to put an end to
In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is trying to indivision among co-heirs and legatees or devisees is deemed to be a partition, although it should purport to be a
recover a sum of money from the deceased Efraim Santibaez; thus the claim should have been filed with sale, an exchange, a compromise, or any other transaction.[27] Thus, in executing any joint agreement which appears
the probate court. She points out that at the time of the execution of the joint agreement there was already to be in the nature of an extra-judicial partition, as in the case at bar, court approval is imperative, and the heirs
an existing probate proceedings of which the petitioner knew about. However, to avoid a claim in the cannot just divest the court of its jurisdiction over that part of the estate. Moreover, it is within the jurisdiction of the
probate court which might delay payment of the obligation, the petitioner opted to require them to execute probate court to determine the identity of the heirs of the decedent.[28] In the instant case, there is no showing that
the said agreement. 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,
According to the respondent, the trial court and the CA did not err in declaring that the agreement was for Edmund and respondent Florence S. Ariola to adjudicate unto themselves the three (3) tractors was a premature
null and void. She asserts that even if the agreement was voluntarily executed by her and her brother act, and prejudicial to the other possible heirs and creditors who may have a valid claim against the estate of the
Edmund, it should still have been subjected to the approval of the court as it may prejudice the estate, the deceased.
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 The question that now comes to fore is whether the heirs assumption of the indebtedness of the decedent is binding.
claim that she is in estoppel. 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
Respondent Florence S. Ariola further asserts that she had not signed any continuing guaranty agreement, indebtedness corresponding to the chattel taken as herein after stated which is in favor of First Countryside Credit
nor was there any document presented as evidence to show that she had caused herself to be bound by the Corp.[29] The assumption of liability was conditioned upon the happening of an event, that is, that each heir shall
obligation of her late father. 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 petition is bereft of merit. 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 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 The Court notes that the loan was contracted by the decedent. The petitioner, purportedly a creditor of the late Efraim
is valid; and c) whether the petitioner can hold the heirs liable on the obligation of the deceased. Santibaez, should have thus filed its money claim with the probate court in accordance with Section 5, Rule 86 of
the Revised Rules of Court, which provides:
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 Section 5. Claims which must be filed under the notice. If not filed barred; exceptions. All claims for money against
properties to be administered.[20] The said court is primarily concerned with the administration, the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims
liquidation and distribution of the estate.[21] 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
In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the will has counterclaims in any action that the executor or administrator may bring against the claimants. Where an executor
been probated: 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
In testate succession, there can be no valid partition among the heirs until after the will has been probated. to the court as herein provided, and mutual claims may be set off against each other in such action; and if final
The law enjoins the probate of a will and the public requires it, because unless a will is probated and notice judgment is rendered in favor of the defendant, the amount so determined shall be considered the true balance against
thereof given to the whole world, the right of a person to dispose of his property by will may be rendered the estate, as though the claim had been presented directly before the court in the administration proceedings. Claims
nugatory. The authentication of a will decides no other question than such as touch upon the capacity of not yet due, or contingent, may be approved at their present value.
the testator and the compliance with those requirements or solemnities which the law prescribes for the
validity of a will.[22] The filing of a money claim against the decedents estate in the probate court is mandatory.[30] As we held in the
vintage case of Py Eng Chong v. Herrera:[31]
This, of course, presupposes that the properties to be partitioned are the same properties embraced in the
will.[23] In the present case, the deceased, Efraim Santibaez, left a holographic will[24] which contained, This requirement is for the purpose of protecting the estate of the deceased by informing the executor or administrator
inter alia, the provision which reads as follows: 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 Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the alleged owners of the 107-square meter
requires the prompt presentation and disposition of the claims against the decedent's estate in order to lot (subject property), which they purportedly bought from Rita during her lifetime.
settle the affairs of the estate as soon as possible, pay off its debts and distribute the residue.[32]
The facts of the present case are as follows:
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 On two separate occasions during her lifetime, Rita sold to respondents Spouses Lumbao the subject property which
the promissory notes and the continuing guaranty agreement, were executed and signed only by the late is a part of her share in the estate of her deceased mother, Maria Catoc (Maria), who died intestate on 19 September
Efraim Santibaez and his son Edmund. As the petitioner failed to file its money claim with the probate 1978. On the first occasion, Rita sold 100 square meters of her inchoate share in her mothers estate through a
court, at most, it may only go after Edmund as co-maker of the decedent under the said promissory notes document denominated as Bilihan ng Lupa, dated 17 August 1979.[4] Respondents Spouses Lumbao claimed the
and continuing guaranty, of course, subject to any defenses Edmund may have as against the petitioner. execution of the aforesaid document was witnessed by petitioners Virgilio and Tadeo, as shown by their signatures
As the court had not acquired jurisdiction over the person of Edmund, we find it unnecessary to delve into affixed therein. On the second occasion, an additional seven square meters was added to the land as evidenced by a
the matter further. document also denominated as Bilihan ng Lupa, dated 9 January 1981.[5]

We agree with the finding of the trial court that the petitioner had not sufficiently shown that it is the After acquiring the subject property, respondents Spouses Lumbao took actual possession thereof and erected
successor-in-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets and thereon a house which they have been occupying as exclusive owners up to the present. As the exclusive owners of
liabilities.[33] The petitioner in its complaint alleged that by virtue of the Deed of Assignment dated the subject property, respondents Spouses Lumbao made several verbal demands upon Rita, during her lifetime, and
August 20, 1981 executed by and between First Countryside Credit Corporation and Union Bank of the thereafter upon herein petitioners, for them to execute the necessary documents to effect the issuance of a separate
Philippines[34] However, the documentary evidence[35] clearly reflects that the parties in the deed of title in favor of respondents Spouses Lumbao insofar as the subject property is concerned. Respondents Spouses
assignment with assumption of liabilities were the FCCC, and the Union Savings and Mortgage Bank, Lumbao alleged that prior to her death, Rita informed respondent Proserfina Lumbao she could not deliver the title
with the conformity of Bancom Philippine Holdings, Inc. Nowhere can the petitioners participation therein to the subject property because the entire property inherited by her and her co-heirs from Maria had not yet been
as a party be found. Furthermore, no documentary or testimonial evidence was presented during trial to partitioned.
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: On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently and in conspiracy with one
another, executed a Deed of Extrajudicial Settlement,[6] adjudicating and partitioning among themselves and the
[T]he court also finds merit to the contention of defendant that plaintiff failed to prove or did not present other heirs, the estate left by Maria, which included the subject property already sold to respondents Spouses Lumbao
evidence to prove that Union Savings and Mortgage Bank is now the Union Bank of the Philippines. and now covered by TCT No. 81729[7] of the Registry of Deeds of Pasig City.
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 On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal demand letter[8] to petitioners but
subject should be promptly resolved in the negative. (Republic vs. Court of Appeals, 107 SCRA 504).[36] despite receipt of such demand letter, petitioners still failed and refused to reconvey the subject property to the
respondents Spouses Lumbao. Consequently, the latter filed a Complaint for Reconveyance with Damages[9] before
This being the case, the petitioners personality to file the complaint is wanting. Consequently, it failed to the RTC of Pasig City.
establish its cause of action. Thus, the trial court did not err in dismissing the complaint, and the CA in
affirming the same. Petitioners filed their Answer denying the allegations that the subject property had been sold to the respondents
Spouses Lumbao. They likewise denied that the Deed of Extrajudicial Settlement had been fraudulently executed
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court of Appeals because the same was duly published as required by law. On the contrary, they prayed for the dismissal of the
Decision is AFFIRMED. No costs. Complaint for lack of cause of action because respondents Spouses Lumbao failed to comply with the Revised
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.VICTORINO F. SANTOS, & Katarungang Pambarangay Law under Republic Act No. 7160, otherwise known as the Local Government Code of
LAGRIMAS SANTOS, ERNESTO F. SANTOS, and TADEO F. SANTOS, - versus - SPS. JOSE 1991, which repealed Presidential Decree No. 1508[10] requiring first resort to barangay conciliation.
LUMBAO and PROSERFINA LUMBAO,
Respondents Spouses Lumbao, with leave of court, amended their Complaint because they discovered that on 16
February 1990, without their knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of Julieta S.
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Esplana for the sum of P30,000.00. The said Deed of Real Estate Mortgage was annotated at the back of TCT No.
Procedure seeking to annul and set aside the Decision[1] and Resolution[2] of the Court of Appeals in PT-81729 on 26 April 1991. Also, in answer to the allegation of the petitioners that they failed to comply with the
CA-G.R. CV No. 60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v. Spouses Virgilio F. mandate of the Revised Katarungang Pambarangay Law, respondents Spouses Lumbao said that the Complaint was
Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and filed directly in court in order that prescription or the Statute of Limitations may not set in.
Tadeo F. Santos, dated 8 June 2005 and 29 July 2005, respectively, which granted the appeal filed by
herein respondents Spouses Jose Lumbao and Proserfina Lumbao (Spouses Lumbao) and ordered herein During the trial, respondents Spouses Lumbao presented Proserfina Lumbao and Carolina Morales as their
petitioners Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. witnesses, while the petitioners presented only the testimony of petitioner Virgilio.
Santos, Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents Spouses Lumbao the subject
property and to pay the latter attorneys fees and litigation expenses, thus, reversing the Decision[3] of the The trial court rendered a Decision on 17 June 1998, the dispositive portion of which reads as follows:
Regional Trial Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the Complaint for
Reconveyance with Damages filed by respondents Spouses Lumbao for lack of merit. Premises considered, the instant complaint is hereby denied for lack of merit.

Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed Santos, are the legitimate and Considering that [petitioners] have incurred expenses in order to protect their interest, [respondents spouses
surviving heirs of the late Rita Catoc Santos (Rita), who died on 20 October 1985. The other petitioners Lumbao] are hereby directed to pay [petitioners], to wit: 1) the amount of P30,000.00 as attorneys fees and litigation
Esperanza Lati and Lagrimas Santos are the daughters-in-law of Rita. expenses, and 2) costs of the suit.[11]
Spouses Lumbao were not entitled to the reconveyance of the subject property because they were guilty of laches
Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8 June 2005, the appellate for their failure to assert their rights for an unreasonable length of time. Since respondents Spouses Lumbao had
court rendered a Decision, thus: slept on their rights for a period of more than 12 years reckoned from the date of execution of the second Bilihan ng
Lupa, it would be unjust and unfair to the petitioners if the respondents will be allowed to recover the subject
WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Decision property.
dated June 17, 1998 of the Regional Trial Court of Pasig City, Branch 69 in Civil Case No. 62175 is hereby
REVERSED and SET ASIDE. A new judgment is hereby entered ordering [petitioners] to reconvey 107 Petitioners allege they are in good faith in executing the Deed of Extrajudicial Settlement because even respondents
square meters of the subject [property] covered by TCT No. PT-81729 of the Registry of Deeds of Pasig Spouses Lumbaos witness, Carolina Morales, testified that neither petitioner Virgilio nor petitioner Tadeo was
City, Metro Manila, and to pay to [respondents spouses Lumbao] the sum of P30,000.00 for attorneys fees present during the execution of the Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981. Petitioners affirm
and litigation expenses. that the Deed of Extrajudicial Settlement was published in a newspaper of general circulation to give notice to all
creditors of the estate subject of partition to contest the same within the period prescribed by law. Since no claimant
No pronouncement as to costs.[12] appeared to interpose a claim within the period allowed by law, a title to the subject property was then issued in
favor of the petitioners; hence, they are considered as holders in good faith and therefore cannot be barred from
Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid Decision but it was denied in entering into any subsequent transactions involving the subject property.
the Resolution of the appellate court dated 29 July 2005 for lack of merit.
Petitioners also contend that they are not bound by the documents denominated as Bilihan ng Lupa because the
Hence, this Petition. same were null and void for the following reasons: 1) for being falsified documents because one of those documents
made it appear that petitioners Virgilio and Tadeo were witnesses to its execution and that they appeared personally
The grounds relied upon by the petitioners are the following: before the notary public, when in truth and in fact they did not; 2) the identities of the properties in the Bilihan ng
Lupa, dated 17 August 1979 and 9 January 1981 in relation to the subject property in litigation were not established
I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN by the evidence presented by the respondents Spouses Lumbao; 3) the right of the respondents Spouses Lumbao to
REVERSING THE DECISION OF THE TRIAL COURT, THEREBY CREATING A VARIANCE ON lay their claim over the subject property had already been barred through estoppel by laches; and 4) the respondents
THE FINDINGS OF FACTS OF TWO COURTS. Spouses Lumbaos claim over the subject property had already prescribed.

II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN


ORDERING THE PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY] TO THE Finally, petitioners claim that the Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao
RESPONDENTS [SPOUSES LUMBAO] AND IN NOT RULING THAT THEY ARE GUILTY OF was dismissible because they failed to comply with the mandate of Presidential Decree No. 1508, as amended by
LACHES, HENCE THEY CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM. Republic Act No. 7160, particularly Section 412 of Republic Act No. 7160.

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN Given the foregoing, the issues presented by the petitioners may be restated as follows:
NOT FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING THE DEED OF
EXTRAJUDICIAL SETTLEMENT DATED [2 MAY 1986]. I. Whether or not the Complaint for Reconveyance with Damages filed by respondents
spouses Lumbao is dismissible for their failure to comply with the mandate of the Revised Katarungang
IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN Pambarangay Law under R.A. No. 7160.
NOT FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY WITH THE
SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981] THAT
WERE SUPPOSEDLY EXECUTED BY THE LATE RITA CATOC.
V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN II. Whether or not the documents known as Bilihan ng Lupa are valid and enforceable, thus,
NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] ACTION FOR RECONVEYANCE they can be the bases of the respondents spouses Lumbaos action for reconveyance with damages.
WITH DAMAGES CANNOT BE SUPPORTED WITH AN UNENFORCEABLE DOCUMENTS,
SUCH AS THE BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981]. III. Whether or not herein petitioners are legally bound to comply with the Bilihan ng Lupa
dated 17 August 1979 and 9 January 1981 and consequently, reconvey the subject property to herein respondents
VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN spouses Lumbao.
NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] COMPLAINT FOR
RECONVEYANCE IS DISMISSABLE (SIC) FOR NON COMPLIANCE OF THE MANDATE OF
[P.D. NO.] 1508, AS AMENDED BY Republic Act No. 7160. It is well-settled that in the exercise of the Supreme Courts power of review, the court is not a trier of facts and does
not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the
VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT case considering that the findings of fact of the Court of Appeals are conclusive and binding on the Court.[13] But,
FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD LIABLE FOR the rule is not without exceptions. There are several recognized exceptions[14] in which factual issues may be
PETITIONERS CLAIM FOR DAMAGES AND ATTORNEY[]S FEES. resolved by this Court. One of these exceptions is when the findings of the appellate court are contrary to those of
the trial court. This exception is present in the case at bar.

Petitioners ask this Court to scrutinize the evidence presented in this case, because they claim that the Going to the first issue presented in this case, it is the argument of the petitioners that the Complaint for
factual findings of the trial court and the appellate court are conflicting. They allege that the findings of Reconveyance with Damages filed by respondents Spouses Lumbao should be dismissed for failure to comply with
fact by the trial court revealed that petitioners Virgilio and Tadeo did not witness the execution of the the barangay conciliation proceedings as mandated by the Revised Katarungang Pambarangay Law under Republic
documents known as Bilihan ng Lupa; hence, this finding runs counter to the conclusion made by the Act No. 7160. This argument cannot be sustained.
appellate court. And even assuming that they were witnesses to the aforesaid documents, still, respondents
Section 408 of the aforesaid law and Administrative Circular No. 14-93[15] provide that all disputes the Bilihan ng Lupa, dated 17 August 1979 and in support thereof, his testimony in the cross-examination
between parties actually residing in the same city or municipality are subject to barangay conciliation. A propounded by the counsel of the respondents Spouses Lumbao is quoted hereunder:
prior recourse thereto is a pre-condition before filing a complaint in court or any government offices. Non-
compliance with the said condition precedent could affect the sufficiency of the plaintiffs cause of action ATTY. CHIU:
and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity; but Q. Now, you said, Mr. WitnessVirgilio Santos, that you dont know about this document which was marked as Exhibit
the same would not prevent a court of competent jurisdiction from exercising its power of adjudication A for the [respondents spouses Lumbao]?
over the case before it, where the defendants failed to object to such exercise of jurisdiction.[16] ATTY. BUGARING:
The question is misleading, your Honor. Counsel premised the question that he does not have any knowledge but
While it is true that the present case should first be referred to the Barangay Lupon for conciliation because not that he does not know.
the parties involved herein actually reside in the same city (Pasig City) and the dispute between them ATTY. CHIU:
involves a real property, hence, the said dispute should have been brought in the city in which the real Q. Being you are one of the witnesses of this document? [I]s it not?
property, subject matter of the controversy, is located, which happens to be the same city where the WITNESS:
contending parties reside. In the event that respondents Spouses Lumbao failed to comply with the said A. No, sir.
condition precedent, their Complaint for Reconveyance with Damages can be dismissed. In this case,
however, respondents Spouses Lumbaos non-compliance with the aforesaid condition precedent cannot Q. I am showing to you this document, there is a signature at the left hand margin of this document Virgilio Santos,
be considered fatal. Although petitioners alleged in their answer that the Complaint for Reconveyance will you please go over the same and tell the court whose signature is this?
with Damages filed by respondents spouses Lumbao should be dismissed for their failure to comply with A. I dont remember, sir, because of the length of time that had passed.
the condition precedent, which in effect, made the complaint prematurely instituted and the trial court Q. But that is your signature?
acquired no jurisdiction to hear the case, yet, they did not file a Motion to Dismiss the said complaint. A. I dont have eyeglasses My signature is different.
Q. You never appeared before this notary public Apolinario Mangahas?
Emphasis must be given to the fact that the petitioners could have prevented the trial court from exercising A. I dont remember.[20]
jurisdiction over the case had they filed a Motion to Dismiss. However, instead of doing so, they invoked
the very same jurisdiction by filing an answer seeking an affirmative relief from it. Worse, petitioners As a general rule, facts alleged in a partys pleading are deemed admissions of that party and are binding upon him,
actively participated in the trial of the case by presenting their own witness and by cross-examining the but this is not an absolute and inflexible rule. An answer is a mere statement of fact which the party filing it expects
witnesses presented by the respondents Spouses Lumbao. It is elementary that the active participation of to prove, but it is not evidence.[21] And in spite of the presence of judicial admissions in a partys pleading, the trial
a party in a case pending against him before a court is tantamount to recognition of that courts jurisdiction court is still given leeway to consider other evidence presented.[22] However, in the case at bar, as the Court of
and a willingness to abide by the resolution of the case which will bar said party from later on impugning Appeals mentioned in its Decision, [herein petitioners] had not adduced any other evidence to override the admission
the courts jurisdiction.[17] It is also well-settled that the non-referral of a case for barangay conciliation made in their [A]nswer that [petitioners Virgilio and Tadeo] actually signed the [Bilihan ng Lupa dated 17 August
when so required under the law is not jurisdictional in nature and may therefore be deemed waived if not 1979] except that they were just misled as to the purpose of the document, x x x.[23] Virgilios answers were unsure
raised seasonably in a motion to dismiss.[18] Hence, herein petitioners can no longer raise the defense of and quibbled. Hence, the general rule that the admissions made by a party in a pleading are binding and conclusive
non-compliance with the barangay conciliation proceedings to seek the dismissal of the complaint filed upon him applies in this case.
by the respondents Spouses Lumbao, because they already waived the said defense when they failed to
file a Motion to Dismiss. On the testimony of respondents Spouses Lumbaos witness Carolina Morales, this Court adopts the findings made
by the appellate court. Thus -

[T]he trial court gave singular focus on her reply to a question during cross-examination if the [petitioners Virgilio
As regards the second issue, petitioners maintain that the Bilihan ng Lupa, dated 17 August 1979 and 9 and Tadeo] were not with her and the vendor [Rita] during the transaction. It must be pointed out that earlier in the
January 1981 are null and void for being falsified documents as it is made to appear that petitioners Virgilio direct examination of said witness, she confirmed that [respondents spouses Lumbao] actually bought the lot from
and Tadeo were present in the execution of the said documents and that the identities of the properties in [Rita] (nagkabilihan). Said witness positively identified and confirmed the two (2) documents evidencing the sale in
those documents in relation to the subject property has not been established by the evidence of the favor of [respondents spouse Lumbao]. Thus, her subsequent statement that the [petitioners Virgilio and Tadeo] were
respondents Spouses Lumbao. Petitioners also claim that the enforceability of those documents is barred not with them during the transaction does not automatically imply that [petitioners Virgilio and Tadeo] did not at
by prescription of action and laches. any time sign as witnesses as to the deed of sale attesting to their mothers voluntary act of selling a portion of her
share in her deceased mothers property. The rule is that testimony of a witness must be considered and calibrated in
It is the petitioners incessant barking that the Bilihan ng Lupa documents dated 17 August 1979 and 9 its entirety and not by truncated portions thereof or isolated passages therein.[24]
January 1981 were falsified because it was made to appear that petitioners Virgilio and Tadeo were present
in the executions thereof, and their allegation that even respondents Spouses Lumbaos witness Carolina Furthermore, both Bilihan ng Lupa documents dated 17 August 1979 and 9 January 1981 were duly notarized before
Morales proved that said petitioners were not present during the execution of the aforementioned a notary public. It is well-settled that a document acknowledged before a notary public is a public document[25] that
documents. This is specious. enjoys the presumption of regularity. It is a prima facie evidence of the truth of the facts stated therein and a
conclusive presumption of its existence and due execution.[26] To overcome this presumption, there must be
Upon examination of the aforesaid documents, this Court finds that in the Bilihan ng Lupa, dated 17 presented evidence that is clear and convincing. Absent such evidence, the presumption must be upheld.[27] In
August 1979, the signatures of petitioners Virgilio and Tadeo appeared thereon. Moreover, in petitioners addition, one who denies the due execution of a deed where ones signature appears has the burden of proving that
Answer and Amended Answer to the Complaint for Reconveyance with Damages, both petitioners contrary to the recital in the jurat, one never appeared before the notary public and acknowledged the deed to be a
Virgilio and Tadeo made an admission that indeed they acted as witnesses in the execution of the Bilihan voluntary act. Nonetheless, in the present case petitioners denials without clear and convincing evidence to support
ng Lupa, dated 17 August 1979.[19] However, in order to avoid their obligations in the said Bilihan ng their claim of fraud and falsity were not sufficient to overthrow the above-mentioned presumption; hence, the
Lupa, petitioner Virgilio, in his cross-examination, denied having knowledge of the sale transaction and authenticity, due execution and the truth of the facts stated in the aforesaid Bilihan ng Lupa are upheld.
claimed that he could not remember the same as well as his appearance before the notary public due to the
length of time that had passed. Noticeably, petitioner Virgilio did not categorically deny having signed
The defense of petitioners that the identities of the properties described in the Bilihan ng Lupa, dated 17 Under the above premises, this Court holds that the Bilihan ng Lupa documents dated 17 August 1979 and 9 January
August 1979 and 9 January 1981 in relation to the subject property were not established by respondents 1981 are valid and enforceable and can be made the basis of the respondents Spouses Lumbaos action for
Spouses Lumbaos evidence is likewise not acceptable. reconveyance. The failure of respondents Spouses Lumbao to have the said documents registered does not affect its
validity and enforceability. It must be remembered that registration is not a requirement for validity of the contract
It is noteworthy that at the time of the execution of the documents denominated as Bilihan ng Lupa, the as between the parties, for the effect of registration serves chiefly to bind third persons. The principal purpose of
entire property owned by Maria, the mother of Rita, was not yet divided among her and her co-heirs and registration is merely to notify other persons not parties to a contract that a transaction involving the property had
so the description of the entire estate is the only description that can be placed in the Bilihan ng Lupa, been entered into. Where the party has knowledge of a prior existing interest which is unregistered at the time he
dated 17 August 1979 and 9 January 1981 because the exact metes and bounds of the subject property sold acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to
to respondents Spouses Lumbao could not be possibly determined at that time. Nevertheless, that does not him.[31] Hence, the Bilihan ng Lupa documents dated 17 August 1979 and 9 January 1981, being valid and
make the contract of sale between Rita and respondents Spouses Lumbao invalid because both the law enforceable, herein petitioners are bound to comply with their provisions. In short, such documents are absolutely
and jurisprudence have categorically held that even while an estate remains undivided, co-owners have valid between and among the parties thereto.
each full ownership of their respective aliquots or undivided shares and may therefore alienate, assign or
mortgage them.[28] The co-owner, however, has no right to sell or alienate a specific or determinate part Finally, the general rule that heirs are bound by contracts entered into by their predecessors-in-interest applies in the
of the thing owned in common, because such right over the thing is represented by an aliquot or ideal present case. Article 1311[32] of the NCC is the basis of this rule. It is clear from the said provision that whatever
portion without any physical division. In any case, the mere fact that the deed purports to transfer a rights and obligations the decedent have over the property were transmitted to the heirs by way of succession, a mode
concrete portion does not per se render the sale void. The sale is valid, but only with respect to the aliquot of acquiring the property, rights and obligations of the decedent to the extent of the value of the inheritance of the
share of the selling co-owner. Furthermore, the sale is subject to the results of the partition upon the heirs.[33] Thus, the heirs cannot escape the legal consequence of a transaction entered into by their predecessor-in-
termination of the co-ownership.[29] interest because they have inherited the property subject to the liability affecting their common ancestor. Being heirs,
there is privity of interest between them and their deceased mother. They only succeed to what rights their mother
In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986 by virtue of a Deed had and what is valid and binding against her is also valid and binding as against them. The death of a party does not
of Extrajudicial Settlement, the 107- square meter lot sold by the mother of the petitioners to respondents excuse nonperformance of a contract which involves a property right and the rights and obligations thereunder pass
Spouses Lumbao should be deducted from the total lot, inherited by them in representation of their to the personal representatives of the deceased. Similarly, nonperformance is not excused by the death of the party
deceased mother, which in this case measures 467 square meters. The 107-square meter lot already sold when the other party has a property interest in the subject matter of the contract.[34]
to respondents Spouses Lumbao can no longer be inherited by the petitioners because the same was no
longer part of their inheritance as it was already sold during the lifetime of their mother. In the end, despite the death of the petitioners mother, they are still bound to comply with the provisions of the
Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981. Consequently, they must reconvey to herein respondents
Likewise, the fact that the property mentioned in the two Bilihan ng Lupa documents was described as a Spouses Lumbao the 107-square meter lot which they bought from Rita, petitioners mother. And as correctly ruled
portion of a parcel of land covered in Tax Declarations No. A-018-01674, while the subject matter of the by the appellate court, petitioners must pay respondents Spouses Lumbao attorneys fees and litigation expenses for
Deed of Extrajudicial Settlement was the property described in Transfer Certificate of Title (TCT) No. having been compelled to litigate and incur expenses to protect their interest.[35] On this matter, we do not find
3216 of the Registry of Deeds of the Province of Rizal in the name of Maria is of no moment because in reasons to reverse the said findings.
the Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981, it is clear that there was only one estate
left by Maria upon her death. And this fact was not refuted by the petitioners. Besides, the property WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the
described in Tax Declaration No. A-018-01674 and the property mentioned in TCT No. 3216 are both Court of Appeals dated 8 June 2005 and 29 July 2005, respectively, are hereby AFFIRMED. Herein petitioners are
located in Barrio Rosario, Municipality of Pasig, Province of Rizal, and almost have the same boundaries. ordered to reconvey to respondents Spouses Lumbao the subject property and to pay the latter attorneys fees and
It is, thus, safe to state that the property mentioned in Tax Declaration No. A-018-01674 and in TCT No. litigation expenses. Costs against petitioners.
3216 are one and the same.

The defense of prescription of action and laches is likewise unjustifiable. In an action for reconveyance,
the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the SO ORDERED.
property or its title which has been wrongfully or erroneously registered in another persons name to its
rightful or legal owner, or to the one with a better right. It is, indeed, true that the right to seek reconveyance TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee; JOSE DE BORJA,
of registered property is not absolute because it is subject to extinctive prescription. However, when the as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and CRISANTO DE BORJA (deceased)
plaintiff is in possession of the land to be reconveyed, prescription cannot set in. Such an exception is as Children of Josefa Tangco, appellees,
based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a vs.
person at the expense of another.[30] TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco de Borja,
appellant. .
In the case at bar, the right of the respondents Spouses Lumbao to seek reconveyance does not prescribe
because the latter have been and are still in actual possession and occupation as owners of the property Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco Vda. de de Borja, special
sought to be reconveyed, which fact has not been refuted nor denied by the petitioners. Furthermore, administratrix of the testate estate of Francisco de Borja,1 from the approval of a compromise agreement by the
respondents Spouses Lumbao cannot be held guilty of laches because from the very start that they bought Court of First Instance of Rizal, Branch I, in its Special Proceeding No. R-7866, entitled, "Testate Estate of Josefa
the 107-square meter lot from the mother of the petitioners, they have constantly asked for the transfer of Tangco, Jose de Borja, Administrator".
the certificate of title into their names but Rita, during her lifetime, and the petitioners, after the death of
Rita, failed to do so on the flimsy excuse that the lot had not been partitioned yet. Inexplicably, after the Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the same compromise agreement
partition of the entire estate of Maria, petitioners still included the 107-square meter lot in their inheritance by the Court of First Instance of Nueva Ecija, Branch II, in its Special Proceeding No. 832, entitled, "Testate Estate
which they divided among themselves despite their knowledge of the contracts of sale between their of Francisco de Borja, Tasiana O. Vda. de de Borja, Special Administratrix".
mother and the respondents Spouses Lumbao.
And Case No. L-28611 is an appeal by administrator Jose de Borja from the decision of the Court of First with a segregated area of approximately 1,313 hectares at the amount of P0.30 per square meter.
Instance of Rizal, Branch X, in its Civil Case No. 7452, declaring the Hacienda Jalajala Poblacion, which
is the main object of the aforesaid compromise agreement, as the separate and exclusive property of the 2. That Jose de Borja agrees and obligates himself to pay Tasiana Ongsingco Vda. de de Borja the total
late Francisco de Borja and not a conjugal asset of the community with his first wife, Josefa Tangco, and amount of Eight Hundred Thousand Pesos (P800,000) Philippine Currency, in cash, which represent P200,000 as
that said hacienda pertains exclusively to his testate estate, which is under administrator in Special his share in the payment and P600,000 as pro-rata shares of the heirs Crisanto, Cayetano and Matilde, all surnamed
Proceeding No. 832 of the Court of First Instance of Nueva Ecija, Branch II. de Borja and this shall be considered as full and complete payment and settlement of her hereditary share in the
estate of the late Francisco de Borja as well as the estate of Josefa Tangco, Sp. Proc. No. 832-Nueva Ecija and Sp.
It is uncontested that Francisco de Borja, upon the death of his wife Josefa Tangco on 6 October 1940, Proc. No. 7866-Rizal, respectively, and to any properties bequeathed or devised in her favor by the late Francisco de
filed a petition for the probate of her will which was docketed as Special Proceeding No. R-7866 of the Borja by Last Will and Testament or by Donation Inter Vivos or Mortis Causa or purportedly conveyed to her for
Court of First Instance of Rizal, Branch I. The will was probated on 2 April 1941. In 1946, Francisco de consideration or otherwise. The funds for this payment shall be taken from and shall depend upon the receipt of full
Borja was appointed executor and administrator: in 1952, their son, Jose de Borja, was appointed co- payment of the proceeds of the sale of Jalajala, "Poblacion."
administrator. When Francisco died, on 14 April 1954, Jose became the sole administrator of the testate
estate of his mother, Josefa Tangco. While a widower Francisco de Borja allegedly took unto himself a 3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment of that particular obligation incurred
second wife, Tasiana Ongsingco. Upon Francisco's death, Tasiana instituted testate proceedings in the by the late Francisco de Borja in favor of the Rehabilitation Finance Corporation, now Development Bank of the
Court of First Instance of Nueva Ecija, where, in 1955, she was appointed special administratrix. The Philippines, amounting to approximately P30,000.00 and also assumes payment of her 1/5 share of the Estate and
validity of Tasiana's marriage to Francisco was questioned in said proceeding. Inheritance taxes on the Estate of the late Francisco de Borja or the sum of P3,500.00, more or less, which shall be
deducted by the buyer of Jalajala, "Poblacion" from the payment to be made to Tasiana Ongsingco Vda. de Borja
The relationship between the children of the first marriage and Tasiana Ongsingco has been plagued with under paragraph 2 of this Agreement and paid directly to the Development Bank of the Philippines and the heirs-
several court suits and counter-suits; including the three cases at bar, some eighteen (18) cases remain children of Francisco de Borja.
pending determination in the courts. The testate estate of Josefa Tangco alone has been unsettled for more
than a quarter of a century. In order to put an end to all these litigations, a compromise agreement was 4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay directly to Tasiana Ongsingco
entered into on 12 October 1963,2 by and between "[T]he heir and son of Francisco de Borja by his first Vda. de de Borja the balance of the payment due her under paragraph 2 of this Agreement (approximately
marriage, namely, Jose de Borja personally and as administrator of the Testate Estate of Josefa Tangco," P766,500.00) and issue in the name of Tasiana Ongsingco Vda. de de Borja, corresponding certified checks/treasury
and "[T]he heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco warrants, who, in turn, will issue the corresponding receipt to Jose de Borja.
Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr." The terms and conditions of the
compromise agreement are as follows: 5. In consideration of above payment to Tasiana Ongsingco Vda. de de Borja, Jose de Borja personally and
as administrator of the Testate Estate of Josefa Tangco, and Tasiana Ongsingco Vda. de de Borja, for themselves
AGREEMENT and for their heirs, successors, executors, administrators, and assigns, hereby forever mutually renounce, withdraw,
waive, remise, release and discharge any and all manner of action or actions, cause or causes of action, suits, debts,
THIS AGREEMENT made and entered into by and between sum or sums of money, accounts, damages, claims and demands whatsoever, in law or in equity, which they ever
had, or now have or may have against each other, more specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal,
The heir and son of Francisco de Borja by his first marriage, namely, Jose de Borja personally and as and Sp. Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI Nueva Ecija and Civil Case No. 7452-CFI, Rizal, as
administrator of the Testate Estate of Josefa Tangco, well as the case filed against Manuel Quijal for perjury with the Provincial Fiscal of Rizal, the intention being to
completely, absolutely and finally release each other, their heirs, successors, and assigns, from any and all liability,
AND arising wholly or partially, directly or indirectly, from the administration, settlement, and distribution of the assets
as well as liabilities of the estates of Francisco de Borja and Josefa Tangco, first spouse of Francisco de Borja, and
The heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de lastly, Tasiana Ongsingco Vda. de de Borja expressly and specifically renounce absolutely her rights as heir over
Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr. any hereditary share in the estate of Francisco de Borja.

WITNESSETH 6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the payment under paragraph 4 hereof, shall
deliver to the heir Jose de Borja all the papers, titles and documents belonging to Francisco de Borja which are in
THAT it is the mutual desire of all the parties herein terminate and settle, with finality, the various court her possession and said heir Jose de Borja shall issue in turn the corresponding receive thereof.
litigations, controversies, claims, counterclaims, etc., between them in connection with the administration,
settlement, partition, adjudication and distribution of the assets as well as liabilities of the estates of 7. That this agreement shall take effect only upon the fulfillment of the sale of the properties mentioned
Francisco de Borja and Josefa Tangco, first spouse of Francisco de Borja. under paragraph 1 of this agreement and upon receipt of the total and full payment of the proceeds of the sale of the
Jalajala property "Poblacion", otherwise, the non-fulfillment of the said sale will render this instrument NULL AND
THAT with this end in view, the parties herein have agreed voluntarily and without any reservations to VOID AND WITHOUT EFFECT THEREAFTER.
enter into and execute this agreement under the following terms and conditions:
IN WITNESS WHEREOF, the parties hereto have her unto set their hands in the City of Manila, Philippines, the
1. That the parties agree to sell the Poblacion portion of the Jalajala properties situated in Jalajala, 12th of October, 1963.
Rizal, presently under administration in the Testate Estate of Josefa Tangco (Sp. Proc. No. 7866, Rizal),
more specifically described as follows: On 16 May 1966, Jose de Borja submitted for Court approval the agreement of 12 October 1963 to the Court of First
Instance of Rizal, in Special Proceeding No. R-7866; and again, on 8 August 1966, to the Court of First Instance of
Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del Municipio de Pililla de la Provincia Nueva Ecija, in Special Proceeding No. 832. Tasiana Ongsingco Vda. de de Borja opposed in both instances. The
de Rizal, y con el pico del Monte Zambrano; al Oeste con Laguna de Bay; por el Sur con los herederos de Rizal court approved the compromise agreement, but the Nueva Ecija court declared it void and unenforceable.
Marcelo de Borja; y por el Este con los terrenos de la Familia Maronilla Special administratrix Tasiana Ongsingco Vda. de de Borja appealed the Rizal Court's order of approval (now
Supreme Court G.R. case No. L-28040), while administrator Jose de Borja appealed the order of last will and testament and would exist even if such will were not probated at all. Thus, the prerequisite of a previous
disapproval (G.R. case No. L-28568) by the Court of First Instance of Nueva Ecija. probate of the will, as established in the Guevara and analogous cases, can not apply to the case of Tasiana Ongsingco
Vda. de de Borja.
The genuineness and due execution of the compromised agreement of 12 October 1963 is not disputed,
but its validity is, nevertheless, attacked by Tasiana Ongsingco on the ground that: (1) the heirs cannot Since the compromise contract Annex A was entered into by and between "Jose de Borja personally and as
enter into such kind of agreement without first probating the will of Francisco de Borja; (2) that the same administrator of the Testate Estate of Josefa Tangco" on the one hand, and on the other, "the heir and surviving
involves a compromise on the validity of the marriage between Francisco de Borja and Tasiana Ongsingco; spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de de Borja", it is clear that the
and (3) that even if it were valid, it has ceased to have force and effect. transaction was binding on both in their individual capacities, upon the perfection of the contract, even without
previous authority of the Court to enter into the same. The only difference between an extrajudicial compromise and
In assailing the validity of the agreement of 12 October 1963, Tasiana Ongsingco and the Probate Court one that is submitted and approved by the Court, is that the latter can be enforced by execution proceedings. Art.
of Nueva Ecija rely on this Court's decision in Guevara vs. Guevara. 74 Phil. 479, wherein the Court's 2037 of the Civil Code is explicit on the point:
majority held the view that the presentation of a will for probate is mandatory and that the settlement and
distribution of an estate on the basis of intestacy when the decedent left a will, is against the law and public 8. Art. 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be
policy. It is likewise pointed out by appellant Tasiana Ongsingco that Section 1 of Rule 74 of the Revised no execution except in compliance with a judicial compromise.
Rules explicitly conditions the validity of an extrajudicial settlement of a decedent's estate by agreement
between heirs, upon the facts that "(if) the decedent left no will and no debts, and the heirs are all of age, It is argued by Tasiana Ongsingco that while the agreement Annex A expressed no definite period for its
or the minors are represented by their judicial and legal representatives ..." The will of Francisco de Borja performance, the same was intended to have a resolutory period of 60 days for its effectiveness. In support of such
having been submitted to the Nueva Ecija Court and still pending probate when the 1963 agreement was contention, it is averred that such a limit was expressly stipulated in an agreement in similar terms entered into by
made, those circumstances, it is argued, bar the validity of the agreement. said Ongsingco with the brothers and sister of Jose de Borja, to wit, Crisanto, Matilde and Cayetano, all surnamed
de Borja, except that the consideration was fixed at P600,000 (Opposition, Annex/Rec. of Appeal, L-28040, pp. 39-
Upon the other hand, in claiming the validity of the compromise agreement, Jose de Borja stresses that at 46) and which contained the following clause:
the time it was entered into, on 12 October 1963, the governing provision was Section 1, Rule 74 of the
original Rules of Court of 1940, which allowed the extrajudicial settlement of the estate of a deceased III. That this agreement shall take effect only upon the consummation of the sale of the property mentioned
person regardless of whether he left a will or not. He also relies on the dissenting opinion of Justice Moran, herein and upon receipt of the total and full payment of the proceeds of the sale by the herein owner heirs-children
in Guevara vs. Guevara, 74 Phil. 479, wherein was expressed the view that if the parties have already of Francisco de Borja, namely, Crisanto, Cayetano and Matilde, all surnamed de Borja; Provided that if no sale of
divided the estate in accordance with a decedent's will, the probate of the will is a useless ceremony; and the said property mentioned herein is consummated, or the non-receipt of the purchase price thereof by the said
if they have divided the estate in a different manner, the probate of the will is worse than useless. owners within the period of sixty (60) days from the date hereof, this agreement will become null and void and of
no further effect.
The doctrine of Guevara vs. Guevara, ante, is not applicable to the case at bar. This is apparent from an
examination of the terms of the agreement between Jose de Borja and Tasiana Ongsingco. Paragraph 2 of Ongsingco's argument loses validity when it is considered that Jose de Borja was not a party to this particular contract
said agreement specifically stipulates that the sum of P800,000 payable to Tasiana Ongsingco — (Annex 1), and that the same appears not to have been finalized, since it bears no date, the day being left blank "this
— day of October 1963"; and while signed by the parties, it was not notarized, although plainly intended to be so
shall be considered as full — complete payment — settlement of her hereditary share in the estate of the done, since it carries a proposed notarial ratification clause. Furthermore, the compromise contract with Jose de
late Francisco de Borja as well as the estate of Josefa Tangco, ... and to any properties bequeathed or Borja (Annex A), provides in its par. 2 heretofore transcribed that of the total consideration of P800, 000 to be paid
devised in her favor by the late Francisco de Borja by Last Will and Testament or by Donation Inter Vivos to Ongsingco, P600,000 represent the "prorata share of the heirs Crisanto, Cayetano and Matilde all surnamed de
or Mortis Causa or purportedly conveyed to her for consideration or otherwise. Borja" which corresponds to the consideration of P600,000 recited in Annex 1, and that circumstance is proof that
the duly notarized contract entered into wit Jose de Borja under date 12 October 1963 (Annex A), was designed to
This provision evidences beyond doubt that the ruling in the Guevara case is not applicable to the cases at absorb and supersede the separate unformalize agreement with the other three Borja heirs. Hence, the 60 days
bar. There was here no attempt to settle or distribute the estate of Francisco de Borja among the heirs resolutory term in the contract with the latter (Annex 1) not being repeated in Annex A, can not apply to the formal
thereto before the probate of his will. The clear object of the contract was merely the conveyance by compromise with Jose de Borja. It is moreover manifest that the stipulation that the sale of the Hacienda de Jalajala
Tasiana Ongsingco of any and all her individual share and interest, actual or eventual in the estate of was to be made within sixty days from the date of the agreement with Jose de Borja's co-heirs (Annex 1) was plainly
Francisco de Borja and Josefa Tangco. There is no stipulation as to any other claimant, creditor or legatee. omitted in Annex A as improper and ineffective, since the Hacienda de Jalajala (Poblacion) that was to be sold to
And as a hereditary share in a decedent's estate is transmitted or vested immediately from the moment of raise the P800,000 to be paid to Ongsingco for her share formed part of the estate of Francisco de Borja and could
the death of such causante or predecessor in interest (Civil Code of the Philippines, Art. 777)3 there is no not be sold until authorized by the Probate Court. The Court of First Instance of Rizal so understood it, and in
legal bar to a successor (with requisite contracting capacity) disposing of her or his hereditary share approving the compromise it fixed a term of 120 days counted from the finality of the order now under appeal, for
immediately after such death, even if the actual extent of such share is not determined until the subsequent the carrying out by the parties for the terms of the contract.
liquidation of the estate.4 Of course, the effect of such alienation is to be deemed limited to what is
ultimately adjudicated to the vendor heir. However, the aleatory character of the contract does not affect This brings us to the plea that the Court of First Instance of Rizal had no jurisdiction to approve the compromise
the validity of the transaction; neither does the coetaneous agreement that the numerous litigations between with Jose de Borja (Annex A) because Tasiana Ongsingco was not an heir in the estate of Josefa Tangco pending
the parties (the approving order of the Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82) are settlement in the Rizal Court, but she was an heir of Francisco de Borja, whose estate was the object of Special
to be considered settled and should be dismissed, although such stipulation, as noted by the Rizal Court, Proceeding No. 832 of the Court of First Instance of Nueva Ecija. This circumstance is irrelevant, since what was
gives the contract the character of a compromise that the law favors, for obvious reasons, if only because sold by Tasiana Ongsingco was only her eventual share in the estate of her late husband, not the estate itself; and as
it serves to avoid a multiplicity of suits. already shown, that eventual share she owned from the time of Francisco's death and the Court of Nueva Ecija could
not bar her selling it. As owner of her undivided hereditary share, Tasiana could dispose of it in favor of whomsoever
It is likewise worthy of note in this connection that as the surviving spouse of Francisco de Borja, Tasiana she chose. Such alienation is expressly recognized and provided for by article 1088 of the present Civil Code:
Ongsingco was his compulsory heir under article 995 et seq. of the present Civil Code. Wherefore, barring
unworthiness or valid disinheritance, her successional interest existed independent of Francisco de Borja's
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of fluctuation in the values of currency and properties of the estate", is particularly opposite in the present case.
the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale,
provided they do so within the period of one month from the time they were notified in writing of the sale Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de Jalajala (Poblacion), concededly
of the vendor. acquired by Francisco de Borja during his marriage to his first wife, Josefa Tangco, is the husband's private property
(as contended by his second spouse, Tasiana Ongsingco), or whether it forms part of the conjugal (ganancial)
If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a coheir could not be partnership with Josefa Tangco. The Court of First Instance of Rizal (Judge Herminio Mariano, presiding) declared
forbidden. that there was adequate evidence to overcome the presumption in favor of its conjugal character established by
Article 160 of the Civil Code.
Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex "A") is void because it
amounts to a compromise as to her status and marriage with the late Francisco de Borja. The point is We are of the opinion that this question as between Tasiana Ongsingco and Jose de Borja has become moot and
without merit, for the very opening paragraph of the agreement with Jose de Borja (Annex "A") describes academic, in view of the conclusion reached by this Court in the two preceding cases (G.R. No. L-28568), upholding
her as "the heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco as valid the cession of Tasiana Ongsingco's eventual share in the estate of her late husband, Francisco de Borja, for
Vda. de de Borja", which is in itself definite admission of her civil status. There is nothing in the text of the sum of P800,000 with the accompanying reciprocal quit-claims between the parties. But as the question may
the agreement that would show that this recognition of Ongsingco's status as the surviving spouse of affect the rights of possible creditors and legatees, its resolution is still imperative.
Francisco de Borja was only made in consideration of the cession of her hereditary rights.
It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been originally acquired jointly by Francisco
It is finally charged by appellant Ongsingco, as well as by the Court of First Instance of Nueva Ecija in its de Borja, Bernardo de Borja and Marcelo de Borja and their title thereto was duly registered in their names as co-
order of 21 September 1964, in Special Proceedings No. 832 (Amended Record on Appeal in L-28568, owners in Land Registration Case No. 528 of the province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo,
page 157), that the compromise agreement of 13 October 1963 (Annex "A") had been abandoned, as 54 Phil. 465). Subsequently, in 1931, the Hacienda was partitioned among the co-owners: the Punta section went to
shown by the fact that, after its execution, the Court of First Instance of Nueva Ecija, in its order of 21 Marcelo de Borja; the Bagombong section to Bernardo de Borja, and the part in Jalajala proper (Poblacion)
September 1964, had declared that "no amicable settlement had been arrived at by the parties", and that corresponded to Francisco de Borja (V. De Borja vs. De Borja 101 Phil. 911, 932).
Jose de Borja himself, in a motion of 17 June 1964, had stated that the proposed amicable settlement "had
failed to materialize". The lot allotted to Francisco was described as —

It is difficult to believe, however, that the amicable settlement referred to in the order and motion above- Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena Romero; S. Heirs of Marcelo de Borja
mentioned was the compromise agreement of 13 October 1963, which already had been formally signed O. Laguna de Bay; containing an area of 13,488,870 sq. m. more or less, assessed at P297,410. (Record on Appeal,
and executed by the parties and duly notarized. What the record discloses is that some time after its pages 7 and 105)
formalization, Ongsingco had unilaterally attempted to back out from the compromise agreement,
pleading various reasons restated in the opposition to the Court's approval of Annex "A" (Record on On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the Testate Estate of Francisco de Borja,
Appeal, L-20840, page 23): that the same was invalid because of the lapse of the allegedly intended instituted a complaint in the Court of First Instance of Rizal (Civil Case No. 7452) against Jose de Borja, in his
resolutory period of 60 days and because the contract was not preceded by the probate of Francisco de capacity as Administrator of Josefa Tangco (Francisco de Borja's first wife), seeking to have the Hacienda above
Borja's will, as required by this Court's Guevarra vs. Guevara ruling; that Annex "A" involved a described declared exclusive private property of Francisco, while in his answer defendant (now appellant) Jose de
compromise affecting Ongsingco's status as wife and widow of Francisco de Borja, etc., all of which Borja claimed that it was conjugal property of his parents (Francisco de Borja and Josefa Tangco), conformably to
objections have been already discussed. It was natural that in view of the widow's attitude, Jose de Borja the presumption established by Article 160 of the Philippine Civil Code (reproducing Article 1407 of the Civil Code
should attempt to reach a new settlement or novatory agreement before seeking judicial sanction and of 1889), to the effect that:
enforcement of Annex "A", since the latter step might ultimately entail a longer delay in attaining final
remedy. That the attempt to reach another settlement failed is apparent from the letter of Ongsingco's Art. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it
counsel to Jose de Borja quoted in pages 35-36 of the brief for appellant Ongsingco in G.R. No. 28040; pertains exclusively to the husband or to the wife.
and it is more than probable that the order of 21 September 1964 and the motion of 17 June 1964 referred
to the failure of the parties' quest for a more satisfactory compromise. But the inability to reach a novatory Defendant Jose de Borja further counterclaimed for damages, compensatory, moral and exemplary, as well as for
accord can not invalidate the original compromise (Annex "A") and justifies the act of Jose de Borja in attorney's fees.
finally seeking a court order for its approval and enforcement from the Court of First Instance of Rizal,
which, as heretofore described, decreed that the agreement be ultimately performed within 120 days from After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held that the plaintiff had adduced
the finality of the order, now under appeal. sufficient evidence to rebut the presumption, and declared the Hacienda de Jalajala (Poblacion) to be the exclusive
private property of the late Francisco de Borja, and his Administratrix, Tasiana Ongsingco Vda. de Borja, to be
We conclude that in so doing, the Rizal court acted in accordance with law, and, therefore, its order should entitled to its possession. Defendant Jose de Borja then appealed to this Court.
be upheld, while the contrary resolution of the Court of First Instance of Nueva Ecija should be, and is,
reversed. The evidence reveals, and the appealed order admits, that the character of the Hacienda in question as owned by the
conjugal partnership De Borja-Tangco was solemnly admitted by the late Francisco de Borja no less than two times:
In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal has affected her first, in the Reamended Inventory that, as executor of the estate of his deceased wife Josefa Tangco, he filed in the
unfavorably, in that while the purchasing power of the agreed price of P800,000 has diminished, the value Special Proceedings No. 7866 of the Court of First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the
of the Jalajala property has increased. But the fact is that her delay in receiving the payment of the agreed Reamended Accounting of the same date, also filed in the proceedings aforesaid (Exhibit "7"). Similarly, the plaintiff
price for her hereditary interest was primarily due to her attempts to nullify the agreement (Annex "A") Tasiana O. Vda. de Borja, herself, as oppositor in the Estate of Josefa Tangco, submitted therein an inventory dated
she had formally entered into with the advice of her counsel, Attorney Panaguiton. And as to the 7 September 1954 (Exhibit "3") listing the Jalajala property among the "Conjugal Properties of the Spouses Francisco
devaluation de facto of our currency, what We said in Dizon Rivera vs. Dizon, L-24561, 30 June 1970, 33 de Borja and Josefa Tangco". And once more, Tasiana Ongsingco, as administratrix of the Estate of Francisco de
SCRA 554, that "estates would never be settled if there were to be a revaluation with every subsequent Borja, in Special Proceedings No. 832 of the Court of First Instance of Nueva Ecija, submitted therein in December,
1955, an inventory wherein she listed the Jalajala Hacienda under the heading "Conjugal Property of the Deceased
Spouses Francisco de Borja and Josefa Tangco, which are in the possession of the Administrator of the It may be true that the inventories relied upon by defendant-appellant (Exhibits "2", "3", "4" and "7") are not
Testate Estate of the Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court of First conclusive on the conjugal character of the property in question; but as already noted, they are clear admissions
Instance of Rizal" (Exhibit "4"). against the pecuniary interest of the declarants, Francisco de Borja and his executor-widow, Tasiana Ongsingco, and
as such of much greater probative weight than the self-serving statement of Francisco (Exhibit "F"). Plainly, the legal
Notwithstanding the four statements aforesaid, and the fact that they are plain admissions against interest presumption in favor of the conjugal character of the Hacienda de Jalajala (Poblacion) now in dispute has not been
made by both Francisco de Borja and the Administratrix of his estate, in the course of judicial proceedings rebutted but actually confirmed by proof. Hence, the appealed order should be reversed and the Hacienda de Jalajala
in the Rizal and Nueva Ecija Courts, supporting the legal presumption in favor of the conjugal community, (Poblacion) declared property of the conjugal partnership of Francisco de Borja and Josefa Tangco.
the Court below declared that the Hacienda de Jalajala (Poblacion) was not conjugal property, but the
private exclusive property of the late Francisco de Borja. It did so on the strength of the following No error having been assigned against the ruling of the lower court that claims for damages should be ventilated in
evidences: (a) the sworn statement by Francis de Borja on 6 August 1951 (Exhibit "F") that — the corresponding special proceedings for the settlement of the estates of the deceased, the same requires no pro
announcement from this Court.
He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4 parte, 337 hectareas) adjunto
a mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal). IN VIEW OF THE FOREGOING, the appealed order of the Court of First Instance of Rizal in Case No. L-28040 is
hereby affirmed; while those involved in Cases Nos. L-28568 and L-28611 are reversed and set aside. Costs against
and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the entire Hacienda had been the appellant Tasiana Ongsingco Vda. de Borja in all three (3) cases.
bought at a foreclosure sale for P40,100.00, of which amount P25,100 was contributed by Bernardo de
Borja and P15,000. by Marcelo de Borja; that upon receipt of a subsequent demand from the provincial Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
treasurer for realty taxes the sum of P17,000, Marcelo told his brother Bernardo that Francisco (son of
Marcelo) wanted also to be a co-owner, and upon Bernardo's assent to the proposal, Marcelo issue a check Fernando, J., took no part.
for P17,000.00 to pay the back taxes and said that the amount would represent Francisco's contribution in
the purchase of the Hacienda. The witness further testified that — ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA (their
father) who represents the minors, Petitioners, vs. LEON BARCENA, MAXIMA ARIAS BALLENA,
Marcelo de Borja said that that money was entrusted to him by Francisco de Borja when he was still a ESPERANZA BARCENA, MANUEL BARCENA, AGUSTINA NERI, widow of JULIAN TAMAYO and
bachelor and which he derived from his business transactions. (Hearing, 2 February 1965, t.s.n., pages 13- HON. LEOPOLDO GIRONELLA of the Court of First Instance of Abra, Respondents.
15) (Emphasis supplied)
This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil Case No. 856, entitled
The Court below, reasoning that not only Francisco's sworn statement overweighed the admissions in the Fortunata Barcena vs. Leon Barcena, et al., denying the motions for reconsideration of its order dismissing the
inventories relied upon by defendant-appellant Jose de Borja since probate courts can not finally determine complaint in the aforementioned case.
questions of ownership of inventoried property, but that the testimony of Gregorio de Borja showed that
Francisco de Borja acquired his share of the original Hacienda with his private funds, for which reason On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion Bonilla and wife of Ponciano
that share can not be regarded as conjugal partnership property, but as exclusive property of the buyer, Bonilla, instituted a civil action in the Court of First Instance of Abra, to quiet title over certain parcels of land
pursuant to Article 1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of the Philippines. located in Abra.

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

(4) That which is purchased with exclusive money of the wife or of the husband. On August 4, 1975, the defendants filed another motion to dismiss the complaint on the ground that Fortunata
Barcena is dead and, therefore, has no legal capacity to sue. Said motion to dismiss was heard on August 14, 1975.
We find the conclusions of the lower court to be untenable. In the first place, witness Gregorio de Borja's In said hearing, counsel for the plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her
testimony as to the source of the money paid by Francisco for his share was plain hearsay, hence minor children and her husband, the petitioners herein; but the court after the hearing immediately dismissed the
inadmissible and of no probative value, since he was merely repeating what Marcelo de Borja had told case on the ground that a dead person cannot be a real party in interest and has no legal personality to sue.
him (Gregorio). There is no way of ascertaining the truth of the statement, since both Marcelo and
Francisco de Borja were already dead when Gregorio testified. In addition, the statement itself is On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the complaint and on August
improbable, since there was no need or occasion for Marcelo de Borja to explain to Gregorio how and 23, 1975, he moved to set aside the order of the dismissal pursuant to Sections 16 and 17 of Rule 3 of the Rules of
when Francisco de Borja had earned the P17,000.00 entrusted to Marcelo. A ring of artificiality is clearly Court. 2
discernible in this portion of Gregorio's testimony.
On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the plaintiff for lack of
As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante, page 14) does not clearly merit. On September 1, 1975, counsel for deceased plaintiff filed a written manifestation praying that the minors
demonstrate that the "mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal) " refers precisely to Rosalio Bonilla and Salvacion Bonilla be allowed to substitute their deceased mother, but the court denied the
the Hacienda in question. The inventories (Exhibits 3 and 4) disclose that there were two real properties counsel's prayer for lack of merit. From the order, counsel for the deceased plaintiff filed a second motion for
in Jalajala owned by Francisco de Borja, one of 72.038 sq. m., assessed at P44,600, and a much bigger reconsideration of the order dismissing the complaint claiming that the same is in violation of Sections 16 and 17 of
one of 1,357.260.70 sq. m., which is evidently the Hacienda de Jalajala (Poblacion). To which of these Rule 3 of the Rules of Court but the same was denied.
lands did the affidavit of Francisco de Borja (Exhibit "F") refer to? In addition, Francisco's characterization
of the land as "mi terreno personal y exclusivo" is plainly self-serving, and not admissible in the absence Hence, this petition for review.
of cross examination.
The Court reverses the respondent Court and sets aside its order dismissing the complaint in Civil Case substitution of the minor children, who are the petitioners therein for the deceased plaintiff and to appoint a qualified
No. 856 and its orders denying the motion for reconsideration of said order of dismissal. While it is true person as guardian ad litem for them. Without pronouncement as to costs.
that a person who is dead cannot sue in court, yet he can be substituted by his heirs in pursuing the case
up to its completion. The records of this case show that the death of Fortunata Barcena took place on July SO ORDERED.
9, 1975 while the complaint was filed on March 31, 1975. This means that when the complaint was filed
on March 31, 1975, Fortunata Barcena was still alive, and therefore, the court had acquired jurisdiction
over her person. If thereafter she died, the Rules of Court prescribes the procedure whereby a party who CELESTINO BALUS, Petitioner, versus - SATURNINO BALUS and LEONARDA BALUS VDA. DE
died during the pendency of the proceeding can be substituted. Under Section 16, Rule 3 of the Rules of CALUNOD,
Court "whenever a party to a pending case dies ... it shall be the duty of his attorney to inform the court
promptly of such death ... and to give the name and residence of his executor, administrator, guardian or Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the Decision[1] of the
other legal representatives." This duty was complied with by the counsel for the deceased plaintiff when Court of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which set aside the February 7, 1997 Decision
he manifested before the respondent Court that Fortunata Barcena died on July 9, 1975 and asked for the of the Regional Trial Court (RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
proper substitution of parties in the case. The respondent Court, however, instead of allowing the
substitution, dismissed the complaint on the ground that a dead person has no legal personality to sue. This The facts of the case are as follows:
is a grave error. Article 777 of the Civil Code provides "that the rights to the succession are transmitted
from the moment of the death of the decedent." From the moment of the death of the decedent, the heirs Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus. Sebastiana died on
become the absolute owners of his property, subject to the rights and obligations of the decedent, and they September 6, 1978, while Rufo died on July 6, 1984.
cannot be deprived of their rights thereto except by the methods provided for by law. 3 The moment of
death is the determining factor when the heirs acquire a definite right to the inheritance whether such right
be pure or contingent. 4 The right of the heirs to the property of the deceased vests in them even before On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan he obtained from the
judicial declaration of their being heirs in the testate or intestate proceedings. 5 When Fortunata Barcena, Rural Bank of Maigo, Lanao del Norte (Bank). The said property was originally covered by Original Certificate of
therefore, died her claim or right to the parcels of land in litigation in Civil Case No. 856, was not Title No. P-439(788) and more particularly described as follows:
extinguished by her death but was transmitted to her heirs upon her death. Her heirs have thus acquired
interest in the properties in litigation and became parties in interest in the case. There is, therefore, no
reason for the respondent Court not to allow their substitution as parties in interest for the deceased
plaintiff. 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
Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not thereby extinguished, Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along line 12-13 by Lot 4649, Csd-292; and along line 12-
the court shall order, upon proper notice, the legal representative of the deceased to appear and be 1, by Lot 4661, Csd-292. x x x [2]
substituted for the deceased, within such time as may be granted ... ." The question as to whether an action
survives or not depends on the nature of the action and the damage sued for. 6 In the causes of action
which survive the wrong complained affects primarily and principally property and property rights, the
injuries to the person being merely incidental, while in the causes of action which do not survive the injury Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and was subsequently sold to the
complained of is to the person, the property and rights of property affected being incidental. 7 Following Bank as the sole bidder at a public auction held for that purpose. On November 20, 1981, a Certificate of Sale[3]
the foregoing criterion the claim of the deceased plaintiff which is an action to quiet title over the parcels was executed by the sheriff in favor of the Bank. The property was not redeemed within the period allowed by law.
of land in litigation affects primarily and principally property and property rights and therefore is one that More than two years after the auction, or on January 25, 1984, the sheriff executed a Definite Deed of Sale[4] in the
survives even after her death. It is, therefore, the duty of the respondent Court to order the legal Bank's favor. Thereafter, a new title was issued in the name of the Bank.
representative of the deceased plaintiff to appear and to be substituted for her. But what the respondent
Court did, upon being informed by the counsel for the deceased plaintiff that the latter was dead, was to On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of Estate[5]
dismiss the complaint. This should not have been done for under the same Section 17, Rule 3 of the Rules adjudicating to each of them a specific one-third portion of the subject property consisting of 10,246 square meters.
of Court, it is even the duty of the court, if the legal representative fails to appear, to order the opposing The Extrajudicial Settlement also contained provisions wherein the parties admitted knowledge of the fact that their
party to procure the appointment of a legal representative of the deceased. In the instant case the father mortgaged the subject property to the Bank and that they intended to redeem the same at the soonest possible
respondent Court did not have to bother ordering the opposing party to procure the appointment of a legal time.
representative of the deceased because her counsel has not only asked that the minor children be
substituted for her but also suggested that their uncle be appointed as guardian ad litem for them because Three years after the execution of the Extrajudicial Settlement, herein respondents bought the subject property from
their father is busy in Manila earning a living for the family. But the respondent Court refused the request the Bank. On October 12, 1992, a Deed of Sale of Registered Land[6] was executed by the Bank in favor of
for substitution on the ground that the children were still minors and cannot sue in court. This is another respondents. Subsequently, Transfer Certificate of Title (TCT) No. T-39,484(a.f.)[7] was issued in the name of
grave error because the respondent Court ought to have known that under the same Section 17, Rule 3 of respondents. Meanwhile, petitioner continued possession of the subject lot.
the Rules of Court, the court is directed to appoint a guardian ad litem for the minor heirs. Precisely in the
instant case, the counsel for the deceased plaintiff has suggested to the respondent Court that the uncle of On June 27, 1995, respondents filed a Complaint[8] for Recovery of Possession and Damages against petitioner,
the minors be appointed to act as guardian ad litem for them. Unquestionably, the respondent Court has contending that they had already informed petitioner of the fact that they were the new owners of the disputed
gravely abused its discretion in not complying with the clear provision of the Rules of Court in dismissing property, but the petitioner still refused to surrender possession of the same to them. Respondents claimed that they
the complaint of the plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case. had exhausted all remedies for the amicable settlement of the case, but to no avail.

IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in Civil On February 7, 1997, the RTC rendered a Decision[9] disposing as follows:
Case No. 856 of the Court of First Instance of Abra and the motions for reconsideration of the order of
dismissal of said complaint are set aside and the respondent Court is hereby directed to allow the
WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in favor of The Court is not persuaded.
the defendant, the one-third share of the property in question, presently possessed by him, and described
in the deed of partition, as follows: 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
A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate of heirs.
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 At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subject property was
and Leonarda Balus-Calunod; South by Lot 4649, Dodiongan River; West by Lot 4661, consisting of exclusively owned by petitioner and respondents' father, Rufo, at the time that it was mortgaged in 1979. This was
10,246 square meters, including improvements thereon. stipulated by the parties during the hearing conducted by the trial court on October 28, 1996.[12] Evidence shows
that a Definite Deed of Sale[13] was issued in favor of the Bank on January 25, 1984, after the period of redemption
and dismissing all other claims of the parties. 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
The amount of P6,733.33 consigned by the defendant with the Clerk of Court is hereby ordered delivered Rufo.
to the plaintiffs, as purchase price of the one-third portion of the land in question.
The rights to a person's succession are transmitted from the moment of his death.[14] In addition, the inheritance of
Plaintiffs are ordered to pay the costs. 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
SO ORDERED.[10] ownership of the subject property during his lifetime, it only follows that at the time of his death, the disputed parcel
The RTC held that the right of petitioner to purchase from the respondents his share in the disputed of land no longer formed part of his estate to which his heirs may lay claim. Stated differently, petitioner and
property was recognized by the provisions of the Extrajudicial Settlement of Estate, which the parties had respondents never inherited the subject lot from their father.
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. 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
On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting aside the fact that, in the eyes of the law, the disputed lot did not pass into the hands of petitioner and respondents as
Decision of the RTC and ordering petitioner to immediately surrender possession of the subject property compulsory heirs of Rufo at any given point in time.
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 The foregoing notwithstanding, the Court finds a necessity for a complete determination of the issues raised in the
in the name of the Bank, their co-ownership was extinguished. 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.

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


It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mere consent; and
WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to
OVER THE PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OF all the consequences which, according to their nature, may be in keeping with good faith, usage and law.
TITLE TO THE BANK) BY VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE
REPURCHASE THEREOF BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S Article 1306 of the same Code also provides that the contracting parties may establish such stipulations, clauses,
ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs,
(PETITIONER'S) JUST SHARE OF THE REPURCHASE PRICE.[11] public order or public policy.

The main issue raised by petitioner is whether co-ownership by him and respondents over the subject In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any express
property persisted even after the lot was purchased by the Bank and title thereto transferred to its name, stipulation for petitioner and respondents to continue with their supposed co-ownership of the contested lot.
and even after it was eventually bought back by the respondents from the Bank.
On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support
Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputed petitioner's contention that it was his and his sibling's intention to buy the subject property from the Bank and
property was already in the name of the Bank, they still proceeded to execute the subject Extrajudicial continue what they believed to be co-ownership thereof. It is a cardinal rule in the interpretation of contracts that the
Settlement, having in mind the intention of purchasing back the property together with petitioner and of intention of the parties shall be accorded primordial consideration.[16] It is the duty of the courts to place a practical
continuing their co-ownership thereof. 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
Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him and their contemporaneous and subsequent acts.[18] Absurd and illogical interpretations should also be avoided.[19]
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 For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblings to continue
contends, is the law between the parties and, as such, binds the respondents. As a result, petitioner asserts what they thought was their ownership of the subject property, even after the same had been bought by the Bank, is
that respondents' act of buying the disputed property from the Bank without notifying him inures to his stretching the interpretation of the said Extrajudicial Settlement too far.
benefit as to give him the right to claim his rightful portion of the property, comprising 1/3 thereof, by In the first place, as earlier discussed, there is no co-ownership to talk about and no property to partition, as the
reimbursing respondents the equivalent 1/3 of the sum they paid to the Bank. 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 evident that when Faustino Nebreda died in 1945 the five parcels of land he was seized of at the time passed from
co-ownership is negated by no less than his assertions in the present petition that on several occasions he the moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil Code).As this Court aptly
had the chance to purchase the subject property back, but he refused to do so. In fact, he claims that after said, "The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor
the Bank acquired the disputed lot, it offered to re-sell the same to him but he ignored such offer. How had executed and delivered to them a deed for the same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321).
then can petitioner now claim that it was also his intention to purchase the subject property from the Bank, From that moment, therefore, the rights of inheritance of Maria Uson over the lands in question became vested.
when he admitted that he refused the Bank's offer to re-sell the subject property to him?
The claim of the defendants that Maria Uson had relinquished her right over the lands in question because she
In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of the execution expressly renounced to inherit any future property that her husband may acquire and leave upon his death in the deed
thereof, the parties were not yet aware that the subject property was already exclusively owned by the of separation they had entered into on February 21, 1931, cannot be entertained for the simple reason that future
Bank. Nonetheless, the lack of knowledge on the part of petitioner and respondents that the mortgage was inheritance cannot be the subject of a contract nor can it be renounced (1 Manresa, 123, sixth edition; Tolentino on
already foreclosed and title to the property was already transferred to the Bank does not give them the Civil Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).
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 But defendants contend that, while it is true that the four minor defendants are illegitimate children of the late
not on the evidence adduced and the law and jurisprudence applicable thereto. Faustino Nebreda and under the old Civil Code are not entitled to any successional rights, however, under the new
Civil Code which became in force in June, 1950, they are given the status and rights of natural children and are
Furthermore, petitioner's contention that he and his siblings intended to continue their supposed co- entitled to the successional rights which the law accords to the latter (article 2264 and article 287, new Civil Code),
ownership of the subject property contradicts the provisions of the subject Extrajudicial Settlement where and because these successional rights were declared for the first time in the new code, they shall be given retroactive
they clearly manifested their intention of having the subject property divided or partitioned by assigning effect even though the event which gave rise to them may have occurred under the prior legislation (Article 2253,
to each of the petitioner and respondents a specific 1/3 portion of the same. Partition calls for the new Civil Code).
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 There is no merit in this claim. Article 2253 above referred to provides indeed that rights which are declared for the
property and giving each one a right to enjoy his estate without supervision or interference from the first time shall have retroactive effect even though the event which gave rise to them may have occurred under the
other.[20] In other words, the purpose of partition is to put an end to co-ownership,[21] an objective which former legislation, but this is so only when the new rights do not prejudice any vested or acquired right of the same
negates petitioner's claims in the present case. origin. Thus, said article provides that "if a right should be declared for the first time in this Code, it shall be effective
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, dated May at once, even though the act or event which gives rise thereto may have been done or may have occurred under the
31, 2005 in CA-G.R. CV No. 58041, is AFFIRMED. prior legislation, provided said new right does not prejudice or impair any vested or acquired right, of the same
origin." As already stated in the early part of this decision, the right of ownership of Maria Uson over the lands in
SO ORDERED. question became vested in 1945 upon the death of her late husband and this is so because of the imperative provision
MARIA USON, plaintiff-appellee, vs MARIA DEL ROSARIO, CONCEPCION NEBREDA, of the law which commands that the rights to succession are transmitted from the moment of death (Article 657, old
CONRADO NEBREDA, DOMINADOR NEBREDA, AND FAUSTINO NEBREDA, Jr., Civil Code). The new right recognized by the new Civil Code in favor of the illegitimate children of the deceased
defendants-appellants. cannot, therefore, be asserted to the impairment of the vested right of Maria Uson over the lands in dispute.

This is an action for recovery of the ownership and possession of five (5) parcels of land situated in the As regards the claim that Maria Uson, while her deceased husband was lying in state, in a gesture of pity or
Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario and her compassion, agreed to assign the lands in question to the minor children for the reason that they were acquired while
four children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda, who are all of the deceased was living with their mother and Maria Uson wanted to assuage somewhat the wrong she has done to
minor age, before the Court of First Instance of Pangasinan. them, this much can be said; apart from the fact that this claim is disputed, we are of the opinion that said assignment,
if any, partakes of the nature of a donation of real property, inasmuch as it involves no material consideration, and
Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands involved in order that it may be valid it shall be made in a public document and must be accepted either in the same document
in this litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However, plaintiff or in a separate one (Article 633, old Civil Code). Inasmuch as this essential formality has not been followed, it
claims that when Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took possession results that the alleged assignment or donation has no valid effect.
illegally of said lands thus depriving her of their possession and enjoyment.
WHEREFORE, the decision appealed from is affirmed, without costs.
Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson and her
husband, the late Faustino Nebreda, executed a public document whereby they agreed to separate as JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO ONG, petitioners,
husband and wife and, in consideration of their separation, Maria Uson was given a parcel of land by way vs.
of alimony and in return she renounced her right to inherit any other property that may be left by her THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY SHERIFF OF
husband upon his death (Exhibit 1). QUEZON CITY, respondents.

After trial, at which both parties presented their respective evidence, the court rendered decision ordering
the defendants to restore to the plaintiff the ownership and possession of the lands in dispute without PARAS, J.:
special pronouncement as to costs. Defendants interposed the present appeal.
This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of Appeals in AC-G.R. CV
There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, former No. 02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming, with modification, the January 5, 1984
owner of the five parcels of lands litigated in the present case. There is likewise no dispute that Maria del Decision of the Regional Trial Court of Quezon City in Civil Case No. Q-35230.
Rosario, one of the defendants-appellants, was merely a common-law wife of the late Faustino Nebreda
with whom she had four illegitimate children, her now co-defendants. It likewise appears that Faustino The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:
Nebreda died in 1945 much prior to the effectivity of the new Civil Code. With this background, it is
...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407, Psd 37326 with an area of The sole issue in this case is —
1960.6 sq. m. and Lot No. 1, Psd 15021, with an area of 3,660.8 sq. m. are covered by Transfer Certificate
of Title No. 188705 in the name of "Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D). Alfredo WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND UNDER
Ong Bio Hong died on January 18, 1975 and Julita Go Ong was appointed administratrix of her husband's PETITIONER'S ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL APPROVAL.
estate in Civil Case No. 107089. The letters of administration was registered on TCT No. 188705 on
October 23, 1979. Thereafter, Julita Go Ong sold Lot No. 12 to Lim Che Boon, and TCT No. 188705 was The instant petition is devoid of merit.
partially cancelled and TCT No. 262852 was issued in favor of Lim Che Boon covering Lot No. 12 (Exh.
D-4). On June 8, 1981 Julita Go Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1) mortgaged Lot The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries even more weight
No. 1 to the Allied Banking Corporation to secure a loan of P900,000.00 obtained by JK Exports, Inc. The when affirmed by the Court of Appeals as in the case at bar.
mortgage was registered on TCT No. 188705 on the same date with the following notation: "... mortgagee's
consent necessary in case of subsequent alienation or encumbrance of the property other conditions set In brief, the lower court found: (1) that the property under the administration of petitioner — the wife of the deceased,
forth in Doc. No. 340, Page No. 69, Book No. XIX, of the Not. Public of Felixberto Abad". On the loan is a community property and not the separate property of the latter; (2) that the mortgage was constituted in the wife's
there was due the sum of P828,000.00 and Allied Banking Corporation tried to collect it from Julita Go personal capacity and not in her capacity as administratrix; and (3) that the mortgage affects the wife's share in the
Ong, (Exh. E). Hence, the complaint alleging nullity of the contract for lack of judicial approval which community property and her inheritance in the estate of her husband.
the bank had allegedly promised to secure from the court. In response thereto, the bank averred that it was
plaintiff Julita Go Ong who promised to secure the court's approval, adding that Julita Go Ong informed Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule 89 of the Rules
the defendant that she was processed the sum of P300,000.00 by the JK Exports, Inc. which will also take of Court and cited several cases wherein this Court ruled that the regulations provided in the said section are
charge of the interest of the loan. mandatory.

Concluding, the trial court ruled: While petitioner's assertion may have merit insofar as the rest of the estate of her husband is concerned the same is
not true as regards her conjugal share and her hereditary rights in the estate. The records show that petitioner willingly
Absent (of) any evidence that the property in question is the capital of the deceased husband brought into and voluntarily mortgaged the property in question because she was processed by JK Exports, Inc. the sum of
the marriage, said property should be presumed as acquired during the marriage and, therefore, conjugal P300,000.00 from the proceeds of the loan; and that at the time she executed the real estate mortgage, there was no
property, court order authorizing the mortgage, so she took it upon herself, to secure an order.

After the dissolution of the marriage with the death of plaintiff's husband, the plaintiff acquired, by law, Thus, in confirming the findings of the lower court, as supported by law and the evidence, the Court of Appeals aptly
her conjugal share, together with the hereditary rights thereon. (Margate vs. Rabacal, L-14302, April 30, ruled that Section 7 of Rule 89 of the Rules of Court is not applicable, since the mortgage was constituted in her
1963). Consequently, the mortgage constituted on said property, upon express authority of plaintiff, personal capacity and not in her capacity as administratrix of the estate of her husband.
notwithstanding the lack of judicial approval, is valid, with respect to her conjugal share thereon, together
with her hereditary rights. Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483) and Fernandez, et al. vs.
Maravilla (10 SCRA 589), further argues that in the settlement proceedings of the estate of the deceased spouse, the
On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed decision entire conjugal partnership property of the marriage is under administration. While such may be in a sense true, that
(Record, pp. 19-22). The dispositive portion of the appellate court's decision reads: fact alone is not sufficient to invalidate the whole mortgage, willingly and voluntarily entered into by the petitioner.
An opposite view would result in an injustice. Under similar circumstances, this Court applied the provisions of
WHEREFORE, with the modification that the extrajudicial foreclosure proceedings instituted by Article 493 of the Civil Code, where the heirs as co-owners shall each have the full ownership of his part and the
defendant against plaintiff shall be held in abeyance to await the final result of Civil Case No. 107089 of fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even effect of the
the Court of First Instance of Manila, 6th Judicial District Branch XXXII, entitled "IN THE MATTER OF alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him
THE INTESTATE ESTATE OF THE LATE ALFREDO ONG BIO: JULITA GO ONG, in the division upon the termination of the co-ownership (Philippine National Bank vs. Court of Appeals, 98 SCRA
ADMINISTRATRIX". In pursuance with which the restraining order of the lower court in this case 207 [1980]).
restraining the sale of the properties levied upon is hereby ordered to continue in full force and effect
coterminous with the final result of Civil Case No. 107089, the decision appealed from is hereby affirmed. Consequently, in the case at bar, the trial court and the Court of Appeals cannot be faulted in ruling that the
Costs against plaintiff-appellant. questioned mortgage constituted on the property under administration, by authority of the petitioner, is valid,
notwithstanding the lack of judicial approval, with respect to her conjugal share and to her hereditary rights. The fact
SO ORDERED. that what had been mortgaged was in custodia legis is immaterial, insofar as her conjugal share and hereditary share
in the property is concerned for after all, she was the ABSOLUTE OWNER thereof. This ownership by hers is not
On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29), but in a disputed, nor is there any claim that the rights of the government (with reference to taxes) nor the rights of any heir
Resolution dated September 11, 1986, respondent court denied the motion for lack of merit (Ibid., p. 23). or anybody else have been prejudiced for impaired. As stated by Associate Justice (later Chief Justice) Manuel
Hence, the instant petition (Ibid., pp. 6-17). Moran in Jakosalem vs. Rafols, et al., 73 Phil. 618 —

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30), without giving The land in question, described in the appealed decision, originally belonged to Juan Melgar. The latter died and the
due course to the petition, resolved to require private respondent to comment thereon and it did on judicial administration of his estate was commenced in 1915 and came to a close on December 2, 1924, only. During
February 19, 1987 (Ibid., pp. 37-42). Thereafter, in a Resolution dated April 6, 1987, the petition was the pendency of the said administration, that is, on July 5, 1917, Susana Melgar, daughter of the deceased Juan
given due course and the parties were required to file their respective memoranda (Ibid., p. 43). Melgar, sold the land with the right of repurchase to Pedro Cui, subject to the stipulation that during the period for
the repurchase she would continue in possession of the land as lessee of the purchase. On December 12, 1920, the
Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent filed its partition of the estate left by the deceased Juan Melgar was made, and the land in question was adjudicated to Susana
Memorandum on May 20, 1987 (Ibid., pp. 62-68). Melgar. In 1921, she conveyed, in payment of professional fees, one-half of the land in favor of the defendant-
appellee Nicolas Rafols, who entered upon the portion thus conveyed and has been in possession thereof up to the
present. On July 23, 1921, Pedro Cui brought an action to recover said half of the land from Nicolas Rafols Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, 1963 filed a motion
and the other half from the other defendants, and while that case was pending, or about August 4, 1925, to declare the former in default. The trial court granted the motion in its order dated April 10, 1963.
Pedro Cui donated the whole land in question to Generosa Teves, the herein plaintiff-appellant, after trial,
the lower court rendered a decision absolving Nicolas Rafols as to the one-half of the land conveyed to On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court acting as Commissioner.
him by Susana Melgar, and declaring the plaintiff owner of the other half by express acknowledgment of The court a quo on May 6, 1963, rendered a decision declaring the plaintiffs lawful owners of the land in question
the other defendants. The plaintiff appealed from that part of the judgment which is favorable to Nicolas and entitled to its peaceful possession and enjoyment; ordering defendant immediately to vacate the portion occupied
Rafols. by him and to restore the peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs the
amount of P1,929.20 and the costs.
The lower court absolved Nicolas Rafols upon the theory that Susana Melgar could not have sold anything
to Pedro Cui because the land was then in custodia legis, that is, under judicial administration. This is On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This was granted by the trial
error. That the land could not ordinary be levied upon while in custodia legis, does not mean that one of court in its order of December 9, 1963.
the heirs may not sell the right, interest or participation which he has or might have in the lands under
administration. The ordinary execution of property in custodia legis is prohibited in order to avoid The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff's return of proceedings reporting the
interference with the possession by the court. But the sale made by an heir of his share in an inheritance, garnishment and sale of a carabao and goat belonging to defendant for P153.00, and the attachment and sale of
subject to the result of the pending administration, in no wise stands in the way of such administration. defendant's parcel of land covered by Tax Declaration No. 4694, situated in Sicet, Polanco, Zamboanga del Norte,
for P500.00 — both sales having been made to the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.
The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect the
substantive rights of private respondent to dispose of her Ideal [not inchoate, for the conjugal partnership On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-Dipolog Branch the
ended with her husband's death, and her hereditary rights accrued from the moment of the death of the residuary estate of its former ward, Eulogio Imperial, in the sum of P10,303.80, pursuant to an order of Branch I of
decedent (Art. 777, Civil Code) share in the co-heirship and/or co-ownership formed between her and the the Court of First Instance of Zamboanga del Norte in Sp. Proc. No. R-145.
other heirs/co-owners (See Art. 493, Civil Code, supra.). Sec. 7, Art. 89 of the Civil Code applies in a case
where judicial approval has to be sought in connection with, for instance, the sale or mortgage of property On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a Deed of Extrajudicial
under administration for the payment, say of a conjugal debt, and even here, the conjugal and hereditary Partition of the residuary estate, wherein was apportioned P1,471.97 as defendant Rufino Imperial's share.
shares of the wife are excluded from the requisite judicial approval for the reason already adverted to
hereinabove, provided of course no prejudice is caused others, including the government. Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for issuance of an alias writ of
execution and of an order directing the manager, or the representative, of the Philippine National Bank-Dipolog
Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise from the Branch, to hold the share of defendant and deliver the same to the provincial sheriff of the province to be applied to
making of a promise even though without consideration, if it was intended that the promise should be the satisfaction of the balance of the money judgment. This was granted by the trial court (Branch II) in its order
relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the dated June 9, 1964.
perpetration of fraud or would result in other injustice (Gonzalo Sy Trading vs. Central Bank, 70 SCRA
570). On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy addressed to defendant, giving
notice of the garnishment of the rights, interests, shares and participation that defendant may have over the residuary
PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of the Court estate of the late Eulogio Imperial, consisting of the money deposited in the Philippine National Bank-Dipolog
of Appeals is hereby AFFIRMED. Branch.

SO ORDERED. Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964 filed a motion for
reconsideration of the order dated June 9, 1964, and to quash the alias writ of execution issued pursuant to it, to
Yap (Chairman), Melencio-Herrera, Padilla and Sarmiento, JJ., concur. which plaintiffs filed their opposition on July 6, 1964. On July 14, 1964, the trial court denied defendant's aforesaid
motion.

HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIA REGANON, JOSEFA Defendant's second motion for reconsideration likewise having denied by the trial court in its order of August 11,
REGANON, VIOLETA REGANON, and FLORA REGANON, plaintiffs-appellees, 1964, defendant appealed to Us, raising the following issues:
vs.
RUFINO IMPERIAL, defendant-appellant. (1) Upon the death of a ward, is the money accumulated in his guardianship proceedings and deposited in a bank,
still considered in custodia legis and therefore cannot be attached?
This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964, respectively, of
the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II). (2) Is the residuary estate of a U.S. veteran, which consists in the aggregate accumulated sum from the monthly
allowances given him by the United States Veterans Administration (USVA) during his lifetime, exempt from
The facts of the case are admitted by both parties. execution?

On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership and Defendant-appellant argues that the property of an incompetent under guardianship is in custodia legis and therefore
possession of about one-hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952, situated at Miasi, can not be attached.
Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7.9954 hectares), with
damages, against Rufino Imperial. It is true that in a former case 1 it was held that property under custodia legis can not be attached. But this was under
the old Rules of Court. The new Rules of Court 2 now specifically provides for the procedure to be followed in case
what is attached is in custodia legis. 3 The clear import of this new provision is that property under custodia legis is
now attachable, subject to the mode set forth in said rule.
Besides, the ward having died, the guardianship proceedings no longer subsist: Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have already executed a Deed of
Extrajudicial Partition — the end result of which is that the property is no longer the property of the estate but of the
The death of the ward necessarily terminates the guardianship, and thereupon all powers and duties of the individual heirs. And it is settled that:
guardian cease, except the duty, which remains, to make a proper accounting and settlement in the probate
court. 4 When the heirs by mutual agreement have divided the estate among themselves, one of the heirs can not therefore
secure the appointment of an administrator to take charge of and administer the estate or a part thereof. The property
As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I of the is no longer the property of the estate, but of the individual heirs, whether it remains undivided or not. 12
Court of First Instance of Zamboanga del Norte in which it was pending, in its order of February 8, 1964,
where it stated — WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-appellant. So
ordered.1äwphï1.ñët
In the meantime, the guardian Philippine National Bank is hereby directed to deposit the residuary estate
of said ward with its bank agency in Dipolog, this province, in the name of the estate of the deceased ward Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Eulogio Imperial, preparatory to the eventual distribution of the same to the heirs when the latter shall be
known, and upon proof of deposit of said residuary estate, the guardian Philippine National Bank shall
forthwith be relieved from any responsibility as such, and this proceeding shall be considered closed and
terminated. 5 Republic of the Philippines
SUPREME COURT
And the condition has long been fulfilled, because on March 13, 1964 the Philippine National Bank- Manila
Manila deposited the residuary estate of the ward with the Philippine National Bank-Dipolog Branch,
evidenced by a receipt attached to the records in Sp. Proc. No. R-145. 6 EN BANC

When Eulogio Imperial died on September 13, 1962, the rights to his succession — from the moment of G.R. No. L-14070 March 29, 1961
his death — were transmitted to his heirs, one of whom is his son and heir, defendant-appellant herein. 7
This automatic transmission can not but proceed with greater ease and certainty than in this case where MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS, LEONCIO GERVACIO BLAS and LODA
the parties agree that the residuary estate is not burdened with any debt. For, GERVACIO BLAS, plaintiffs-appellants,
vs.
The rights to the succession of a person are transmitted from the moment of death, and where, as in this ROSALINA SANTOS, in her capacity as Special Administratrix of the Estate of the deceased MAXIMA SANTOS
case, the heir is of legal age and the estate is not burdened with any debts, said heir immediately succeeds, VDA. DE BLAS, in Sp. Proc. No. 2524, Court of First Instance of Rizal, defendants-appellants. MARTA
by force of law, to the dominion, ownership, and possession of the properties of his predecessor and GERVACIO BLAS and DR. JOSE CHIVI, defendants-appellants.
consequently stands legally in the shoes of the latter. 8
Teofilo Sison and Nicanor Sison for plaintiffs-appellants.
That the interest of an heir in the estate of a deceased person may be attached for purposes of execution, De los Santos, Caluag, Pascal and Felizardo for defendants-appellees.
even if the estate is in the process of settlement before the courts, is already a settled matter in this
jurisdiction. 9 LABRADOR, J.:

It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on May 25, This action was instituted by plaintiffs against the administration of the estate of Maxima Santos, to secure a judicial
1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the entire estate of the declaration that one-half of the properties left by Maxima Santos Vda. de Blas, the greater bulk of which are set forth
decedent — provided all the requisites for its validity are fulfilled 10 — even without the approval of the and described in the project of partition presented in the proceedings for the administration of the estate of the
court. Therefore, the estate for all practical purposes have been settled. The heirs are at full liberty to deceased Simeon Blas, had been promised by the deceased Maxima Santos to be delivered upon her death and in her
withdraw the residuary estate from the Philippine National Bank-Dipolog Branch and divide it among will to the plaintiffs, and requesting that the said properties so promised be adjudicated to the plaintiffs. The
themselves. The only reason they have not done so is because of the alleged illegal withdrawal from said complaint also prays for actual damages in the amount of P50,000. (Record on Appeal, pp. 1-65.) The alleged
estate of the amount of P1,080.00 by one Gloria Gomez by authority of Branch I of the Court of First promise of the deceased Maxima Santos is contained in a document executed by Maxima Santos on December 26,
Instance of Zamboanga del Norte, which incident is now on appeal before the Court of Appeals. This 1936 attached to the complaint as Annex "H" and introduced at the trial as Exhibit "A". (Ibid., pp. 258-259.) The
appeal, however, does not detract any from the fact that the guardianship proceedings is closed and complaint also alleges that the plaintiffs are entitled to inherit certain properties enumerated in paragraph 3 thereof,
terminated and the residuary estate no longer under custodia legis. situated in Malabon, Rizal and Obando, Bulacan, but which properties have already been in included in the inventory
of the estate of the deceased Simeon Blas and evidently partitioned and conveyed to his heirs in the proceedings for
Finally, it is defendant-appellant's position that the residuary estate of Eulogio Imperial, a former U.S. the administration of his (Simeon Blas) estate.
veteran, having been set aside from the monthly allowances given him by the United States Veterans
Administration (USVA) during his lifetime, is exempt from execution. Defendant, who is the administratrix of the estate of the deceased Maxima Santos Vda. de Blas, filed an answer with
a counterclaim, and later, an amended answer and a counterclaim. The said amended answer admits the allegations
Any pension, annuity, or gratuity granted by a Government to its officers or employees in recognition of of the complaint as to her capacity as administratrix the death of Simeon Blas on January 3, 1937; the fact that
past services rendered, is primordially aimed at tiding them over during their old age and/or disability. Simeon Blas and Marta Cruz begot three children only one of whom, namely, Eulalio Blas, left legitimate
This is therefore a right personalissima, purely personal because founded on necessity. It requires no descendants; that Simeon Blas contracted a second marriage with Maxima Santos on June 28, 1898. She denies for
argument to show that where the recipient dies, the necessity motivating or underlying its grant necessarily lack of sufficient information and belief, knowledge edge of the first marriage of Simeon Blas to Marta Cruz, the
ceases to be. Even more so in this case where the law 11 providing for the exemption is calculated to averment that Simeon Blas and Marta Cruz acquired properties situated in Obando, Bulacan, that said properties
benefit U.S. veterans residing here, and is therefore merely a manifestation of comity. were utilized as capital, etc. As special defenses, she alleges that the properties of the spouses Blas and Santos had
been settled and liquidated in the project of partition of the estate of said Simeon Blas; that pursuant to the
project of partition, plaintiffs and some defendants had already received the respective properties At the time of the execution of said will, Andres Pascual a son-in-law of the testator, and Avelina Pascual and others,
adjudicated to them; that the plaintiffs and the defendants Marta Geracio and Jose Chivi are estopped from were present. Andres Pascual had married a descendant by the first marriage. The will was prepared by Andres
impugning the validity of the project of partition of the estate of the deceased Simeon Blas and from Pascual, with the help of his nephew Avelino Pascual. The testator asked Andres Pascual to prepare a document
questioning the ownership in the properties conveyed in the project of partition to Maxima Santos as her which was presented in court as Exhibit "A", thus:
own exclusive property; that the testament executed by Maxima Santos is valid, the plain plaintiffs having
no right to recover any portion of Maxima Santos' estate now under administration by the court. A Q — Was there anybody who asked you to prepare this document?
counterclaim for the amount of P50,000 as damages is also included in the complaint, as also a cross-claim
against Marta Gervacio Blas and Jose Chivi. A — Don Simeon Blas asked me to prepare this document (referring to Exhibit "A"), (t.s.n., Sarmiento to, P. 24).

Trial of the case was Conducted and, thereafter, the court, Hon. Gustave Victoriano, presiding, rendered The reason why the testator ordered the preparation of Exhibit "A" was because the properties that the testator had
judgment dismissing the complaint, with costs against plaintiff, and dismissing also the counterclaim and acquired during his first marriage with Marta Cruz had not been liquidated and were not separated from those
cross-claim decision ,the plaintiffs filed by the defendants. From this district have appealed to this Court. acquired during the second marriage. Pascual's testimony is as follows:

The facts essential to an understanding of the issues involved in the case may be briefly summarized as Q — To whom do you refer with the word "they"?
follows: Simeon Blas contracted a first marriage with Marta Cruz sometime before 1898. They had three
children, only one of whom, Eulalio, left children, namely, Maria Gervacio Blas, one of the plaintiffs, A — Simeon Blas and his first wife, Marta Cruz. When Marta Cruz died they had not made a liquidation of their
Marta Gervacio Blas, one of the defendants, and Lazaro Gervacio Blas. Lazaro died in 1950, and is conjugal properties and so all those properties were included all in the assets of the second marriage, and that is the
survived by three legitimate children who are plaintiffs herein, namely, Manuel Gervacio Blas, Leoncio reason why this document was prepared. (t.s.n., Sarmiento, p. 36.)
Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in 1898, and the following year, Simeon Blas
contracted a second marriage with Maxima Santos. At the time of this second marriage, no liquidation of The above testimony is fully corroborated by that of Leoncio Gervacio, son-in-law of Simeon Blas.
the properties required by Simeon Blas and Marta Cruz was made. Three of the properties left are
fishponds located in Obando, Bulacan. Maxima Santos does not appear to have apported properties to her Q — Please state to the Court?
marriage with Simeon Blas.
A — My children were claiming from their grandfather Simeon Blas the properties left by their grandmother Marta
On December 26, 1936, only over a week before over a week before his death on January 9, 1937, Simeon Cruz in the year 1936.
Blas executed a last will and testament. In the said testament Simeon Blas makes the following
declarations: Q — And what happened with that claim of your children against Simeon Blas regarding the assets or properties of
the first marriage that were left after the death of Marta Cruz in 1936?
I
A — The claim was not pushed through because they reached into an agreement whereby the parties Simeon Blas
2. Sa panahon ng aking pangalawang asawa, MAXIMA SANTOS DE BLAS, ay nagkaroon ako at Maxima Santos, Maria Gervacio Bias, Marta Gervacio Blas and Lazaro Gervacio Blas agreed that Simeon Blas and
nakatipon ng mga kayamanan (bienes) at pag-aari (propriedades) na ang lahat ng lupa, palaisdaan at iba Maxima Blas will give one-half of the estate of Simeon Blas. (t.s.n., Sarmiento, pp. 143-144).
pang pag-aari ay umaabot sa halagang ANIM NA RAAN PITONG PU'T WALONG DAAN LIBO
WALONG DAAN WALONG PUNG PISO (678,880-00) sang-ayon sa mga halaga sa amillarimento The document which was thus prepared and which is marked as Exhibit "A" reads in Tagalog, thus:
(valor Amillarado.)
MAUNAWA NG SINO MANG MAKABABASA:
II
Na akong si MAXIMA SANTOS DE BLAS, nasa hustong gulang, kasal kay SIMEON BLAS, taga bayan ng
1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang lahat ng aking o aming pag-kakautang Malabon, Rizal, Philippines, sa pamamagitan ng kasulatang ito ay malaya kong ipinahahayag:
na mag-asawa, kung mayroon man, yayamang ang lahat ng ito ay kita sa loob ng matrimonio (bienes
ganaciales) ay bahagi ng para sa aking asawa, MAXIMA SANTOS DE BLAS, sang-ayon sa batas. Na aking nabasa at naunawa ang testamento at huling kalooban na nilagdaan ng aking asawa, SIMEON BLAS, at
(Record on Appeal, pp. 250-251.) ipinahahayag ko sa ilalim ng aking karangalan at sa harap ng aking asawa na igagalang at pagpipitaganan ang lahat
at bawa't isang bahagi ng nabanggit na testamento at ipinangangako ko pa sa pamamagitan ng kasulatang ito na ang
The above testamentary provisions may be translated as follows: lahat ng maiiwang pag-aari at kayamanan naming mag-asawa, na nauukol at bahaging para sa akin sa paggawa ko
naman ng aking testamento ay ipagkakaloob ko ang kalahati (½) sa mga herederos at legatarios o pinamamanahan
I ng aking nabanggit na asawa, SIMEON BLAS, sa kaniyang testamento, na ako'y makapipili o makahihirang na kahit
kangino sa kanila ng aking pagbibigyan at pamamanahan sang-ayon sa paggalang, paglilingkod, at pakikisama ng
2. During my second marriage with Maxima Santos de Blas, I possessed and acquired wealth and gagawin sa akin.
properties, consisting of lands, fishponds and other kinds of properties, the total assessed value of which
reached the amount P678,880.00. SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko ang kasulatang ito ngayon ika 26 ng Diciembre ng taong
1936, dito sa San Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 29-30 — Appellant's brief).
II
(Fdo.) MAXIMA SANTOS DE BLAS
1. One-half of our properties, after the payment of my and our indebtedness, all these properties having
been acquired during marriage (conjugal properties), constitutes the share of my wife Maxima Santos de and which, translated into English, reads as follows:
Blas, according to the law.
KNOW ALL MEN BY THESE PRESENTS:
Exhibit "A" states that the maker (Maxima Santos) had read and knew the contents of the will of her husband read
That I MAXIMA SANTOS DE BLAS, of legal age, married to SIMEON BLAS, resident of Malabon, and knew the contents of the will Simeon Blas — she was evidently referring to the declaration in the will(of Simeon
Rizal, Philippines, voluntarily state: Blas) that his properties are conjugal properties and one-half thereof belongs to her (Maxima Santos) as her share of
the conjugal assets under the law. The agreement or promise that Maxima Santos makes in Exhibit "A" is to hold
That I have read and knew the contents of the will signed by my husband, SIMEON BLAS, (2) and I one-half of her said share in the conjugal assets in trust for the heirs and legatees of her husband in his will, with the
promise on my word of honor in the presence of my husband that I will respect and obey all and every obligation of conveying the same to such of his heirs or legatees as she may choose in her last will and testament. It
disposition of said will (3) and furthermore, I promise in this document that all the properties my husband is to be noted that the conjugal properties referred to are those that were actually existing at that time, December 26,
and I will leave, the portion and share corresponding to me when I make my will, I will give one-half (½) 1936. Simeon Blas died on January 9, 1937. On June 2, 1937, an inventory of the properties left by him, all
to the heirs and legatees or the beneficiaries named in the will of my husband, (4) and that I can select or considered conjugal, was submitted by Maxima Santos herself as administratrix of his estate. A list of said properties
choose any of them, to whom I will give depending upon the respect, service and treatment accorded to is found in Annex "E", the complete inventory submitted by Maxima Santos Vda. de Blas, is administratrix of the
me. estate of her husband, dated March 10, 1939. The properties which were given to Maxima Santos as her share in the
conjugal properties are also specified in the project of partition submitted by said Maxima Santos herself on March
IN WITNESS WHEREOF, I signed this document this 26th day of December, 1936 at San Francisco del 14, 1939. (Record on Appeal, pp. 195-241.) Under Exhibit "A", therefore, Maxima Santos contracted the obligation
Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 30-31, Appellant's brief). and promised to give one-half of the above indicated properties to the heirs and legatees of Simeon Blas.

(Sgd.) MAXIMA SANTOS DE BLAS Counsel for the defendant-appellee claims Exhibit "A" is a worthless piece of paper because it is not a will nor a
donation mortis causa nor a contract. As we have in indicated above, it is a compromise and at the same time a
The court below held that said Exhibit "A" has not created any right in favor of plaintiffs which can serve contract with a sufficient cause or consideration. It is also contended that it deals with future inheritance. We do not
as basis for the complaint; that neither can it be considered as a valid and enforceable contract for lack of think that Exhibit "A" is a contract on future inheritance. it is an obligation or promise made by the maker to transmit
consideration and because it deals with future inheritance. The court also declared that Exhibit "A" is not one-half of her share in the conjugal properties acquired with her husband, which properties are stated or declared
a will because it does not comply with the requisites for the execution of a will; nor could it be considered to be conjugal properties in the will of the husband. The conjugal properties were in existence at the time of the
as a donation, etc. execution of Exhibit "A" on December 26, 1936. As a matter of fact, Maxima Santos included these properties in
her inventory of her husband's estate of June 2, 1937. The promise does not refer to any properties that the maker
Both the court below in its decision and the appellees in their brief before us, argue vehemently that the would inherit upon the death of her husband, because it is her share in the conjugal assets. That the kind of agreement
heirs of Simeon Blas and his wife Marta Cruz can no longer make any claim for the unliquidated conjugal or promise contained in Exhibit "A" is not void under Article 1271 of the old Civil Code, has been decided by the
properties acquired during said first marriage, because the same were already included in the mass of Supreme Court of Spain in its decision of October 8, 19154, thus:
properties constituting the estate of the deceased Simeon Blas and in the adjudications made by virtue of
his will, and that the action to recover the same has prescribed. This contention is correct. The descendants Que si bien el art. 1271 del Codigo civil dispone que sobre la herenciafutura no se podra celebrar otros contratos que
of Marta Cruz can no longer claim the conjugal properties that she and her husband may have required aquellos cuyo objecto seapracticar entre vivos la division de un caudal, conforme al articulo 1056, esta prohibicion
during their marriage although no liquidation of such properties and delivery thereof to the heirs of Marta noes aplicable al caso, porque la obligacion que contrajoel recurr en contrato privado de otorgar testamento e instituir
Cruz have been made, no action to recover said propertied having been presented in the proceedings for heredera a su subrina de los bienes que adquirio en virtud de herencia, procedentes desu finada consorte que le
the settlement of the estate of Simeon Blas. quedasen sobrantes despues de pagar las deudas, y del ganacial que se expresa, asi como de reconocer, ademas, con
alguna cosaa otros sobrinos, se refiere a bienes conocidos y determinados existentes cuando tal compromisi se
But the principal basis for the plaintiffs' action in the case at bar is the document Exhibit "A". It is not otorgo, y no a la universalidad de una herencia que, sequn el art. 659 del citado Codigo civil, as determina a muerte,
disputed that this document was prepared at the instance of Simeon Blas for the reason that the conjugal constituyendola todos los bienes, derechos y obligaciones que por ella no sehayan extinguido: ..." (Emphasis
properties of me on Blas for the reason his first marriage had not been liquidated; that it was prepared at supplied.)
the same time as the will of Simeon Blas on December 26, 1936, at the instance of the latter himself. It is
also not disputed that the document was signed by Maxima Santos and one copy thereof, which was It will be noted that what is prohibited to be the subject matter of a contract under Article 1271 of the Civil Code is
presented in court as Exhibit "A", was kept by plaintiffs' witness Andres Pascual. " future inheritance." To us future inheritance is any property or right not in existence or capable of determination at
the time of the contract, that a person may in the future acquire by succession. The properties subject of the contract
Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement and a contract in the nature Exhibit "A" are well defined properties, existing at the time of the agreement, which Simeon Blas declares in his
of a compromise to avoid litigation. Defendants-appellees, in answer, claim that it is neither a trust statement as belonging to his wife as her share in the conjugal partnership. Certainly his wife's actual share in the
agreement nor a compromise a agreement. Considering that the properties of the first marriage of Simeon conjugal properties may not be considered as future inheritance because they were actually in existence at the time
Blas had not been liquidated when Simeon Blas executed his will on December 26, 1936', and the further Exhibit "A" was executed.
fact such properties where actually , and the further fact that included as conjugal properties acquired
during the second marriage, we find, as contended by plaintiffs-appellants that the preparation and The trial court held that the plaintiffs-appellants in the case at bar are concluded by the judgement rendered in the
execution of Exhibit "A" was ordered by Simeon Blas evidently to prevent his heirs by his first marriage proceedings for the settlement of the estate of Simeon Blas for the reason that the properties left by him belonged to
from contesting his will and demanding liquidation of the conjugal properties acquired during the first himself and his wife Maxima Santos; that the project of partition in the said case, adjudicating to Maxima Santos
marriage, and an accounting of the fruits and proceeds thereof from the time of the death of his first wife. one-half as her share in the conjugal properties, is a bar to another action on the same subject matter, Maxima Santos
having become absolute owner of the said properties adjudicated in her favor. As already adverted to above, these
Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the Civil Code of Spain, contentions would be correct if applied to the claim of the plaintiffs-appellants that said properties were acquired
in force at the time of the execution of Exhibit "A", which provides as follows: with the first wife of Simeon Blas, Marta Cruz. But the main ground upon which plaintiffs base their present action
is the document Exhibit "A", already fully considered above. As this private document contains the express promise
Compromise is a contract by which each of the parties in interest, by giving, promising, or retaining made by Maxima Santos to convey in her testament, upon her death, one-half of the conjugal properties she would
something avoids the provocation of a suitor terminates one which has already the provocation been receive as her share in the conjugal properties, the action to enforce the said promise did not arise until and after her
instituted. (Emphasis supplied.) death when it was found that she did not comply with her above-mentioned promise. (Art. 1969, old Civil Code.)
The argument that the failure of the plaintiffs-appellants herein to oppose the project of partition in the Blas as the persons for whose benefit Exhibit "A" had been executed, have not appeared in these proceedings, the
settlement of the estate of Simeon Blas, especially that portion of the project which assigned to Maxima record is hereby remanded to the court below, with instructions that, after the conveyance of the properties
Santos one-half of all the conjugal properties bars their present action, is, therefore, devoid of merit. It hereinabove ordered had been effected, the said heirs and legatees (of Simeon Blas) file adversary pleadings to
may be added that plaintiffs-appellants did not question the validity of the project of partition precisely determine the participation of each and every one of them in said properties. Costs against the defendant- appellee
because of the promise made by Maxima Santos in the compromise Exhibit "A"; they acquised in the Rosalina Santos.
approval of said project of partition because they were relying on the promise made by Maxima Santos in
Exhibit "A", that she would transmit one-half of the conjugal properties that she was going to receive as NELSON NUFABLE, SILMOR NUFABLE and AQUILINA NUFABLE petitioners, vs. GENEROSA
her share in the conjugal partnership upon her death and in her will, to the heirs and legatees of her husband NUFABLE, VILFOR NUFABLE, MARCELO NUFABLE, and the COURT OF APPEALS, respondents.
Simeon Blas.
This petition for review on certiorari seeks to reverse and set aside the Decision dated November 25, 1995 of the
Neither can the claim of prescription be considered in favor of the defendants. The right of action arose at Fifth Division[1] of the Court of Appeals for allegedly being contrary to law.
the time of the death of Maxima Santos on October 5,1956, when she failed to comply with the promise
made by her in Exhibit "A". The plaintiffs-appellants immediately presented this action on December 27, The following facts as found by the Court of Appeals are undisputed:
1956, upon learning of such failure on the part of Maxima Santos to comply with said promise. This
defense is, therefore, also without merit. Edras Nufable owned an untitled parcel of land located at Poblacion, Manjuyod, Negros Oriental, consisting of 948
square meters, more or less. He died on August 9, 1965 and was survived by his children, namely: Angel Custodio,
It is next contended by the defendant-appellee that Maxima Santos complied with her above-mentioned Generosa, Vilfor and Marcelo, all surnamed Nufable. Upon petition for probate filed by said heirs and after due
promise, — that Andres Pascual, Tomasa Avelino, Justo Garcia, Ludovico Pimpin and Marta Gervacio publication and hearing, the then Court of First Instance of Negros Oriental (Branch II) issued an Order dated March
Blas were given substancial legacies in the will and testament of Maxima Santos. To determine whether 30, 1966 admitting to probate the last will and testament executed by the deceased Edras Nufable (Exhs. B, C and
she had actually complied with the promise made in Exhibit "A", there is herein set forth a list only of the C-1).
fishponds and their respective areas as contained in the list of properties she acquired as her share in the
conjugal partnership, which list includes, besides many ricelands as well as residential lots, thus: On June 6, 1966, the same court issued an Order approving the Settlement of Estate submitted by the heirs of the
late Esdras Nufable, portions of which read:

In her will, Maxima Santos devised to Marta Gervacio Blas the 80-hectare fishpond situated in Lubao, KNOW ALL MEN BY THESE PRESENTS:
Pampanga. The fishpond devised is evidently that designated as "Propios" in Lubao, Pampanga, item No.
8 in the list of properties adjudicated to her in the project of partition. (Record on Appeal, p. 215.) We, ANGEL CUSTODIO NUFABLE, GENEROSA NUFABLE, VILFOR NUFABLE, and MARCELO
Considering that the total area of the fishponds amount to 1045.7863 hectares, the 80 hectares devised to NUFABLE, all of legal ages (sic), Filipinos, and with residence and postal address at Manjuyod, Negros Oriental,
Marta Gervacio Blas is not even one-tenth of the total area of the fishponds. Add to this the fact that in the Philippines,
will she imposed upon Marta Gervacio Blas de Chivi an existing obligation on said fishponds, namely, its
lease in 1957 and the duty to pay out of the rentals thereof an obligation to the Rehabilitation Finance - HEREBY DECLARE AND MAKE MANIFEST -
Corporation RFC (Ibid., pp. 262-263.) Angelina Blas was given only a lot of 150 square meters in Hulong
Duhat, Malabon, Rizal, and Leony Blas, the sum of P300.00 (Ibid., p. 264.) 1. That on August 9, 1965, Rev. Fr. Esdras Nufable died leaving (a) Last Will and Testament (marked Exh. G)
disposing (of) his properties or estate in favor of his four legitimate children, namely: Angel Custodio Nufable,
It is evident from a consideration of the above figures and facts that Maxima Santos did not comply with Generosa Nufable, Vilfor Nufable and Marcelo Nufable;
her obligation to devise one-half of her conjugal properties to the heirs and legatees of her husband. She
does not state that she had complied with such obligation in her will. If she intended to comply therewith 2. That on March 30, 1966, the said Last Will and Testament was probated by the Honorable Court, Court of First
by giving some of the heirs of Simeon Blas the properties mentioned above, the most that can be Instance of Negros Oriental, and is embodied in the same order appointing an Administratrix, Generosa Nufable, but
considered in her favor is to deduct the value of said properties from the total amount of properties which to qualify only if she put up a necessary bond of P1,000.00;
she had undertaken to convey upon her death.
3. That herein legitimate children prefer not to appoint an Administratrix, as agreed upon (by) all the heirs, because
All the issues in the pleadings of the parties and in their respective briefs, have now been fully discussed they have no objection as to the manner of disposition of their share made by the testator, the expenses of the
and considered. Reiterating what we have stated above, we declare that by Exhibit "A", a compromise to proceedings and that they have already taken possession of their respective shares in accordance with the will;
avoid litigation, Maxima Santos promised to devise to the heirs and legatees of her husband Simeon Blas,
one-half of the properties she received as her share in the conjugal partnership of herself and her husband, 4. That the herein heirs agreed, as they hereby agree to settle the estate in accordance with the terms and condition
which share is specified in the project of partition submitted by herself on March 14, 1939 in the settlement of the will in the following manner, to wit:
of the estate of her husband, and which is found on pages 195 to 240 of the record on appeal and on pages
27 to 46 of the project of partition, submitted by Maxima Santos herself before the Court of First Instance a) That the parcel of land situated in Poblacion Manjuyod, Negros Oriental remains undivided for community
of Rizal in Civil Case No. 6707, entitled "Testamentaria del Finado Don Simeon Blas, Maxima Santos ownership but respecting conditions imposed therein (sic) in the will;
Vda. de Bias, Administradora"; and that she failed to comply with her aforementioned obligation. (Exhibit
"A") xxx xxx xxx.

WHEREFORE, the judgment appealed from is hereby reversed and the defendant-appellee, administratrix (Exhs. E and E-1)
of the estate of Maxima Santos, is ordered to convey and deliver one-half of the properties adjudicated o
Maxima Santos as her share in the conjugal properties in said Civil Case No. 6707, entitled "Testamentaria Two months earlier, or on March 15, 1966, spouses Angel Custodio and Aquilina Nufable mortgaged the entire
del Finado Don Simeon Blas, Maxima Santos Vda. de Blas, Administradora", to the heirs and the legatees property located at Manjuyod to the Development Bank of the Philippines [DBP] (Pre-trial Order, dated January 7,
of her husband Simeon Blas. Considering that all said heirs and legatees, designated in the will of Simeon
1992, p. 103, Original Records). Said mortgagors became delinquent for which reason the mortgaged 1. The Honorable Court of Appeals erred in considering as controlling the probate of the Last Will and Testament
property was foreclosed by DBP on February 26, 1973 (id.). of Esdras Nufable, the probate thereof not being an issue in this case;

On January 11, 1980, Nelson Nufable, the son of Angel Custodio Nufable (who died on August 29, 1978 2. The Honorable Court of Appeals erred in not considering the fact that the Development Bank of the Philippines
[TSN, Testimony of Nelson Nufable, Hearing of August 18, 1992, p. 17]), purchased said property from became the absolute, exclusive, legal, and rightful owner of the land in question, from whom petitioner Nelson
DBP (Exh. 1). Nufable acquired the same by purchase and that, therefore, no award can be made in favor of private respondents
unless and until the Development Bank of the Philippines title thereto is first declared null and void by the court.
Generosa, Vilfor and Marcelo, all surnamed Nufable filed with the lower court a complaint dated July 25,
1985 To Annul Fraudulent Transactions, to Quiet Title and To Recover Damages against Nelson Nufable, The Court of Appeals, in its decision, stated that the trial court failed to take into consideration the probated will of
and wife, Silnor Nufable and his mother Aquilina Nufable. Plaintiffs pray: the late Esdras Nufable bequeathing the subject property to all his four children.[5] In the present petition, petitioners
present the issue of whether or not the Last Will and Testament of Esdras Nufable and its subsequent probate are
WHEREFORE, plaintiffs pray this Honorable Court that after trial judgment be rendered ordering: pertinent and material to the question of the right of ownership of petitioner Nelson Nufable who purchased the land
in question from, and as acquired property of, the Development Bank of the Philippines (DBP, for short). They
(a) That the said Deed of Sale (Annex C) executed by the Development Bank of the Philippines in favor contend that the probate of the Last Will and Testament of Esdras Nufable did not determine the ownership of the
of the defendants be declared null and void as far as the three fourths () rights which belongs (sic) to the land in question as against third parties.
plaintiffs are concerned;
As a general rule, courts in probate proceedings are limited only to passing upon the extrinsic validity of the will
'(b) That the said three fourths () rights over the above parcel in question be declared as belonging to the sought to be probated, the due execution thereof, the testators testamentary capacity and the compliance with the
plaintiffs at one fourth right to each of them; requisites or solemnities prescribed by law. Said court at this stage of the proceedings is not called upon to rule on
the intrinsic validity or efficacy of the provision of the will.[6] The question of the intrinsic validity of a will normally
(c) To order the defendants to pay jointly and severally to the plaintiffs by way of actual and moral comes only after the court has declared that the will has been duly authenticated.
damages the amount of P10,000.00 and another P5,000.00 as Attorneys fees, and to pay the costs.
The records show that upon petition for probate filed by the heirs of the late Esdras Nufable, an Order dated March
(d) Plus any other amount which this Court may deem just and equitable. (p. 6, Original Records) 30, 1966 was issued by then Court of First Instance of Negros Oriental, Branch II, admitting to probate the last will
and testament executed by the decedent.[7] Thereafter, on June 6, 1966, the same court approved the Settlement of
In their Answer, defendants contend: Estate submitted by the heirs of the late Esdras Nufable wherein they agreed (T)hat the parcel land situated in
Poblacion Manjuyod, Negros Oriental remains undivided for community ownership but respecting conditions
4. Paragraph 4 is denied, the truth being that the late Angel Nufable was the exclusive owner of said imposed therein (sic) in the will.[8] In paragraph 3 thereof, they stated that they have no objection as to the manner
property, that as such owner he mortgaged the same to the Development Bank of the Philippines on March of disposition of their share made by the testator, the expenses of the proceeding and that they have already taken
15, 1966, that said mortgage was foreclosed and the DBP became the successful bidder at the auction sale, possession of their respective shares in accordance with the will. Verily, it was the heirs of the late Esdras Nufable
that ownership was consolidated in the name of the DBP, and that defendant Nelson Nufable bought said who agreed among themselves on the disposition of their shares. The probate court simply approved the agreement
property from the DBP thereafter. During this period, the plaintiffs never questioned the transactions among the heirs which approval was necessary for the validity of any disposition of the decedents estate.[9]
which were public, never filed any third party claim nor attempted to redeem said property as
redemptioners, and that said Deed of Sale, Annex B to the complaint, is fictitious, not being supported by It should likewise be noted that the late Esdras Nufable died on August 9, 1965. When the entire property located at
any consideration; (pp. 20-21, id.) Manjuyod was mortgaged on March 15, 1966 by his son Angel Custodio with DBP, the other heirs of Esdras -
namely: Generosa, Vilfor and Marcelo - had already acquired successional rights over the said property. This is so
The Deed of Sale (Annex B), referred to by the parties is a notarized Deed of Sale, dated July 12, 1966 because of the principle contained in Article 777 of the Civil Code to the effect that the rights to the succession are
(marked as Exhibit H) by virtue of which, spouses Angel and Aquilina Nufable, as vendors, sold portion transmitted from the moment of death of the decedent. Accordingly, for the purpose of transmission of rights, it does
of the subject property to herein plaintiffs for and in consideration of P1,000.00 (Exh. 5).[2] not matter whether the Last Will and Testament of the late Esdras Nufable was admitted on March 30, 1966 or
thereafter or that the Settlement of Estate was approved on June 6, 1966 or months later. It is to be noted that the
On November 29, 1995, the Court of Appeals rendered judgment, the dispositive portion[3] of which probated will of the late Esdras Nufable specifically referred to the subject property in stating that the land situated
reads: in the Poblacion, Manjuyod, Negros Oriental, should not be divided because this must remain in common for them,
but it is necessary to allow anyone of them brothers and sisters to construct a house therein.[10] It was therefor the
WHEREFORE, the appealed decision of the lower court is REVERSED and SET ASIDE. A new will of the decedent that the subject property should remain undivided, although the restriction should not exceed
judgment is hereby entered declaring plaintiffs-appellants as the rightful co-owners of the subject property twenty (20) years pursuant to Article 870[11] of the Civil Code.
and entitled to possession of southern portion thereof; and defendant-appellee Nelson Nufable to portion.
Thus, when Angel Nufable and his spouse mortgaged the subject property to DBP on March 15, 1966, they had no
No award on damages. right to mortgage the entire property. Angels right over the subject property was limited only to pro indiviso share.
As co-owner of the subject property, Angels right to sell, assign or mortgage is limited to that portion that may be
No costs. allotted to him upon termination of the co-ownership. Well-entrenched is the rule that a co-owner can only alienate
his pro indiviso share in the co-owned property.[12]
Defendants-appellees Motion for Reconsideration was denied for lack of merit in the Resolution of the
Court of Appeals[4] dated October 2, 1996. The Court of Appeals did not err in ruling that Angel Custodio Nufable had no right to mortgage the subject property
in its entirety. His right to encumber said property was limited only to pro indiviso share of the property in
Hence, the present petition. Petitioners raise the following grounds for the petition: question.[13] Article 493 of the Civil Code spells out the rights of co-owners over a co-owned property. Pursuant to
said Article, a co-owner shall have full ownership of his part and of the fruits and benefits pertaining thereto. He has
the right to alienate, assign or mortgage it, and even substitute another person in its enjoyment. As a mere part owner,
he cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule In the Rejoinder to the Reply, private respondents that the non-inclusion of DBP as a necessary party was not
that no one can give what he does not have.[14] questioned by petitioners from the time the Complaint was filed until the case was finished. It was only after the
adverse decision by the respondent Court of Appeals that petitioners raised the issue.
Moreover, respondents stipulated that they were not aware of the mortgage by petitioners of the subject
property.[15] This being the case, a co-owner does not lose his part ownership of a co-owned property At the outset, it should be stated that petitioners never raised this issue in their Answer and pursuant to Section 2,
when his share is mortgaged by another co-owner without the formers knowledge and consent[16] as in Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in the answer are
the case at bar. It has likewise been ruled that the mortgage of the inherited property is not binding against deemed waived.
co-heirs who never benefitted.[17]
Nonetheless, the rule is that indispensable parties, i.e., parties in interest without whom no final determination can
Furthermore, the Deed of Sale dated June 17, 1966 marked as Exhibit H executed by spouses Angel and be had of an action, shall be joined either as plaintiffs or defendants; the inclusion as a party being compulsory.[24]
Aquilina Nufable in favor of respondents Generosa, Vilfor and Marcelo wherein the former sold, ceded On the other hand, in case of proper or necessary parties, i.e., persons who are not indispensable but ought to be
and transferred back to the latter the portion of the subject property bolsters respondents claim that there parties if complete relief is to be accorded as between those already parties, the court may, in its discretion, proceed
was co-ownership. Petitioner Nelson himself claimed that he was aware of the aforesaid Deed of Sale.[18] in the action without making such persons parties, and the judgment rendered therein shall be without prejudice to
the rights of such persons.[25] Proper parties, therefore, have been described as parties whose presence is necessary
Anent the second ground of the petition, petitioners allege that the Development Bank of the Philippines in order to adjudicate the whole controversy, but whose interests are so far separable that a final decree can be made
acquired ownership of the land in question through foreclosure, purchase and consolidation of ownership. in their absence without affecting them.[26] Any claim against a party may be severed and proceeded with
Petitioners argue that if petitioner Nelson Nufable had not bought said land from the DBP, private separately.[27]
respondents, in order to acquire said property, must sue said bank for the recovery thereof, and in so doing,
must allege grounds for the annulment of documents evidencing the banks ownership thereof. Petitioners The pivotal issue to be determined is whether DBP is an indispensable party in this case.
contend that since petitioner Nelson Nufable simply bought the whole land from the bank, they cannot be
deprived of the ownership of without making any pronouncement as to the legality or illegality of the Private respondents do not question the legality of the foreclosure of the mortgaged property and the subsequent sale
banks ownership of said land. It is argued that there was no evidence to warrant declaration of nullity of of the same to DBP. The subject property was already purchased by petitioner Nelson from DBP and the latter, by
the banks acquisition of said land; and that neither was there a finding by the court that the bank illegally such sale, transferred its rights and obligations to the former. Clearly, petitioners interest in the controversy is distinct
acquired the said property. and separable from the interest of DBP and a final determination can be had of the action despite the non-inclusion
of DBP as party-defendant. Hence, DBP, not being an indispensable party, did not have to be impleaded in this case.
As adverted to above, when the subject property was mortgaged by Angel Custodio, he had no right to
mortgage the entire property but only with respect to his pro indiviso share as the property was subject to WHEREFORE, there being no reversible error in the decision appealed from, the petition for review on certiorari is
the successional rights of the other heirs of the late Esdras. Moreover, in case of foreclosure, a sale would hereby DENIED.
result in the transmission of title to the buyer which is feasible only if the seller can be in a position to
convey ownership of the things sold.[19] And in one case,[20] it was held that a foreclosure would be
ineffective unless the mortgagor has title to the property to be foreclosed. Therefore, as regards the RUBEN AUSTRIA, CONSUELO AUSTRIA-BENTA and LAURO AUSTRIA MOZO, petitioners,
remaining pro indiviso share, the same was held in trust for the party rightfully entitled thereto,[21] who vs.
are the private respondents herein. HON. ANDRES REYES, Judge, Court of First Instance of Rizal, PERFECTO CRUZ, BENITA CRUZ-
MENEZ ISAGANI CRUZ, ALBERTO CRUZ and LUZ CRUZ-SALONGA respondents.
Pursuant to Article 1451 of the Civil Code, when land passes by succession to any person and he causes
the legal title to be put in the name of another, a trust is established by implication of law for the benefit
of the true owner. Likewise, under Article 1456 of the same Code, if property is acquired through mistake On July 7, 1956 Basilia Austria vda. de Cruz filed with the Court of First Instance of Rizal (Special Proceedings
or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit 2457) a petition for probate, ante mortem, of her last will and testament. The probate was opposed by the present
of the person from whom the property comes. In the case of Noel vs. Court of Appeals,[22] this Court petitioners Ruben Austria, Consuelo Austria-Benta and Lauro Austria Mozo, and still others who, like the petitioner,
held that a buyer of a parcel of land at a public auction to satisfy a judgment against a widow acquired are nephews and nieces of Basilia. This opposition was, however, dismissed and the probate of the will allowed after
only one-half interest on the land corresponding to the share of the widow and the other half belonging to due hearing.
the heirs of her husband became impressed with a constructive trust in behalf of said heirs.
The bulk of the estate of Basilia, admittedly, was destined under the will to pass on to the respondents Perfecto Cruz,
Neither does the fact that DBP succeeded in consolidating ownership over the subject property in its name Benita Cruz-Meñez, Isagani Cruz, Alberto Cruz, and Luz Cruz-Salonga, all of whom had been assumed and declared
terminate the existing co-ownership. Registration of property is not a means of acquiring ownership.[23] by Basilia as her own legally adopted children.
When the subject property was sold to and consolidated in the name of DBP, it being the winning bidder
in the public auction, DBP merely held the portion in trust for the private respondents. When petitioner On April 23, 1959, more than two years after her will was allowed to probate, Basilia died. The respondent Perfecto
Nelson purchased the said property, he merely stepped into the shoes of DBP and acquired whatever rights Cruz was appointed executor without bond by the same court in accordance with the provisions of the decedent's
and obligations appertain thereto. will, notwithstanding the blocking attempt pursued by the petitioner Ruben Austria.

This brings us to the issue of whether or not the DBP should have been impleaded as party-defendant in Finally, on November 5, 1959, the present petitioners filed in the same proceedings a petition in intervention for
the case at bar. Petitioners contend that DBP was never impleaded and that due process requires that DBP partition alleging in substance that they are the nearest of kin of Basilia, and that the five respondents Perfecto Cruz,
be impleaded so that it can defend its sale to petitioner Nelson Nufable; and that it was the duty of private et al., had not in fact been adopted by the decedent in accordance with law, in effect rendering these respondents
respondents, and not of petitioner Nelson, to implead the bank and ask for the annulment of documents mere strangers to the decedent and without any right to succeed as heirs.
evidencing the banks ownership of the disputed land.
Notwithstanding opposition by the respondent Perfecto Cruz, as executor of the estate, the court a quo allowed the
petitioners' intervention by its order of December 22, 1959, couched in broad terms, as follows: "The Petition in
Intervention for Partition filed by the above-named oppositors [Ruben Austria, et al.,] dated November 5, One who has compulsory heirs may dispose of his estate provided he does not contravene the provisions of this Code
1959 is hereby granted." with regard to the legitime of said heirs.

In the meantime, the contending sides debated the matter of authenticity or lack of it of the several adoption The lower court must have assumed that since the petitioners nephews and niece are not compulsory heirs, they do
papers produced and presented by the respondents. On motion of the petitioners Ruben Austria, et al., not possess that interest which can be prejudiced by a free-wheeling testamentary disposition. The petitioners' interest
these documents were referred to the National Bureau of Investigation for examination and advice. N.B.I. is confined to properties, if any, that have not been disposed of in the will, for to that extent intestate succession can
report seems to bear out the genuineness of the documents, but the petitioners, evidently dissatisfied with take place and the question of the veracity of the adoption acquires relevance.
the results, managed to obtain a preliminary opinion from a Constabulary questioned-document examiner
whose views undermine the authenticity of the said documents. The petitioners Ruben Austria, et al., thus The petitioners nephews and niece, upon the other hand, insist that the entire estate should descend to them by
moved the lower court to refer the adoption papers to the Philippine Constabulary for further study. The intestacy by reason of the intrinsic nullity of the institution of heirs embodied in the decedent's will. They have thus
petitioners likewise located former personnel of the court which appeared to have granted the questioned raised squarely the issue of whether or not such institution of heirs would retain efficacy in the event there exists
adoption, and obtained written depositions from two of them denying any knowledge of the pertinent proof that the adoption of the same heirs by the decedent is false.
adoption proceedings.
The petitioners cite, as the controlling rule, article 850 of the Civil Code which reads:
On February 6, 1963, more than three years after they were allowed to intervene, the petitioners Ruben
Austria, let al., moved the lower court to set for hearing the matter of the genuineness of the adoption of The statement of a false cause for the institution of an heir shall be considered as not written, unless it appears from
the respondents Perfecto Cruz, et al., by the late Basilia. Before the date set by the court for hearing arrived, the will that the testator would not have made such institution if he had known the falsity of such cause.
however, the respondent Benita Cruz-Meñez who entered an appearance separately from that of her
brother Perfecto Cruz, filed on February 28, 1963 a motion asking the lower court, by way of alternative Coming closer to the center of the controversy, the petitioners have called the attention of the lower court and this
relief, to confine the petitioners' intervention, should it be permitted, to properties not disposed of in the Court to the following pertinent portions of the will of the deceased which recite:
will of the decedent.
III
On March 4, 1963, the lower court heard the respondent Benita's motion. Both sides subsequently
submitted their respective memoranda, and finally, the lower court issued an order on June 4, 1963, Ang aking mga sapilitang tagapagmana (herederos forzosos) ay ang aking itinuturing na mga anak na tunay (Hijos
delimiting the petitioners' intervention to the properties of the deceased which were not disposed of in the legalmente adoptados) na sina Perfecto, Alberto, Luz, Benita at Isagani, na pawang may apelyidong Cruz.
will.
xxx xxx xxx
The petitioners moved the lower court to reconsider this latest order, eliciting thereby an opposition, from
the respondents. On October 25, 1963 the same court denied the petitioners' motion for reconsideration. Kung ako ay bawian ng Dios ng buhay, ay aking ipinamamana ang aking mga ari-ariang maiiwan, sa kaparaanang
sumusunod:
A second motion for reconsideration which set off a long exchange of memoranda from both sides, was
summarily denied on April 21, 1964. A.—Aking ipinamamana sa aking nabanggit na limang anak na sina Perfecto, Alberto, Luz, Benita at Isagani, na
pawang may apelyidong Cruz, na parepareho ang kaparti ng bawa't isa at walang lamangan (en partes iguales), bilang
Hence this petition for certiorari, praying this Court to annul the orders of June 4 and October 25, 1963 kanilang sapilitang mana (legiti[ma]), ang kalahati (½) ng aking kaparti sa lahat ng aming ari-ariang gananciales ng
and the order of April 21, 1964, all restricting petitioners' intervention to properties that were not included aking yumaong asawang Pedro Cruz na napapaloob sa Actuacion Especial No. 640 ng Hukumang Unang Dulugan
in the decedent's testamentary dispositions. ng Rizal at itinutukoy sa No. 1 ng parafo IV ng testamentong ito, ang kalahati (½) ng mga lagay na lupa at palaisdaan
na nasa Obando at Polo, Bulacan, na namana ko sa aking yumaong ama na si Calixto Austria, at ang kalahati (½) ng
The uncontested premises are clear. Two interests are locked in dispute over the bulk of the estate of the ilang lagay na lupa na nasa Tinejeros, Malabon, Rizal, na aking namana sa yumao kong kapatid na si Fausto Austria.
deceased. Arrayed on one side are the petitioners Ruben Austria, Consuelo Austria-Benta and Lauro
Austria Mozo, three of a number of nephews and nieces who are concededly the nearest surviving blood The tenor of the language used, the petitioners argue, gives rise to the inference that the late Basilia was deceived
relatives of the decedent. On the other side are the respondents brothers and sisters, Perfecto Cruz, Benita into believing that she was legally bound to bequeath one-half of her entire estate to the respondents Perfecto Cruz,
Cruz-Meñez, Isagani Cruz, Alberto Cruz and Luz Cruz-Salonga, all of whom heirs in the will of the et al. as the latter's legitime. The petitioners further contend that had the deceased known the adoption to be spurious,
deceased Basilia, and all of whom claim kinship with the decedent by virtue of legal adoption. At the heart she would not have instituted the respondents at all — the basis of the institution being solely her belief that they
of the controversy is Basilia's last will — immaculate in its extrinsic validity since it bears the imprimatur were compulsory heirs. Proof therefore of the falsity of the adoption would cause a nullity of the institution of heirs
of duly conducted probate proceedings. and the opening of the estate wide to intestacy. Did the lower court then abuse its discretion or act in violation of the
rights of the parties in barring the petitioners nephews and niece from registering their claim even to properties
The complaint in intervention filed in the lower court assails the legality of the tie which the respondent adjudicated by the decedent in her will?
Perfecto Cruz and his brothers and sisters claim to have with the decedent. The lower court had, however,
assumed, by its orders in question, that the validity or invalidity of the adoption is not material nor decisive Before the institution of heirs may be annulled under article 850 of the Civil Code, the following requisites must
on the efficacy of the institution of heirs; for, even if the adoption in question were spurious, the concur: First, the cause for the institution of heirs must be stated in the will; second, the cause must be shown to be
respondents Perfecto Cruz, et al., will nevertheless succeed not as compulsory heirs but as testamentary false; and third, it must appear from the face of the will that the testator would not have made such institution if he
heirs instituted in Basilia's will. This ruling apparently finds support in article, 842 of the Civil Code which had known the falsity of the cause.
reads:
The petitioners would have us imply, from the use of the terms, "sapilitang tagapagmana" (compulsory heirs) and
One who has no compulsory heirs may dispose of by will all his estate or any part of it in favor of any "sapilitang mana" (legitime), that the impelling reason or cause for the institution of the respondents was the
person having capacity to succeed. testatrix's belief that under the law she could not do otherwise. If this were indeed what prompted the testatrix in
instituting the respondents, she did not make it known in her will. Surely if she was aware that succession to the
legitime takes place by operation of law, independent of her own wishes, she would not have found it
convenient to name her supposed compulsory heirs to their legitimes. Her express adoption of the rules In the Matter of the Petition to Approve the Will of Leodegaria Julian. FELIX BALANAY, JR., petitioner,
on legitimes should very well indicate her complete agreement with that statutory scheme. But even this, vs.
like the petitioners' own proposition, is highly speculative of what was in the mind of the testatrix when HON. ANTONIO M. MARTINEZ, Judge of the Court of First Instance of Davao, Branch VI; AVELINA B.
she executed her will. One fact prevails, however, and it is that the decedent's will does not state in a ANTONIO and DELIA B. LANABAN, respondents.
specific or unequivocal manner the cause for such institution of heirs. We cannot annul the same on the
basis of guesswork or uncertain implications. Felix Balanay, Jr. appealed by certiorari from the order of the Court of First Instance of Davao dated February 28,
1974, declaring illegal and void the will of his mother, Leodegaria Julian, converting the testate proceeding into an
And even if we should accept the petitioners' theory that the decedent instituted the respondents Perfecto intestate proceeding and ordering the issuance of the corresponding notice to creditors (Special Case No. 1808). The
Cruz, et al. solely because she believed that the law commanded her to do so, on the false assumption that antecedents of the appeal are as follows:
her adoption of these respondents was valid, still such institution must stand.
Leodegaria Julian, a native of Sta. Maria, Ilocos Sur, died on February 12, 1973 in Davao City at the age of sixty-
Article 850 of the Civil Code, quoted above, is a positive injunction to ignore whatever false cause the seven. She was survived by her husband, Felix Balanay, Sr., and by their six legitimate children named Felix
testator may have written in his will for the institution of heirs. Such institution may be annulled only Balanay, Jr., Avelina B. Antonio, Beatriz B. Solamo, Carolina B. Manguiob, Delia B. Lanaban and Emilia B.
when one is satisfied, after an examination of the will, that the testator clearly would not have made the Pabaonon.
institution if he had known the cause for it to be false. Now, would the late Basilia have caused the
revocation of the institution of heirs if she had known that she was mistaken in treating these heirs as her Felix J. Balanay, Jr. filed in the lower court a petition dated February 27, 1973 for the probate of his mother's notarial
legally adopted children? Or would she have instituted them nonetheless? will dated September 5, 1970 which is written in English. In that will Leodegaria Julian declared (a) that she was the
owner of the "southern half of nine conjugal lots (par. II); (b) that she was the absolute owner of two parcels of land
The decedent's will, which alone should provide the answer, is mute on this point or at best is vague and which she inherited from her father (par. III), and (c) that it was her desire that her properties should not be divided
uncertain. The phrases, "mga sapilitang tagapagmana" and "sapilitang mana," were borrowed from the among her heirs during her husband's lifetime and that their legitimes should be satisfied out of the fruits of her
language of the law on succession and were used, respectively, to describe the class of heirs instituted and properties (Par. IV).
the abstract object of the inheritance. They offer no absolute indication that the decedent would have willed
her estate other than the way she did if she had known that she was not bound by law to make allowance Then, in paragraph V of the will she stated that after her husband's death (he was eighty-two years old in 1973) her
for legitimes. Her disposition of the free portion of her estate (libre disposicion) which largely favored the paraphernal lands and all the conjugal lands (which she described as "my properties") should be divided and
respondent Perfecto Cruz, the latter's children, and the children of the respondent Benita Cruz, shows a distributed in the manner set forth in that part of her will. She devised and partitioned the conjugal lands as if they
perceptible inclination on her part to give to the respondents more than what she thought the law enjoined were all owned by her. She disposed of in the will her husband's one half share of the conjugal assets. *
her to give to them. Compare this with the relatively small devise of land which the decedent had left for
her blood relatives, including the petitioners Consuelo Austria-Benta and Lauro Mozo and the children of Felix Balanay, Sr. and Avelina B. Antonio opposed the probate of the will on the grounds of lack of testamentary
the petitioner Ruben Austria. Were we to exclude the respondents Perfecto Cruz, et al. from the capacity, undue influence, preterition of the husband and alleged improper partition of the conjugal estate. The
inheritance, then the petitioners and the other nephews and nieces would succeed to the bulk of the testate oppositors claimed that Felix Balanay, Jr. should collate certain properties which he had received from the testatrix.
by intestacy — a result which would subvert the clear wishes of the decedent.
Felix Balanay, Jr., in his reply to the opposition, attached thereto an affidavit of Felix Balanay, Sr. dated April 18,
Whatever doubts one entertains in his mind should be swept away by these explicit injunctions in the Civil 1973 wherein he withdrew his opposition to the probate of the will and affirmed that he was interested in its probate.
Code: "The words of a will are to receive an interpretation which will give to every expression some effect, On the same date Felix Balanay, Sr. signed an instrument captioned "Conformation (sic) of Division and
rather than one which will render any of the expressions inoperative; and of two modes of interpreting a Renunciation of Hereditary Rights" wherein he manifested that out of respect for his wife's will he "waived and
will, that is to be preferred which will prevent intestacy." 1 renounced' his hereditary rights in her estate in favor of their six children. In that same instrument he confirmed the
agreement, which he and his wife had perfected before her death, that their conjugal properties would be partitioned
Testacy is favored and doubts are resolved on its side, especially where the will evinces an intention on in the manner indicated in her will.
the part of the testator to dispose of practically his whole estate,2 as was done in this case. Moreover, so
compelling is the principle that intestacy should be avoided and the wishes of the testator allowed to Avelina B. Antonio, an oppositor, in her rejoinder contended that the affidavit and "conformation" of Felix Balanay,
prevail, that we could even vary the language of the will for the purpose of giving it effect.3 A probate Sr. were void. The lower court in its order of June 18, 1973 "denied" the opposition and reset for hearing the probate
court has found, by final judgment, that the late Basilia Austria Vda. de Cruz was possessed of of the will. It gave effect to the affidavit and conformity of Felix Balanay, Sr. In an order dated August 28, 1973 it
testamentary capacity and her last will executed free from falsification, fraud, trickery or undue influence. appointed its branch clerk of court as special administrator of the decedent's estate.
In this situation, it becomes our duty to give full expression to her will.4
Mrs. Antonio moved for the reconsideration of the lower court's order of June 18, 1973 on the grounds (a) that the
At all events, the legality of the adoption of the respondents by the testatrix can be assailed only in a testatrix illegally claimed that she was the owner of the southern half of the conjugal lots and (b) that she could not
separate action brought for that purpose, and cannot be the subject of a collateral attack.5 partition the conjugal estate by allocating portions of the nine lots to her children. Felix Balanay, Jr., through his
counsel, Hermenegildo Cabreros, opposed that motion. The lower court denied it in its order of October 15, 1973.
To the petitioners' charge that the lower court had no power to reverse its order of December 22, 1959,
suffice it to state that, as borne by the records, the subsequent orders complained of served merely to In the meanwhile, another lawyer appeared in the case. David O. Montaña, Sr., claiming to be the lawyer of petitioner
clarify the first — an act which the court could legally do. Every court has the inherent power to amend Felix Balanay, Jr. (his counsel of record was Atty. Cabreros), filed a motion dated September 25, 1973 for "leave of
and control its processes and orders so as to make them conformable to law and justices.6 That the court court to withdraw probate of alleged will of Leodegaria Julian and requesting authority to proceed by intestate estate
a quo has limited the extent of the petitioners' intervention is also within its powers as articulated by the proceeding." In that motion Montaña claimed to be the lawyer not only of the petitioner but also of Felix Balanay,
Rules of Court.7 Sr., Beatriz B. Solamo, Carolina B. Manguiob and Emilia B. Pabaonon.

ACCORDINGLY, the present petition is denied, at petitioners cost.


Montaña in his motion assailed the provision of the will which partitioned the conjugal assets or allegedly The statement of the testatrix that she owned the "southern half of the conjugal lands is contrary to law because,
effected a compromise of future legitimes. He prayed that the probate of the will be withdrawn and that although she was a coowner thereof, her share was inchoate and proindiviso (Art. 143, Civil Code; Madrigal and
the proceeding be converted into an intestate proceeding. In another motion of the same date he asked that Paterno vs. Rafferty and Concepcion, 38 Phil. 414). But That illegal declaration does not nullify the entire will. It
the corresponding notice to creditors be issued. may be disregarded.

Avelina B. Antonio and Delia B. Lanaban, through Atty. Jose B. Guyo, in their comments dated October The provision of the will that the properties of the testatrix should not be divided among her heirs during her
15, 1973 manifested their conformity with the motion for the issuance of a notice to creditors. They prayed husband's lifetime but should be kept intact and that the legitimes should be paid in cash is contrary to article 1080
that the will be declared void for being contrary to law and that an intestacy be declared. of the Civil Code which reads:

The lower court, acting on the motions of Atty. Montaña, assumed that the issuance of a notice to creditors ART. 1080. Should a person make a partition of his estate by an act inter vivos, or by will, such partition shall be
was in order since the parties had agreed on that point. It adopted the view of Attys. Montaña and Guyo respected, insofar as it does not prejudice the legitime of the compulsory heirs.
that the will was void. So, in its order of February 28, 1974 it dismissed the petition for the probate,
converted the testate proceeding into an intestate proceeding, ordered the issuance of a notice to creditors A parent who, in the interest of his or her family, to keep any agricultural, industrial, or manufacturing enterprise
and set the intestate proceeding for hearing on April 1 and 2, 1974. The lower court did not abrogate its intact, may avail himself of the right granted him in this article, by ordering that the legitime of the other children to
prior orders of June 18 and October 15, 1973. The notice to creditors was issued on April 1, 1974 and whom the property is not assigned be paid in cash. (1056a)
published on May 2, 9 and 16 in the Davao Star in spite of petitioner's motion of April 17, 1974 that its
publication be held in abeyance. The testatrix in her will made a partition of the entire conjugal estate among her six children (her husband had
renounced his hereditary rights and his one-half conjugal share). She did not assign the whole estate to one or more
Felix Balanay, Jr., through a new counsel, Roberto M. Sarenas, in a verified motion dated April 15, 1974, children as envisaged in article 1080. Hence, she had no right to require that the legitimes be paid in cash. On the
asked for the reconsideration of the lower court's order of February 28, 1974 on the ground that Atty. other hand, her estate may remain undivided only for a period of twenty years. So, the provision that the estate should
Montaña had no authority to withdraw the petition for the allowance of the will. Attached to the motion not be divided during her husband's lifetime would at most be effective only for twenty years from the date of her
was a copy of a letter dated March 27, 1974 addressed to Atty. Montaña and signed by Felix Balanay, Jr., death unless there are compelling reasons for terminating the coownership (Art. 1083, Civil Code).
Beatriz V. Solamo, Carolina B. Manguiob and Emilia B. Pabaonon, wherein they terminated Montaña's
services and informed him that his withdrawal of the petition for the probate of the will was without their Felix Balanay, Sr. could validly renounce his hereditary rights and his one-half share of the conjugal partnership
consent and was contrary to their repeated reminder to him that their mother's will was "very sacred" to (Arts. 179[1] and 1041, Civil Code) but insofar as said renunciation partakes of a donation of his hereditary rights
them. and his one-half share in the conjugal estate (Art. 1060[1] Civil Code), it should be subject to the limitations
prescribed in articles 750 and 752 of the Civil Code. A portion of the estate should be adjudicated to the widower
Avelina B. Antonio and Delia B. Lanaban opposed the motion for reconsideration. The lower court denied for his support and maintenance. Or at least his legitime should be respected.
the motion in its order of June 29, 1974. It clarified that it declared the will void on the basis of its own
independent assessment of its provisions and not because of Atty. Montaña's arguments. Subject to the foregoing observations and the rules on collation, the will is intrinsically valid and the partition therein
may be given effect if it does not prejudice the creditors and impair the legitimes. The distribution and partition
The basic issue is whether the probate court erred in passing upon the intrinsic validity of the will, before would become effective upon the death of Felix Balanay, Sr. In the meantime, the net income should be equitably
ruling on its allowance or formal validity, and in declaring it void. divided among the children and the surviving spouse.

We are of the opinion that in view of certain unusual provisions of the will, which are of dubious legality, It should be stressed that by reason of the surviving husband's conformity to his wife's will and his renunciation of
and because of the motion to withdraw the petition for probate (which the lower court assumed to have his hereditary rights, his one-half conjugal share became a part of his deceased wife's estate. His conformity had the
been filed with the petitioner's authorization), the trial court acted correctly in passing upon the will's effect of validating the partition made in paragraph V of the will without prejudice, of course, to the rights of the
intrinsic validity even before its formal validity had been established. The probate of a will might become creditors and the legitimes of the compulsory heirs.
an idle ceremony if on its face it appears to be intrinsically void. Where practical considerations demand
that the intrinsic validity of the will be passed upon, even before it is probated, the court should meet the Article 793 of the Civil Code provides that "property acquired after the making of a will shall only pass thereby, as
issue (Nuguid vs. Nuguid, 64 O.G. 1527, 17 SCRA 449. Compare with Sumilang vs. Ramagosa, L-23135, if the testator had it at the time of making the will, should it expressly appear by the will that such was his intention".
December 26, 1967, 21 SCRA 1369; Cacho vs. Udan, L-19996, April 30, 1965, 13 SCRA Under article 930 of the Civil Code "the legacy or devise of a thing belonging to another person is void, if the testator
693).1äwphï1.ñët erroneously believed that the thing pertained to him. But if the thing bequeathed, though not belonging to the testator
when he made the will, afterwards becomes his, by whatever title, the disposition shall take effect."
But the probate court erred in declaring, in its order of February 28, 1974 that the will was void and in
converting the testate proceeding into an intestate proceeding notwithstanding the fact that in its order of In the instant case there is no doubt that the testatrix and her husband intended to partition the conjugal estate in the
June 18, 1973 , it gave effect to the surviving husband's conformity to the will and to his renunciation of manner set forth in paragraph V of her will. It is true that she could dispose of by will only her half of the conjugal
his hereditary rights which presumably included his one-half share of the conjugal estate. estate (Art. 170, Civil Code) but since the husband, after the dissolution of the conjugal partnership, had assented to
her testamentary partition of the conjugal estate, such partition has become valid, assuming that the will may be
The rule is that "the invalidity of one of several dispositions contained in a will does not result in the probated.
invalidity of the other dispositions, unless it is to be presumed that the testator would not have made such
other dispositions if the first invalid disposition had not been made" (Art. 792, Civil Code). "Where some The instant case is different from the Nuguid case, supra, where the testatrix instituted as heir her sister and preterited
of the provisions of a will are valid and others invalid, the valid parts will be upheld if they can be separated her parents. Her will was intrinsically void because it preterited her compulsory heirs in the direct line. Article 854
from the invalid without defeating the intention of the testator or interfering with the general testamentary of the Civil Code provides that "the preterition or omission of one, some, or all of the compulsory heirs in the direct
scheme, or doing injustice to the beneficiaries" (95 C.J.S. 873). line, whether living at the time of the execution of the will or born after the death of the testator, shall annul the
institution of heir; but the devises and legacies, shall be valid insofar as they are not inofficious." Since the preterition
of the parents annulled the institution of the sister of the testatrix and there were no legacies and devises, conduct further proceedings in Special Case No. 1808 in consonance with this opinion. Costs, against the private
total intestacy resulted (.Art. 960[2], Civil Code).1äwphï1.ñët respondents.

In the instant case, the preterited heir was the surviving spouse. His preterition did not produce intestacy. SO ORDERED.
Moreover, he signified his conformity to his wife's will and renounced his hereditary rights. .
Fernando (Chairman), Barredo, Antonio and Concepcion, Jr., JJ., concur.
It results that the lower court erred in not proceeding with the probate of the will as contemplated in its
uncancelled order of June 18, 1973. Save in an extreme case where the will on its face is intrinsically void, DIONISIO FERNANDEZ, EUSEBIO REYES and LUISA REYES, petitioners,
it is the probate court's duty to pass first upon the formal validity of the will. Generally, the probate of the vs.
will is mandatory (Art. 838, Civil Code; Guevara vs. Guevara, 74 Phil. 479 and 98 Phil. 249; Fernandez ISMAELA DIMAGIBA, respondent.
vs. Dimagiba, L-23638, October 12, 1967, 21 SCRA 428).
The heirs intestate of the late Benedicta de los Reyes have petitioned for a review of the decision of the Court of
As aptly stated by Mr. Justice Barredo, "the very existence of a purported testament is in itself prima facie Appeals (in CA-G. R. No. 31221-R) affirming that of the Court of First Instance of Bulacan, in Special Proceeding
proof that the supposed testator has willed that his estate should be distributed in the manner therein No. 831 of said Court, admitting to probate the alleged last will and testament of the deceased, and overruling the
provided, and it is incumbent upon the state that, if legally tenable, such desire be given effect independent opposition to the probate.
of the attitude of the parties affected thereby" (Resolution, Vda. de Precilla vs. Narciso, L-27200, August
18, 1972, 46 SCRA 538, 565). It appears from the record that on January 19, 1955, Ismaela Dimagiba, now respondent, submitted to the Court of
First Instance a petition for the probate of the purported will of the late Benedicta de los Reyes, executed on October
To give effect to the intention and wishes of the testatrix is the first and principal law in the matter of 22, 1930, and annexed to the petition. The will instituted the petitioner as the sole heir of the estate of the deceased.
testaments (Dizon-Rivera vs. Dizon, L-24561, June 30, 1970, 33 SCRA 554, 561). Testacy is preferable The petition was set for hearing, and in due time, Dionisio Fernandez, Eusebio Reyes and Luisa Reyes and one
to intestacy. An interpretation that will render a testamentary disposition operative takes precedence over month later, Mariano, Cesar, Leonor and Paciencia, all surnamed Reyes, all claiming to be heirs intestate of the
a construction that will nullify a provision of the will (Arts. 788 and 791, Civil Code). decedent, filed oppositions to the probate asked. Grounds advanced for the opposition were forgery, vices of consent
of the testatrix, estoppel by laches of the proponent and revocation of the will by two deeds of conveyance of the
Testacy is favored. Doubts are resolved in favor of testacy especially where the will evinces an intention major portion of the estate made by the testatrix in favor of the proponent in 1943 and 1944, but which conveyances
on the part of the testator to dispose of practically his whole estate. So compelling is the principle that were finally set aside by this Supreme Court in a decision promulgated on August 3, 1954, in cases G.R. Nos. L-
intestacy should be avoided and that the wishes of the testator should prevail that sometimes the language 5618 and L-5620 (unpublished).
of the will can be varied for the purpose of giving it effect (Austria vs. Reyes, L-23079, February 27, 1970,
31 SCRA 754, 762). After trial on the formulated issues, the Court of First Instance, by decision of June 20, 1958, found that the will was
genuine and properly executed; but deferred resolution on the questions of estoppel and revocation "until such time
As far as is legally possible, the expressed desire of the testator must be followed and the dispositions of when we shall pass upon the intrinsic validity of the provisions of the will or when the question of adjudication of
the properties in his will should be upheld (Estorque vs. Estorque, L-19573, June 30, 1970, 33 SCRA 540, the properties is opportunely presented."
546).
Oppositors Fernandez and Reyes petitioned for reconsideration, and/or new trial, insisting that the issues of estoppel
The law has a tender regard for the wishes of the testator as expressed in his will because any disposition and revocation be considered and resolved; whereupon, on July 27, 1959, the Court overruled the claim that
therein is better than that which the law can make (Castro vs. Bustos, L-25913, February 28, 1969, 27 proponent was in estoppel to ask for the probate of the will, but "reserving unto the parties the right to raise the issue
SCRA 327, 341). of implied revocation at the opportune time."

Two other errors of the lower court may be noticed. It erred in issuing a notice to creditors although no On January 11, 1960, the Court of First Instance appointed Ricardo Cruz as administrator for the sole purpose of
executor or regular administrator has been appointed. The record reveals that it appointed a special submitting an inventory of the estate, and this was done on February 9, 1960.
administrator. A notice to creditors is not in order if only a special administrator has been appointed.
Section 1, Rule 86 of the Rules of Court, in providing that "immediately after granting letters of On February 27, 1962, after receiving further evidence on the issue whether the execution by the testatrix of deeds
testamentary or of administration, the court shall issue a notice requiring all persons having money claims of sale of the larger portion of her estate in favor of the testamentary heir, made in 1943 and 1944, subsequent to the
against the decedent to file them in the office of the clerk of said court" clearly contemplates the execution of her 1930 testament, had revoked the latter under Article 957(2) of the 1950 Civil Code (Art. 869 of the
appointment of an executor or regular administrator and not that of a special administrator. Civil Code of 1889), the trial Court resolved against the oppositors and held the will of the late Benedicta de los
Reyes "unaffected and unrevoked by the deeds of sale." Whereupon, the oppositors elevated the case to the Court of
It is the executor or regular administrator who is supposed to oppose the claims against the estate and to Appeals.
pay such claims when duly allowed (See. 10, Rule 86 and sec. 1, Rule 88, Rules of Court).
The appellate Court held that the decree of June 20, 1958, admitting the will to probate, had become final for lack
We also take this occasion to point out that the probate court's appointment of its branch clerk of court as of opportune appeal; that the same was appealable independently of the issue of implied revocation; that contrary to
special administrator (p. 30, Rollo) is not a salutary practice because it might engender the suspicion that the claim of oppositors-appellants, there had been no legal revocation by the execution of the 1943 and 1944 deeds
the probate Judge and his clerk of court are in cahoots in milking the decedent's estate. Should the branch of sale, because the latter had been made in favor of the legatee herself, and affirmed the decision of the Court of
clerk of court commit any abuse or devastavit in the course of his administration, the probate Judge might First Instance.
find it difficult to hold him to a strict accountability. A court employee should devote his official time to
his official duties and should not have as a sideline the administration of a decedent's estate. Oppositors then appealed to this Court.

WHEREFORE, the lower court's orders of February 28, and June 29, 1974 are set aside and its order of In this instance, both sets of oppositors-appellants pose three main issues: (a) whether or not the decree of the Court
June 18, 1973, setting for hearing the petition for probate, is affirmed. The lower court is directed to of First Instance allowing the will to probate had become final for lack of appeal; (b) whether or not the order of the
Court of origin dated July 27, 1959, overruling the estoppel invoked by oppositors-appellants had likewise xxx xxx xxx
become final; and (c) whether or not the 1930 will of Benedicta de los Reyes had been impliedly revoked
by her execution of deeds of conveyance in favor of the proponent on March 26, 1943 and April 3, 1944. It is well to note that, unlike in the French and Italian Codes, the basis of the quoted provision is a presumed change
of intention on the part of the testator. As pointed out by Manresa in his Commentaries on Article 869 of the Civil
As to the first point, oppositors-appellants contend that the order allowing the will to probate should be Code (Vol. 6, 7th Ed., p. 743) —
considered interlocutory, because it fails to resolve the issues of estoppel and revocation propounded in
their opposition. We agree with the Court of Appeals that the appellant's stand is untenable. It is elementary Este caso se funda en la presunta voluntad del testador. Si este, despues de legar, se desprende de la cosa por titulo
that a probate decree finally and definitively settles all questions concerning capacity of the testator and lucrativo u oneroso, hace desaparecer su derecho sobra ella, dando lugar a la presuncion de que ha cambiado de
the proper execution and witnessing of his last will and testament, irrespective of whether its provisions voluntad, y no quiere que el legado se cumpla. Mas para que pueda presumirse esa voluntad, es necesario que medien
are valid and enforceable or otherwise. (Montañano vs. Suesa, 14 Phil. 676; Mercado vs. Santos, 66 Phil. actos del testador que la indiquen. Si la perdida del derecho sobre la cosa ha sido independiente de la voluntad del
215; Trillana vs. Crisostomo, 89 Phil. 710). As such, the probate order is final and appealable; and it is so testador, el legado podraquedar sin efecto, mas no en virtud del numero 2 del articulo 869, que exige siempre actos
recognized by express provisions of Section 1 of Rule 109, that specifically prescribes that "any interested voluntarios de enajenacion por parte del mismo testador.
person may appeal in special proceedings from an order or judgment . . . where such order or judgment:
(a) allows or disallows a will." As observed by the Court of Appeals, the existence of any such change or departure from the original intent of the
testatrix, expressed in her 1930 testament, is rendered doubtful by the circumstance that the subsequent alienations
Appellants argue that they were entitled to await the trial Court's resolution on the other grounds of their in 1943 and 1944 were executed in favor of the legatee herself, appellee Dimagiba. In fact, as found by the Court of
opposition before taking an appeal, as otherwise there would be a multiplicity of recourses to the higher Appeals in its decision annulling these conveyances (affirmed in that point by this Supreme Court in Reyes vs. Court
Courts. This contention is without weight, since Rule 109, section 1, expressly enumerates six different of Appeals and Dimagiba, L-5618 and L-5620, promulgated on July 31, 1954), "no consideration whatever was paid
instances when appeal may be taken in special proceedings. by respondent Dimagiba" on account of the transfers, thereby rendering it even more doubtful whether in conveying
the property to her legatee, the testatrix merely intended to comply in advance with what she had ordained in her
There being no controversy that the probate decree of the Court below was not appealed on time, the same testament, rather than an alteration or departure therefrom.1 Revocation being an exception, we believe, with the
had become final and conclusive. Hence, the appellate courts may no longer revoke said decree nor review Courts below, that in the circumstances of the particular case, Article 957 of the Civil Code of the Philippines, does
the evidence upon which it is made to rest. Thus, the appeal belatedly lodged against the decree was not apply to the case at bar.
correctly dismissed.
Not only that, but even if it were applicable, the annulment of the conveyances would not necessarily result in the
The alleged revocation implied from the execution of the deeds of conveyance in favor of the testamentary revocation of the legacies, if we bear in mind that the findings made in the decision decreeing the annulment of the
heir is plainly irrelevant to and separate from the question of whether the testament was duly executed. subsequent 1943 and 1944 deeds of sale were also that
For one, if the will is not entitled to probate, or its probate is denied, all questions of revocation become
superfluous in law, there is no such will and hence there would be nothing to revoke. Then, again, the it was the moral influence, originating from their confidential relationship, which was the only cause for the
revocation invoked by the oppositors-appellants is not an express one, but merely implied from subsequent execution of Exhs. A and B (the 1943 and 1944 conveyances). (Decision, L-5618 and L-5620).
acts of the testatrix allegedly evidencing an abandonment of the original intention to bequeath or devise
the properties concerned. As such, the revocation would not affect the will itself, but merely the particular If the annulment was due to undue influence, as the quoted passage implies, then the transferor was not expressing
devise or legacy. Only the total and absolute revocation can preclude probate of the revoked testament her own free will and intent in making the conveyances. Hence, it can not be concluded, either, that such conveyances
(Trillana vs. Crisostomo, supra.). established a decision on her part to abandon the original legacy.

As to the issue of estoppel, we have already ruled in Guevara vs. Guevara, 98 Phil. 249, that the True it is that the legal provision quoted prescribes that the recovery of the alienated property "even if it be by reason
presentation and probate of a will are requirements of public policy, being primarily designed to protect of the nullity of the contract" does not revive the legacy; but as pointed out by Scaevola (Codigo Civil, Vol. XV, 4th
the testator's, expressed wishes, which are entitled to respect as a consequence of the decedent's ownership Ed., pp. 324-325) the "nullity of the contract" can not be taken in an absolute sense.2 Certainly, it could not be
and right of disposition within legal limits. Evidence of it is the duty imposed on a custodian of a will to maintained, for example, that if a testator's subsequent alienation were avoided because the testator was mentally
deliver the same to the Court, and the fine and imprisonment prescribed for its violation (Revised Rule deranged at the time, the revocatory effect ordained by the article should still ensue. And the same thing could be
75). It would be a non sequitur to allow public policy to be evaded on the pretext of estoppel. Whether or said if the alienation (posterior to the will) were avoided on account of physical or mental duress. Yet, an alienation
not the order overruling the allegation of estoppel is still appealable or not, the defense is patently through undue influence in no way differs from one made through violence or intimidation. In either case, the
unmeritorious and the Court of Appeals correctly so ruled. transferor is not expressing his real intent,3 and it can not be held that there was in fact an alienation that could
produce a revocation of the anterior bequest.
The last issue, that of revocation, is predicated on paragraph 2 of Article 957 of the Civil Code of 1950
(Art. 869 of the Code of 1889), which recites: In view of the foregoing considerations, the appealed decision of the Court of Appeals is hereby affirmed. Costs
against appellants Reyes and Fernandez. So ordered.
Art. 957. The legacy or devise shall be without effect:
Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
(1) .... Concepcion, C.J. and Bengzon, J.P., J., are on leave, took no part.

(2) If the testator by any title or for any cause alienates the thing bequeathed or any part thereof, it
being understood that in the latter case the legacy or devise shall be without effect only with respect to the NATIVIDAD P. NAZARENO, MAXIMINO P. NAZARENO, JR., petitioners, vs. COURT OF APPEALS,
part thus alienated. If after the alienation the thing should again belong to the testator, even if it be by ESTATE OF MAXIMINO A. NAZARENO, SR., ROMEO P. NAZARENO and ELIZA NAZARENO,
reason of nullity of the contract, the legacy or devise shall not thereafter be valid, unless the reacquisition respondents.
shall have been effected by virtue of the exercise of the right of repurchase;
This is a petition for review on certiorari of the decision[1] of the Court of Appeals in CA-GR CV No. Mons. bearings true; date of the original survey, April 8-July 15, 1920 and that of the subdivision survey, March 25,
39441 dated May 29, 1998 affirming with modifications the decision of the Regional Trial Court, Branch 1956.
107, Quezon City, in an action for annulment of sale and damages.
TRANS. CERT. OF TITLE NO. 132019
The facts are as follows:
A parcel of land (Lot 3, Block 93 of the subdivision plan Psd-57970 being a portion of Lot 6, Pcs-4786, G.L.R.O.
Maximino Nazareno, Sr. and Aurea Poblete were husband and wife. Aurea died on April 15, 1970, while Rec. No. 917) situated in Quirino District Quezon City. Bounded on the NW., along line 1-2, by Lot 1, Block 93; on
Maximino, Sr. died on December 18, 1980. They had five children, namely, Natividad, Romeo, Jose, the NE., along line 2-3, by Road Lot 101; on the SE., along line 3-4, by Road Lot 100; on the SW., along line 4-1,
Pacifico, and Maximino, Jr. Natividad and Maximino, Jr. are the petitioners in this case, while the estate by Lot 4, Block 93; all of the subdivision plan. Beginning at point marked 1 on plan, being S. 65 deg. 40 3339.92 m.
of Maximino, Sr., Romeo, and his wife Eliza Nazareno are the respondents. from B.L.L.M. No. 1, Marikina, Rizal;

During their marriage, Maximino Nazareno, Sr. and Aurea Poblete acquired properties in Quezon City thence N. 23 deg. 28 min. E., 11.70 m. to point 2;
and in the Province of Cavite. It is the ownership of some of these properties that is in question in this
case. thence S. 66 deg. 32 min. E., 18.00 m. to point 3;

It appears that after the death of Maximino, Sr., Romeo filed an intestate case in the Court of First Instance thence S. 23 deg. 28 min. W., 11.70 m. to point 4;
of Cavite, Branch XV, where the case was docketed as Sp. Proc. No. NC-28. Upon the reorganization of
the courts in 1983, the case was transferred to the Regional Trial Court of Naic, Cavite. Romeo was thence N. 66 deg. 32. min. W., 18.00 m. to the point
appointed administrator of his fathers estate.
of beginning; containing an area of TWO HUNDRED TEN SQUARE METERS AND SIXTY SQUARE
In the course of the intestate proceedings, Romeo discovered that his parents had executed several deeds DECIMETERS (210.60). All points referred to are indicated on the plan and are marked on the ground by B.L. Cyl.
of sale conveying a number of real properties in favor of his sister, Natividad. One of the deeds involved Conc. Mons. 15 x 60 cm.; bearings true; date of the original survey, Nov. 10, 1920 and Jan. 31-March 31, 1924 and
six lots in Quezon City which were allegedly sold by Maximino, Sr., with the consent of Aurea, to that of the subdivision survey, February 1 to September 30, 1954. Date approved - March 9, 1962.
Natividad on January 29, 1970 for the total amount of P47,800.00. The Deed of Absolute Sale reads as
follows: TRANS. CERT. OF TITLE NO. 118885

DEED OF ABSOLUTE SALE A parcel of land (Lot No. 10, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated
Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in
KNOW ALL MEN BY THESE PRESENTS: the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 11 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of
I, MAXIMINO A. NAZARENO, Filipino, married to Aurea Poblete-Nazareno, of legal age and a resident the consolidation and subdivision plan; and on the NW., by Lot No. 9 of the consolidation and subdivision plan.
of the Mun. of Naic, Prov. of Cavite, Philippines, Beginning at a point marked 1 on the plan, being S. 7 deg. 26W., 4269.90 m. more or less from B.L.L.M. No. 1, Mp.
of Mariquina;
-WITNESSETH-
thence S. 25 deg. 00E., 12.00 m. to point 2;
That I am the absolute registered owner of six (6) parcels of land with the improvements thereon situated
in Quezon City, Philippines, which parcels of land are herewith described and bounded as follows, to wit: thence S. 64 deg. 59W., 29.99 m. to point 3;

TRANS. CERT. OF TITLE NO. 140946 thence N. 25 deg. 00W., 12.00 m to point 4;

A parcel of land (Lot 3-B of the subdivision plan Psd-47404, being a portion of Lot 3, Block D-3 described thence N. 64 deg. 59E., 29.99 m. to the point of
on plan Bsd-10642, G.L.R.O. Record No.) situated in the Quirino District, Quezon City. Bounded on the
N., along line 1-2 by Lot 15, Block D-3 of plan Bsd - 10642; along line 2-3 by Lot 4, Block D-3 of plan beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points
Bsd-10642; along line 3-4 by Aurora Boulevard (Road Lot-1, Bsd-10642); and along line 4-1 by Lot 3-D referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true;
of the subdivision plan. Beginning at a point marked 1 on plan, being S.29 deg. 26E., 1156.22 m. from declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and
B.L.L.M. 9, Quezon City, subdivision survey, April 24 to 26, 1941.

thence N. 79 deg. 53E., 12.50 m. to point 2; TRANS. CERT. OF TITLE NO. 118886

thence S. 10 deg. 07E., 40.00 m. to point 3; A parcel of land (Lot No. 11, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated
Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in
thence S. 79 deg. 53W., 12.50 m. to point 4; the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 12 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of
thence N. 10 deg. 07W., 40.00 m. to the point the consolidation and subdivision plan; on the NW., by Lot No. 10 of the consolidation and subdivision plan.
Beginning at a point marked 1 on plan, being S. 79 deg. 07W., 4264.00 m. more or less from B.L.L.M. No. 1, Mp.
of beginning; containing an area of FIVE HUNDRED (500) SQUARE METERS. All points referred to of Mariquina;
are indicated on the plan and are marked on the ground as follows: points 1 and 4 by P.L.S. Cyl. Conc.
thence S. 64 deg. 59W., 29.99 m. to point 2; legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to
my entire satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P.
thence N. 25 deg. 00W., 12.00 m. to point 3; Nazareno, her heirs, administrators and assigns, all my title, rights, interests and participations to the abovedescribed
parcels of land with the improvements thereon, with the exception of LOT NO. 11 COVERED BY T.C.T. NO.
thence N. 64 deg. 59E., 29.99 m. to point 4; 118886, free of any and all liens and encumbrances; and

thence S. 26 deg. 00E., 12.00 m. to the point of That for and in consideration of the sum of FOUR THOUSAND EIGHT HUNDRED PESOS (P4,800.00)
PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of legal age and
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to my entire
All points referred to are indicated on the plan and on the ground, are marked by P.L.S. Conc. Mons. 15 satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno,
x 60 cm.; bearings true; declination 0 deg. 50E.; date of the original survey, April 8 to July 15, 1920, and her heirs, administrators and assigns, all my title, rights, interests and participations in and to Lot No. 11 covered by
that of the consolidation and subdivision survey, April 24 to 26, 1941. T.C.T. No. 118886 above-described, free of any and all liens and encumbrances, with the understanding that the title
to be issued in relation hereto shall be separate and distinct from the title to be issued in connection with Lots Nos.
A parcel of land (Lot No. 13 of the consolidation and subdivision plan Pcs-988, being a portion of the 13 and 14, although covered by the same title.
consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O.
Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., IN WITNESS WHEREOF, I have hereunto signed this deed of absolute sale in the City of Manila, Philippines, this
by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 14, of the consolidation; 29th day of January, 1970.[2]
and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW.,
by Lot No. 12, of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being By virtue of this deed, transfer certificates of title were issued to Natividad, to wit: TCT No. 162738 (Lot 3-B),[3]
S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; TCT No. 162739 (Lot 3),[4] TCT No. 162735 (Lot 10),[5] TCT No. 162736 (Lot 11),[6] and TCT No. 162737 (Lots
13 and 14),[7] all of the Register of Deeds of Quezon City.
thence S. 64 deg. 58W., 30.00 m. to point 2;
Among the lots covered by the above Deed of Sale is Lot 3-B which is registered under TCT No. 140946. This lot
thence N. 25 deg. 00W., 12.00 m. to point 3; had been occupied by Romeo, his wife Eliza, and by Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold
Lot 3-B on July 31, 1982 to Maximino, Jr.,[8] for which reason the latter was issued TCT No. 293701 by the Register
thence N. 64 deg. 59E., 29.99 m. to point 4; of Deeds of Quezon City.[9]

thence S.25 deg. 00E., 12.00 m. to point of When Romeo found out about the sale to Maximino, Jr., he and his wife Eliza locked Maximino, Jr. out of the house.
On August 4, 1983, Maximino, Jr. brought an action for recovery of possession and damages with prayer for writs
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360, more or less. All of preliminary injunction and mandatory injunction with the Regional Trial Court of Quezon City. On December 12,
points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 1986, the trial court ruled in favor of Maximino, Jr. In CA-G.R. CV No. 12932, the Court of Appeals affirmed the
cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that decision of the trial court.[10]
of the consolidation and subdivision survey, April 24 to 26, 1941.
On June 15, 1988, Romeo in turn filed, on behalf of the estate of Maximino, Sr., the present case for annulment of
A parcel of land (Lot No. 14, of the consolidation and subdivision plan Pcs-988, being a portion of the sale with damages against Natividad and Maximino, Jr. The case was filed in the Regional Trial Court of Quezon
consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. City, where it was docketed as Civil Case No. 88-58.[11] Romeo sought the declaration of nullity of the sale made
Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., on January 29, 1970 to Natividad and that made on July 31, 1982 to Maximino, Jr. on the ground that both sales
by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 15, of the consolidation were void for lack of consideration.
and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW.,
by Lot No. 13 of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being On March 1, 1990, Natividad and Maximino, Jr. filed a third-party complaint against the spouses Romeo and
S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; Eliza.[12] They alleged that Lot 3, which was included in the Deed of Absolute Sale of January 29, 1970 to Natividad,
had been surreptitiously appropriated by Romeo by securing for himself a new title (TCT No. 277968) in his
thence S. 25 deg. 00E., 12.00 m. to point 2; name.[13] They alleged that Lot 3 is being leased by the spouses Romeo and Eliza to third persons. They therefore
sought the annulment of the transfer to Romeo and the cancellation of his title, the eviction of Romeo and his wife
thence S. 65 deg. 00W., 30.00 m. to point 3; Eliza and all persons claiming rights from Lot 3, and the payment of damages.

thence S. 65 deg. 00W., 12.00 m. to point 4; The issues having been joined, the case was set for trial. Romeo presented evidence to show that Maximino and
Aurea Nazareno never intended to sell the six lots to Natividad and that Natividad was only to hold the said lots in
thence N.64 deg. 58E., 30.00 m. to the point of trust for her siblings. He presented the Deed of Partition and Distribution dated June 28, 1962 executed by Maximino
Sr. and Aurea and duly signed by all of their children, except Jose, who was then abroad and was represented by
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. their mother, Aurea. By virtue of this deed, the nine lots subject of this Deed of Partition were assigned by raffle as
All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x follows:
60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and
that of the consolidation and subdivision survey, April 24 to 26, 1941. 1. Romeo - Lot 25-L (642 m2)

That for and in consideration of the sum of FORTY THREE THOUSAND PESOS (P43,000.00) 2. Natividad - Lots 23 (312 m2) and 24 (379 m2)
PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of
3. Maximino, Jr. - Lots 6 (338 m2) and 7 (338 m2)
All other claims by one party against the other are dismissed.
4. Pacifico - Lots 13 (360 m2) and 14 (360 m2)
SO ORDERED.[21]
5. Jose - Lots 10 (360 m2) and 11 (360 m2)
Natividad and Maximino, Jr. filed a motion for reconsideration. As a result, on October 14, 1992 the trial court
Romeo received the title to Lot 25-L under his name,[14] while Maximino, Jr. received Lots 6 and 7 modified its decision as follows:
through a Deed of Sale dated August 16, 1966 for the amount of P9,500.00.[15] Pacifico and Joses shares
were allegedly given to Natividad, who agreed to give Lots 10 and 11 to Jose, in the event the latter came WHEREFORE, the plaintiffs Partial Motion for Reconsideration is hereby granted. The judgment dated August 10,
back from abroad. Natividads share, on the other hand, was sold to third persons[16] because she allegedly 1992 is hereby amended, such that the first paragraph of its dispositive portion is correspondingly modified to read
did not like the location of the two lots. But, Romeo said, the money realized from the sale was given to as follows:
Natividad.
WHEREFORE, judgment is hereby rendered declaring the nullity of the Deeds of Sale dated January 29, 1970 and
Romeo also testified that Lot 3-B was bought for him by his father, while Lot 3 was sold to him for July 31, 1982.
P7,000.00 by his parents on July 4, 1969.[17] However, he admitted that a document was executed by his
parents transferring six properties in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13, and 14, to Natividad. Except as to Lots 3, 13 and 14 which had passed on to third person, the defendant Natividad shall hold the rest OF
THE PROPERTIES COVERED BY THE DEED OF SALE DATED JANUARY 29, 1970 (LOTS 10 and 11) in
Romeo further testified that, although the deeds of sale executed by his parents in their favor stated that trust for Jose Nazareno to whom the same had been adjudicated.
the sale was for a consideration, they never really paid any amount for the supposed sale. The transfer was
made in this manner in order to avoid the payment of inheritance taxes.[18] Romeo denied stealing Lot 3 The Register of Deeds of Quezon City is directed to annotate this judgment on Transfer Certificates of Title No.
from his sister but instead claimed that the title to said lot was given to him by Natividad in 1981 after 162735 and 162736 as a lien on the titles of Natividad P. Nazareno.
their father died.
LIKEWISE, THE SAID REGISTER OF DEEDS IS DIRECTED TO CANCEL TCT NO. 293701 (formerly 162705)
Natividad and Maximino, Jr. claimed that the Deed of Partition and Distribution executed in 1962 was not OVER LOT 3-B AND RESTORE TCT NO. 140946 IN THE NAME OF MAXIMINO NAZARENO SR. AND
really carried out. Instead, in December of 1969, their parents offered to sell to them the six lots in Quezon AUREA POBLETE.[22]
City, i.e., Lots 3, 3-B, 10, 11, 13 and 14. However, it was only Natividad who bought the six properties
because she was the only one financially able to do so. Natividad said she sold Lots 13 and 14 to Ros- On appeal to the Court of Appeals, the decision of the trial court was modified in the sense that titles to Lot 3 (in the
Alva Marketing Corp.[19] and Lot 3-B to Maximino, Jr. for P175,000.00.[20] Natividad admitted that name of Romeo Nazareno) and Lot 3-B (in the name of Maximino Nazareno, Jr.), as well as to Lots 10 and 11 were
Romeo and the latters wife were occupying Lot 3-B at that time and that she did not tell the latter about cancelled and ordered restored to the estate of Maximino Nazareno, Sr. The dispositive portion of the decision dated
the sale she had made to Maximino, Jr. May 29, 1998 reads:

Natividad said that she had the title to Lot 3 but it somehow got lost. She could not get an original copy WHEREFORE, the appeal is GRANTED. The decision and the order in question are modified as follows:
of the said title because the records of the Registrar of Deeds had been destroyed by fire. She claimed she
was surprised to learn that Romeo was able to obtain a title to Lot 3 in his name. 1. The Deed of Absolute Sale dated 29 January 1970 and the Deed of Absolute Sale dated 31 July 1982 are hereby
declared null and void;
Natividad insisted that she paid the amount stated in the Deed of Absolute Sale dated January 29, 1970.
She alleged that their parents had sold these properties to their children instead of merely giving the same 2. Except as to Lots 13 and 14 ownership of which has passed on to third persons, it is hereby declared that Lots 3,
to them in order to impose on them the value of hardwork. 3-B, 10 and 11 shall form part of the estate of the deceased Maximino Nazareno, Sr.;

Natividad accused Romeo of filing this case to harass her after Romeo lost in the action for recovery of 3. The Register of Deeds of Quezon City is hereby ordered to restore TCT No. 140946 (covering Lot 3-B), TCT No.
possession (Civil Case No. Q-39018) which had been brought against him by Maximino, Jr. It appears 132019 (covering Lot 3), TCT No. 118885 (covering Lot 10), and TCT No. 118886 (covering Lot 11).[23]
that before the case filed by Romeo could be decided, the Court of Appeals rendered a decision in CA-GR
CV No. 12932 affirming the trial courts decision in favor of Maximino, Jr. Petitioners filed a motion for reconsideration but it was denied in a resolution dated May 27, 1999. Hence this
petition.
On August 10, 1992, the trial court rendered a decision, the dispositive portion of which states:
Petitioners raise the following issues:
WHEREFORE, judgment is hereby rendered declaring the nullity of the Deed of Sale dated January 29,
1970. Except as to Lots 3, 3-B, 13 and 14 which had passed on to third persons, the defendant Natividad 1. WHETHER OR NOT THE UNCORROBORATED TESTIMONY OF PRIVATE RESPONDENT ROMEO P.
shall hold the rest in trust for Jose Nazareno to whom the same had been adjudicated. The Register of NAZARENO CAN DESTROY THE FULL FAITH AND CREDIT ACCORDED TO NOTARIZED
Deeds of Quezon City is directed to annotate this judgment on Transfer Certificate of Titles Nos. 162735 DOCUMENTS LIKE THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) EXECUTED
and 162736 as a lien in the titles of Natividad P. Nazareno. BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE IN FAVOR OF
PETITIONER NATIVIDAD P. NAZARENO.
The defendants counterclaim is dismissed. Likewise, the third-party complaint is dismissed.
2. WHETHER OR NOT THE RESPONDENT COURT GROSSLY MISAPPRECIATED THE FACTS OF THE
The defendants are hereby directed to pay to the plaintiff jointly and severally the sum of P30,000 as and CASE WITH RESPECT TO THE VALIDITY OF THE SAID DEED OF ABSOLUTE SALE DATED JANUARY
for attorneys fees. Likewise, the third-party plaintiff is directed to pay the third-party defendants attorneys 29, 1970 (EXH. 1) IN THE LIGHT OF THE FOLLOWING:
fees of P20,000.
A) THE DOCUMENTARY EVIDENCE, ALL OF WHICH ARE NOTARIZED, EXECUTED BY THE support or are clearly erroneous so as to constitute serious abuse of discretion.[25] The lone testimony of a witness,
DECEASED SPOUSES DURING THEIR LIFETIME INVOLVING SOME OF THEIR CONJUGAL if credible, is sufficient. In this case, the testimony of Romeo that no consideration was ever paid for the sale of the
PROPERTIES. six lots to Natividad was found to be credible both by the trial court and by the Court of Appeals and it has not been
successfully rebutted by petitioners. We, therefore, have no reason to overturn the findings by the two courts giving
B) THE EXECUTION OF AN EXTRA-JUDICIAL PARTITION WITH WAIVER OF RIGHTS AND credence to his testimony.
CONFIRMATION OF SALE DATED MAY 24, 1975 (EXH. 14A) OF THE ESTATE OF AUREA
POBLETE BY THE DECEASED MAXIMINO A. NAZARENO, SR. AND THEIR CHILDREN The fact that the deed of sale was notarized is not a guarantee of the validity of its contents. As held in Suntay v.
INVOLVING THE ONLY REMAINING ESTATE OF AUREA POBLETE THUS IMPLIEDLY Court of Appeals:[26]
ADMITTING THE VALIDITY OF PREVIOUS DISPOSITIONS MADE BY SAID DECEASED
SPOUSES ON THEIR CONJUGAL PROPERTIES, HALF OF WHICH WOULD HAVE BECOME A Though the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the
PART OF AUREA POBLETES ESTATE UPON HER DEMISE. intention nor the function of the notary public to validate and make binding an instrument never, in the first place,
intended to have any binding legal effect upon the parties thereto. The intention of the parties still and always is the
C) THE ADMISSION MADE BY MAXIMINO A. NAZARENO, SR. IN HIS TESTIMONY IN OPEN primary consideration in determining the true nature of a contract.
COURT ON AUGUST 13, 1980 DURING HIS LIFETIME IN CIVIL CASE NO. NC-712 (EXH. 81,
81B) THAT HE HAD SOLD CERTAIN PROPERTIES IN FAVOR OF NATIVIDAD P. NAZARENO Second. Petitioners make capital of the fact that in C.A.-G.R. CV No. 12932, which was declared final by this Court
THUS BELYING THE CLAIM OF ROMEO P. NAZARENO THAT THE DEED OF ABSOLUTE in G.R. No. 107684, the Court of Appeals upheld the right of Maximino, Jr. to recover possession of Lot 3-B. In that
SALE DATED JANUARY 29, 1970 IS ONE AMONG THE DOCUMENTS EXECUTED BY THE case, the Court of Appeals held:
DECEASED SPOUSES TO BE WITHOUT CONSIDERATION.
As shown in the preceding disquisition, Natividad P. Nazareno acquired the property in dispute by purchase in 1970.
D) THE ADMISSIONS MADE BY ROMEO P. NAZARENO HIMSELF CONTAINED IN A FINAL She was issued Transfer Certificate of Title No. 162738 of the Registry of Deeds of Quezon City. When her parents
DECISION OF THE RESPONDENT COURT IN CA-GR CV NO. 12932 DATED AUGUST 31, 1992 died, her mother Aurea Poblete-Nazareno in 1970 and her father Maximino A. Nazareno, Sr. in 1980, Natividad P.
AND AN ANNEX APPEARING IN HIS ANSWER TO THE COMPLAINT IN CIVIL CASE NO. Q- Nazareno had long been the exclusive owner of the property in question. There was no way therefore that the
39018 (EXH. 11-B) INVOLVING LOT 3B, ONE OF THE PROPERTIES IN QUESTION THAT THE aforesaid property could belong to the estate of the spouses Maximino Nazareno, Sr. and Aurea Poblete. The mere
SAID PROPERTY IS OWNED BY PETITIONER NATIVIDAD P. NAZARENO. fact that Romeo P. Nazareno included the same property in an inventory of the properties of the deceased Maximino
A. Nazareno, Sr. will not adversely affect the ownership of the said realty. Appellant Romeo P. Nazarenos suspicion
E) THE PARTIAL PROJECT OF PARTITION DATED MAY 24, 1995 WHICH WAS APPROVED BY that his parents had entrusted all their assets under the care and in the name of Natividad P. Nazareno, their eldest
THE INTESTATE COURT IN SP. PROC. NO. NC-28 AND EXECUTED IN ACCORDANCE WITH living sister who was still single, to be divided upon their demise to all the compulsory heirs, has not progressed
THE LATTER COURTS FINAL ORDER DATED JULY 9, 1991 DETERMINING WHICH WERE THE beyond mere speculation. His barefaced allegation on the point not only is without any corroboration but is even
REMAINING PROPERTIES OF THE ESTATE. belied by documentary evidence. The deed of absolute sale (Exhibit B), being a public document (Rule 132, Secs.
19 and 23, Revised Rules on Evidence), is entitled to great weight; to contradict the same, there must be evidence
3. WHETHER OR NOT THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 EXECUTED that is clear, convincing and more than merely preponderant (Yturralde vs. Aganon, 28 SCRA 407; Favor vs. Court
BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE of Appeals, 194 SCRA 308). Defendants-appellants own conduct disproves their claim of co-ownership over the
DURING THEIR LIFETIME INVOLVING THEIR CONJUGAL PROPERTIES IS AN INDIVISIBLE property in question. Being themselves the owner of a ten-unit apartment building along Stanford St., Cubao Quezon
CONTRACT? AND IF SO WHETHER OR NOT UPON THEIR DEATH, THE ESTATE OF City, defendants-appellants, in a letter of demand to vacate addressed to their tenants (Exhibits P, P-1 and P-2) in
MAXIMINO A. NAZARENO, SR. ALONE CAN SEEK THE ANNULMENT OF SAID SALE? said apartment, admitted that the house and lot located at No. 979 Aurora Blvd., Quezon City where they were
residing did not belong to them. Also, when they applied for a permit to repair the subject property in 1977, they
4. WHETHER OR NOT THE SALE OF LOT 3 UNDER THE DEED OF ABSOLUTE SALE DATED stated that the property belonged to and was registered in the name of Natividad P. Nazareno. Among the documents
JANUARY 29, 1970 IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO, IS VALID submitted to support their application for a building permit was a copy of TCT No. 162738 of the Registry of Deeds
CONSIDERING THAT AS PER THE ORDER OF THE LOWER COURT DATED NOVEMBER 21, of Quezon City in the name of Natividad Nazareno (Exhibit O and submarkings; tsn March 15, 1985, pp. 4-5).[27]
1990. ROMEO NAZARENO ADMITTED THAT HE DID NOT PAY THE CONSIDERATION
STATED IN THE DEED OF ABSOLUTE SALE DATED JULY 4, 1969 EXECUTED BY THE To be sure, that case was for recovery of possession based on ownership of Lot 3-B. The parties in that case were
DECEASED SPOUSES IN HIS FAVOR (EXH. M-2). Maximino, Jr., as plaintiff, and the spouses Romeo and Eliza, as defendants. On the other hand, the parties in the
present case for annulment of sale are the estate of Maximino, Sr., as plaintiff, and Natividad and Maximino, Jr., as
5. WHETHER OR NOT AS A CONSEQUENCE, THE TITLE ISSUED IN THE NAME OF ROMEO P. defendants. Romeo and Eliza were named third-party defendants after a third-party complaint was filed by Natividad
NAZARENO, TCT NO. 277968 (EXH. M) SHOULD BE CANCELLED AND DECLARED NULL AND and Maximino, Jr. As already stated, however, this third-party complaint concerned Lot 3, and not Lot 3-B.
VOID AND A NEW ONE ISSUED IN FAVOR OF NATIVIDAD P. NAZARENO PURSUANT TO
THE DEED OF ABSOLUTE SALE EXECUTED IN THE LATTERS FAVOR ON JANUARY 29, 1970 The estate of a deceased person is a juridical entity that has a personality of its own.[28] Though Romeo represented
BY THE DECEASED SPOUSES.[24] at one time the estate of Maximino, Sr., the latter has a separate and distinct personality from the former. Hence, the
judgment in CA-GR CV No. 12932 regarding the ownership of Maximino, Jr. over Lot 3-B binds Romeo and Eliza
We find the petition to be without merit. only, and not the estate of Maximino, Sr., which also has a right to recover properties which were wrongfully
disposed.
First. Petitioners argue that the lone testimony of Romeo is insufficient to overcome the presumption of
validity accorded to a notarized document. Furthermore, Natividads title was clearly not an issue in the first case. In other words, the title to the other five lots
subject of the present deed of sale was not in issue in that case. If the first case resolved anything, it was the ownership
To begin with, the findings of fact of the Court of Appeals are conclusive on the parties and carry even of Maximino, Jr. over Lot 3-B alone.
more weight when these coincide with the factual findings of the trial court. This Court will not weigh the
evidence all over again unless there is a showing that the findings of the lower court are totally devoid of
Third. Petitioners allege that, as shown by several deeds of sale executed by Maximino, Sr. and Aurea contract is inexistent from the beginning. Hence, even if the estate of Maximino, Sr. alone contests the validity of
during their lifetime, the intention to dispose of their real properties is clear. Consequently, they argue that the sale, the outcome of the suit will bind the estate of Aurea as if no sale took place at all.
the Deed of Sale of January 29, 1970 should also be deemed valid.
Fifth. As to the third-party complaint concerning Lot 3, we find that this has been passed upon by the trial court and
This is a non-sequitur. The fact that other properties had allegedly been sold by the spouses Maximino, the Court of Appeals. As Romeo admitted, no consideration was paid by him to his parents for the Deed of Sale.
Sr. and Aurea does not necessarily show that the Deed of Sale made on January 29, 1970 is valid. Therefore, the sale was void for having been simulated. Natividad never acquired ownership over the property
because the Deed of Sale in her favor is also void for being without consideration and title to Lot 3 cannot be issued
Romeo does not dispute that their parents had executed deeds of sale. The question, however, is whether in her name.
these sales were made for a consideration. The trial court and the Court of Appeals found that the Nazareno
spouses transferred their properties to their children by fictitious sales in order to avoid the payment of Nonetheless, it cannot be denied that Maximino, Sr. intended to give the six Quezon City lots to Natividad. As
inheritance taxes. Romeo testified, their parents executed the Deed of Sale in favor of Natividad because the latter was the only female
and the only unmarried member of the family.[34] She was thus entrusted with the real properties in behalf of her
Indeed, it was found both by the trial court and by the Court of Appeals that Natividad had no means to siblings. As she herself admitted, she intended to convey Lots 10 and 11 to Jose in the event the latter returned from
pay for the six lots subject of the Deed of Sale. abroad. There was thus an implied trust constituted in her favor. Art. 1449 of the Civil Code states:

All these convince the Court that Natividad had no means to pay for all the lots she purportedly purchased There is also an implied trust when a donation is made to a person but it appears that although the legal estate is
from her parents. What is more, Romeos admission that he did not pay for the transfer to him of lots 3 and transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof.
25-L despite the considerations stated in the deed of sale is a declaration against interest and must ring
with resounding truth. The question is, why should Natividad be treated any differently, i.e., with There being an implied trust, the lots in question are therefore subject to collation in accordance with Art. 1061
consideration for the sale to her, when she is admittedly the closest to her parents and the one staying with which states:
them and managing their affairs? It just seems without reason. Anyway, the Court is convinced that the
questioned Deed of Sale dated January 29, 1970 (Exh. A or 1) is simulated for lack of consideration, and Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any
therefore ineffective and void.[29] property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation,
or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and
In affirming this ruling, the Court of Appeals said: in the account of the partition.

Facts and circumstances indicate badges of a simulated sale which make the Deed of Absolute Sale dated As held by the trial court, the sale of Lots 13 and 14 to Ros-Alva Marketing, Corp. on April 20, 1979[35] will have
29 January 1970 void and of no effect. In the case of Suntay vs. Court of Appeals (251 SCRA 430 [1995]), to be upheld for Ros-Alva Marketing is an innocent purchaser for value which relied on the title of Natividad. The
the Supreme Court held that badges of simulation make a deed of sale null and void since parties thereto rule is settled that every person dealing with registered land may safely rely on the correctness of the certificate of
enter into a transaction to which they did not intend to be legally bound. title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of
the property.[36]
It appears that it was the practice in the Nazareno family to make simulated transfers of ownership of real
properties to their children in order to avoid the payment of inheritance taxes. Per the testimony of Romeo, WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
he acquired Lot 25-L from his parents through a fictitious or simulated sale wherein no consideration was
paid by him. He even truthfully admitted that the sale of Lot 3 to him on 04 July 1969 (Deed of Absolute SO ORDERED.
Sale, Records, Vol. II, p. 453) likewise had no consideration. This document was signed by the spouses
Max, Sr. and Aurea as vendors while defendant-appellant Natividad signed as witness.[30] HEIRS OF POLICRONIO M. URETA, SR., namely: CONRADO B. URETA, MACARIO B. URETA,
GLORIA URETA-GONZALES, ROMEO B. URETA, RITA URETA-SOLANO, NENA URETA-
Fourth. Petitioners argue further: TONGCUA, VENANCIO B. URETA, LILIA URETA-TAYCO, and HEIRS OF POLICRONIO B. URETA,
JR., namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA, EMMANUEL T. URETA, and
The Deed of Absolute Sale dated January 29, 1970 is an indivisible contract founded on an indivisible BERNADETTE T. URETA,
obligation. As such, it being indivisible, it can not be annulled by only one of them. And since this suit
was filed only by the estate of Maximino A. Nazareno, Sr. without including the estate of Aurea Poblete, These consolidated petitions for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure
the present suit must fail. The estate of Maximino A. Nazareno, Sr. can not cause its annulment while its assail the April 20, 2004 Decision[1] of the Court of Appeals (CA), and its October 14, 2004 Resolution[2] in C.A.-
validity is sustained by the estate of Aurea Poblete.[31] G.R. CV No. 71399, which affirmed with modification the April 26, 2001 Decision[3] of the Regional Trial Court,
Branch 9, Kalibo, Aklan (RTC) in Civil Case No. 5026.
An obligation is indivisible when it cannot be validly performed in parts, whatever may be the nature of
the thing which is the object thereof. The indivisibility refers to the prestation and not to the object The Facts
thereof.[32] In the present case, the Deed of Sale of January 29, 1970 supposedly conveyed the six lots to
Natividad. The obligation is clearly indivisible because the performance of the contract cannot be done in In his lifetime, Alfonso Ureta (Alfonso) begot 14 children, namely, Policronio, Liberato, Narciso, Prudencia,
parts, otherwise the value of what is transferred is diminished. Petitioners are therefore mistaken in basing Vicente, Francisco, Inocensio, Roque, Adela, Wenefreda, Merlinda, Benedicto, Jorge, and Andres. The children of
the indivisibility of a contract on the number of obligors. Policronio (Heirs of Policronio), are opposed to the rest of Alfonsos children and their descendants (Heirs of
Alfonso).
In any case, if petitioners only point is that the estate of Maximino, Sr. alone cannot contest the validity
of the Deed of Sale because the estate of Aurea has not yet been settled, the argument would nonetheless Alfonso was financially well-off during his lifetime. He owned several fishpens, a fishpond, a sari-sari store, a
be without merit. The validity of the contract can be questioned by anyone affected by it.[33] A void passenger jeep, and was engaged in the buying and selling of copra. Policronio, the eldest, was the only child of
Alfonso who failed to finish schooling and instead worked on his fathers lands.
in favor of his 3 children and second wife for taxation purposes; that although tax declarations were issued in the
Sometime in October 1969, Alfonso and four of his children, namely, Policronio, Liberato, Prudencia, and name of Policronio, he or his heirs never took possession of the subject lands except a portion of parcel 5; and that
Francisco, met at the house of Liberato. Francisco, who was then a municipal judge, suggested that in all the produce were turned over by the tenants to Alfonso and the administrators of his estate and never to Policronio
order to reduce the inheritance taxes, their father should make it appear that he had sold some of his lands or his heirs.
to his children. Accordingly, Alfonso executed four (4) Deeds of Sale covering several parcels of land in
favor of Policronio,[4] Liberato,[5] Prudencia,[6] and his common-law wife, Valeriana Dela Cruz.[7] The The RTC further found that there was no money involved in the sale. Even granting that there was, as claimed by
Deed of Sale executed on October 25, 1969, in favor of Policronio, covered six parcels of land, which are the Heirs of Policronio, ₱2,000.00 for six parcels of land, the amount was grossly inadequate. It was also noted that
the properties in dispute in this case. the aggregate area of the subject lands was more than double the average share adjudicated to each of the other
children in the Deed of Extra-Judicial Partition; that the siblings of Policronio were the ones who shared in the
Since the sales were only made for taxation purposes and no monetary consideration was given, Alfonso produce of the land; and that the Heirs of Policronio only paid real estate taxes in 1996 and 1997. The RTC opined
continued to own, possess and enjoy the lands and their produce. that Policronio must have been aware that the transfer was merely for taxation purposes because he did not
subsequently take possession of the properties even after the death of his father.
When Alfonso died on October 11, 1972, Liberato acted as the administrator of his fathers estate. He was
later succeeded by his sister Prudencia, and then by her daughter, Carmencita Perlas. Except for a portion The Deed of Extra-Judicial Partition, on the other hand, was declared valid by the RTC as all the heirs of Alfonso
of parcel 5, the rest of the parcels transferred to Policronio were tenanted by the Fernandez Family. These were represented and received equal shares and all the requirements of a valid extra-judicial partition were met. The
tenants never turned over the produce of the lands to Policronio or any of his heirs, but to Alfonso and, RTC considered Conrados claim that he did not understand the full significance of his signature when he signed in
later, to the administrators of his estate. behalf of his co-heirs, as a gratutitous assertion. The RTC was of the view that when he admitted to have signed all
the pages and personally appeared before the notary public, he was presumed to have understood their contents.
Policronio died on November 22, 1974. Except for the said portion of parcel 5, neither Policronio nor his Lastly, neither party was entitled to damages. The Heirs of Alfonso failed to present testimony to serve as factual
heirs ever took possession of the subject lands. basis for moral damages, no document was presented to prove actual damages, and the Heirs of Policronio were
On April 19, 1989, Alfonsos heirs executed a Deed of Extra-Judicial Partition,[8] which included all the found to have filed the case in good faith.
lands that were covered by the four (4) deeds of sale that were previously executed by Alfonso for taxation
purposes. Conrado, Policronios eldest son, representing the Heirs of Policronio, signed the Deed of Extra- The Ruling of the CA
Judicial Partition in behalf of his co-heirs.
Aggrieved, the Heirs of Policronio appealed before the CA, which rendered a decision on April 20, 2004, the
After their fathers death, the Heirs of Policronio found tax declarations in his name covering the six parcels dispositive portion of which reads as follows:
of land. On June 15, 1995, they obtained a copy of the Deed of Sale executed on October 25, 1969 by
Alfonso in favor of Policronio. WHEREFORE, the appeal is PARTIALLY GRANTED. The appealed Decision, dated 26 April 2001, rendered by
Hon. Judge Dean R. Telan of the Regional Trial Court of Kalibo, Aklan, Branch 9, is hereby AFFIRMED with
Not long after, on July 30, 1995, the Heirs of Policronio allegedly learned about the Deed of Extra-Judicial MODIFICATION:
Partition involving Alfonsos estate when it was published in the July 19, 1995 issue of the Aklan Reporter. 1.) The Deed of Sale in favor of Policronio Ureta, Sr., dated 25 October 1969, covering six (6) parcels of land is
hereby declared VOID for being ABSOLUTELY SIMULATED;
Believing that the six parcels of land belonged to their late father, and as such, excluded from the Deed 2.) The Deed of Extra-Judicial Partition, dated 19 April 1989, is ANNULLED;
of Extra-Judicial Partition, the Heirs of Policronio sought to amicably settle the matter with the Heirs of 3.) The claim for actual and exemplary damages are DISMISSED for lack of factual and legal basis.
Alfonso. Earnest efforts proving futile, the Heirs of Policronio filed a Complaint for Declaration of
Ownership, Recovery of Possession, Annulment of Documents, Partition, and Damages[9] against the The case is hereby REMANDED to the court of origin for the proper partition of ALFONSO URETAS Estate in
Heirs of Alfonso before the RTC on November 17, 1995 where the following issues were submitted: (1) accordance with Rule 69 of the 1997 Rules of Civil Procedure. No costs at this instance.
whether or not the Deed of Sale was valid; (2) whether or not the Deed of Extra-Judicial Partition was
valid; and (3) who between the parties was entitled to damages. SO ORDERED.

The Ruling of the RTC The CA affirmed the finding of the RTC that the Deed of Sale was void. It found the Deed of Sale to be absolutely
simulated as the parties did not intend to be legally bound by it. As such, it produced no legal effects and did not
On April 26, 2001, the RTC dismissed the Complaint of the Heirs of Policronio and ruled in favor of the alter the juridical situation of the parties. The CA also noted that Alfonso continued to exercise all the rights of an
Heirs of Alfonso in a decision, the dispositive portion of which reads: owner even after the execution of the Deed of Sale, as it was undisputed that he remained in possession of the subject
parcels of land and enjoyed their produce until his death.
WHEREFORE, the Court finds that the preponderance of evidence tilts in favor of the defendants, hence
the instant case is hereby DISMISSED. Policronio, on the other hand, never exercised any rights pertaining to an owner over the subject lands from the time
they were sold to him up until his death. He never took or attempted to take possession of the land even after his
The counterclaims are likewise DISMISSED. fathers death, never demanded delivery of the produce from the tenants, and never paid realty taxes on the properties.
It was also noted that Policronio never disclosed the existence of the Deed of Sale to his children, as they were, in
With costs against plaintiffs. fact, surprised to discover its existence. The CA, thus, concluded that Policronio must have been aware that the
transfer was only made for taxation purposes.
SO ORDERED.
The testimony of Amparo Castillo, as to the circumstances surrounding the actual arrangement and agreement
The RTC found that the Heirs of Alfonso clearly established that the Deed of Sale was null and void. It between the parties prior to the execution of the four (4) Deeds of Sale, was found by the CA to be unrebutted. The
held that the Heirs of Policronio failed to rebut the evidence of the Heirs of Alfonso, which proved that RTCs assessment of the credibility of her testimony was accorded respect, and the intention of the parties was given
the Deed of Sale in the possession of the former was one of the four (4) Deeds of Sale executed by Alfonso the primary consideration in determining the true nature of the contract.
III. Whether the Court of Appeals correctly ruled in nullifying the Deed of Extrajudicial Partition because Conrado
Contrary to the finding of the RTC though, the CA annulled the Deed of Extra-Judicial Partition due to Ureta signed the same without the written authority from his siblings in contravention of Article 1878 in relation to
the incapacity of one of the parties to give his consent to the contract. It held that before Conrado could Article 1390 of the Civil Code and in relation therewith, whether the defense of ratification and/or preterition raised
validly bind his co-heirs to the Deed of Extra-Judicial Partition, it was necessary that he be clothed with for the first time on appeal may be entertained?
the proper authority. The CA ruled that a special power of attorney was required under Article 1878 (5)
and (15) of the Civil Code. Without a special power of attorney, it was held that Conrado lacked the legal The issues presented for resolution by the Heirs of Alfonso in G.R. No. 165930 are as follows:
capactiy to give the consent of his co-heirs, thus, rendering the Deed of Extra-Judicial Partition voidable
under Article 1390 (1) of the Civil Code. I. Whether or not grave error was committed by the Trial Court and Court of Appeals in declaring the Deed of Sale
of subject properties as absolutely simulated and null and void thru parol evidence based on their factual findings as
As a consequence, the CA ordered the remand of the case to the RTC for the proper partition of the estate, to its fictitious nature, and there being waiver of any objection based on violation of the parol evidence rule.
with the option that the parties may still voluntarily effect the partition by executing another agreement or
by adopting the assailed Deed of Partition with the RTCs approval in either case. Otherwise, the RTC may II. Whether or not the Court of Appeals was correct in holding that Conrado Uretas lack of capacity to give his co-
proceed with the compulsory partition of the estate in accordance with the Rules. heirs consent to the Extra-Judicial Partition rendered the same voidable.

III. Granting arguendo that Conrado Ureta was not authorized to represent his co-heirs and there was no ratification,
whether or not the Court of Appeals was correct in ordering the remand of the case to the Regional Trial Court for
With regard to the claim for damages, the CA agreed with the RTC and dismissed the claim for actual and partition of the estate of Alfonso Ureta.
compensatory damages for lack of factual and legal basis.

Both parties filed their respective Motions for Reconsideration, which were denied by the CA for lack of
merit in a Resolution dated October 14, 2004. IV. Since the sale in favor of Policronio Ureta Sr. was null and void ab initio, the properties covered therein formed
part of the estate of the late Alfonso Ureta and was correctly included in the Deed of Extrajudicial Partition even if
In their Motion for Reconsideration, the Heirs of Policronio argued that the RTC violated the best no prior action for nullification of the sale was filed by the heirs of Liberato Ureta.
evidence rule in giving credence to the testimony of Amparo Castillo with regard to the simulation of the
Deed of Sale, and that prescription had set in precluding any question on the validity of the contract. V. Whether or not the heirs of Policronio Ureta Sr. can claim that estoppel based on Article 1412 of the Civil Code
as well as the issue of prescription can still be raised on appeal.
The CA held that the oral testimony was admissible under Rule 130, Section 9 (b) and (c), which provides
that evidence aliunde may be allowed to explain the terms of the written agreement if the same failed to These various contentions revolve around two major issues, to wit: (1) whether the Deed of Sale is valid, and (2)
express the true intent and agreement of the parties thereto, or when the validity of the written agreement whether the Deed of Extra-Judicial Partition is valid. Thus, the assigned errors shall be discussed jointly and in
was put in issue. Furthermore, the CA found that the Heirs of Policronio waived their right to object to seriatim.
evidence aliunde having failed to do so during trial and for raising such only for the first time on appeal.
With regard to prescription, the CA ruled that the action or defense for the declaration of the inexistence The Ruling of the Court
of a contract did not prescribe under Article 1410 of the Civil Code.
Validity of the Deed of Sale
On the other hand, the Heirs of Alfonso argued that the Deed of Extra-Judicial Partition should not have
been annulled, and instead the preterited heirs should be given their share. The CA reiterated that Conrados Two veritable legal presumptions bear on the validity of the Deed of Sale: (1) that there was sufficient consideration
lack of capacity to give his co-heirs consent to the extra-judicial settlement rendered the same voidable. for the contract; and (2) that it was the result of a fair and regular private transaction. If shown to hold, these
presumptions infer prima facie the transactions validity, except that it must yield to the evidence adduced.[10]
Hence, the present Petitions for Review on Certiorari.
As will be discussed below, the evidence overcomes these two presumptions.
The Issues
Absolute Simulation
The issues presented for resolution by the Heirs of Policronio in G.R. No. 165748 are as follows:
First, the Deed of Sale was not the result of a fair and regular private transaction because it was absolutely simulated.
I.Whether the Court of Appeals is correct in ruling that the Deed of Absolute Sale of 25 October 1969 is
void for being absolutely fictitious and in relation therewith, may parol evidence be entertained to thwart The Heirs of Policronio argued that the land had been validly sold to Policronio as the Deed of Sale contained all
its binding effect after the parties have both died? the essential elements of a valid contract of sale, by virtue of which, the subject properties were transferred in his
name as evidenced by the tax declaration. There being no invalidation prior to the execution of the Deed of Extra-
Assuming that indeed the said document is simulated, whether or not the parties thereto including their Judicial Partition, the probity and integrity of the Deed of Sale should remain undiminished and accorded respect as
successors in interest are estopped to question its validity, they being bound by Articles 1412 and 1421 of it was a duly notarized public instrument.
the Civil Code? The Heirs of Policronio posited that his loyal services to his father and his being the eldest among Alfonsos children,
might have prompted the old man to sell the subject lands to him at a very low price as an advance inheritance. They
II. Whether prescription applies to bar any question respecting the validity of the Deed of Absolute Sale explained that Policronios failure to take possession of the subject lands and to claim their produce manifests a
dated 25 October 1969? Whether prescription applies to bar any collateral attack on the validity of the Filipino family practice wherein a child would take possession and enjoy the fruits of the land sold by a parent only
deed of absolute sale executed 21 years earlier? after the latters death. Policronio simply treated the lands the same way his father Alfonso treated them - where his
children enjoyed usufructuary rights over the properties, as opposed to appropriating them exclusively to himself.
They contended that Policronios failure to take actual possession of the lands did not prove that he was not the owner
as he was merely exercising his right to dispose of them. They argue that it was an error on the part of the
CA to conclude that ownership by Policronio was not established by his failure to possess the properties Amparo Castillo, the daughter of Liberato, testified, to wit:
sold. Instead, emphasis should be made on the fact that the tax declarations, being indicia of possession,
were in Policronios name. Q: Now sometime in the year 1969 can you recall if your grandfather and his children [met] in your house?
A: Yes sir, that was sometime in October 1969 when they [met] in our house, my grandfather, my late uncle
They further argued that the Heirs of Alfonso failed to appreciate that the Deed of Sale was clear enough Policronio Ureta, my late uncle Liberato Ureta, my uncle Francisco Ureta, and then my auntie Prudencia Ureta they
to convey the subject parcels of land. Citing jurisprudence, they contend that there is a presumption that talk[ed] about, that idea came from my uncle Francisco Ureta to [sell] some parcels of land to his children to lessen
an instrument sets out the true agreement of the parties thereto and that it was executed for valuable the inheritance tax whatever happened to my grandfather, actually no money involved in this sale.
consideration,[11] and where there is no doubt as to the intention of the parties to a contract, the literal Q: Now you said there was that agreement, verbal agreement. [W]here were you when this Alfonso Ureta and his
meaning of the stipulation shall control.[12] Nowhere in the Deed of Sale is it indicated that the transfer children gather[ed] in your house?
was only for taxation purposes. On the contrary, the document clearly indicates that the lands were sold. A: I was near them in fact I heard everything they were talking [about]
Therefore, they averred that the literal meaning of the stipulation should control. xxx
Q: Were there documents of sale executed by Alfonso Ureta in furtherance of their verbal agreement?
A: Yes sir.
Q: To whom in particular did your grandfather Alfonso Ureta execute this deed of sale without money consideration
The Court disagrees. according to you?

The Court finds no cogent reason to deviate from the finding of the CA that the Deed of Sale is null and
void for being absolutely simulated. The Civil Code provides: A: To my uncle Policronio Ureta and to Prudencia Ureta Panadero.
Q: And who else?
Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties A: To Valeriana dela Cruz.
do not intend to be bound at all; the latter, when the parties conceal their true agreement. Q: How about your father?
A: He has.[18]
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not
prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public The other Deeds of Sale executed by Alfonso in favor of his children Prudencia and Liberato, and second wife
order or public policy binds the parties to their real agreement. Valeriana, all bearing the same date of execution, were duly presented in evidence by the Heirs of Alfonso, and were
uncontested by the Heirs of Policronio. The lands which were the subject of these Deeds of Sale were in fact included
in the Deed of Extra-Judicial Partition executed by all the heirs of Alfonso, where it was expressly stipulated:
Valerio v. Refresca[13] is instructive on the matter of simulation of contracts:
That the above-named Amparo U. Castillo, Prudencia U. Paradero, Conrado B. Ureta and Merlinda U. Rivera do
In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention hereby recognize and acknowledge as a fact that the properties presently declared in their respective names or in the
to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not names of their respective parents and are included in the foregoing instrument are actually the properties of the
really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. deceased Alfonso Ureta and were transferred only for the purpose of effective administration and development and
As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each convenience in the payment of taxes and, therefore, all instruments conveying or affecting the transfer of said
other what they may have given under the contract. However, if the parties state a false cause in the properties are null and void from the beginning.[19]
contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound
by their real agreement. Hence, where the essential requisites of a contract are present and the simulation As found by the CA, Alfonso continued to exercise all the rights of an owner even after the execution of the Deeds
refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable of Sale. It was undisputed that Alfonso remained in possession of the subject lands and enjoyed their produce until
between the parties and their successors in interest. his death. No credence can be given to the contention of the Heirs of Policrionio that their father did not take
possession of the subject lands or enjoyed the fruits thereof in deference to a Filipino family practice. Had this been
Lacking, therefore, in an absolutely simulated contract is consent which is essential to a valid and true, Policronio should have taken possession of the subject lands after his father died. On the contrary, it was
enforceable contract.[14] Thus, where a person, in order to place his property beyond the reach of his admitted that neither Policronio nor his heirs ever took possession of the subject lands from the time they were sold
creditors, simulates a transfer of it to another, he does not really intend to divest himself of his title and to him, and even after the death of both Alfonso and Policronio.
control of the property; hence, the deed of transfer is but a sham.[15] Similarly, in this case, Alfonso
simulated a transfer to Policronio purely for taxation purposes, without intending to transfer ownership It was also admitted by the Heirs of Policronio that the tenants of the subject lands never turned over the produce of
over the subject lands. the properties to Policronio or his heirs but only to Alfonso and the administrators of his estate. Neither was there a
demand for their delivery to Policronio or his heirs. Neither did Policronio ever pay real estate taxes on the properties,
The primary consideration in determining the true nature of a contract is the intention of the parties. If the the only payment on record being those made by his heirs in 1996 and 1997 ten years after his death. In sum,
words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such Policronio never exercised any rights pertaining to an owner over the subject lands.
intention is determined not only from the express terms of their agreement, but also from the
contemporaneous and subsequent acts of the parties.[16] The true intention of the parties in this case was The most protuberant index of simulation of contract is the complete absence of an attempt in any manner on the
sufficiently proven by the Heirs of Alfonso. part of the ostensible buyer to assert rights of ownership over the subject properties. Policronios failure to take
exclusive possession of the subject properties or, in the alternative, to collect rentals, is contrary to the principle of
The Heirs of Alfonso established by a preponderance of evidence[17] that the Deed of Sale was one of ownership. Such failure is a clear badge of simulation that renders the whole transaction void. [20]
the four (4) absolutely simulated Deeds of Sale which involved no actual monetary consideration, executed
by Alfonso in favor of his children, Policronio, Liberato, and Prudencia, and his second wife, Valeriana,
for taxation purposes.
It is further telling that Policronio never disclosed the existence of the Deed of Sale to his children. This,
coupled with Policronios failure to exercise any rights pertaining to an owner of the subject lands, leads
to the conclusion that he was aware that the transfer was only made for taxation purposes and never
intended to bind the parties thereto. For lack of consideration, the Deed of Sale is once again found to be void. It states that Policronio paid, and Alfonso
As the above factual circumstances remain unrebutted by the Heirs of Policronio, the factual findings of received, the ₱2,000.00 purchase price on the date of the signing of the contract:
the RTC, which were affirmed by the CA, remain binding and conclusive upon this Court.[21]

It is clear that the parties did not intend to be bound at all, and as such, the Deed of Sale produced no legal
effects and did not alter the juridical situation of the parties. The Deed of Sale is, therefore, void for being That I, ALFONSO F. URETA, x x x for and in consideration of the sum of TWO THOUSAND (₱2,000.00) PESOS,
absolutely simulated pursuant to Article 1409 (2) of the Civil Code which provides: Philippine Currency, to me in hand paid by POLICRONIO M. URETA, x x x, do hereby CEDE, TRANSFER, and
CONVEY, by way of absolute sale, x x x six (6) parcels of land x x x.[26] [Emphasis ours]
Art. 1409. The following contracts are inexistent and void from the beginning:
xxx

(2) Those which are absolutely simulated or fictitious; Although, on its face, the Deed of Sale appears to be supported by valuable consideration, the RTC found that there
xxx was no money involved in the sale.[27] This finding was affirmed by the CA in ruling that the sale is void for being
For guidance, the following are the most fundamental characteristics of void or inexistent contracts: absolutely simulated. Considering that there is no cogent reason to deviate from such factual findings, they are
binding on this Court.
1) As a general rule, they produce no legal effects whatsoever in accordance with the principle "quod
nullum est nullum producit effectum."
2) They are not susceptible of ratification.
3) The right to set up the defense of inexistence or absolute nullity cannot be waived or renounced. It is well-settled in a long line of cases that where a deed of sale states that the purchase price has been paid but in
4) The action or defense for the declaration of their inexistence or absolute nullity is imprescriptible. fact has never been paid, the deed of sale is null and void for lack of consideration.[28] Thus, although the contract
5) The inexistence or absolute nullity of a contract cannot be invoked by a person whose interests are not states that the purchase price of ₱2,000.00 was paid by Policronio to Alfonso for the subject properties, it has been
directly affected.[22] proven that such was never in fact paid as there was no money involved. It must, therefore, follow that the Deed of
Sale is void for lack of consideration.
Since the Deed of Sale is void, the subject properties were properly included in the Deed of Extra-Judicial
Partition of the estate of Alfonso.

Absence and Inadequacy of Consideration Given that the Deed of Sale is void, it is unnecessary to discuss the issue on the inadequacy of consideration.
The second presumption is rebutted by the lack of consideration for the Deed of Sale.

In their Answer,[23] the Heirs of Alfonso initially argued that the Deed of Sale was void for lack of Parol Evidence and Hearsay
consideration, and even granting that there was consideration, such was inadequate. The Heirs of
Policronio counter that the defenses of absence or inadequacy of consideration are not grounds to render
a contract void.
The Heirs of Policronio aver that the rules on parol evidence and hearsay were violated by the CA in ruling that the
Deed of Sale was void.
The Heirs of Policronio contended that under Article 1470 of the Civil Code, gross inadequacy of the price
does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really
intended a donation or some other act or contract. Citing jurisprudence, they argued that inadequacy of
monetary consideration does not render a conveyance inexistent as liberality may be sufficient cause for They argued that based on the parol evidence rule, the Heirs of Alfonso and, specifically, Amparo Castillo, were not
a valid contract, whereas fraud or bad faith may render it either rescissible or voidable, although valid in a position to prove the terms outside of the contract because they were not parties nor successors-in-interest in the
until annulled.[24] Thus, they argued that if the contract suffers from inadequate consideration, it remains Deed of Sale in question. Thus, it is argued that the testimony of Amparo Castillo violates the parol evidence rule.
valid until annulled, and the remedy of rescission calls for judicial intervention, which remedy the Heirs
of Alfonso failed to take.

It is further argued that even granting that the sale of the subject lands for a consideration of ₱2,000.00
Stemming from the presumption that the Heirs of Alfonso were not parties to the contract, it is also argued that the
was inadequate, absent any evidence of the fair market value of the land at the time of its sale, it cannot
parol evidence rule may not be properly invoked by either party in the litigation against the other, where at least one
be concluded that the price at which it was sold was inadequate.[25] As there is nothing in the records to
of the parties to the suit is not a party or a privy of a party to the written instrument in question and does not base a
show that the Heirs of Alfonso supplied the true value of the land in 1969, the amount of ₱2,000.00 must
claim on the instrument or assert a right originating in the instrument or the relation established thereby.[29]
thus stand as its saleable value.
Their arguments are untenable.
On this issue, the Court finds for the Heirs of Alfonso.
The objection against the admission of any evidence must be made at the proper time, as soon as the the Heirs of Alfonso are not precluded from presenting evidence to modify, explain or add to the terms of the written
grounds therefor become reasonably apparent, and if not so made, it will be understood to have been agreement.
waived. In the case of testimonial evidence, the objection must be made when the objectionable question
is asked or after the answer is given if the objectionable features become apparent only by reason of such
answer.[30] In this case, the Heirs of Policronio failed to timely object to the testimony of Amparo Castillo
and they are, thus, deemed to have waived the benefit of the parol evidence rule. The Heirs of Policronio must be in a state of confusion in arguing that the Heirs of Alfonso may not question the
Deed of Sale for not being parties or successors-in-interest therein on the basis that the parol evidence rule may not
be properly invoked in a proceeding or litigation where at least one of the parties to the suit is not a party or a privy
of a party to the written instrument in question and does not base a claim on the instrument or assert a right originating
Granting that the Heirs of Policronio timely objected to the testimony of Amparo Castillo, their argument in the instrument or the relation established thereby. If their argument was to be accepted, then the Heirs of Policronio
would still fail. would themselves be precluded from invoking the parol evidence rule to exclude the evidence of the Heirs of
Alfonso.

Section 9 of Rule 130 of the Rules of Court provides:


Indeed, the applicability of the parol evidence rule requires that the case be between parties and their successors-in-
Section 9. Evidence of written agreements. When the terms of an agreement have been reduced to writing, interest.[35] In this case, both the Heirs of Alfonso and the Heirs of Policronio are successors-in-interest of the
it is considered as containing all the terms agreed upon and there can be, between the parties and their parties to the Deed of Sale as they claim rights under Alfonso and Policronio, respectively. The parol evidence rule
successors in interest, no evidence of such terms other than the contents of the written agreement. excluding evidence aliunde, however, still cannot apply because the present case falls under two exceptions to the
rule, as discussed above.
However, a party may present evidence to modify, explain or add to the terms of written agreement if he
puts in issue in his pleading:
With respect to hearsay, the Heirs of Policronio contended that the rule on hearsay was violated when the testimony
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement; of Amparo Castillo was given weight in proving that the subject lands were only sold for taxation purposes as she
was a person alien to the contract. Even granting that they did not object to her testimony during trial, they argued
(b) The failure of the written agreement to express the true intent and agreement of the parties thereto; that it should not have been appreciated by the CA because it had no probative value whatsoever.[36]

(c) The validity of the written agreement; or The Court disagrees.

(d) The existence of other terms agreed to by the parties or their successors in interest after the execution It has indeed been held that hearsay evidence whether objected to or not cannot be given credence for having no
of the written agreement. probative value.[37] This principle, however, has been relaxed in cases where, in addition to the failure to object to
the admissibility of the subject evidence, there were other pieces of evidence presented or there were other
The term "agreement" includes wills. circumstances prevailing to support the fact in issue. In Top-Weld Manufacturing, Inc. v. ECED S.A.,[38] this Court
held:
[Emphasis ours]

Hearsay evidence alone may be insufficient to establish a fact in an injunction suit (Parker v. Furlong, 62 P. 490)
but, when no objection is made thereto, it is, like any other evidence, to be considered and given the importance it
Paragraphs (b) and (c) are applicable in the case at bench. deserves. (Smith v. Delaware & Atlantic Telegraph & Telephone Co., 51 A 464). Although we should warn of the
undesirability of issuing judgments solely on the basis of the affidavits submitted, where as here, said affidavits are
overwhelming, uncontroverted by competent evidence and not inherently improbable, we are constrained to uphold
the allegations of the respondents regarding the multifarious violations of the contracts made by the petitioner.
The failure of the Deed of Sale to express the true intent and agreement of the parties was clearly put in
issue in the Answer[31] of the Heirs of Alfonso to the Complaint. It was alleged that the Deed of Sale was
only made to lessen the payment of estate and inheritance taxes and not meant to transfer ownership. The
exception in paragraph (b) is allowed to enable the court to ascertain the true intent of the parties, and once In the case at bench, there were other prevailing circumstances which corroborate the testimony of Amparo Castillo.
the intent is clear, it shall prevail over what the document appears to be on its face.[32] As the true intent First, the other Deeds of Sale which were executed in favor of Liberato, Prudencia, and Valeriana on the same day
of the parties was duly proven in the present case, it now prevails over what appears on the Deed of Sale. as that of Policronios were all presented in evidence. Second, all the properties subject therein were included in the
Deed of Extra-Judicial Partition of the estate of Alfonso. Third, Policronio, during his lifetime, never exercised acts
of ownership over the subject properties (as he never demanded or took possession of them, never demanded or
received the produce thereof, and never paid real estate taxes thereon). Fourth, Policronio never informed his children
The validity of the Deed of Sale was also put in issue in the Answer, and was precisely one of the issues of the sale.
submitted to the RTC for resolution.[33] The operation of the parol evidence rule requires the existence
of a valid written agreement. It is, thus, not applicable in a proceeding where the validity of such agreement
is the fact in dispute, such as when a contract may be void for lack of consideration.[34] Considering that
the Deed of Sale has been shown to be void for being absolutely simulated and for lack of consideration, As the Heirs of Policronio failed to controvert the evidence presented, and to timely object to the testimony of
Amparo Castillo, both the RTC and the CA correctly accorded probative weight to her testimony.
set up its inexistence.[41] The Heirs of Alfonso are the children of Alfonso, with his deceased children represented
by their children (Alfonsos grandchildren). The Heirs of Alfonso are clearly his heirs and successors-in-interest and,
as such, their interests are directly affected, thereby giving them the right to question the legality of the Deed of Sale.
Prior Action Unnecessary
Inapplicability of Article 842

The Heirs of Policronio further argued that even assuming that the Heirs of Alfonso have an interest in the Deed of
The Heirs of Policronio averred that the Heirs of Alfonso should have filed an action to declare the sale Sale, they would still be precluded from questioning its validity. They posited that the Heirs of Alfonso must first
void prior to executing the Deed of Extra-Judicial Partition. They argued that the sale should enjoy the prove that the sale of Alfonsos properties to Policronio substantially diminished their successional rights or that their
presumption of regularity, and until overturned by a court, the Heirs of Alfonso had no authority to include legitimes would be unduly prejudiced, considering that under Article 842 of the Civil Code, one who has compulsory
the land in the inventory of properties of Alfonsos estate. By doing so, they arrogated upon themselves heirs may dispose of his estate provided that he does not contravene the provisions of the Civil Code with regard to
the power of invalidating the Deed of Sale which is exclusively vested in a court of law which, in turn, the legitime of said heirs. Having failed to do so, they argued that the Heirs of Alfonso should be precluded from
can rule only upon the observance of due process. Thus, they contended that prescription, laches, or questioning the validity of the Deed of Sale.
estoppel have set in to militate against assailing the validity of the sale.
Still, the Court disagrees.
Article 842 of the Civil Code provides:

The Heirs of Policronio are mistaken. Art. 842. One who has no compulsory heirs may dispose by will of all his estate or any part of it in favor of any
person having capacity to succeed.

A simulated contract of sale is without any cause or consideration, and is, therefore, null and void; in such One who has compulsory heirs may dispose of his estate provided he does not contravene the provisions of this Code
case, no independent action to rescind or annul the contract is necessary, and it may be treated as non- with regard to the legitime of said heirs.
existent for all purposes.[39] A void or inexistent contract is one which has no force and effect from the
beginning, as if it has never been entered into, and which cannot be validated either by time or ratification. This article refers to the principle of freedom of disposition by will. What is involved in the case at bench is not a
A void contract produces no effect whatsoever either against or in favor of anyone; it does not create, disposition by will but by Deed of Sale. Hence, the Heirs of Alfonso need not first prove that the disposition
modify or extinguish the juridical relation to which it refers.[40] Therefore, it was not necessary for the substantially diminished their successional rights or unduly prejudiced their legitimes.
Heirs of Alfonso to first file an action to declare the nullity of the Deed of Sale prior to executing the Deed
of Extra-Judicial Partition. Inapplicability of Article 1412
Personality to Question Sale
The Heirs of Policronio contended that even assuming that the contract was simulated, the Heirs of Alfonso would
The Heirs of Policronio contended that the Heirs of Alfonso are not parties, heirs, or successors-in-interest still be barred from recovering the properties by reason of Article 1412 of the Civil Code, which provides that if the
under the contemplation of law to clothe them with the personality to question the Deed of Sale. They act in which the unlawful or forbidden cause does not constitute a criminal offense, and the fault is both on the
argued that under Article 1311 of the Civil Code, contracts take effect only between the parties, their contracting parties, neither may recover what he has given by virtue of the contract or demand the performance of
assigns and heirs. Thus, the genuine character of a contract which personally binds the parties cannot be the others undertaking. As the Heirs of Alfonso alleged that the purpose of the sale was to avoid the payment of
put in issue by a person who is not a party thereto. They posited that the Heirs of Alfonso were not parties inheritance taxes, they cannot take from the Heirs of Policronio what had been given to their father.
to the contract; neither did they appear to be beneficiaries by way of assignment or inheritance. Unlike
themselves who are direct heirs of Policronio, the Heirs of Alfonso are not Alfonsos direct heirs. For the
Heirs of Alfonso to qualify as parties, under Article 1311 of the Civil Code, they must first prove that they
are either heirs or assignees. Being neither, they have no legal standing to question the Deed of Sale. On this point, the Court again disagrees.

Article 1412 of the Civil Code is as follows:


They further argued that the sale cannot be assailed for being barred under Article 1421 of the Civil Code Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the
which provides that the defense of illegality of a contract is not available to third persons whose interests following rules shall be observed:
are not directly affected.
(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the
Again, the Court disagrees. contract, or demand the performance of the others undertaking;

Article 1311 and Article 1421 of the Civil Code provide: (2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract,
or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of
Art. 1311. Contracts take effect only between the parties, their assigns and heirs, x x x what he has given without any obligation to comply with his promise.

Art. 1421. The defense of illegality of contracts is not available to third persons whose interests are not Article 1412 is not applicable to fictitious or simulated contracts, because they refer to contracts with an illegal
directly affected. cause or subject-matter.[42] This article presupposes the existence of a cause, it cannot refer to fictitious or simulated
contracts which are in reality non-existent.[43] As it has been determined that the Deed of Sale is a simulated
The right to set up the nullity of a void or non-existent contract is not limited to the parties, as in the case contract, the provision cannot apply to it.
of annullable or voidable contracts; it is extended to third persons who are directly affected by the contract.
Thus, where a contract is absolutely simulated, even third persons who may be prejudiced thereby may
The Heirs of Alfonso averred that granting arguendo that Conrado was not authorized to represent his co-heirs and
Granting that the Deed of Sale was not simulated, the provision would still not apply. Since the subject there was no ratification, the CA should not have remanded the case to the RTC for partition of Alfonsos estate.
properties were included as properties of Alfonso in the Deed of Extra-Judicial Partition, they are covered They argued that the CA should not have applied the Civil Code general provision on contracts, but the special
by corresponding inheritance and estate taxes. Therefore, tax evasion, if at all present, would not arise, provisions dealing with succession and partition. They contended that contrary to the ruling of the CA, the extra-
and Article 1412 would again be inapplicable. judicial parition was not an act of strict dominion, as it has been ruled that partition of inherited land is not a
conveyance but a confirmation or ratification of title or right to the land.[46] Therefore, the law requiring a special
Prescription power of attorney should not be applied to partitions.

From the position that the Deed of Sale is valid and not void, the Heirs of Policronio argued that any
question regarding its validity should have been initiated through judicial process within 10 years from its
notarization in accordance with Article 1144 of the Civil Code. Since 21 years had already elapsed when On the other hand, the Heirs of Policronio insisted that the CA pronouncement on the invalidity of the Deed of Extra-
the Heirs of Alfonso assailed the validity of the Deed of Sale in 1996, prescription had set in. Furthermore, Judicial Partition should not be disturbed because the subject properties should not have been included in the estate
since the Heirs of Alfonso did not seek to nullify the tax declarations of Policronio, they had impliedly of Alfonso, and because Conrado lacked the written authority to represent his siblings. They argued with the CA in
acquiesced and given due recognition to the Heirs of Policronio as the rightful inheritors and should, thus, ruling that a special power of attorney was required before Conrado could sign in behalf of his co-heirs.
be barred from laying claim on the land.

The Heirs of Policronio are mistaken. The Heirs of Policronio denied that they ratified the Deed of Extra-Judicial Partition. They claimed that there is
nothing on record that establishes that they ratified the partition. Far from doing so, they precisely questioned its
Article 1410 of the Civil Code provides: execution by filing a complaint. They further argued that under Article 1409 (3) of the Civil Code, ratification cannot
Art. 1410. The action for the declaration of the inexistence of a contract does not prescribe. be invoked to validate the illegal act of including in the partition those properties which do not belong to the estate
as it provides another mode of acquiring ownership not sanctioned by law.

This is one of the most fundamental characteristics of void or inexistent contracts.[44]

As the Deed of Sale is a void contract, the action for the declaration of its nullity, even if filed 21 years Furthermore, the Heirs of Policronio contended that the defenses of unenforceability, ratification, and preterition are
after its execution, cannot be barred by prescription for it is imprescriptible. Furthermore, the right to set being raised for the first time on appeal by the Heirs of Alfonso. For having failed to raise them during the trial, the
up the defense of inexistence or absolute nullity cannot be waived or renounced.[45] Therefore, the Heirs Heirs of Alfonso should be deemed to have waived their right to do so.
of Alfonso cannot be precluded from setting up the defense of its inexistence.

Validity of the Deed of Extra-Judicial Partition


The Court agrees in part with the Heirs of Alfonso.
The Court now resolves the issue of the validity of the Deed of Extra-Judicial Partition.
Unenforceability
To begin, although the defenses of unenforceability, ratification and preterition were raised by the Heirs of Alfonso
The Heirs of Alfonso argued that the CA was mistaken in annulling the Deed of Extra-Judicial Partition for the first time on appeal, they are concomitant matters which may be taken up. As long as the questioned items
due to the incapacity of Conrado to give the consent of his co-heirs for lack of a special power of attorney. bear relevance and close relation to those specifically raised, the interest of justice would dictate that they, too, must
They contended that what was involved was not the capacity to give consent in behalf of the co-heirs but be considered and resolved. The rule that only theories raised in the initial proceedings may be taken up by a party
the authority to represent them. They argue that the Deed of Extra-Judicial Partition is not a voidable or thereto on appeal should refer to independent, not concomitant matters, to support or oppose the cause of action.[47]
an annullable contract under Article 1390 of the Civil Code, but rather, it is an unenforceable or, more
specifically, an unauthorized contract under Articles 1403 (1) and 1317 of the Civil Code. As such, the
Deed of Extra-Judicial Partition should not be annulled but only be rendered unenforceable against the
siblings of Conrado. In the RTC, the Heirs of Policronio alleged that Conrados consent was vitiated by mistake and undue influence, and
that he signed the Deed of Extra-Judicial Partition without the authority or consent of his co-heirs.

They further argued that under Article 1317 of the Civil Code, when the persons represented without
authority have ratified the unauthorized acts, the contract becomes enforceable and binding. They The RTC found that Conrados credibility had faltered, and his claims were rejected by the RTC as gratuitous
contended that the Heirs of Policronio ratified the Deed of Extra-Judicial Partition when Conrado took assertions. On the basis of such, the RTC ruled that Conrado duly represented his siblings in the Deed of Extra-
possession of one of the parcels of land adjudicated to him and his siblings, and when another parcel was Judicial Partition.
used as collateral for a loan entered into by some of the Heirs of Policronio. The Deed of Extra-Judicial
Partition having been ratified and its benefits accepted, the same thus became enforceable and binding
upon them.
On the other hand, the CA annulled the Deed of Extra-Judicial Partition under Article 1390 (1) of the Civil Code,
holding that a special power of attorney was lacking as required under Article 1878 (5) and (15) of the Civil Code.
These articles are as follows:
consent to the contract, but rather his lack of authority to do so. Instead, Articles 1403 (1), 1404, and 1317 of the
Civil Code find application to the circumstances prevailing in this case. They are as follows:
Art. 1878. Special powers of attorney are necessary in the following cases:

xxx
Art. 1403. The following contracts are unenforceable, unless they are ratified:

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration; (1) Those entered into in the name of another person by one who has been given no authority or legal representation,
or who has acted beyond his powers;
xxx

(15) Any other act of strict dominion. Art. 1404. Unauthorized contracts are governed by Article 1317 and the principles of agency in Title X of this Book.

Art. 1390. The following contracts are voidable or annullable, even though there may have been no Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by
damage to the contracting parties: law a right to represent him.

(1) Those where one of the parties is incapable of giving consent to a contract; A contract entered into in the name of another by one who has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf
it has been executed, before it is revoked by the other contracting party.

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of Such was similarly held in the case of Badillo v. Ferrer:
ratification.

The Deed of Extrajudicial Partition and Sale is not a voidable or an annullable contract under Article 1390 of the
This Court finds that Article 1878 (5) and (15) is inapplicable to the case at bench. It has been held in New Civil Code. Article 1390 renders a contract voidable if one of the parties is incapable of giving consent to the
several cases[48] that partition among heirs is not legally deemed a conveyance of real property resulting contract or if the contracting partys consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
in change of ownership. It is not a transfer of property from one to the other, but rather, it is a confirmation xxx
or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts
and receives the inheritance. It is merely a designation and segregation of that part which belongs to each
heir. The Deed of Extra-Judicial Partition cannot, therefore, be considered as an act of strict dominion.
Hence, a special power of attorney is not necessary. The deed of extrajudicial parition and sale is an unenforceable or, more specifically, an unauthorized contract under
Articles 1403(1) and 1317 of the New Civil Code.[50]

In fact, as between the parties, even an oral partition by the heirs is valid if no creditors are affected. The
requirement of a written memorandum under the statute of frauds does not apply to partitions effected by Therefore, Conrados failure to obtain authority from his co-heirs to sign the Deed of Extra-Judicial Partition in their
the heirs where no creditors are involved considering that such transaction is not a conveyance of property behalf did not result in his incapacity to give consent so as to render the contract voidable, but rather, it rendered the
resulting in change of ownership but merely a designation and segregation of that part which belongs to contract valid but unenforceable against Conrados co-heirs for having been entered into without their authority.
each heir.[49]

A closer review of the evidence on record, however, will show that the Deed of Extra-Judicial Partition is not
Neither is Article 1390 (1) applicable. Article 1390 (1) contemplates the incapacity of a party to give unenforceable but, in fact, valid, binding and enforceable against all the Heirs of Policronio for having given their
consent to a contract. What is involved in the case at bench though is not Conrados incapacity to give consent to the contract. Their consent to the Deed of Extra-Judicial Partition has been proven by a preponderance of
evidence.
Q: And why is it that you did not read all the pages of this document because I understand that you know also how
to read in English?
A: Because the way Nay Pruding explained to me is that the property of my grandfather will be partitioned that is
Regarding his alleged vitiated consent due to mistake and undue influence to the Deed of Extra-Judicial why I am so happy.
Partition, Conrado testified, to wit: xxx
Q: You mean to say that after you signed this deed of extra judicial partition up to the present you never informed
them?
A: Perhaps they know already that I have signed and they read already the document and they have read the
Q: Mr. Ureta you remember having signed a document entitled deed of extra judicial partition consisting document.
of 11 pages and which have previously [been] marked as Exhibit I for the plaintiffs? Q: My question is different, did you inform them?
A: The document sir? I did not tell them.
A: Yes sir. Q: Even until now?
A: Until now I did not inform them.[52]
Q: Can you recall where did you sign this document?

A: The way I remember I signed that in our house.

Q: And who requested or required you to sign this document? This Court finds no cogent reason to reverse the finding of the RTC that Conrados explanations were mere gratuitous
assertions not entitled to any probative weight. The RTC found Conrados credibility to have faltered when he
A: My aunties. testified that perhaps his siblings were already aware of the Deed of Extra-Judicial Partition. The RTC was in the
best position to judge the credibility of the witness testimony. The CA also recognized that Conrados consent was
Q: Who in particular if you can recall? not vitiated by mistake and undue influence as it required a special power of attorney in order to bind his co-heirs
and, as such, the CA thereby recognized that his signature was binding to him but not with respect to his co-heirs.
A: Nay Pruding Panadero. Findings of fact of the trial court, particularly when affirmed by the CA, are binding to this Court.[53]

Q: You mean that this document that you signed was brought to your house by your Auntie Pruding
Pa[r]adero [who] requested you to sign that document?
Furthermore, this Court notes other peculiarities in Conrados testimony. Despite claims of undue influence, there is
A: When she first brought that document I did not sign that said document because I [did] no[t] know the no indication that Conrado was forced to sign by his aunt, Prudencia Paradero. In fact, he testified that he was happy
contents of that document. to sign because his grandfathers estate would be partitioned. Conrado, thus, clearly understood the document he
signed. It is also worth noting that despite the document being brought to him on three separate occasions and
Q: How many times did she bring this document to you [until] you finally signed the document? indicating his intention to inform his siblings about it, Conrado failed to do so, and still neglected to inform them
even after he had signed the partition. All these circumstances negate his claim of vitiated consent. Having duly
signed the Deed of Extra-Judicial Partition, Conrado is bound to it. Thus, it is enforceable against him.

A: Perhaps 3 times.
Although Conrados co-heirs claimed that they did not authorize Conrado to sign the Deed of Extra-Judicial Partition
Q: Can you tell the court why you finally signed it? in their behalf, several circumstances militate against their contention.

A: Because the way she explained it to me that the land of my grandfather will be partitioned.
First, the Deed of Extra-Judicial Partition was executed on April 19, 1989, and the Heirs of Policronio claim that
Q: When you signed this document were your brothers and sisters who are your co-plaintiffs in this case they only came to know of its existence on July 30, 1995 through an issue of the Aklan Reporter. It is difficult to
aware of your act to sign this document? believe that Conrado did not inform his siblings about the Deed of Extra-Judicial Partition or at least broach its
A: They do not know. subject with them for more than five years from the time he signed it, especially after indicating in his testimony that
he had intended to do so.
xxx
Q: After you have signed this document did you inform your brothers and sisters that you have signed this
document?
A: No I did not. [51] Second, Conrado retained possession of one of the parcels of land adjudicated to him and his co-heirs in the Deed
xxx of Extra-Judicial Partition.
Q: Now you read the document when it was allegedly brought to your house by your aunt Pruding
Pa[r]adero?
A: I did not read it because as I told her I still want to ask the advise of my brothers and sisters.
Q: So do I get from you that you have never read the document itself or any part thereof? Third, after the execution of the partition on April 19, 1989 and more than a year before they claimed to have
A: I have read the heading. discovered the existence of the Deed of Extra-Judicial Partition on July 30, 1995, some of the Heirs of Policronio,
xxx namely, Rita Solano, Macario Ureta, Lilia Tayco, and Venancio Ureta executed on June 1, 1994, a Special Power of
Attorney[54] in favor of their sister Gloria Gonzales, authorizing her to obtain a loan from a bank and to mortgage
one of the parcels of land adjudicated to them in the Deed of Extra-Judicial Partition to secure payment of
the loan. They were able to obtain the loan using the land as collateral, over which a Real Estate
Mortgage[55] was constituted. Both the Special Power of Attorney and the Real Estate Mortgage were I would, however, interpret the failure to come to the said meeting as an indication that the parties are not willing to
presented in evidence in the RTC, and were not controverted or denied by the Heirs of Policronio. or interested in amicable settlement of this matter and as a go signal for me to resort to legal and/or judicial remedies
to protest the rights of my clients.

Fourth, in the letter dated August 15, 1995, sent by the counsel of the Heirs of Policronio to the Heirs of
Alfonso requesting for amicable settlement, there was no mention that Conrados consent to the Deed of Thank you very much.[56]
Extra-Judicial Partition was vitiated by mistake and undue influence or that they had never authorized
Conrado to represent them or sign the document on their behalf. It is questionable for such a pertinent
detail to have been omitted. The body of said letter is reproduced hereunder as follows:
Based on the foregoing, this Court concludes that the allegation of Conrados vitiated consent and lack of authority
to sign in behalf of his co-heirs was a mere afterthought on the part of the Heirs of Policronio. It appears that the
Heirs of Policronio were not only aware of the existence of the Deed of Extra-Judicial Partition prior to June 30,
Greetings: 1995 but had, in fact, given Conrado authority to sign in their behalf. They are now estopped from questioning its
legality, and the Deed of Extra-Judicial Partition is valid, binding, and enforceable against them.

Your nephews and nieces, children of your deceased brother Policronio Ureta, has referred to me for
appropriate legal action the property they inherited from their father consisting of six (6) parcels of land In view of the foregoing, there is no longer a need to discuss the issue of ratification.
which is covered by a Deed of Absolute Sale dated October 25, 1969. These properties ha[ve] already
been transferred to the name of their deceased father immediately after the sale, machine copy of the said
Deed of Sale is hereto attached for your ready reference.
Preterition

Lately, however, there was published an Extra-judicial Partition of the estate of Alfonso Ureta, which to
the surprise of my clients included the properties already sold to their father before the death of said The Heirs of Alfonso were of the position that the absence of the Heirs of Policronio in the partition or the lack of
Alfonso Ureta. This inclusion of their property is erroneous and illegal because these properties were authority of their representative results, at the very least, in their preterition and not in the invalidity of the entire
covered by the Deed of Absolute Sale in favor of their father Policronio Ureta no longer form part of the deed of partition. Assuming there was actual preterition, it did not render the Deed of Extra-Judicial Partition
estate of Alfonso Ureta. Since Policronio Ureta has [sic] died in 1974 yet, these properties have passed by voidable. Citing Article 1104 of the Civil Code, they aver that a partition made with preterition of any of the
hereditary succession to his children who are now the true and lawful owners of the said properties. compulsory heirs shall not be rescinded, but the heirs shall be proportionately obliged to pay the share of the person
omitted. Thus, the Deed of Extra-Judicial Partition should not have been annulled by the CA. Instead, it should have
ordered the share of the heirs omitted to be given to them.

My clients are still entitled to a share in the estate of Alfonso Ureta who is also their grandfather as they
have stepped into the shoes of their deceased father Policronio Ureta. But this estate of Alfonso Ureta
should already exclude the six (6) parcels of land covered by the Deed of Absolute Sale in favor of The Heirs of Alfonso also argued that all that remains to be adjudged is the right of the preterited heirs to represent
Policronio Ureta. their father, Policronio, and be declared entitled to his share. They contend that remand to the RTC is no longer
necessary as the issue is purely legal and can be resolved by the provisions of the Civil Code for there is no dispute
that each of Alfonsos heirs received their rightful share. Conrado, who received Policronios share, should then fully
account for what he had received to his other co-heirs and be directed to deliver their share in the inheritance.
My clients cannot understand why the properties of their late father [should] be included in the estate of
their grandfather and be divided among his brothers and sisters when said properties should only be
divided among themselves as children of Policronio Ureta.
These arguments cannot be given credence.

Since this matter involves very close members of the same family, I have counseled my clients that an
earnest effort towards a compromise or amicable settlement be first explored before resort to judicial Their posited theory on preterition is no longer viable. It has already been determined that the Heirs of Policronio
remedy is pursued. And a compromise or amicable settlement can only be reached if all the parties meet gave their consent to the Deed of Extra-Judicial Partition and they have not been excluded from it. Nonetheless, even
and discuss the problem with an open mind. To this end, I am suggesting a meeting of the parties on granting that the Heirs of Policronio were denied their lawful participation in the partition, the argument of the Heirs
September 16, 1995 at 2:00 P.M. at B Place Restaurant at C. Laserna St., Kalibo, Aklan. It would be best of Alfonso would still fail.
if the parties can come or be represented by their duly designated attorney-in-fact together with their
lawyers if they so desire so that the problem can be discussed unemotionally and intelligently.
Preterition under Article 854 of the Civil Code is as follows:
VALID, and
Art. 854. The preterition or omission of one, some, or all of the compulsory heirs in the direct line, whether
living at the time of the execution of the will or born after the death of the testator, shall annul the
institution of heir; but the devises and legacies shall be valid insofar as they are not inofficious.
(2) The order to remand the case to the court of origin is hereby DELETED.
If the omitted compulsory heirs should die before the testator, the institution shall be effectual, without
prejudice to the right of representation.

SO ORDERED.

Preterition has been defined as the total omission of a compulsory heir from the inheritance. It consists in
the silence of the testator with regard to a compulsory heir, omitting him in the testament, either by not
mentioning him at all, or by not giving him anything in the hereditary property but without expressly THIRD DIVISION
disinheriting him, even if he is mentioned in the will in the latter case.[57] Preterition is thus a concept of
testamentary succession and requires a will. In the case at bench, there is no will involved. Therefore, G.R. No. 198434, February 29, 2016
preterition cannot apply.
HEIRS OF LEANDRO NATIVIDAD AND JULIANA V. NATIVIDAD, Petitioners, v. JUANA MAURICIO-
NATIVIDAD, AND SPOUSES JEAN NATIVIDAD CRUZ AND JERRY CRUZ, Respondents.

Remand Unnecessary DECISION

PERALTA, J.:

The Deed of Extra-Judicial Partition is in itself valid for complying with all the legal requisites, as found Challenged in the present petition for review on certiorari are the Decision1 and Resolution2 of the Court of Appeals
by the RTC, to wit: (CA), dated February 7, 2011 and August 25, 2011, respectively, in CA-G.R. CV No. 92840. The assailed CA
Decision modified the Decision of the Regional Trial Court. (RTC) of San Mateo, Rizal, Branch 75, in Civil Case
No. 1637-02-SM, while the CA Resolution denied petitioners' motion for reconsideration.

A persual of the Deed of Extra-judicial Partition would reveal that all the heirs and children of Alfonso The present petition arose from an action for specific performance and/or recovery of sum of money filed against
Ureta were represented therein; that nobody was left out; that all of them received as much as the others herein respondents by the spouses Leandro Natividad (Leandro) and Juliana Natividad (Juliana), who are the
as their shares; that it distributed all the properties of Alfonso Ureta except a portion of parcel 29 predecessors of herein petitioners.
containing an area of 14,000 square meters, more or less, which was expressly reserved; that Alfonso
Ureta, at the time of his death, left no debts; that the heirs of Policronio Ureta, Sr. were represented by In their Complaint, Leandro and Juliana alleged that sometime in 1974, Sergio Natividad (Sergio), husband of
Conrado B. Ureta; all the parties signed the document, was witnessed and duly acknowledged before respondent Juana Mauricio-Natividad (Juana) and father of respondent Jean Natividad-Cruz (Jean), obtained a loan
Notary Public Adolfo M. Iligan of Kalibo, Aklan; that the document expressly stipulated that the heirs to from the Development Bank of the Philippines (DBP). As security for the loan, Sergio mortgaged two parcels of
whom some of the properties were transferred before for taxation purposes or their children, expressly land, one of which is co-owned and registered in his name and that of his siblings namely, Leandro, Domingo and
recognize and acknowledge as a fact that the properties were transferred only for the purpose of effective Adoracion. This property is covered by Original Certificate of Title (OCT) No. 5980. Sergio's siblings executed a
administration and development convenience in the payment of taxes and, therefore, all instruments Special Power of Attorney authorizing him to mortgage the said property. The other mortgaged parcel of land,
conveying or effecting the transfer of said properties are null and void from the beginning (Exhs. 1-4, 7- covered by OCT No. 10271, was registered in the name of Sergio and Juana. Subsequently, Sergio died without
d).[58] being able to pay his obligations with DBP. Since the loan was nearing its maturity and the mortgaged properties
were in danger of being foreclosed, Leandro paid Sergio's loan obligations. Considering that respondents were unable
to reimburse Leandro for the advances he made in Sergio's favor, respondents agreed that Sergio's share in the lot
which he co-owned with his siblings and the other parcel of land in the name of Sergio and Juana, shall be assigned
Considering that the Deed of Sale has been found void and the Deed of Extra-Judicial Partition valid, with in favor of Leandro and Juliana. Leandro's and Sergio's brother, Domingo, was tasked to facilitate the transfer of
the consent of all the Heirs of Policronio duly given, there is no need to remand the case to the court of ownership of the subject properties in favor of Leandro and Juliana. However, Domingo died without being able to
origin for partition. cause such transfer. Subsequently, despite demands and several follow-ups made by petitioners, respondents failed
and refused to honor their undertaking.

Respondents filed their Answer denying the allegations in the complaint and raising the following defenses: (1)
WHEREFORE, the petition in G.R. No. 165748 is DENIED. The petition in G.R. No. 165930 is respondents are not parties to the contract between Sergio and DBP; (2) there is neither verbal nor written agreement
GRANTED. The assailed April 20, 2004 Decision and October 14, 2004 Resolution of the Court of between petitioners and respondents that the latter shall reimburse whatever payment was made by the former or
Appeals in CA-G.R. CV No. 71399, are hereby MODIFIED in this wise: their predecessor-in-interest; (3) Jean was only a minor during the execution of the alleged agreement and is not a
party thereto; (4) that whatever liability or obligation of respondents is already barred by prescription, laches and
estoppel; (5) that the complaint states no cause of action as respondents are not duty-bound to reimburse whatever
alleged payments were made by petitioners; and (6) there is no contract between the parties to the effect that
(1) The Deed of Extra-Judicial Partition, dated April 19, 1989, is
respondents are under obligation to transfer ownership in petitioners' favor as reimbursement for the he made in Sergio's favor. To support this contention, petitioners relied heavily on the Extrajudicial Settlement
alleged payments made by petitioners to DBP. Among Heirs, which was executed by respondents to prove that there was indeed such an agreement and that such a
Settlement is evidence of the partial execution of the said agreement. The provisions of the said Settlement are as
Respondents waived their right to present evidence and they merely filed their memorandum. Also, during follows:
pendency' of the trial, Leandro died and was substituted by his heirs, herein petitioners.
EXTRAJUDICIAL SETTLEMENT AMONG HEIRS
On November. 4, 2008, the RTC rendered its Decision in favor of petitioners, the dispositive portion of
which reads as follows: KNOW ALL MEN BY THESE PRESENTS:

This EXTRAJUDICIAL SETTLEMENT, made and entered into by and among:


WHEREFORE, premises considered, judgment is hereby rendered as follows:
JUAN M. NATIVIDAD, widow; JEAN N. CRUZ, married to JERRY CRUZ; JOSELITO M. NATIVIDAD, single,
1. Defendants Juana Mauricio [Vda.] de Natividad and Jean Natividad-Cruz are ordered to effect the all of legal age, Filipino citizens, and residents of Malanday, San Mateo, Rizal
transfer of title in OCT No. 5980 with respect to the undivided share of the late Sergio Natividad; and in
OCT No. 10271 both of the Registry of Deeds of the Province of Rizal in favor of plaintiff Juliana [Vda.] WITNESSETH
de Natividad and the Heirs of the late Leandro Natividad.
That the above-named parties, is the legitimate wife and children and sole heirs of the deceased SERGIO
2. Defendants to pay jointly and severally, attorney's fees in the sum of Thirty Thousand Pesos NATIVIDAD, who died in San Mateo, Rizal on May 31, 1981;
(P30,000.00); and cost of suit.
That the said deceased, at the time of his death, left certain real estate properties located at San Mateo, Rizal, and
SO ORDERED Montalban, Rizal, more particularly described as follows:

Aggrieved by the RTC Decision, respondents filed an Appeal with the CA. a. A whole portion of a parcel of land (Plan Psu-295655, L.R. Case No. Q-29, L.R.C. Record No. N-295 ________
, situated in the Barrio of Malanday, Municipality of San Mateo, Province of Rizal, containing an area of TWO
On February 7, 2011, the C A'promulgated its questioned Decision, disposing as follows: HUNDRED EIGHT (208) SQUARE METERS, more or less, and covered by OCT NO. 10271.

WHEREFORE, the appeal is PARTLY GRANTED. The Decision dated November 4, 2008 is hereby " b. A one-fourth (1/4) share in the parcel of land situated in Guinayang, San Mateo, Rizal, containing an area of 2,742
MODIFIED in that defendants-appellants Juana Mauricio-Natividad and Jean Natividad-Cruz are ordered square meters, Covered by OCT No. 10493.
instead to reimburse plaintiffs-appellees Juliana Natividad and the heirs of the late Leandro Natividad the
amount of P162,514.88 representing the amount of the loan obligation paid to the Development Bank of c. A one-fourth (1/4) share in the parcel of land situated in San Jose, Montalban, Rizal, containing an area of 4,775
the Philippines, plus legal interest of 12% per annum computed from June 23, 2001 until finality of the square meters, and covered by OCT No. ON-403.
judgment, the total amount of which shall be to the extent only of defendants-appellants' successional
rights in the mortgaged properties and Juana1 s conjugal share in [the] property covered by OCT No. d. A one-fourth (1/4) share in the parcel of land situated in Cambal, San Mateo, Rizal, containing an area of 13,456
10271. The award of attorney's fees and cost of suit are AFFIRMED. square meters, and covered by OCT No. 5980.

SO ORDERED. That no other personal properties are involved in this extrajudicial settlement.

Petitioners filed a Motion 'for Partial Reconsideration, while respondents filed their own Motion for That to the best knowledge and information of the parties hereto, the said deceased left certain obligations amounting
Reconsideration, both of which, however, were denied by the CA in its assailed Resolution dated August to PI75,000.00 representing loan obligations with the Development Bank of the Philippines.
25, 2011.
That a notice of this extrajudicial settlement had been published once a week for three consecutive weeks
Hence, the instant petition based on the following grounds: in____________ a newspaper of general circulation in ___________, as certified by the said newspaper hereto
attached as Annex "A";
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS' RULING THAT THE VERBAL
AGREEMENT TO CONVEY THE PROPERTY SHARES OF SERGIO NATIVIDAD IN THE That the parties hereto being all of legal age and with full civil capacity to contract, hereby by these presents, agree
PAYMENT OF HIS OBLIGATION IS COVERED BY THE STATUTE OF FRAUDS DESPITE THE to divide and adjudicate, as they hereby divide and adjudicate, among themselves the above-described real estate
FACT THAT IT HAS BEEN PARTIALLY EXECUTED, IS CONTRARY TO EXISTING property in equal shares and interest.
JURISPRUDENCE.
IN WITNESS WHEREOF, the parties have signed this document on this 2nd day of September, 1994 in San Mateo,
WITH DUE RESPECT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE Rizal, Philippines.
INTEREST ON THE UNPAID LOAN OBLIGATION SHOULD BE IMPOSED ONLY ON JUNE 23,
2001, DATE OF THE DEMAND FOR PAYMENT INSTEAD OF SEPTEMBER 23, 1994, WHEN THE x x x6
PARTIES VERBALLY AGREED TO CONVEY THEIR PROPERTY RIGHTS WITH THE
EXECUTION OF THE EXTRAJUDIC1AL SETTLEMENT OF ESTATE OF SERGIO NATIVIDAD.5 After a careful reading of the abovequoted Extrajudicial Settlement Among Heirs, the Court agrees with the CA that
there is nothing in the said document which would indicate that respondents agreed to the effect that the subject
Petitioners, insist that there was a verbal agreement between respondents and Leandro, their predecessor- properties shall be transferred in the name of Leandro as reimbursement for his payment of Sergio's loan obligations
in-interest, wherein the subject properties shall be assigned to the latter as reimbursement for the payments
with the DBP. On the contrary, the second to the last paragraph of the said Settlement clearly shows that Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by
herein respondents, as heirs of Sergio, have divided the subject properties exclusively among themselves. his death.

There is no competent evidence to prove the verbal agreement being claimed by respondents. Aside from Art. 781. The inheritance of a person includes not only the property and the transmissible rights and obligations
the subject Extrajudicial Settlement Among Heirs, the self-serving claims of Leandro on the witness stand, existing at the time of his death, but also those which have accrued thereto since the opening of the succession.
as well as the cash voucher,7 which supposedly represented payment of P8,000.00 given to Atty. Domingo
Natividad for the expenses in transferring the title of the subject properties in Leandro's favor, would In the present case, respondents, being heirs of Sergio, are now liable to settle his transmissible obligations, which
hardly count as competent evidence in the eyes of the law. Respondents' claim of the existence of a verbal include the amount due to petitioners, prior to the distribution of the remainder of Sergio's estate to them, in
agreement between them, on one hand, and petitioners' predecessors-in-interest, on the other, remains to accordance with Section I,10 Rule 90 of the Rules of Court.
be mere allegation. It is an age-old rule in civil cases that he who alleges a fact has the burden of proving
it and a mere allegation is not evidence.8 As to when the interest on the sum due from respondents should be reckoned, the Court finds no error in the ruling
of the CA that such interest should be computed from June 23, 2001, the date when petitioners made a written
In relation to petitioners' contention that the subject verbal agreement actually existed, they-reiterate their demand for the payment of respondents' obligation.11 There is no merit in petitioners' contention that the reckoning
contention that the conveyance of the subject properties in their favor is not covered by the Statute of date should have been September 23, 1994, the date when respondents executed the Extrajudicial Settlement Among
Frauds because they claim that respondents' execution of the Extrajudicial Settlement Among Heirs Heirs, because there is nothing therein to prove that petitioners, at that time, made a demand for reimbursement.
constitutes partial execution of their alleged agreement.
However, the rate of interest should be modified in view of the issuance of Circular No. 799, Series of 2013 by the
The Court does not agree. Bangko Sentral ng Pilipinas Monetary Board (BSP-MB). The said Circular reduced the "rate of interest for the loan
or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract
Suffice it to say that there is no partial execution of any contract, whatsoever, because petitioners failed to as to such rate of interest," from twelve percent (12%) to six percent (6%) per annum. The Circular was made
prove, in the first place, that there was a verbal agreement that was entered into. effective on July 1-, 2013. Hence, under the modified guidelines in the imposition of interest, as laid down in the
case of Nacar v. Gallery Frames,12 this Court held that:
Even granting that such an agreement existed, the CA did not commit any error in ruling that the
assignment of the shares of Sergio in the subject properties in petitioners' favor as payment of Sergio's xxxx
obligation cannot be enforced if there is no written contract to such effect. Under the Statute of Frauds9,
an agreement to convey real properties shall be unenforceable by action in the absence of a written note II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of
or memorandum thereof and subscribed by the party charged or by his agent. As earlier discussed, the interest, as well as the accrual thereof, is imposed, as follows:
pieces of evidence presented by petitioners, consisting of respondents' acknowledgment of Sergio's loan
obligations with DBP as embodied in the Extrajudicial Settlement Among Heirs, as well as the cash 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance
voucher which allegedly represents payment for taxes and transfer of title in petitioners' name do not serve of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due
as written notes or memoranda of the alleged verbal agreement. shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest
shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject
The foregoing, notwithstanding, the Court finds it proper to reiterate the CA ruling that, in any case, since to the provisions of Article 1169 of the Civil Code.
respondents had already acknowledged that Sergio had, in fact, incurred loan obligations with the DBP,
they are liable to reimburse the amount paid by Leandro for the payment of the said obligation even if 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
such payment was made without their knowledge or consent. damages awarded may be imposed at the discretion, of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with
Article 1236 of the Civil Code clearly provides that: reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty
The creditor is not bound to accept payment or performance by a third person who has no interest in the cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date
fulfillment of the obligation, unless there is a stipulation to the contrary. the judgment of the court is made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The .actual base for the computation of legal interest shall, in any case, be on the amount
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without finally adjudged.
the knowledge or against the will of the debtor, he can recover only insofar as the payment has been
beneficial to the debtor. (Emphasis supplied) 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its
Neither can respondents evade liability by arguing that they were not parties to the contract between Sergio satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. (Emphasis
and the DBP. As earlier stated, the fact remains that, in the Extrajudicial Settlement Among Heirs, supplied)
respondents clearly acknowledged Sergio's loan obligations with the DBP. Being Sergio's heirs, they
succeed not only to the rights of Sergio but also to his obligations. x x x13

The following provisions of the Civil Code are clear on this matter, to wit: The Court explained that:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the [F]rom the foregoing, in the absence of an express stipulation as to the rate of interest that would govern the parties,
extent of the value of the inheritance, of a person are transmitted through his death to another or others the rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments
either by will or by operation of law. shall no longer be twelve percent (12%) per annum -as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Btoks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 -
but will now be six percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that
the new rate could only be applied prospectively and not retroactively. Consequently, the twelve percent Respondent filed a motion to dismiss on the ground that petitioner did not have the legal personality to sue because
(12%) per annum legal interest shall apply only until June 3.0, 2013. Come July 1, 2013, the new rate of his birth certificate names him as Joselito Musni Muno. Apropos, there was yet a need for a judicial declaration that
six percent (6%) per annum shall be the prevailing rate of interest when applicable.14 Joselito Musni Puno and Joselito Musni Muno were one and the same.

Thus, in accordance with the above ruling, the rate of interest on the principal amount due to petitioners
shall be 12% from June 23, 2001, the date when petitioners made a demand for payment, to June 30, 2013. The court ordered that the proceedings be held in abeyance, ratiocinating that petitioners certificate of live birth was
From July 1, 2013, the effective date of BSP-MB Circular No. 799, until full satisfaction of the monetary no proof of his paternity and relation to Carlos L. Puno.
award, the rate of interest shall be 6%.-

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of Appeals, Petitioner submitted the corrected birth certificate with the name Joselito M. Puno, certified by the Civil Registrar
dated February 7, 2011 and August 25, 2011, respectively, in CA-G.R. CV No. 92840 are AFFIRMED of the City of Manila, and the Certificate of Finality thereof. To hasten the disposition of the case, the court
with MODIFICATION by ORDERING respondents to pay petitioners, in addition to the principal amount conditionally admitted the corrected birth certificate as genuine and authentic and ordered respondent to file its
of P162,514.88, interest thereon at the rate of twelve percent (12%) per annum, computed from June 23, answer within fifteen days from the order and set the case for pretrial.[3]
2001 to June 30, 2013, and six percent (6%) per annum from July 1, 2013 until full satisfaction of the
judgment award.
On October 11, 2005, the court rendered a Decision, the dispositive portion of which reads:
SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Perez, Reyes, and Jardeleza, JJ., WHEREFORE, judgment is hereby rendered ordering Jesusa Puno and/or Felicidad Fermin to allow the plaintiff to
inspect the corporate books and records of the company from 1962 up to the present including the financial
statements of the corporation.

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

JOSELITO MUSNI PUNO


SO ORDERED.[4]
(as heir of the late Carlos Puno),

Petitioner, On appeal, the CA ordered the dismissal of the complaint in its Decision dated October 11, 2006. According to the
- versus - CA, petitioner was not able to establish the paternity of and his filiation to Carlos L. Puno since his birth certificate
was prepared without the intervention of and the participatory acknowledgment of paternity by Carlos L. Puno.
PUNO ENTERPRISES, INC., represented by JESUSA PUNO, Accordingly, the CA said that petitioner had no right to demand that he be allowed to examine respondents books.
Moreover, petitioner was not a stockholder of the corporation but was merely claiming rights as an heir of Carlos L.
Respondent. Puno, an incorporator of the corporation. His action for specific performance therefore appeared to be premature;
the proper action to be taken was to prove the paternity of and his filiation to Carlos L. Puno in a petition for the
Upon the death of a stockholder, the heirs do not automatically become stockholders of the corporation; settlement of the estate of the latter.[5]
neither are they mandatorily entitled to the rights and privileges of a stockholder. This, we declare in this
petition for review on certiorari of the Court of Appeals (CA) Decision[1] dated October 11, 2006 and
Resolution dated March 6, 2007 in CA-G.R. CV No. 86137.
Petitioners motion for reconsideration was denied by the CA in its Resolution[6] dated March 6, 2007.

The facts of the case follow:


In this petition, petitioner raises the following issues:

Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno Enterprises, Inc. On
March 14, 2003, petitioner Joselito Musni Puno, claiming to be an heir of Carlos L. Puno, initiated a
complaint for specific performance against respondent. Petitioner averred that he is the son of the deceased I. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE JOSELITO
with the latters common-law wife, Amelia Puno. As surviving heir, he claimed entitlement to the rights PUNO IS ENTITLED TO THE RELIEFS DEMANDED HE BEING THE HEIR OF THE LATE CARLOS PUNO,
and privileges of his late father as stockholder of respondent. The complaint thus prayed that respondent ONE OF THE INCORPORATORS [OF] RESPONDENT CORPORATION.
allow petitioner to inspect its corporate book, render an accounting of all the transactions it entered into
from 1962, and give petitioner all the profits, earnings, dividends, or income pertaining to the shares of
Carlos L. Puno.[2]
II. HONORABLE COURT OF APPEALS ERRED IN RULING THAT FILIATION OF business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.
JOSELITO PUNO, THE PETITIONER[,] IS NOT DULY PROVEN OR ESTABLISHED.
xxxx

Sec. 75. Right to financial statements. Within ten (10) days from receipt of a written request of any stockholder or
III. THE HONORABLE COURT ERRED IN NOT RULING THAT JOSELITO MUNO AND member, the corporation shall furnish to him its most recent financial statement, which shall include a balance sheet
JOSELITO PUNO REFERS TO THE ONE AND THE SAME PERSON. as of the end of the last taxable year and a profit or loss of statement for said taxable year, showing in reasonable
detail its assets and liabilities and the result of its operations.[12]

The stockholders right of inspection of the corporations books and records is based upon his ownership of shares in
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT the corporation and the necessity for self-protection. After all, a shareholder has the right to be intelligently informed
RESPONDENT MERELY DISPUTES IS THE SURNAME OF THE PETITIONER WHICH WAS about corporate affairs.[13] Such right rests upon the stockholders underlying ownership of the corporations assets
MISSPELLED AND THE FACTUAL ALLEGATION E.G. RIGHTS OF PETITIONER AS HEIR OF and property.[14]
CARLOS PUNO ARE DEEMED ADMITTED HYPOTHETICALLY IN THE RESPONDENT[S]
MOTION TO DISMISS. Similarly, only stockholders of record are entitled to receive dividends declared by the corporation, a right inherent
in the ownership of the shares.[15]

Upon the death of a shareholder, the heirs do not automatically become stockholders of the corporation and acquire
V. THE HONORABLE COURT OF APPEALS THEREFORE ERRED I[N] DECREEING the rights and privileges of the deceased as shareholder of the corporation. The stocks must be distributed first to the
THAT PETITIONER IS NOT ENTITLED TO INSPECT THE CORPORATE BOOKS OF heirs in estate proceedings, and the transfer of the stocks must be recorded in the books of the corporation. Section
DEFENDANT CORPORATION.[7] 63 of the Corporation Code provides that no transfer shall be valid, except as between the parties, until the transfer
is recorded in the books of the corporation.[16] During such interim period, the heirs stand as the equitable owners
of the stocks, the executor or administrator duly appointed by the court being vested with the legal title to the
The petition is without merit. Petitioner failed to establish the right to inspect respondent corporations stock.[17] Until a settlement and division of the estate is effected, the stocks of the decedent are held by the
books and receive dividends on the stocks owned by Carlos L. Puno. administrator or executor.[18] Consequently, during such time, it is the administrator or executor who is entitled to
exercise the rights of the deceased as stockholder.
Petitioner anchors his claim on his being an heir of the deceased stockholder. However, we agree with the
appellate court that petitioner was not able to prove satisfactorily his filiation to the deceased stockholder;
thus, the former cannot claim to be an heir of the latter.
Thus, even if petitioner presents sufficient evidence in this case to establish that he is the son of Carlos L. Puno, he
Incessantly, we have declared that factual findings of the CA supported by substantial evidence, are would still not be allowed to inspect respondents books and be entitled to receive dividends from respondent, absent
conclusive and binding.[8] In an appeal via certiorari, the Court may not review the factual findings of the any showing in its transfer book that some of the shares owned by Carlos L. Puno were transferred to him. This
CA. It is not the Courts function under Rule 45 of the Rules of Court to review, examine, and evaluate or would only be possible if petitioner has been recognized as an heir and has participated in the settlement of the estate
weigh the probative value of the evidence presented.[9] of the deceased.

A certificate of live birth purportedly identifying the putative father is not competent evidence of paternity
when there is no showing that the putative father had a hand in the preparation of the certificate. The local
civil registrar has no authority to record the paternity of an illegitimate child on the information of a third Corollary to this is the doctrine that a determination of whether a person, claiming proprietary rights over the estate
person.[10] As correctly observed by the CA, only petitioners mother supplied the data in the birth of a deceased person, is an heir of the deceased must be ventilated in a special proceeding instituted precisely for the
certificate and signed the same. There was no evidence that Carlos L. Puno acknowledged petitioner as purpose of settling the estate of the latter. The status of an illegitimate child who claims to be an heir to a decedents
his son. estate cannot be adjudicated in an ordinary civil action, as in a case for the recovery of property.[19] The doctrine
applies to the instant case, which is one for specific performance to direct respondent corporation to allow petitioner
As for the baptismal certificate, we have already decreed that it can only serve as evidence of the to exercise rights that pertain only to the deceased and his representatives.
administration of the sacrament on the date specified but not of the veracity of the entries with respect to
the childs paternity.[11]

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated October 11,
2006 and Resolution dated March 6, 2007 are AFFIRMED.
In any case, Sections 74 and 75 of the Corporation Code enumerate the persons who are entitled to the
inspection of corporate books, thus

SO ORDERED.
Sec. 74. Books to be kept; stock transfer agent. x x x.

The records of all business transactions of the corporation and the minutes of any meeting shall be open SECOND DIVISION
to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on
OSCAR C. REYES,
Petitioner,
On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.[9] He claimed
- versus - that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for
Intra-Corporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of the nature
HON. REGIONAL TRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special
CORPORATION, and RODRIGO C. REYES, commercial court. The RTC, in its Order dated November 29, 2002 (RTC Order), denied the motion in part and
declared:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision
of the Court of Appeals (CA)[1] promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The CA
Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November
29, 2002[2] in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for
Damages") which denied petitioner Oscar C. Reyes (Oscar) Motion to Declare Complaint as Nuisance or accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the
Harassment Suit. respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for
determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent,
its accounting and the corresponding delivery of these shares to the parties brothers and sisters. The latter is not a
derivative suit and should properly be threshed out in a petition for settlement of estate.
BACKGROUND FACTS

Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be
Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith taken cognizance of by this Court.[10]
Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964,
while Anastacia died in 1993. Although Pedros estate was judicially partitioned among his heirs sometime
in the 1970s, no similar settlement and partition appear to have been made with Anastacias estate, which Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus[11] and prayed that the RTC
included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings. The
Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.[3] appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It likewise denied
Oscars motion for reconsideration in a Resolution dated October 21, 2004.

Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of
On May 9, 2000, Zenith and Rodrigo filed a complaint[4] with the Securities and Exchange Commission Court.
(SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is a derivative
suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and
assets of ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, ASSIGNMENT OF ERRORS
and/or possession of respondent [herein petitioner Oscar] and to determine the shares of stock of deceased
spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for
himself [and] which were not collated and taken into account in the partition, distribution, and/or
settlement of the estate of the deceased spouses, for which he should be ordered to account for all the Petitioner Oscar presents the following points as conclusions the CA should have made:
income from the time he took these shares of stock, and should now deliver to his brothers and sisters their
just and respective shares.[5] [Emphasis supplied.]

1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of
Procedure of Intra-Corporate Controversies; and
In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired the shares of
Anastacia Reyes. He asserted, as a defense, that he purchased the subject shares with his own funds from 2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of
the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court.
therefor have not been complied with. He thus questioned the SECs jurisdiction to entertain the complaint
because it pertains to the settlement of the estate of Anastacia Reyes.

Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of
Rodrigos complaint before the RTC.
When Republic Act (R.A.) No. 8799[7] took effect, the SECs exclusive and original jurisdiction over
cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC
designated as a special commercial court.[8] The records of Rodrigos SEC case were thus turned over to
the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553. THE COURTS RULING
The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the
plaintiffs cause of action and must specify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of Court
provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated
with particularity.[14] These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of
We find the petition meritorious. corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the
stockholders.

The core question for our determination is whether the trial court, sitting as a special commercial court,
has jurisdiction over the subject matter of Rodrigos complaint. To resolve it, we rely on the judicial In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following:
principle that jurisdiction over the subject matter of a case is conferred by law and is determined by the
allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein.[12]
3. This is a complaintto determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were
arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar] which were not collated and taken into
account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and Anastacia
JURISDICTION OF SPECIAL COMMERCIAL COURTS Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and
should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent
amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens
Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken
P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes.
court) exercises exclusive jurisdiction:

SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange 3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for
Commission over corporations, partnership, and other forms of associations registered with it as expressly his own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance
granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses
cases involving: Pedro and Anastacia Reyes.

a) Devices or schemes employed by or any acts of the board of directors, business associates,
its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest
of the public and/or of the stockholders, partners, members of associations or organizations registered with xxxx
the Commission.

b) Controversies arising out of intra-corporate or partnership relations, between and among


stockholders, members, or associates; between any or all of them and the corporation, partnership or 4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered
association of which they are stockholders, members, or associates, respectively; and between such by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral.
corporation, partnership or association and the State insofar as it concerns their individual franchise or
right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of xxxx


such corporations, partnerships, or associations.

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their
deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28,
more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such
The allegations set forth in Rodrigos complaint principally invoke Section 5, paragraphs (a) and (b) above fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly
as basis for the exercise of the RTCs special court jurisdiction. Our focus in examining the allegations of increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which
the complaint shall therefore be on these two provisions. portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes
including the complainant herein.

Fraudulent Devices and Schemes


xxxx
eventually, the corporations President. This is the essence of the complaint read as a whole and is particularly
demonstrated under the following allegations:
9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28
were illegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and
installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his
brothers and sisters of their respective equal shares thereof including complainant hereto. 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their
deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28,
xxxx more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such
fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly
increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which
portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes
10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and including the complainant herein.
fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C.
Reyes [which] must be properly collated and/or distributed equally amongst the children, including the
complainant Rodrigo C. Reyes herein, to their damage and prejudice.
xxxx

xxxx
9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were
illegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and installed himself
as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their
11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance respective equal shares thereof including complainant hereto. [Emphasis supplied.]
Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him
from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or
partition in equal shares among their children. [Emphasis supplied.]

In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since
such defect can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-
Corporate Controversies, however, a bill of particulars is a prohibited pleading.[17] It is essential, therefore, for the
complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke
the courts special commercial jurisdiction.
Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions
of law that, without supporting statements of the facts to which the allegations of fraud refer, do not
sufficiently state an effective cause of action.[15] The late Justice Jose Feria, a noted authority in Remedial
Law, declared that fraud and mistake are required to be averred with particularity in order to enable the We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of
opposing party to controvert the particular facts allegedly constituting such fraud or mistake.[16] amending or withdrawing the complaint, but he consistently refused. The courts function in resolving issues of
jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these allegations, to the
determination of whether they are of such nature and subject that they fall within the terms of the law defining the
courts jurisdiction. Regretfully, we cannot read into the complaint any specifically alleged corporate fraud that will
Tested against these standards, we find that the charges of fraud against Oscar were not properly supported call for the exercise of the courts special commercial jurisdiction. Thus, we cannot affirm the RTCs assumption of
by the required factual allegations. While the complaint contained allegations of fraud purportedly jurisdiction over Rodrigos complaint on the basis of Section 5(a) of P.D. No. 902-A.[18]
committed by him, these allegations are not particular enough to bring the controversy within the special
commercial courts jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law:
how and why the alleged appropriation of shares can be characterized as illegal and fraudulent were not
explained nor elaborated on.

Intra-Corporate Controversy

Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the
case within the special commercial courts jurisdiction. To fall within this jurisdiction, there must be
sufficient nexus showing that the corporations nature, structure, or powers were used to facilitate the
fraudulent device or scheme. Contrary to this concept, the complaint presented a reverse situation. No
corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an
individual and without reference to his corporate personality, was alleged to have transferred the shares of intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-
Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among
the parties.[19] The types of relationships embraced under Section 5(b), as declared in the case of Union of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the
Glass & Container Corp. v. SEC,[20] were as follows: case does not involve an intra-corporate controversy.

Given these standards, we now tackle the question posed for our determination under the specific circumstances of
a) between the corporation, partnership, or association and the public; this case:

b) between the corporation, partnership, or association and its stockholders, partners, members, or
officers;

c) between the corporation, partnership, or association and the State as far as its franchise, permit or
license to operate is concerned; and Application of the Relationship Test

d) among the stockholders, partners, or associates themselves. [Emphasis supplied.]

Is there an intra-corporate relationship between the parties that would characterize the case as an intra-corporate
The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, dispute?
regardless of the subject matter of the dispute. This came to be known as the relationship test.

We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc.,[21] the Court own right with respect to the 4,250 shares registered in his name, and as one of the heirs of Anastacia Reyes with
introduced the nature of the controversy test. We declared in this case that it is not the mere existence of respect to the 136,598 shares registered in her name. What is material in resolving the issues of this case under the
an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship allegations of the complaint is Rodrigos interest as an heir since the subject matter of the present controversy centers
test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a on the shares of stocks belonging to Anastacia, not on Rodrigos personally-owned shares nor on his personality as
corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the
minimizing the value of the nature of the transactions which gives rise to the dispute. shareholdings of the deceased Anastacia and the parties interest therein as her heirs.

Under the nature of the controversy test, the incidents of that relationship must also be considered for the Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the
purpose of ascertaining whether the controversy itself is intra-corporate.[22] The controversy must not decedent. Accordingly, upon Anastacias death, her children acquired legal title to her estate (which title includes her
only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the shareholdings in Zenith), and they are, prior to the estates partition, deemed co-owners thereof.[25] This status as
enforcement of the parties correlative rights and obligations under the Corporation Code and the internal co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and
and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do
incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no not become registered stockholders of the corporation. Section 63 provides:
intra-corporate controversy exists.

Section 63. Certificate of stock and transfer of shares. The capital stock of stock corporations shall be divided into
The Court then combined the two tests and declared that jurisdiction should be determined by considering shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant
not only the status or relationship of the parties, but also the nature of the question under controversy.[23] secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock
This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24] so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the
owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be
To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the
the branches of the RTC specifically designated by the Court to try and decide such cases, two elements names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the
must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject number of shares transferred. [Emphasis supplied.]
of their controversy.

The first element requires that the controversy must arise out of intra-corporate or partnership relations
between any or all of the parties and the corporation, partnership, or association of which they are No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the
stockholders, members or associates; between any or all of them and the corporation, partnership, or corporation.
association of which they are stockholders, members, or associates, respectively; and between such
corporation, partnership, or association and the State insofar as it concerns their individual franchises. The
second element requires that the dispute among the parties be intrinsically connected with the regulation
Simply stated, the transfer of title by means of succession, though effective and valid between the parties
involved (i.e., between the decedents estate and her heirs), does not bind the corporation and third parties.
The transfer must be registered in the books of the corporation to make the transferee-heir a stockholder
entitled to recognition as such both by the corporation and by third parties.[26] Application of the Nature of Controversy Test

We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] and TCL Sales Corporation
v. Court of Appeals[28] we did not require the registration of the transfer before considering the transferee
a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between The body rather than the title of the complaint determines the nature of an action.[31] Our examination of the
the parties and bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement
marked difference, however, exists between these cases and the present one. of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as
a complaint for accounting of all corporate funds and assets.

In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares
of the corporation; after the transferee had established prima facie ownership over the shares of stocks in Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the
question, registration became a mere formality in confirming their status as stockholders. In the present complaint. The derivative suit for accounting of the funds and assets of the corporation which are in the control,
case, each of Anastacias heirs holds only an undivided interest in the shares. This interest, at this point, is custody, and/or possession of the respondent [herein petitioner Oscar] does not constitute a separate cause of action
still inchoate and subject to the outcome of a settlement proceeding; the right of the heirs to specific, but is, as correctly claimed by Oscar, only an incident to the action for determination of the shares of stock of
distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding
paid. In short, the heirs are only entitled to what remains after payment of the decedents debts;[29] whether delivery of these shares to the parties brothers and sisters. There can be no mistake of the relationship between the
there will be residue remains to be seen. Justice Jurado aptly puts it as follows: accounting mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in
paragraph 10.1 of the complaint that:

No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent 10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently
shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the debts transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be
are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein
liquidation is necessary in order to determine whether or not the decedent has left any liquid assets which to their damage and prejudice.
may be transmitted to his heirs.[30] [Emphasis supplied.]

We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting
Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with other than to determine the extent of Anastacias shareholdings for purposes of distribution.
respect to the shareholdings originally belonging to Anastacia. First, he must prove that there are
shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of
the decedents estate. No such proceeding has been commenced to date. Second, he must register the
transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that Another significant indicator that points us to the real nature of the complaint are Rodrigos repeated claims of illegal
this be done unless and until he has established his specific allotment (and prima facie ownership) of the and fraudulent transfers of Anastacias shares by Oscar to the prejudice of the other heirs of the decedent; he cited
shares. Without the settlement of Anastacias estate, there can be no definite partition and distribution of these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacias shares to the
the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. heirs. These claims tell us unequivocally that the present controversy arose from the parties relationship as heirs of
And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the Anastacia and not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and
existence of an intra-corporate relationship as premise for an intra-corporate controversy within the not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir (for the impairment of his
jurisdiction of a special commercial court. successional rights) and not by the corporation nor by Rodrigo as a shareholder on record.

In sum, we find that insofar as the subject shares of stock (i.e., Anastacias shares) are concerned Rodrigo More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of
cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intra-corporate illegal acquisition by Oscar is the distribution of Anastacias shareholdings without a prior settlement of her estate an
relationship exists that would serve as basis to bring this case within the special commercial courts objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special
jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigos complaint, therefore, fails the commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision
relationship test. Section 2 of Rule 90 of the Revised Rules of Court that contemplates properties of the decedent held by one of the
heirs declares:
Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion
Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard in, or exclusion from, the inventory of a piece of property without prejudice to its final determination in a separate
and determined by the court having jurisdiction of the estate proceedings; and the final order of the court action.
thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.]

Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are
all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction
by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the
Worth noting are this Courts statements in the case of Natcher v. Court of Appeals:[32] question of ownership. [Citations omitted. Emphasis supplied.]

In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate
dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigos complaint also
Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive fails the nature of the controversy test.
province of the probate court in the exercise of its limited jurisdiction.

xxxx
DERIVATIVE SUIT

It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special
proceeding because it is subject to specific prescribed rules. [Emphasis supplied.] Rodrigos bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a
special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These
requisites are:

That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacias a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the
shareholdings will be undertaken by a probate court and not by a special commercial court is completely number of shares not being material;
consistent with the probate courts limited jurisdiction. It has the power to enforce an accounting as a
necessary means to its authority to determine the properties included in the inventory of the estate to be b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for
administered, divided up, and distributed. Beyond this, the determination of title or ownership over the the appropriate relief, but the latter has failed or refused to heed his plea; and
subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court
as a question of collation or advancement. We had occasion to recognize the courts authority to act on c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused
questions of title or ownership in a collation or advancement situation in Coca v. Pangilinan[33] where to the corporation and not to the particular stockholder bringing the suit.[34]
we ruled:

Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit.
It should be clarified that whether a particular matter should be resolved by the Court of First Instance in
the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional
question. In essence, it is a procedural question involving a mode of practice "which may be waived."
First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging
to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. With respect
to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder
As a general rule, the question as to title to property should not be passed upon in the testate or intestate on record to proceed against Oscar.
proceeding. That question should be ventilated in a separate action. That general rule has qualifications or
exceptions justified by expediency and convenience.

Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some
particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient
demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is
denied.[35] Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates realty belonging to the estate. Rule 89, Section 8 of the Rules of Court, deals with the conveyance of real property
is the exhaustion of remedies within the corporate setting: contracted by the decedent while still alive. In contrast with Sections 2 and 4 of the same Rule, the said provision
does not limit to the executor or administrator the right to file the application for authority to sell, mortgage or
otherwise encumber realty under administration. The standing to pursue such course of action before the probate
8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal court inures to any person who stands to be benefited or injured by the judgment or to be entitled to the avails of the
means of resolving the dispute with the end view of amicably settling the case, but the dispute between suit.1âwphi1.nêt
them ensued.
The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to reverse and set aside the Decision1
dated April 16, 1999 and the Resolution2 dated January 12, 2000, both promulgated by the Court of Appeals in CA-
Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscars GR CV No. 49491. The dispositive portion of the assailed Decision reads as follows:3
acts. If indeed he illegally and fraudulently transferred Anastacias shares in his own name, then the damage
is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the "WHEREFORE, for all the foregoing, [w]e hereby MODIFY the [O]rder of the lower court dated January 13, 1995,
assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing approving the Receipt of Earnest Money With Promise to Buy and Sell dated June 7, 1982, only to the three-fifth
against the corporation that he can champion in his capacity as a shareholder on record.[36] (3/5) portion of the disputed lots covering the share of [A]dministrator Eliodoro Sandejas, Sr. [in] the property. The
intervenor is hereby directed to pay appellant the balance of the purchase price of the three-fifth (3/5) portion of the
property within thirty (30) days from receipt of this [O]rder and x x x the administrator [is directed] to execute the
necessary and proper deeds of conveyance in favor of appellee within thirty (30) days thereafter."
In summary, whether as an individual or as a derivative suit, the RTC sitting as special commercial court
has no jurisdiction to hear Rodrigos complaint since what is involved is the determination and distribution The assailed Resolution denied reconsideration of the foregoing disposition.
of successional rights to the shareholdings of Anastacia Reyes. Rodrigos proper remedy, under the
circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia The Facts
Reyes, a move that is not foreclosed by the dismissal of his present complaint.
The facts of the case, as narrated by the Court of Appeals (CA), are as follows:4

"On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition (Record, SP. Proc. No. R-83-15601, pp. 8-10) in the
WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife,
May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Regional Trial Court, Branch 142, REMEDIOS R. SANDEJAS, who died on April 17, 1955. On July 1, 1981, Letters of Administration [were issued
Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction. by the lower court appointing Eliodoro Sandejas, Sr. as administrator of the estate of the late Remedios Sandejas
(Record, SP. Proc. No. R-83-15601, p. 16). Likewise on the same date, Eliodoro Sandejas, Sr. took his oath as
administrator (Record, SP. Proc. No. R-83-15601, p. 17). x x x.

"On November 19, 1981, the 4th floor of Manila City Hall was burned and among the records burned were the
records of Branch XI of the Court of First Instance of Manila. As a result, [A]dministrator Eliodoro Sandejas, Sr.
SO ORDERED. filed a [M]otion for [R]econstitution of the records of the case on February 9, 1983 (Record, SP. Proc. No. R-83-
15601, pp. 1-5). On February 16, 1983, the lower court in its [O]rder granted the said motion (Record, SP. Proc. No.
R-83-15601, pp. 28-29).

THIRD DIVISION "On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by [M]ovant
Alex A. Lina alleging among others that on June 7, 1982, movant and [A]dministrator Eliodoro P. Sandejas, in his
G.R. No. 141634 February 5, 2001 capacity as seller, bound and obligated himself, his heirs, administrators, and assigns, to sell forever and absolutely
and in their entirety the following parcels of land which formed part of the estate of the late Remedios R. Sandejas,
Heirs of Spouses REMEDIOS R. SANDEJAS and ELIODORO P. SANDEJAS SR. -- ROBERTO R. to wit:
SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA SANDEJAS MORELAND, BENJAMIN R.
SANDEJAS, REMEDIOS R. SANDEJAS, and heirs of SIXTO S. SANDEJAS II, RAMON R. 1. 'A parcel of land (Lot No.22 Block No. 45 of the subdivision plan Psd-21121, being a portion of Block 45 described
SANDEJAS, TERESITA R. SANDEJAS, and ELIODORO R. SANDEJAS JR., all represented by on plan Psd-19508, G.L.R.O. Rec. No. 2029), situated in the "Municipality of Makati, province of Rizal, containing
ROBERTO R. SANDEJAS, petitioners, an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13465;
vs.
ALEX A. LINA, respondent. 2. 'A parcel of land (Lot No. 21 Block No. 45 of the subdivision plan Psd-21141, being a portion of Block 45
described on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal,
PANGANIBAN, J.: containing an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13464;'

A contract of sale is not invalidated by the fact that it is subject to probate court approval. The transaction 3. 'A parcel of land (Lot No. 5 Block No. 45 of the subdivision plan Psd-21141, being a portion of Block 45 described
remains binding on the seller-heir, but not on the other heirs who have not given their consent to it. In on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal, containing
settling the estate of the deceased, a probate court has jurisdiction over matters incidental and collateral to an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with TCT No. 13468;'
the exercise of its recognized powers. Such matters include selling, mortgaging or otherwise encumbering
4. 'A parcel of land (Lot No. 6, Block No. 45 of the subdivision plan Psd-21141, being a portion of Block "On January 7, 1985, the counsel for [A]dministrator Eliodoro P. Sandejas filed a [M]anifestation alleging among
45 described on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province others that the administrator, Mr. Eliodoro P. Sandejas, died sometime in November 1984 in Canada and said counsel
of Rizal, containing an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with is still waiting for official word on the fact of the death of the administrator. He also alleged, among others that the
TCT No. 13468;' matter of the claim of Intervenor Alex A. Lina becomes a money claim to be filed in the estate of the late Mr.
Eliodoro P. Sandejas (Record, SP. Proc. No. R-83-15601, p. 220). On February 15, 1985, the, lower court issued an
"The [R]eceipt of the [E]arnest [M]oney with [P]romise to [S]ell and to [B]uy is hereunder quoted, to wit: [O]rder directing, among others, that the counsel for the four (4) heirs and other heirs of Teresita R. Sandejas to
move for the appointment of [a] new administrator within fifteen (15) days from receipt of this [O]rder (Record, SP.
'Received today from MR. ALEX A. LINA the sum of ONE HUNDRED THOUSAND (P100,000.00) Proc. No. R-83-15601, p. 227). In the same manner, on November 4, 1985, the lower court again issued an order,
PESOS, Philippine Currency, per Metropolitan Bank & Trust Company Chec[k] No. 319913 dated today the content of which reads:
for P100,000.00, x x x as additional earnest money for the following:
'On October 2, 1985, all the heirs, Sixto, Roberto, Antonio, Benjamin all surnamed Sandejas were ordered to move
xxx xxx xxx for the appointment of [a] new administrator. On October 16, 1985, the same heirs were given a period of fifteen
(15) days from said date within which to move for the appointment of the new administrator. Compliance was set
all registered with the Registry of Deeds of the [P]rovince of Rizal (Makati Branch Office) in the name of for October 30, 1985, no appearance for the aforenamed heirs. The aforenamed heirs are hereby ordered to show
SELLER 'EL!ODORO SANDEJAS, Filipino Citizen, of legal age, married to Remedios Reyes de cause within fifteen (15) days from receipt of this Order why this Petition for Settlement of Estate should not be
Sandejas;' and which undersigned, as SELLER, binds and obligates himself, his heirs, administrators and dismissed for lack of interest and failure to comply with a lawful order of this Court.
assigns, to sell forever and absolutely in their entirety (all of the four (4) parcels of land above described,
which are contiguous to each other as to form one big lot) to said Mr. Alex A. Lina, who has agreed to 'SO ORDERED.' (Record, SP. Proc. No. R-83-15601, p. 273).
buy all of them, also binding on his heirs, administrators and assigns, for the consideration of ONE
MILLION (P1,000,000.00) PESOS, Philippine Currency, upon such reasonable terms of payment as may "On November 22, 1985, Alex A. Lina as petitioner filed with the Regional Trial Court of Manila an Omnibus
be agreed upon by them. The parties have, however, agreed on the following terms and conditions: Pleading for (1) petition for letters of administration [and] (2) to consolidate instant case with SP. Proc. No. R-83-
15601 RTC-Branch XI-Manila, docketed therein as SP. Proc. No. 85- 33707 entitled 'IN RE: INTESTATE ESTATE
'1. The P100,000.00 herein received is in addition to the P70,000.00 earnest money already received by OF ELIODORO P. SANDEJAS, SR., ALEX A. LINA PETITIONER", [for letters of administration] (Record, SP.
SELLER from BUYER, all of which shall form part of, and shall be deducted from, the purchase price of Proc. No.85-33707, pp. 1-7). On November 29, 1985, Branch XXXVI of the Regional Trial Court of Manila issued
P1,000,000.00, once the deed of absolute [sale] shall be executed; an [O]rder consolidating SP. Proc. No. 85-33707, with SP. Proc. No. R-83-15601 (Record, SP. Proc. No. 85-33707,
p. 13). Likewise, on December 13, 1985, the Regional Trial Court of Manila, Branch XI, issued an [O]rder stating
'2. As a consideration separate and distinct from the price, undersigned SELLER also acknowledges that 'this Court has no objection to the consolidation of Special proceedings No. 85-331707, now pending before
receipt from Mr. Alex A. Lina of the sum of ONE THOUSAND (P1,000.00) PESOS, Philippine Currency, Branch XXXVI of this Court, with the present proceedings now pending before this Branch' (Record, SP. Proc. No.
per Metropolitan Bank & Trust Company Check No. 319912 dated today and payable to SELLER for R-83- 15601, p. 279).
P1,000.00;
"On January 15, 1986, Intervenor Alex A. Lina filed [a] Motion for his appointment as a new administrator of the
'3. Considering that Mrs. Remedios Reyes de Sandejas is already deceased and as there is a pending Intestate Estate of Remedios R. Sandejas on the following reasons:
intestate proceedings for the settlement of her estate (Spec. Proc. No.138393, Manila CFI, Branch XI),
wherein SELLER was appointed as administrator of said Estate, and as SELLER, in his capacity as '5.01. FIRST, as of this date, [i]ntervenor has not received any motion on the part of the heirs Sixto, Antonio, Roberto
administrator of said Estate, has informed BUYER that he (SELLER) already filed a [M]otion with the and Benjamin, all surnamed Sandejas, for the appointment of anew [a]dministrator in place of their father, Mr.
Court for authority to sell the above parcels of land to herein BUYER, but which has been delayed due to Eliodoro P. Sandejas, Sr.;
the burning of the records of said Spec. Pro. No. 138398, which records are presently under reconstitution,
the parties shall have at least ninety (90) days from receipt of the Order authorizing SELLER, in his '5.02. SECOND, since Sp. Proc. 85-33707, wherein the [p]etitioner is herein Intervenor Alex A. Lina and the instant
capacity as administrator, to sell all THE ABOVE DESCRIBED PARCELS OF LAND TO HEREIN Sp. PROC. R-83-15601, in effect are already consolidated, then the appointment of Mr. Alex Lina as [a]dministrator
BUYER (but extendible for another period of ninety (90) days upon the request of either of the parties of the Intestate Estate of Remedios R. Sandejas in instant Sp. Proc. R-83-15601, would be beneficial to the heirs and
upon the other), within which to execute the deed of absolute sale covering all above parcels of land; also to the Intervenor;

'4. In the event the deed of absolute sale shall not proceed or not be executed for causes either due to '5.03. THIRD, of course, Mr. Alex A. Lina would be willing to give way at anytime to any [a]dministrator who may
SELLER'S fault, or for causes of which the BUYER is innocent, SELLER binds himself to personally be proposed by the heirs of the deceased Remedios R. Sandejas, so long as such [a]dministrator is qualified.' (Record,
return to Mr. Alex A. Lina the entire ONE HUNDRED SEVENTY THOUSAND ([P]170,000.00) PESOS SP. Proc. No. R-83-15601, pp. 281-283)
In earnest money received from said Mr. Lina by SELLER, plus fourteen (14%) percentum interest per
annum, all of which shall be considered as liens of said parcels of land, or at least on the share therein of "On May 15, 1986, the lower court issued an order granting the [M]otion of Alex A. Lina as the new [a]dministrator
herein SELLER; of the Intestate Estate of Remedios R. Sandejas in this proceedings. (Record, SP. Proc. No. R-83-15601, pp. 288-
290)
'5. Whether indicated or not, all of above terms and conditions shall be binding on the heirs, administrators,
and assigns of both the SELLER (undersigned MR. ELIODORO P. SANDEJAS, SR.) and BUYER (MR. "On August 281 1986, heirs Sixto, Roberto, Antonio and Benjamin, all surnamed Sandejas, and heirs [sic] filed a
ALEX A. LINA).' (Record, SP. Proc. No. R-83-15601, pp. 52-54) [M]otion for [R]econsideration and the appointment of another administrator Mr. Sixto Sandejasl in lieu of
[I]ntervenor Alex A. Lina stating among others that it [was] only lately that Mr. Sixto Sandejas, a son and heir,
"On July 17, 1984, the lower court issued an [O]rder granting the intervention of Alex A. Lina (Record, expressed his willingness to act as a new administrator of the intestate estate of his mother, Remedios R. Sandejas
SP. Proc. No. R-83-15601, p. 167). (Record, SP. Proc. No. 85-33707, pp. 29-31). On October 2, 1986, Intervenor Alex A. Lina filed his [M]anifestation
and [C]ounter [M]otion alleging that he ha[d] no objection to the appointment of Sixto Sandejas as [a]dministrator
of the [i]ntestate [e]state of his mother Remedios R. Sandejas (Sp. Proc. No.85-15601), provided that Sixto Sandejas
be also appointed as administrator of the [i]ntestate [e]state of his father, Eliodoro P . Sandejas, Sr. (Spec. "b) Whether or not Eliodoro P. Sandejas Sr. was guilty of bad faith despite the conclusion of the Court of Appeals
Proc. No. 85-33707), which two (2) cases have been consolidated (Record, SP. Proc. No. 85-33707, pp. that the respondent [bore] the burden of proving that a motion for authority to sell ha[d] been filed in court;
34-36). On March 30, 1987, the lower court granted the said [M]otion and substituted Alex Lina with
Sixto Sandejas as petitioner in the said [P]etitions (Record, SP. Proc. No. 85-33707, p. 52). After the "c) Whether or not the undivided shares of Eliodoro P. Sandejas Sr. in the subject property is three-fifth (3/5) and
payment of the administrator's bond (Record, SP. Proc. No. 83-15601, pp. 348-349) and approval thereof the administrator of the latter should execute deeds of conveyance therefor within thirty days from receipt of the
by the court (Record, SP. Proc. No. 83-15601, p. 361), Administrator Sixto Sandejas on January 16, 1989 balance of the purchase price from the respondent; and
took his oath as administrator of the estate of the deceased Remedios R. Sandejas and Eliodoro P. Sandejas
(Record, SP. Proc. No. 83-15601, p. 367) and was likewise issued Letters of Administration on the same "d) Whether or not the respondent's petition-in-intervention was converted to a money claim and whether the [trial
day (Record, SP. Proc. No. 83-15601, p. 366). court] acting as a probate court could approve the sale and compel the petitioners to execute [a] deed of conveyance
even for the share alone of Eliodoro P. Sandejas Sr."9
"On November 29, 1993, Intervenor filed [an] Omnibus Motion (a) to approve the deed of conditional sale
executed between Plaintiff-in-lntervention Alex A. Lina and Elidioro [sic] Sandejas, Sr. on June 7, 1982; In brief, the Petition poses the main issue of whether the CA erred in modifying the trial court's Decision and in
(b) to compel the heirs of Remedios Sandejas and Eliodoro Sandejas, Sr. thru their administrator, to obligating petitioners to sell 3/5 of the disputed properties to respondent, even if the suspensive condition had not
execute a deed of absolute sale in favor of [I]ntervenor Alex A. Lina pursuant to said conditional deed of been fulfilled. It also raises the following collateral issues: (1) the settlement court's jurisdiction; (2) respondent-
sale (Record, SP. Proc. No. 83-15601, pp. 554-561) to which the administrator filed a [M]otion to intervenor's standing to file an application for the approval of the sale of realty in the settlement case, (3) the
[D]ismiss and/or [O]pposition to said omnibus motion on December 13, 1993 (Record, SP. Proc. No.83- decedent's bad faith, and (4) the computation of the decedent's share in the realty under administration.
15601, pp. 591-603).
This Court’s Ruling
"On January 13, 1995, the lower court rendered the questioned order granting intervenor's [M]otion for
the [A]pproval of the Receipt of Earnest Money with promise to buy between Plaintiff-in-lntervention The Petition is partially meritorious.
Alex A. Lina and Eliodoro Sandejas, Sr. dated June 7, 1982 (Record, SP. Proc. No. 83-15601, pp. 652-
654 ). x x x." Main Issue:

The Order of the intestate courts disposed as follows: Obligation With a Suspensive Condition

"WHEREFORE, [i]ntervenor's motion for the approval of the Receipt Of Earnest Money With Promise Petitioners argue that the CA erred in ordering the conveyance of the disputed 3/5 of the parcels of land, despite the
To Sell And To Buy dated June 7, 1982, is granted. The [i]ntervenor is directed to pay the balance of the nonfulfillment of the suspensive condition -- court approval of the sale -- as contained in the "Receipt of Earnest
purchase price amounting to P729,000.00 within thirty (30) days from receipt of this Order and the Money with Promise to Sell and to Buy" (also referred to as the "Receipt"). Instead, they assert that because this
Administrator is directed to execute within thirty (30) days thereafter the necessary and proper deeds of condition had not been satisfied, their obligation to deliver the disputed parcels of land was converted into a money
conveyancing."6 claim.

Ruling of the Court of Appeals We disagree. Petitioners admit that the agreement between the deceased Eliodoro Sandejas Sr. and respondent was
a contract to sell. Not exactly. In a contract to sell, the payment of the purchase price is a positive suspensive
Overturning the RTC ruling, the CA held that the contract between Eliodoro Sandejas Sr. and respondent condition. The vendor's obligation to convey the title does not become effective in case of failure to pay.10
was merely a contract to sell, not a perfected contract of sale. It ruled that the ownership of the four lots
was to remain in the intestate estate of Remedios Sandejas until the approval of the sale was obtained from On the other hand, the agreement between Eliodoro Sr. and respondent is subject to a suspensive condition -- the
the settlement court. That approval was a positive suspensive condition, the nonfulfillment of which was procurement of a court approval, not full payment. There was no reservation of ownership in the agreement. In
not tantamount to a breach. It was simply an event that prevented the obligation from maturing or accordance with paragraph 1 of the Receipt, petitioners were supposed to deed the disputed lots over to respondent.
becoming effective. If the condition did not happen, the obligation would not arise or come into existence. This they could do upon the court's approval, even before full payment. Hence, their contract was a conditional sale,
rather than a contract to sell as determined by the CA.
The CA held that Section 1, Rule 897 of the Rules of Court was inapplicable, because the lack of written
notice to the other heirs showed the lack of consent of those heirs other than Eliodoro Sandejas Sr. For When a contract is subject to a suspensive condition, its birth or effectivity can take place only if and when the
this reason, bad faith was imputed to him, for no one is allowed to enjoyed a claim arising from one’s own condition happens or is fulfilled.11 Thus, the intestate court's grant of the Motion for Approval of the sale filed by
wrongdoing. Thus, Eliodoro Sr. was bound, as a matter of justice and good faith, to comply with his respondent resulted in petitioners' obligation to execute the Deed of Sale of the disputed lots in his favor. The
contractual commitments as an owner and heir. When he entered into the agreement with respondent, he condition having been satisfied, the contract was perfected. Henceforth, the parties were bound to fulfil what they
bound his conjugal and successional shares in the property. had expressly agreed upon.

Hence, this Petition.8 Court approval is required in any disposition of the decedent's estate per Rule 89 of the Rules of Court. Reference to
judicial approval, however, cannot adversely affect the substantive rights of heirs to dispose of their own pro indiviso
Issues shares in the co-heirship or co-ownership.12 In other words, they can sell their rights, interests or participation in the
property under administration. A stipulation requiring court approval does not affect the validity and the effectivity
In their Memorandum, petitioners submit the following issues for our resolution: of the sale as regards the selling heirs. It merely implies that the property may be taken out of custodia legis, but only
with the court's permission.13 It would seem that the suspensive condition in the present conditional sale was
"a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated to convey title to the property referred to imposed only for this reason.
in the subject document which was found to be in the nature of a contract to sell - where the suspensive
condition set forth therein [i.e.] court approval, was not complied with; Thus, we are not persuaded by petitioners' argument that the obligation was converted into a mere monetary claim.
Paragraph 4 of the Receipt, which petitioners rely on, refers to a situation wherein the sale has not materialized. In
such a case," the seller is bound to return to the buyer the earnest money paid plus interest at fourteen property, or an interest therein, the court having jurisdiction of the estate may, on application for that purpose,
percent per annum. But the sale was approved by the intestate court; hence, the proviso does not apply. authorize the executor or administrator to convey such property according to such contract, or with such
modifications as are agreed upon by the parties and approved by the court; and if the contract is to convey real
Because petitioners did not consent to the sale of their ideal shares in the disputed lots, the CA correctly property to the executor or administrator, the clerk of the court shall execute the deed. x x x."
limited the scope of the Receipt to the pro-indiviso share of Eliodoro Sr. Thus, it correctly modified the
intestate court's ruling by excluding their shares from the ambit of the transaction. This provision should be differentiated from Sections 2 and 4 of the same Rule, specifically requiring only the
executor or administrator to file the application for authority to sell, mortgage or otherwise encumber real estate for
First Collateral Issue: the purpose of paying debts, expenses and legacies (Section 2);19 or for authority to sell real or personal estate
beneficial to the heirs, devisees or legatees and other interested persons, although such authority is not necessary to
Jurisdiction of Settlement Court pay debts, legacies or expenses of administration (Section 4).20 Section 8 mentions only an application to authorize
the conveyance of realty under a contract that the deceased entered into while still alive. While this Rule does not
Petitioners also fault the CA Decision by arguing, inter alia, (a) jurisdiction over ordinary civil action specify who should file the application, it stands to reason that the proper party must be one .who is to be benefited
seeking not merely to enforce a sale but to compel performance of a contract falls upon a civil court, not or injured by the judgment, or one who is to be entitled to the avails of the suit.21
upon an intestate court; and (b) that Section 8 of Rule 89 allows the executor or administrator, and no one
else, to file an application for approval of a sale of the property under administration. Third Collateral Issue:

Citing Gil v. Cancio14 and Acebedo v. Abesamis,15 petitioners contend that the CA erred in clothing the Bad Faith
settlement court with the jurisdiction to approve the sale and to compel petitioners to execute the Deed of
Sale. They allege factual differences between these cases and the instant case, as follows: in Gil, the sale Petitioners assert that Eliodoro Sr. was not in bad faith, because (a) he informed respondent of the need to secure
of the realty in administration was a clear and an unequivocal agreement for the support of the widow and court approval prior to the sale of the lots, and (2) he did not promise that he could obtain the approval.
the adopted child of the decedent; and in Acebedo, a clear sale had been made, and all the heirs consented
to the disposition of their shares in the realty in administration. We agree. Eliodoro Sr. did not misrepresent these lots to respondent as his own properties to which he alone had a
title in fee simple. The fact that he failed to obtain the approval of the conditional sale did not automatically imply
We are not persuaded. We hold that Section 8 of Rule 89 allows this action to proceed. The factual bad faith on his part. The CA held him in bad faith only for the purpose of binding him to the conditional sale. This
differences alleged by petitioners have no bearing on the intestate court's jurisdiction over the approval of was unnecessary because his being bound to it is, as already shown, beyond cavil.
the subject conditional sale. Probate jurisdiction covers all matters relating to the settlement of estates
(Rules 74 & 86-91) and the probate of wills (Rules 75-77) of deceased persons, including the appointment Fourth Collateral Issue:
and the removal of administrators and executors (Rules 78-85). It also extends to matters incidental and
collateral to the exercise of a probate court's recognized powers such as selling, mortgaging or otherwise Computation of Eliodoro's Share
encumbering realty belonging to the estate. Indeed, the rules on this point are intended to settle the estate
in a speedy manner, so that the benefits that may flow from such settlement may be immediately enjoyed Petitioners aver that the CA's computation of Eliodoro Sr.'s share in the disputed parcels of land was erroneous
by the heirs and the beneficiaries.16 because, as the conjugal partner of Remedios, he owned one half of these lots plus a further one tenth of the remaining
half, in his capacity as a one of her legal heirs. Hence, Eliodoro's share should be 11/20 of the entire property.
In the present case, the Motion for Approval was meant to settle the decedent's obligation to respondent; Respondent poses no objection to this computation.22
hence, that obligation clearly falls under the jurisdiction of the settlement court. To require respondent to
file a separate action -- on whether petitioners should convey the title to Eliodoro Sr.'s share of the disputed On the other hand, the CA held that, at the very least, the conditional sale should cover the one half (1/2) pro indiviso
realty -- will unnecessarily prolong the settlement of the intestate estates of the deceased spouses. conjugal share of Eliodoro plus his one tenth (1/10) hereditary share as one of the ten legal heirs of the decedent, or
a total of three fifths (3/5) of the lots in administration.23
The suspensive condition did not reduce the conditional sale between Eliodoro Sr. and respondent to one
that was "not a definite, clear and absolute document of sale," as contended by petitioners. Upon the Petitioners' correct. The CA computed Eliodoro's share as an heir based on one tenth of the entire disputed property.
occurrence of the condition, the conditional sale became a reciprocally demandable obligation that is It should be based only on the remaining half, after deducting the conjugal share.24
binding upon the parties.17 That Acebedo also involved a conditional sale of real property18 proves that
the existence of the suspensive condition did not remove that property from the jurisdiction of the intestate The proper determination of the seller-heir's shares requires further explanation. Succession laws and jurisprudence
court. require that when a marriage is dissolved by the death of the husband or the wife, the decedent's entire estate - under
the concept of conjugal properties of gains -- must be divided equally, with one half going to the surviving spouse
Second Collateral Issue: and the other half to the heirs of the deceased.25 After the settlement of the debts and obligations, the remaining half
of the estate is then distributed to the legal heirs, legatees and devices. We assume, however, that this preliminary
Intervenor's Standing determination of the decedent's estate has already been taken into account by the parties, since the only issue raised
in this case is whether Eliodoro's share is 11/20 or 3/5 of the disputed lots.
Petitioners contend that under said Rule 89, only the executor or administrator is authorized to apply for
the approval of a sale of realty under administration. Hence, the settlement court allegedly erred in WHEREFORE, The Petition is hereby PARTIALLY GRANTED. The appealed Decision and Resolution are
entertaining and granting respondent's Motion for Approval.1âwphi1.nêt AFFIRMED with the MODIFICATION that respondent is entitled to only a pro-indiviso share equivalent to 11/20
of the disputed lots.
We read no such limitation. Section 8, Rule 89 of the Rules of Court, provides:
SO ORDERED.
"SEC. 8. When court may authorize conveyance of realty which deceased contracted to convey. Notice.
Effect of deed. -- Where the deceased was in his lifetime under contract, binding in law, to deed real