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INTRODUCTION After Celestina's death, Ursulina had been sharing the

produce of the donated properties with private


G.R. No. 123968 April 24, 2003 respondents Leocadia G. Flores, et al., nieces of Celestina.

URSULINA GANUELAS, METODIO GANUELAS and In 1982, or twenty-four years after the execution of the
ANTONIO GANUELAS, petitioners, Deed of Donation, Ursulina secured the corresponding tax
vs. declarations, in her name, over the donated properties, to
HON. ROBERT T. CAWED, Judge of the Regional wit: Tax Declarations Nos. 18108, 18109, 18110, 18111,
Trial Court of San Fernando, La Union (Branch 18112, 18113 and 18114, and since then, she refused to
29), LEOCADIA G. FLORES, FELICITACION G. give private respondents any share in the produce of the
AGTARAP, CORAZON G. SIPALAY and ESTATE OF properties despite repeated demands.
ROMANA GANUELAS DE LA ROSA, represented by
GREGORIO DELA ROSA, Private respondents were thus prompted to file on May
Administrator, respondents. 26, 1986 with the RTC of San Fernando, La Union a
complaint5 against Ursulina, along with Metodio Ganuelas
CARPIO MORALES, J.: and Antonio Ganuelas who were alleged to be unwilling
plaintiffs. The complaint alleged that the Deed of
The present petition for review under Rule 45 of the Rules Donation executed by Celestina in favor of Ursulina was
of Court assails, on a question of law, the February 22, void for lack of acknowledgment by the attesting
1996 decision 1 of the Regional Trial Court of San witnesses thereto before notary public Atty. Henry
Fernando, La Union, Branch 29, in Civil Case No. 3947, an Valmonte, and the donation was a disposition mortis
action for declaration of nullity of a deed of donation. causa which failed to comply with the provisions of the
Civil Code regarding formalities of wills and testaments,
hence, it was void. The plaintiffs-herein private
The facts, as culled from the records of the case, are as
respondents thus prayed that judgment be rendered
follows:
ordering Ursulina to return to them as intestate heirs the
possession and ownership of the properties. They likewise
On April 11, 1958, Celestina Ganuelas Vda. de Valin prayed for the cancellation of the tax declarations secured
(Celestina) executed a Deed of Donation of Real Property in the name of Ursulina, the partition of the properties
2 covering seven parcels of land in favor of her niece among the intestate heirs of Celestina, and the rendering
Ursulina Ganuelas (Ursulina), one of herein petitioners. by Ursulina of an accounting of all the fruits of the
properties since 1982 and for her to return or pay the
The pertinent provision of the deed of donation reads, value of their shares.
quoted verbatim:
The defendants-herein petitioners alleged in their
xxx xxx xxx Answer6 that the donation in favor of Ursulina was inter
vivos as contemplated under Article 729 of the Civil
That, for and in consideration of the love and Code,7 hence, the deed did not have to comply with the
affection which the DONOR has for the DONEE, requirements for the execution of a valid will; the
and of the faithful services the latter has rendered Revocation of Donation is null and void as the ground
in the past to the former, the said DONOR does mentioned therein is not among those provided by law to
by these presents transfer and convey, by way of be the basis thereof; and at any rate, the revocation could
DONATION, unto the DONEE the property above, only be legally enforced upon filing of the appropriate
described, to become effective upon the death of complaint in court within the prescriptive period provided
the DONOR; but in the event that the DONEE by law, which period had, at the time the complaint was
should die before the DONOR, the present filed, already lapsed.
donation shall be deemed rescinded and of no
further force and effect. By Decision of February 22, 1996, the trial court, holding
that the provision in the Deed of Donation that in the
xxx xxx xxx.3 event that the DONEE should predecease the DONOR, the
"donation shall be deemed rescinded and of no further
On June 10, 1967, Celestina executed a document force and effect" is an explicit indication that the deed is
denominated as Revocation of Donation 4 purporting to a donation mortis causa,8 found for the plaintiffs-herein
set aside the deed of donation. More than a month later private respondents, thus:
or on August 18, 1967, Celestina died without issue and
any surviving ascendants and siblings. WHEREFORE the Court renders judgment
declaring null and void the Deed of Donation of
Real Property executed by Celestina Ganuelas,
and orders the partition of the estate of Celestina In a letter of March 16, 1998,20 private respondent
among the intestate heirs. Corazon Sipalay, reacting to this Court's January 28, 1998
Resolution requiring private respondents "to SHOW
SO ORDERED.9 CAUSE why they should not be disciplinarily dealt with or
held in contempt" for failure to submit the name and
The trial court also held that the absence of a reservation address of their new counsel, explains that they are no
clause in the deed implied that Celestina retained longer interested in pursuing the case and are "willing and
complete dominion over her properties, thus supporting ready to waive whatever rights" they have over the
the conclusion that the donation is mortis causa,10 and properties subject of the donation. Petitioners, who were
that while the deed contained an attestation clause and required to comment on the letter, by Comment of
an acknowledgment showing the intent of the donor to October 28, 1998,21 welcome private respondents'
effect a postmortem disposition, the acknowledgment gesture but pray that "for the sake of enriching
was defective as only the donor and donee appear to have jurisprudence, their [p]etition be given due course and
acknowledged the deed before the notary public, thereby resolved."
rendering the entire document void.11
The issue is thus whether the donation is inter
Lastly, the trial court held that the subsequent execution vivos or mortis causa.
by Celestina of the Revocation of Donation showed that
the donor intended the revocability of the donation ad Crucial in the resolution of the issue is the determination
nutum, thus sustaining its finding that the conveyance of whether the donor intended to transfer the ownership
was mortis causa.12 over the properties upon the execution of the deed.22

On herein petitioners' argument that the Revocation of Donation inter vivos differs from donation mortis causa in
Donation was void as the ground mentioned therein is not that in the former, the act is immediately operative even
one of those allowed by law to be a basis for revocation, if the actual execution may be deferred until the death of
the trial court held that the legal grounds for such the donor, while in the latter, nothing is conveyed to or
revocation as provided under the Civil Code arise only in acquired by the donee until the death of the donor-
cases of donations inter vivos, but not in donations mortis testator.23 The following ruling of this Court in Alejandro
causa which are revocable at will during the lifetime of v. Geraldez is illuminating:24
the donor. The trial court held, in any event, that given
the nullity of the disposition mortis causa in view of a If the donation is made in contemplation of the
failure to comply with the formalities required therefor, donor's death, meaning that the full or naked
the Deed of Revocation was a superfluity.13 ownership of the donated properties will pass to
the donee only because of the donor's death,
Hence, the instant petition for review, petitioners then it is at that time that the donation takes
contending that the trial court erred: effect, and it is a donation mortis causa which
should be embodied in a last will and testament.
I. . . . WHEN IT DECLARED NULL AND VOID THE
DONATION EXECUTED BY CELESTINA But if the donation takes effect during the donor's
GANUELAS; lifetime or independently of the donor's death,
meaning that the full or naked ownership (nuda
II. . . . WHEN IT UPHELD THE REVOCATION OF proprietas) of the donated properties passes to
DONATION; the donee during the donor's lifetime, not by
reason of his death but because of the deed of
donation, then the donation is inter vivos.
III. . . . IN RENDERING ITS DECISION ADVERSE
TO PETITIONER URSULINA GANUELAS.14
The distinction between a transfer inter vivos and mortis
causa is important as the validity or revocation of the
Petitioners argue that the donation contained in the deed
donation depends upon its nature. If the donation is inter
is inter vivos as the main consideration for its execution
vivos, it must be executed and accepted with the
was the donor's affection for the donee rather than the
formalities prescribed by Articles 74825 and 74926 of the
donor's death;15 that the provision on the effectivity of the
Civil Code, except when it is onerous in which case the
donation — after the donor's death — simply meant that
rules on contracts will apply. If it is mortis causa, the
absolute ownership would pertain to the donee on the
donation must be in the form of a will, with all the
donor's death;16 and that since the donation is inter vivos,
formalities for the validity of wills, otherwise it is void and
it may be revoked only for the reasons provided in Articles
cannot transfer ownership.27
760,17 76418 and 76519 of the Civil Code.
The distinguishing characteristics of a donation mortis motivation.32 In other words, love and affection may also
causa are the following: underline transfers mortis causa.33

1. It conveys no title or ownership to the In Maglasang v. Heirs of Cabatingan,34 the deeds of


transferee before the death of the transferor; or, donation contained provisions almost identical to those
what amounts to the same thing, that the found in the deed subject of the present case:
transferor should retain the ownership (full or
naked) and control of the property while alive; That for and in consideration of the love and
affection of the DONOR for the DONEE, x x x. the
2. That before his death, the transfer should be DONOR does hereby, by these presents, transfer,
revocable by the transferor at will, ad nutum; but convey, by way of donation, unto the DONEE the
revocability may be provided for indirectly by above-described property, together with the
means of a reserved power in the donor to buildings and all improvements existing
dispose of the properties conveyed; thereon, to become effective upon the death of
the DONOR; PROVIDED, HOWEVER, that in the
3. That the transfer should be void if the event that the DONEE should die before the
transferor should survive the transferee.28 DONOR, the present donation shall be deemed
automatically rescinded and of no further force
In the donation subject of the present case, there is and effect. (Emphasis supplied)
nothing therein which indicates that any right, title or
interest in the donated properties was to be transferred In that case, this Court held that the donations
to Ursulina prior to the death of Celestina. were mortis causa, for the above-quoted provision
conclusively establishes the donor's intention to transfer
The phrase "to become effective upon the death of the the ownership and possession of the donated property to
DONOR" admits of no other interpretation but that the donee only after the former's death. Like in the
Celestina intended to transfer the ownership of the present case, the deeds therein did not contain any clear
properties to Ursulina on her death, not during her provision that purports to pass proprietary rights to the
lifetime.29 donee prior to the donor's death.

More importantly, the provision in the deed stating that if As the subject deed then is in the nature of a mortis causa
the donee should die before the donor, the donation shall disposition, the formalities of a will under Article 728 of
be deemed rescinded and of no further force and effect the Civil Code should have been complied with, failing
shows that the donation is a postmortem disposition. which the donation is void and produces no effect.35

As stated in a long line of cases, one of the decisive As noted by the trial court, the attesting witnesses failed
characteristics of a donation mortis causa is that the to acknowledge the deed before the notary public, thus
transfer should be considered void if the donor should violating Article 806 of the Civil Code which provides:
survive the donee.30
Art. 806. Every will must be acknowledged before
More. The deed contains an attestation clause expressly a notary public by the testator and the witnesses.
confirming the donation as mortis causa: The notary public shall not be required to retain
a copy of the will, or file another with the office
of the Clerk of Court. (Emphasis supplied)
SIGNED by the above-named donor, Celestina
Ganuelas, at the foot of this deed of donation
mortis causa, consisting of two (2) pages and on The trial court did not thus commit any reversible error in
the left margin of each and every page thereof in declaring the Deed of Donation to be mortis causa.
the joint presence of all of us who at her request
and in her presence and that of each other have WHEREFORE, the petition is hereby DENIED for lack of
in like manner subscribed our names as merit.
witnesses.31 (Emphasis supplied)
SO ORDERED.
To classify the donation as inter vivos simply because it is
founded on considerations of love and affection is
erroneous. That the donation was prompted by the
affection of the donor for the donee and the services
rendered by the latter is of no particular significance in
determining whether the deed constitutes a transfer inter
vivos or not, because a legacy may have an identical
INTRODUCTION she was to all the works in our house, and because of the
love and affection which I feel [for] her, I have one parcel
G.R. No. 172804 January 24, 2011 of land located at Sitio Amambajag, Culaba, Leyte bearing
Tax Decl. No. 1878 declared in the name of Alvegia
GONZALO VILLANUEVA, represented by his Rodrigo, I give (devise) said land in favor of EUFRACIA
heirs, Petitioner, RODRIGUEZ, her heirs, successors, and assigns together
vs. with all the improvements existing thereon, which parcel
SPOUSES FROILAN and LEONILA of land is more or less described and bounded as follows:
BRANOCO, Respondents.
1. Bounded North by Amambajag River; East, Benito
DECISION Picao; South, Teofilo Uyvico; and West, by Public land; 2.
It has an area of 3,492 square meters more or less; 3. It
is planted to coconuts now bearing fruits; 4. Having an
CARPIO, J.:
assessed value of ₱240.00; 5. It is now in the possession
of EUFRACIA RODRIGUEZ since May 21, 1962 in the
The Case concept of an owner, but the Deed of Donation or that
ownership be vested on her upon my demise.
This resolves the petition for review1 of the ruling2 of the
Court of Appeals dismissing a suit to recover a realty. That I FURTHER DECLARE, and I reiterate that the land
above described, I already devise in favor of EUFRACIA
The Facts RODRIGUEZ since May 21, 1962, her heirs, assigns, and
that if the herein Donee predeceases me, the same land
Petitioner Gonzalo Villanueva (petitioner), here will not be reverted to the Donor, but will be inherited by
represented by his heirs,3 sued respondents, spouses the heirs of EUFRACIA RODRIGUEZ;
Froilan and Leonila Branoco (respondents), in the
Regional Trial Court of Naval, Biliran (trial court) to That I EUFRACIA RODRIGUEZ, hereby accept the land
recover a 3,492 square-meter parcel of land in above described from Inay Alvegia Rodrigo and I am
Amambajag, Culaba, Leyte (Property) and collect much grateful to her and praying further for a longer life;
damages. Petitioner claimed ownership over the Property however, I will give one half (1/2) of the produce of the
through purchase in July 1971 from Casimiro Vere (Vere), land to Apoy Alve during her lifetime.4
who, in turn, bought the Property from Alvegia Rodrigo
(Rodrigo) in August 1970. Petitioner declared the Property Respondents entered the Property in 1983 and paid taxes
in his name for tax purposes soon after acquiring it. afterwards.

In their Answer, respondents similarly claimed ownership The Ruling of the Trial Court
over the Property through purchase in July 1983 from
Eufracia Rodriguez (Rodriguez) to whom Rodrigo donated
The trial court ruled for petitioner, declared him owner of
the Property in May 1965. The two-page deed of donation
the Property, and ordered respondents to surrender
(Deed), signed at the bottom by the parties and two
possession to petitioner, and to pay damages, the value
witnesses, reads in full:
of the Property’s produce since 1982 until petitioner’s
repossession and the costs.5 The trial court rejected
KNOW ALL MEN BY THESE PRESENTS: respondents’ claim of ownership after treating the Deed
as a donation mortis causa which Rodrigo effectively
That I, ALVEGIA RODRIGO, Filipino, of legal age, widow cancelled by selling the Property to Vere in 1970. 6 Thus,
of the late Juan Arcillas, a resident of Barrio Bool, by the time Rodriguez sold the Property to respondents in
municipality of Culaba, subprovince of Biliran, Leyte del 1983, she had no title to transfer.
Norte, Philippines, hereby depose and say:
Respondents appealed to the Court of Appeals (CA),
That as we live[d] together as husband and wife with imputing error in the trial court’s interpretation of the
Juan Arcillas, we begot children, namely: LUCIO, Deed as a testamentary disposition instead of an inter
VICENTA, SEGUNDINA, and ADELAIDA, all surnamed vivos donation, passing title to Rodriguez upon its
ARCILLAS, and by reason of poverty which I suffered execution.
while our children were still young; and because my
husband Juan Arcillas aware as he was with our Ruling of the Court of Appeals
destitution separated us [sic] and left for Cebu; and from
then on never cared what happened to his family; and
The CA granted respondents’ appeal and set aside the
because of that one EUFRACIA RODRIGUEZ, one of my
trial court’s ruling. While conceding that the "language of
nieces who also suffered with our poverty, obedient as
the [Deed is] x x x confusing and which could admit of
possible different interpretations,"7 the CA found the (2) That before the [donor’s] death, the transfer
following factors pivotal to its reading of the Deed as should be revocable by the transferor at will, ad
donation inter vivos: (1) Rodriguez had been in nutum; but revocability may be provided for
possession of the Property as owner since 21 May 1962, indirectly by means of a reserved power in the
subject to the delivery of part of the produce to Apoy Alve; donor to dispose of the properties conveyed;
(2) the Deed’s consideration was not Rodrigo’s death but
her "love and affection" for Rodriguez, considering the (3) That the transfer should be void if the
services the latter rendered; (3) Rodrigo waived dominion transferor should survive the transferee.10
over the Property in case Rodriguez predeceases her,
implying its inclusion in Rodriguez’s estate; and (4) Further –
Rodriguez accepted the donation in the Deed itself, an act
necessary to effectuate donations inter vivos, not
[4] [T]he specification in a deed of the causes
devises.8 Accordingly, the CA upheld the sale between
whereby the act may be revoked by the donor
Rodriguez and respondents, and, conversely found the
indicates that the donation is inter vivos, rather
sale between Rodrigo and petitioner’s predecessor-in-
than a disposition mortis causa[;]
interest, Vere, void for Rodrigo’s lack of title.
[5] That the designation of the donation as mortis
In this petition, petitioner seeks the reinstatement of the
causa, or a provision in the deed to the effect that
trial court’s ruling. Alternatively, petitioner claims
the donation is "to take effect at the death of the
ownership over the Property through acquisitive
donor" are not controlling criteria; such
prescription, having allegedly occupied it for more than
statements are to be construed together with the
10 years.9
rest of the instrument, in order to give effect to
the real intent of the transferor[;] [and]
Respondents see no reversible error in the CA’s ruling and
pray for its affirmance.
(6) That in case of doubt, the conveyance should
be deemed donation inter vivos rather
The Issue than mortis causa, in order to avoid uncertainty
as to the ownership of the property subject of the
The threshold question is whether petitioner’s title over deed.11
the Property is superior to respondents’. The resolution of
this issue rests, in turn, on whether the contract between It is immediately apparent that Rodrigo passed naked title
the parties’ predecessors-in-interest, Rodrigo and to Rodriguez under a perfected donation inter vivos.
Rodriguez, was a donation or a devise. If the former, First. Rodrigo stipulated that "if the herein Donee
respondents hold superior title, having bought the predeceases me, the [Property] will not be reverted to the
Property from Rodriguez. If the latter, petitioner prevails, Donor, but will be inherited by the heirs of x x x
having obtained title from Rodrigo under a deed of sale Rodriguez," signaling the irrevocability of the passage of
the execution of which impliedly revoked the earlier title to Rodriguez’s estate, waiving Rodrigo’s right to
devise to Rodriguez. reclaim title. This transfer of title was perfected the
moment Rodrigo learned of Rodriguez’s acceptance of the
The Ruling of the Court disposition12 which, being reflected in the Deed, took
place on the day of its execution on 3 May 1965. Rodrigo’s
We find respondents’ title superior, and thus, affirm the acceptance of the transfer underscores its essence as a
CA. gift in presenti, not in futuro, as only donations inter
vivos need acceptance by the recipient.13 Indeed, had
Naked Title Passed from Rodrigo to Rodriguez Rodrigo wished to retain full title over the Property, she
Under a Perfected Donation could have easily stipulated, as the testator did in another
case, that "the donor, may transfer, sell, or encumber to
We examine the juridical nature of the Deed – whether it any person or entity the properties here donated x x
passed title to Rodriguez upon its execution or is effective x"14 or used words to that effect. Instead, Rodrigo
only upon Rodrigo’s death – using principles distilled from expressly waived title over the Property in case Rodriguez
relevant jurisprudence. Post-mortem dispositions typically predeceases her.

In a bid to diffuse the non-reversion stipulation’s damning
(1) Convey no title or ownership to the transferee effect on his case, petitioner tries to profit from it,
before the death of the transferor; or, what contending it is a fideicommissary substitution
amounts to the same thing, that the transferor clause.15 Petitioner assumes the fact he is laboring to
should retain the ownership (full or naked) and prove. The question of the Deed’s juridical nature,
control of the property while alive; whether it is a will or a donation, is the crux of the present
controversy. By treating the clause in question as It will not do, therefore, for petitioner to cherry-pick
mandating fideicommissary substitution, a mode of stipulations from the Deed tending to serve his cause
testamentary disposition by which the first heir instituted (e.g. "the ownership shall be vested on [Rodriguez] upon
is entrusted with the obligation to preserve and to my demise" and "devise"). Dispositions bearing
transmit to a second heir the whole or part of the contradictory stipulations are interpreted wholistically, to
inheritance,16 petitioner assumes that the Deed is a will. give effect to the donor’s intent. In no less than seven
Neither the Deed’s text nor the import of the contested cases featuring deeds of donations styled as "mortis
clause supports petitioner’s theory. causa" dispositions, the Court, after going over the deeds,
eventually considered the transfers inter
Second. What Rodrigo reserved for herself was only the vivos,22 consistent with the principle that "the designation
beneficial title to the Property, evident from Rodriguez’s of the donation as mortis causa, or a provision in the deed
undertaking to "give one [half] x x x of the produce of the to the effect that the donation is ‘to take effect at the
land to Apoy Alve during her lifetime."17 Thus, the Deed’s death of the donor’ are not controlling criteria [but] x x x
stipulation that "the ownership shall be vested on are to be construed together with the rest of the
[Rodriguez] upon my demise," taking into account the instrument, in order to give effect to the real intent of the
non-reversion clause, could only refer to Rodrigo’s transferor."23 Indeed, doubts on the nature of dispositions
beneficial title. We arrived at the same conclusion are resolved to favor inter vivos transfers "to avoid
in Balaqui v. Dongso18 where, as here, the donor, while uncertainty as to the ownership of the property subject of
"b[inding] herself to answer to the [donor] and her heirs the deed."24
x x x that none shall question or disturb [the donee’s]
right," also stipulated that the donation "does not pass Nor can petitioner capitalize on Rodrigo’s post-donation
title to [the donee] during my lifetime; but when I die, transfer of the Property to Vere as proof of her retention
[the donee] shall be the true owner" of the donated of ownership. If such were the barometer in interpreting
parcels of land. In finding the disposition as a gift inter deeds of donation, not only will great legal uncertainty be
vivos, the Court reasoned: visited on gratuitous dispositions, this will give license to
rogue property owners to set at naught perfected
Taking the deed x x x as a whole, x x x x it is noted that transfers of titles, which, while founded on liberality, is a
in the same deed [the donor] guaranteed to [the donee] valid mode of passing ownership. The interest of settled
and her heirs and successors, the right to said property property dispositions counsels against licensing such
thus conferred. From the moment [the donor] guaranteed practice.25
the right granted by her to [the donee] to the two parcels
of land by virtue of the deed of gift, she surrendered such Accordingly, having irrevocably transferred naked title
right; otherwise there would be no need to guarantee said over the Property to Rodriguez in 1965, Rodrigo "cannot
right. Therefore, when [the donor] used the words upon afterwards revoke the donation nor dispose of the said
which the appellants base their contention that the gift in property in favor of another."26 Thus, Rodrigo’s post-
question is a donation mortis causa [that the gift "does donation sale of the Property vested no title to Vere. As
not pass title during my lifetime; but when I die, she shall Vere’s successor-in-interest, petitioner acquired no better
be the true owner of the two aforementioned right than him. On the other hand, respondents bought
parcels"] the donor meant nothing else than that the Property from Rodriguez, thus acquiring the latter’s
she reserved of herself the possession and title which they may invoke against all adverse claimants,
usufruct of said two parcels of land until her death, including petitioner.
at which time the donee would be able to dispose
of them freely.19 (Emphasis supplied) Petitioner Acquired No Title Over the Property

Indeed, if Rodrigo still retained full ownership over the Alternatively, petitioner grounds his claim of ownership
Property, it was unnecessary for her to reserve partial over the Property through his and Vere’s combined
usufructuary right over it.20 possession of the Property for more than ten years,
counted from Vere’s purchase of the Property from
Third. The existence of consideration other than the Rodrigo in 1970 until petitioner initiated his suit in the trial
donor’s death, such as the donor’s love and affection to court in February 1986.27 Petitioner anchors his
the donee and the services the latter rendered, while also contention on an unfounded legal assumption. The ten
true of devises, nevertheless "corroborates the express year ordinary prescriptive period to acquire title through
irrevocability of x x x [inter vivos] transfers."21 Thus, the possession of real property in the concept of an owner
CA committed no error in giving weight to Rodrigo’s requires uninterrupted possession coupled with just
statement of "love and affection" for Rodriguez, her niece, title and good faith.28 There is just title when the adverse
as consideration for the gift, to underscore its finding. claimant came into possession of the property through
one of the modes recognized by law for the acquisition of
ownership or other real rights, but the grantor was not
the owner or could not transmit any right. 29 Good faith,
on the other hand, consists in the reasonable belief that
the person from whom the possessor received the thing
was the owner thereof, and could transmit his
ownership.30

Although Vere and petitioner arguably had just title


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

Lacking good faith possession, petitioner’s only other


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

Ancillary Matters Petitioner Raises Irrelevant

Petitioner brings to the Court’s attention facts which,


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

WHEREFORE, we DENY the petition. We AFFIRM the


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

SO ORDERED.
ARTICLE 774-776 assume the indebtedness of their late father to FCCC,
corresponding to the tractor respectively taken by them.
G.R. No. 149926 February 23, 2005
On August 20, 1981, a Deed of Assignment with
UNION BANK OF THE PHILIPPINES, petitioner, Assumption of Liabilities9 was executed by and between
vs. FCCC and Union Savings and Mortgage Bank, wherein the
EDMUND SANTIBAÑEZ and FLORENCE FCCC as the assignor, among others, assigned all its
SANTIBAÑEZ ARIOLA, respondents. assets and liabilities to Union Savings and Mortgage Bank.

DECISION Demand letters10 for the settlement of his account were


sent by petitioner Union Bank of the Philippines (UBP) to
CALLEJO, SR., J.: Edmund, but the latter failed to heed the same and
refused to pay. Thus, on February 5, 1988, the petitioner
filed a Complaint11 for sum of money against the heirs of
Before us is a petition for review on certiorari under Rule
Efraim Santibañez, Edmund and Florence, before the RTC
45 of the Revised Rules of Court which seeks the reversal
of Makati City, Branch 150, docketed as Civil Case No.
of the Decision1 of the Court of Appeals dated May 30,
18909. Summonses were issued against both, but the one
2001 in CA-G.R. CV No. 48831 affirming the dismissal2 of
intended for Edmund was not served since he was in the
the petitioner’s complaint in Civil Case No. 18909 by the
United States and there was no information on his
Regional Trial Court (RTC) of Makati City, Branch 63.
address or the date of his return to the
Philippines.12 Accordingly, the complaint was narrowed
The antecedent facts are as follows: down to respondent Florence S. Ariola.

On May 31, 1980, the First Countryside Credit Corporation On December 7, 1988, respondent Florence S. Ariola filed
(FCCC) and Efraim M. Santibañez entered into a loan her Answer13 and alleged that the loan documents did not
agreement3 in the amount of ₱128,000.00. The amount bind her since she was not a party thereto. Considering
was intended for the payment of the purchase price of that the joint agreement signed by her and her brother
one (1) unit Ford 6600 Agricultural All-Purpose Diesel Edmund was not approved by the probate court, it was
Tractor. In view thereof, Efraim and his son, Edmund, null and void; hence, she was not liable to the petitioner
executed a promissory note in favor of the FCCC, the under the joint agreement.
principal sum payable in five equal annual amortizations
of ₱43,745.96 due on May 31, 1981 and every May 31st
On January 29, 1990, the case was unloaded and re-
thereafter up to May 31, 1985.
raffled to the RTC of Makati City, Branch
63.14 Consequently, trial on the merits ensued and a
On December 13, 1980, the FCCC and Efraim entered into decision was subsequently rendered by the court
another loan agreement,4 this time in the amount of dismissing the complaint for lack of merit. The decretal
₱123,156.00. It was intended to pay the balance of the portion of the RTC decision reads:
purchase price of another unit of Ford 6600 Agricultural
All-Purpose Diesel Tractor, with accessories, and one (1)
WHEREFORE, judgment is hereby rendered DISMISSING
unit Howard Rotamotor Model AR 60K. Again, Efraim and
the complaint for lack of merit.15
his son, Edmund, executed a promissory note for the said
amount in favor of the FCCC. Aside from such promissory
note, they also signed a Continuing Guaranty The trial court found that the claim of the petitioner
Agreement5 for the loan dated December 13, 1980. should have been filed with the probate court before
which the testate estate of the late Efraim Santibañez was
pending, as the sum of money being claimed was an
Sometime in February 1981, Efraim died, leaving a
obligation incurred by the said decedent. The trial court
holographic will.6 Subsequently in March 1981, testate
also found that the Joint Agreement apparently executed
proceedings commenced before the RTC of Iloilo City,
by his heirs, Edmund and Florence, on July 22, 1981, was,
Branch 7, docketed as Special Proceedings No. 2706. On
in effect, a partition of the estate of the decedent.
April 9, 1981, Edmund, as one of the heirs, was appointed
However, the said agreement was void, considering that
as the special administrator of the estate of the
it had not been approved by the probate court, and that
decedent.7 During the pendency of the testate
there can be no valid partition until after the will has been
proceedings, the surviving heirs, Edmund and his sister
probated. The trial court further declared that petitioner
Florence Santibañez Ariola, executed a Joint
failed to prove that it was the now defunct Union Savings
Agreement8 dated July 22, 1981, wherein they agreed to
and Mortgage Bank to which the FCCC had assigned its
divide between themselves and take possession of the
assets and liabilities. The court also agreed to the
three (3) tractors; that is, two (2) tractors for Edmund
contention of respondent Florence S. Ariola that the list of
and one (1) tractor for Florence. Each of them was to
assets and liabilities of the FCCC assigned to Union
Savings and Mortgage Bank did not clearly refer to the WHEREFORE, premises considered, the appealed
decedent’s account. Ruling that the joint agreement Decision of the Regional Trial Court of Makati City, Branch
executed by the heirs was null and void, the trial court 63, is hereby AFFIRMED in toto.
held that the petitioner’s cause of action against
respondent Florence S. Ariola must necessarily fail. SO ORDERED.18

The petitioner appealed from the RTC decision and In the present recourse, the petitioner ascribes the
elevated its case to the Court of Appeals (CA), assigning following errors to the CA:
the following as errors of the trial court:
I.
1. THE COURT A QUO ERRED IN FINDING THAT
THE JOINT AGREEMENT (EXHIBIT A) SHOULD BE THE HONORABLE COURT OF APPEALS ERRED IN
APPROVED BY THE PROBATE COURT. FINDING THAT THE JOINT AGREEMENT SHOULD BE
APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT
THERE CAN BE NO VALID PARTITION AMONG II.
THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.
THE COURT OF APPEALS ERRED IN FINDING THAT
THERE CAN BE NO VALID PARTITION AMONG THE HEIRS
3. THE COURT A QUO ERRED IN NOT FINDING OF THE LATE EFRAIM SANTIBAÑEZ UNTIL AFTER THE
THAT THE DEFENDANT HAD WAIVED HER WILL HAS BEEN PROBATED.
RIGHT TO HAVE THE CLAIM RE-LITIGATED IN
THE ESTATE PROCEEDING.16
III.

The petitioner asserted before the CA that the obligation


THE COURT OF APPEALS ERRED IN NOT FINDING THAT
of the deceased had passed to his legitimate children and
THE RESPONDENT HAD WAIVED HER RIGHT TO HAVE
heirs, in this case, Edmund and Florence; the
THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.
unconditional signing of the joint agreement marked as
Exhibit "A" estopped respondent Florence S. Ariola, and
that she cannot deny her liability under the said IV.
document; as the agreement had been signed by both
heirs in their personal capacity, it was no longer necessary RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND
to present the same before the probate court for SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE
approval; the property partitioned in the agreement was LATE EFRAIM SANTIBAÑEZ ON THE STRENGTH OF THE
not one of those enumerated in the holographic will made CONTINUING GUARANTY AGREEMENT EXECUTED IN
by the deceased; and the active participation of the heirs, FAVOR OF PETITIONER-APPELLANT UNION BANK.
particularly respondent Florence S. Ariola, in the present
ordinary civil action was tantamount to a waiver to re- V.
litigate the claim in the estate proceedings.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE
On the other hand, respondent Florence S. Ariola SUM OF ₱128,000.00 AND DECEMBER 13, 1980 IN THE
maintained that the money claim of the petitioner should AMOUNT OF ₱123,000.00 CATEGORICALLY
have been presented before the probate court. 17 ESTABLISHED THE FACT THAT THE RESPONDENTS
BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE
The appellate court found that the appeal was not WITH THE LATE DEBTOR EFRAIM SANTIBAÑEZ IN
meritorious and held that the petitioner should have filed FAVOR OF PETITIONER UNION BANK.19
its claim with the probate court as provided under
Sections 1 and 5, Rule 86 of the Rules of Court. It further The petitioner claims that the obligations of the deceased
held that the partition made in the agreement was null were transmitted to the heirs as provided in Article 774 of
and void, since no valid partition may be had until after the Civil Code; there was thus no need for the probate
the will has been probated. According to the CA, page 2, court to approve the joint agreement where the heirs
paragraph (e) of the holographic will covered the subject partitioned the tractors owned by the deceased and
properties (tractors) in generic terms when the deceased assumed the obligations related thereto. Since
referred to them as "all other properties." Moreover, the respondent Florence S. Ariola signed the joint agreement
active participation of respondent Florence S. Ariola in the without any condition, she is now estopped from asserting
case did not amount to a waiver. Thus, the CA affirmed any position contrary thereto. The petitioner also points
the RTC decision, viz.: out that the holographic will of the deceased did not
include nor mention any of the tractors subject of the
complaint, and, as such was beyond the ambit of the said she had caused herself to be bound by the obligation of
will. The active participation and resistance of respondent her late father.
Florence S. Ariola in the ordinary civil action against the
petitioner’s claim amounts to a waiver of the right to have The petition is bereft of merit.
the claim presented in the probate proceedings, and to
allow any one of the heirs who executed the joint The Court is posed to resolve the following issues: a)
agreement to escape liability to pay the value of the whether or not the partition in the Agreement executed
tractors under consideration would be equivalent to by the heirs is valid; b) whether or not the heirs’
allowing the said heirs to enrich themselves to the assumption of the indebtedness of the deceased is valid;
damage and prejudice of the petitioner. and c) whether the petitioner can hold the heirs liable on
the obligation of the deceased.1awphi1.nét
The petitioner, likewise, avers that the decisions of both
the trial and appellate courts failed to consider the fact At the outset, well-settled is the rule that a probate court
that respondent Florence S. Ariola and her brother has the jurisdiction to determine all the properties of the
Edmund executed loan documents, all establishing deceased, to determine whether they should or should
the vinculum jurisor the legal bond between the late not be included in the inventory or list of properties to be
Efraim Santibañez and his heirs to be in the nature of a administered.20 The said court is primarily concerned with
solidary obligation. Furthermore, the Promissory Notes the administration, liquidation and distribution of the
dated May 31, 1980 and December 13, 1980 executed by estate.21
the late Efraim Santibañez, together with his heirs,
Edmund and respondent Florence, made the obligation
In our jurisdiction, the rule is that there can be no valid
solidary as far as the said heirs are concerned. The
partition among the heirs until after the will has been
petitioner also proffers that, considering the express
probated:
provisions of the continuing guaranty agreement and the
promissory notes executed by the named respondents,
the latter must be held liable jointly and severally liable In testate succession, there can be no valid partition
thereon. Thus, there was no need for the petitioner to file among the heirs until after the will has been probated.
its money claim before the probate court. Finally, the The law enjoins the probate of a will and the public
petitioner stresses that both surviving heirs are being requires it, because unless a will is probated and notice
sued in their respective personal capacities, not as heirs thereof given to the whole world, the right of a person to
of the deceased. dispose of his property by will may be rendered nugatory.
The authentication of a will decides no other question
than such as touch upon the capacity of the testator and
In her comment to the petition, respondent Florence S.
the compliance with those requirements or solemnities
Ariola maintains that the petitioner is trying to recover a
which the law prescribes for the validity of a will.22
sum of money from the deceased Efraim Santibañez; thus
the claim should have been filed with the probate court.
She points out that at the time of the execution of the This, of course, presupposes that the properties to be
joint agreement there was already an existing probate partitioned are the same properties embraced in the
proceedings of which the petitioner knew about. will.23 In the present case, the deceased, Efraim
However, to avoid a claim in the probate court which Santibañez, left a holographic will24 which contained, inter
might delay payment of the obligation, the petitioner alia, the provision which reads as follows:
opted to require them to execute the said
agreement.1a\^/phi1.net (e) All other properties, real or personal, which I own and
may be discovered later after my demise, shall be
According to the respondent, the trial court and the CA distributed in the proportion indicated in the immediately
did not err in declaring that the agreement was null and preceding paragraph in favor of Edmund and Florence,
void. She asserts that even if the agreement was my children.
voluntarily executed by her and her brother Edmund, it
should still have been subjected to the approval of the We agree with the appellate court that the above-quoted
court as it may prejudice the estate, the heirs or third is an all-encompassing provision embracing all the
parties. Furthermore, she had not waived any rights, as properties left by the decedent which might have escaped
she even stated in her answer in the court a quo that the his mind at that time he was making his will, and other
claim should be filed with the probate court. Thus, the properties he may acquire thereafter. Included therein
petitioner could not invoke or claim that she is in estoppel. are the three (3) subject tractors. This being so, any
partition involving the said tractors among the heirs is not
Respondent Florence S. Ariola further asserts that she had valid. The joint agreement25 executed by Edmund and
not signed any continuing guaranty agreement, nor was Florence, partitioning the tractors among themselves, is
there any document presented as evidence to show that invalid, specially so since at the time of its execution,
there was already a pending proceeding for the probate
of their late father’s holographic will covering the said against the decedent, arising from contract, express or
tractors. implied, whether the same be due, not due, or contingent,
all claims for funeral expenses for the last sickness of the
It must be stressed that the probate proceeding had decedent, and judgment for money against the decedent,
already acquired jurisdiction over all the properties of the must be filed within the time limited in the notice;
deceased, including the three (3) tractors. To dispose of otherwise they are barred forever, except that they may
them in any way without the probate court’s approval is be set forth as counterclaims in any action that the
tantamount to divesting it with jurisdiction which the executor or administrator may bring against the
Court cannot allow.26 Every act intended to put an end to claimants. Where an executor or administrator
indivision among co-heirs and legatees or devisees is commences an action, or prosecutes an action already
deemed to be a partition, although it should purport to be commenced by the deceased in his lifetime, the debtor
a sale, an exchange, a compromise, or any other may set forth by answer the claims he has against the
transaction.27 Thus, in executing any joint agreement decedent, instead of presenting them independently to
which appears to be in the nature of an extra-judicial the court as herein provided, and mutual claims may be
partition, as in the case at bar, court approval is set off against each other in such action; and if final
imperative, and the heirs cannot just divest the court of judgment is rendered in favor of the defendant, the
its jurisdiction over that part of the estate. Moreover, it is amount so determined shall be considered the true
within the jurisdiction of the probate court to determine balance against the estate, as though the claim had been
the identity of the heirs of the decedent. 28 In the instant presented directly before the court in the administration
case, there is no showing that the signatories in the joint proceedings. Claims not yet due, or contingent, may be
agreement were the only heirs of the decedent. When it approved at their present value.
was executed, the probate of the will was still pending
before the court and the latter had yet to determine who The filing of a money claim against the decedent’s estate
the heirs of the decedent were. Thus, for Edmund and in the probate court is mandatory.30 As we held in the
respondent Florence S. Ariola to adjudicate unto vintage case of Py Eng Chong v. Herrera:31
themselves the three (3) tractors was a premature act,
and prejudicial to the other possible heirs and creditors … This requirement is for the purpose of protecting the
who may have a valid claim against the estate of the estate of the deceased by informing the executor or
deceased. administrator of the claims against it, thus enabling him
to examine each claim and to determine whether it is a
The question that now comes to fore is whether the heirs’ proper one which should be allowed. The plain and
assumption of the indebtedness of the decedent is obvious design of the rule is the speedy settlement of the
binding. We rule in the negative. Perusing the joint affairs of the deceased and the early delivery of the
agreement, it provides that the heirs as parties thereto property to the distributees, legatees, or heirs. `The law
"have agreed to divide between themselves and take strictly requires the prompt presentation and disposition
possession and use the above-described chattel and each of the claims against the decedent's estate in order to
of them to assume the indebtedness corresponding to the settle the affairs of the estate as soon as possible, pay off
chattel taken as herein after stated which is in favor of its debts and distribute the residue.32
First Countryside Credit Corp."29 The assumption of
liability was conditioned upon the happening of an event, Perusing the records of the case, nothing therein could
that is, that each heir shall take possession and use of hold private respondent Florence S. Ariola accountable for
their respective share under the agreement. It was made any liability incurred by her late father. The documentary
dependent on the validity of the partition, and that they evidence presented, particularly the promissory notes and
were to assume the indebtedness corresponding to the the continuing guaranty agreement, were executed and
chattel that they were each to receive. The partition being signed only by the late Efraim Santibañez and his son
invalid as earlier discussed, the heirs in effect did not Edmund. As the petitioner failed to file its money claim
receive any such tractor. It follows then that the with the probate court, at most, it may only go after
assumption of liability cannot be given any force and Edmund as co-maker of the decedent under the said
effect. promissory notes and continuing guaranty, of course,
subject to any defenses Edmund may have as against the
The Court notes that the loan was contracted by the petitioner. As the court had not acquired jurisdiction over
decedent.l^vvphi1.net The petitioner, purportedly a the person of Edmund, we find it unnecessary to delve
creditor of the late Efraim Santibañez, should have thus into the matter further.
filed its money claim with the probate court in accordance
with Section 5, Rule 86 of the Revised Rules of Court, We agree with the finding of the trial court that the
which provides: petitioner had not sufficiently shown that it is the
successor-in-interest of the Union Savings and Mortgage
Section 5. Claims which must be filed under the notice. If Bank to which the FCCC assigned its assets and
not filed barred; exceptions. — All claims for money liabilities.33 The petitioner in its complaint alleged that " by
virtue of the Deed of Assignment dated August 20, 1981
executed by and between First Countryside Credit
Corporation and Union Bank of the
Philippines…"34 However, the documentary
evidence35 clearly reflects that the parties in the deed of
assignment with assumption of liabilities were the FCCC,
and the Union Savings and Mortgage Bank, with the
conformity of Bancom Philippine Holdings, Inc. Nowhere
can the petitioner’s participation therein as a party be
found. Furthermore, no documentary or testimonial
evidence was presented during trial to show that Union
Savings and Mortgage Bank is now, in fact, petitioner
Union Bank of the Philippines. As the trial court declared
in its decision:

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


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

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


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

IN LIGHT OF ALL THE FOREGOING, the petition is


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

SO ORDERED.
ARTICLE 774-776 ourselves for the payment thereof under the same terms
and conditions as above mentioned without the
[G.R. No. L-8437. November 28, 1956.] necessity of executing another indemnity agreement for
ESTATE OF K. H. HEMADY, deceased, vs. LUZON the purpose and that we hereby equally waive our right
SURETY CO., INC., claimant-Appellant. to be notified of any renewal or extension of this
________ which may be granted under this indemnity
agreement.
DECISION Interest on amount paid by the Company. — Any and all
REYES, J. B. L., J.: sums of money so paid by the company shall bear
interest at the rate of 12% per annum which interest, if
Appeal by Luzon Surety Co., Inc., from an order of the not paid, will be accummulated and added to the capital
Court of First Instance of Rizal, presided by Judge quarterly order to earn the same interests as the capital
Hermogenes Caluag, dismissing its claim against the and the total sum thereof, the capital and interest, shall
Estate of K. H. Hemady (Special Proceeding No. Q-293) be paid to the COMPANY as soon as the COMPANY shall
for failure to state a cause of action. have become liable therefore, whether it shall have paid
The Luzon Surety Co. had filed a claim against the Estate out such sums of money or any part thereof or not.
based on twenty different indemnity agreements, or xxx xxx xxx
counter bonds, each subscribed by a distinct principal
and by the deceased K. H. Hemady, a surety solidary Waiver. — It is hereby agreed upon by and between the
guarantor) in all of them, in consideration of the Luzon undersigned that any question which may arise between
Surety Co.’s of having guaranteed, the various principals them by reason of this document and which has to be
in favor of different creditors. The twenty counterbonds, submitted for decision to Courts of Justice shall be
or indemnity agreements, all contained the following brought before the Court of competent jurisdiction in the
stipulations:
chanroblesvirtuallawlibrary
City of Manila, waiving for this purpose any other venue.
Our right to be notified of the acceptance and approval
“Premiums. — As consideration for this suretyship, the of this indemnity agreement is hereby likewise waived.
undersigned jointly and severally, agree to pay the
COMPANY the sum of ________________ (P______) xxx xxx xxx
pesos, Philippines Currency, in advance as premium Our Liability Hereunder. — It shall not be necessary for
there of for every __________ months or fractions the COMPANY to bring suit against the principal upon his
thereof, this ________ or any renewal or substitution default, or to exhaust the property of the principal, but
thereof is in effect. the liability hereunder of the undersigned indemnitor
Indemnity. — The undersigned, jointly and severally, shall be jointly and severally, a primary one, the same as
agree at all times to indemnify the COMPANY and keep that of the principal, and shall be exigible immediately
it indemnified and hold and save it harmless from and upon the occurrence of such default.” (Rec. App. pp. 98-
against any and all damages, losses, costs, stamps, taxes, 102.)
penalties, charges, and expenses of whatsoever kind and The Luzon Surety Co., prayed for allowance, as a
nature which the COMPANY shall or may, at any time contingent claim, of the value of the twenty bonds it had
sustain or incur in consequence of having become surety executed in consideration of the counterbonds, and
upon this bond or any extension, renewal, substitution further asked for judgment for the unpaid premiums and
or alteration thereof made at the instance of the documentary stamps affixed to the bonds, with 12 per
undersigned or any of them or any order executed on cent interest thereon.
behalf of the undersigned or any of them; and to pay, chan roble svirtualawlibrary

reimburse and make good to the COMPANY, its Before answer was filed, and upon motion of the
successors and assigns, all sums and amount of money administratrix of Hemady’s estate, the lower court, by
which it or its representatives shall pay or cause to be order of September 23, 1953, dismissed the claims of
paid, or become liable to pay, on account of the Luzon Surety Co., on two grounds: (1) that the chanroble svirtuallawlibrary

undersigned or any of them, of whatsoever kind and premiums due and cost of documentary stamps were not
nature, including 15% of the amount involved in the contemplated under the indemnity agreements to be a
litigation or other matters growing out of or connected part of the undertaking of the guarantor (Hemady), since
therewith for counsel or attorney’s fees, but in no case they were not liabilities incurred after the execution of
less than P25. It is hereby further agreed that in case of the counterbonds; and (2) that “whatever losses may
chan roblesvirtualawlibrary

extension or renewal of this ________ we equally bind occur after Hemady’s death, are not chargeable to his
estate, because upon his death he ceased to be “ART. 774. — Succession is a mode of acquisition by
guarantor.” virtue of which the property, rights and obligations to the
extent of the value of the inheritance, of a person are
Taking up the latter point first, since it is the one more
transmitted through his death to another or others
far reaching in effects, the reasoning of the court below
either by his will or by operation of law.”
ran as follows: chanroblesvirtuallawlibrary

“ART. 776. — The inheritance includes all the property,


“The administratrix further contends that upon the
rights and obligations of a person which are not
death of Hemady, his liability as a guarantor terminated,
extinguished by his death.”
and therefore, in the absence of a showing that a loss or
damage was suffered, the claim cannot be considered In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
contingent. This Court believes that there is merit in this ruled:chanroble svirtuallawlibrary

contention and finds support in Article 2046 of the new


“Under the Civil Code the heirs, by virtue of the rights of
Civil Code. It should be noted that a new requirement has
succession are subrogated to all the rights and
been added for a person to qualify as a guarantor, that
obligations of the deceased (Article 661) and cannot be
is: integrity. As correctly pointed out by the
regarded as third parties with respect to a contract to
chanroble svirtuallawlibrary

Administratrix, integrity is something purely personal


which the deceased was a party, touching the estate of
and is not transmissible. Upon the death of Hemady, his
the deceased (Barrios vs. Dolor, 2 Phil. 44).
integrity was not transmitted to his estate or successors.
Whatever loss therefore, may occur after Hemady’s xxx xxx xxx
death, are not chargeable to his estate because upon his “The principle on which these decisions rest is not
death he ceased to be a guarantor. affected by the provisions of the new Code of Civil
Another clear and strong indication that the surety Procedure, and, in accordance with that principle, the
company has exclusively relied on the personality, heirs of a deceased person cannot be held to be “third
character, honesty and integrity of the now deceased K. persons” in relation to any contracts touching the real
H. Hemady, was the fact that in the printed form of the estate of their decedent which comes in to their hands
indemnity agreement there is a paragraph entitled by right of inheritance; they take such property
chan roblesvirtualawlibrary

‘Security by way of first mortgage, which was expressly subject to all the obligations resting thereon in the hands
waived and renounced by the security company. The of him from whom they derive their rights.”
security company has not demanded from K. H. Hemady (See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p.
to comply with this requirement of giving security by way 2874 and de Guzman vs. Salak, 91 Phil., 265).
of first mortgage. In the supporting papers of the claim
presented by Luzon Surety Company, no real property The binding effect of contracts upon the heirs of the
was mentioned in the list of properties mortgaged which deceased party is not altered by the provision in our
appears at the back of the indemnity agreement.” (Rec. Rules of Court that money debts of a deceased must be
App., pp. 407-408). liquidated and paid from his estate before the residue is
distributed among said heirs (Rule 89). The reason is that
We find this reasoning untenable. Under the present Civil whatever payment is thus made from the estate is
Code (Article 1311), as well as under the Civil Code of ultimately a payment by the heirs and distributees, since
1889 (Article 1257), the rule is that — the amount of the paid claim in fact diminishes or
“Contracts take effect only as between the parties, their reduces the shares that the heirs would have been
assigns and heirs, except in the case where the rights and entitled to receive.
obligations arising from the contract are not Under our law, therefore, the general rule is that a
transmissible by their nature, or by stipulation or by party’s contractual rights and obligations are
provision of law.” transmissible to the successors. The rule is a
While in our successional system the responsibility of the consequence of the progressive “depersonalization” of
heirs for the debts of their decedent cannot exceed the patrimonial rights and duties that, as observed by
value of the inheritance they receive from him, the Victorio Polacco, has characterized the history of these
principle remains intact that these heirs succeed not only institutions. From the Roman concept of a relation from
to the rights of the deceased but also to his obligations. person to person, the obligation has evolved into a
Articles 774 and 776 of the New Civil Code (and Articles relation from patrimony to patrimony, with the persons
659 and 661 of the preceding one) expressly so provide, occupying only a representative position, barring those
thereby confirming Article 1311 already quoted. 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 him to expressly stipulate to that effect; hence, his chan roblesvirtualawlibrary

transition is marked by the disappearance of the failure to do so is no sign that he intended his bargain to
imprisonment for debt. terminate upon his death. Similarly, that the Luzon
Surety Co., did not require bondsman Hemady to
Of the three exceptions fixed by Article 1311, the nature
execute a mortgage indicates nothing more than the
of the obligation of the surety or guarantor does not
company’s faith and confidence in the financial stability
warrant the conclusion that his peculiar individual
of the surety, but not that his obligation was strictly
qualities are contemplated as a principal inducement for
personal.
the contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the latter as The third exception to the transmissibility of obligations
surety in the counterbonds? Nothing but the under Article 1311 exists when they are “not
reimbursement of the moneys that the Luzon Surety Co. transmissible by operation of law”. The provision makes
might have to disburse on account of the obligations of reference to those cases where the law expresses that
the principal debtors. This reimbursement is a payment the rights or obligations are extinguished by death, as is
of a sum of money, resulting from an obligation to give; chan the case in legal support (Article 300), parental authority
and to the Luzon Surety Co., it was indifferent that the
roblesvirtualawlibrary (Article 327), usufruct (Article 603), contracts for a piece
reimbursement should be made by Hemady himself or of work (Article 1726), partnership (Article 1830 and
by some one else in his behalf, so long as the money was agency (Article 1919). By contract, the articles of the Civil
paid to it. Code that regulate guaranty or suretyship (Articles 2047
to 2084) contain no provision that the guaranty is
The second exception of Article 1311, p. 1, is
extinguished upon the death of the guarantor or the
intransmissibility by stipulation of the parties. Being
surety.
exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must The lower court sought to infer such a limitation from
be expressly established, or at the very least, clearly Art. 2056, to the effect that “one who is obliged to
inferable from the provisions of the contract itself, and furnish a guarantor must present a person who
the text of the agreements sued upon nowhere indicate possesses integrity, capacity to bind himself, and
that they are non-transferable. sufficient property to answer for the obligation which he
guarantees”. It will be noted, however, that the law
“(b) Intransmisibilidad por pacto. — Lo general es la
requires these qualities to be present only at the time of
transmisibilidad de darechos y obligaciones; le
the perfection of the contract of guaranty. It is self-
chan roblesvirtualawlibrary

excepcion, la intransmisibilidad. Mientras nada se diga


evident that once the contract has become perfected
en contrario impera el principio de la transmision, como
and binding, the supervening incapacity of the guarantor
elemento natural a toda relacion juridica, salvo las
would not operate to exonerate him of the eventual
personalisimas. Asi, para la no transmision, es menester
liability he has contracted; and if that be true of his
el pacto expreso, porque si no, lo convenido entre partes
chan roblesvirtualawlibrary

capacity to bind himself, it should also be true of his


trasciende a sus herederos.
integrity, which is a quality mentioned in the article
Siendo estos los continuadores de la personalidad del alongside the capacity.
causante, sobre ellos recaen los efectos de los vinculos
The foregoing concept is confirmed by the next Article
juridicos creados por sus antecesores, y para evitarlo, si
2057, that runs as follows:
asi se quiere, es indespensable convension terminante
chanroblesv irtuallawlibrary

en tal sentido. “ART. 2057. — If the guarantor should be convicted in


first instance of a crime involving dishonesty or should
Por su esencia, el derecho y la obligacion tienden a ir más
become insolvent, the creditor may demand another
allá de las personas que les dieron vida, y a ejercer
who has all the qualifications required in the preceding
presion sobre los sucesores de esa persona; cuando no
article. The case is excepted where the creditor has
chan roblesvirtualawlibrary

se quiera esto, se impone una estipulacion limitativa


required and stipulated that a specified person should be
expresamente de la transmisibilidad o de cuyos tirminos
guarantor.”
claramente se deduzca la concresion del concreto a las
mismas personas que lo otorgon.” (Scaevola, Codigo From this article it should be immediately apparent that
Civil, Tomo XX, p. 541-542) (Emphasis supplied.) the supervening dishonesty of the guarantor (that is to
say, the disappearance of his integrity after he has
Because under the law (Article 1311), a person who
become bound) does not terminate the contract but
enters into a contract is deemed to have contracted for
merely entitles the creditor to demand a replacement of
himself and his heirs and assigns, it is unnecessary for
the guarantor. But the step remains optional in the
creditor: it is his right, not his duty; he may waive it
chanroblesvirtuallawlibrary chan roblesvirtualawlibrary The foregoing ruling is of course without prejudice to the
if he chooses, and hold the guarantor to his bargain. remedies of the administratrix against the principal
Hence Article 2057 of the present Civil Code is debtors under Articles 2071 and 2067 of the New Civil
incompatible with the trial court’s stand that the Code.
requirement of integrity in the guarantor or surety
Our conclusion is that the solidary guarantor’s liability is
makes the latter’s undertaking strictly personal, so linked
not extinguished by his death, and that in such event, the
to his individuality that the guaranty automatically
Luzon Surety Co., had the right to file against the estate
terminates upon his death.
a contingent claim for reimbursement. It becomes
The contracts of suretyship entered into by K. H. Hemady unnecessary now to discuss the estate’s liability for
in favor of Luzon Surety Co. not being rendered premiums and stamp taxes, because irrespective of the
intransmissible due to the nature of the undertaking, nor solution to this question, the Luzon Surety’s claim did
by the stipulations of the contracts themselves, nor by state a cause of action, and its dismissal was erroneous.
provision of law, his eventual liability thereunder
Wherefore, the order appealed from is reversed, and the
necessarily passed upon his death to his heirs. The
records are ordered remanded to the court of origin,
contracts, therefore, give rise to contingent claims
with instructions to proceed in accordance with law.
provable against his estate under section 5, Rule 87 (2
Costs against the Administratrix- Appellee. SO ORDERED.
Moran, 1952 ed., p. 437; Gaskell & Co. vs. Tan Sit, 43 chan roblesvirtuala wlibrary

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


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

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


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

For Defendant administratrix it is averred that the above


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

urged that the rule does not apply to the case before us,
where the late Hemady was a surety, not a principal
debtor. The argument evinces a superficial view of the
relations between parties. If under the Gaskell ruling, the
Luzon Surety Co., as guarantor, could file a contingent
claim against the estate of the principal debtors if the
latter should die, there is absolutely no reason why it
could not file such a claim against the estate of Hemady,
since Hemady is a solidary co-debtor of his principals.
What the Luzon Surety Co. may claim from the estate of
a principal debtor it may equally claim from the estate of
Hemady, since, in view of the existing solidarity, the
latter does not even enjoy the benefit of exhaustion of
the assets of the principal debtor.
ARTICLE 774-776 does not show whether the children of Felipe also
cultivated some portions of the lots but it is established
G.R. No. L-68053 May 7, 1990 that Rufino and his children left the province to settle in
other places as a result of the outbreak of World War II.
LAURA ALVAREZ, FLORA ALVAREZ and According to Estelita, from the "Japanese time up to
RAYMUNDO ALVAREZ, petitioners, peace time", they did not visit the parcels of land in
vs. question but "after liberation", when her brother went
THE HONORABLE INTERMEDIATE APELLATE there to get their share of the sugar produced therein, he
COURT and JESUS YANES, ESTELITA YANES, was informed that Fortunato Santiago, Fuentebella
ANTONIO YANES, ROSARIO YANES, and (Puentevella) and Alvarez were in possession of Lot 773. 2
ILUMINADO YANES, respondents.
It is on record that on May 19, 1938, Fortunato D.
Francisco G. Banzon for petitioner. Santiago was issued Transfer Certificate of Title No. RF
2694 (29797) covering Lot 773-A with an area of 37,818
square meters. 3 TCT No. RF 2694 describes Lot 773-A as
Renecio R. Espiritu for private respondents.
a portion of Lot 773 of the cadastral survey of Murcia and
as originally registered under OCT No. 8804.

The bigger portion of Lot 773 with an area of 118,831


FERNAN, C.J.: square meters was also registered in the name of
Fortunato D. Santiago on September 6, 1938 Under TCT
This is a petition for review on certiorari seeking the No. RT-2695 (28192 ). 4 Said transfer certificate of title
reversal of: (a) the decision of the Fourth Civil Cases also contains a certification to the effect that Lot 773-B
Division of the Intermediate Appellate Court dated August was originally registered under OCT No. 8804.
31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes
et al. v. Dr. Rodolfo Siason et al." affirming the decision On May 30, 1955, Santiago sold Lots 773-A and 773-B to
dated July 8, 1974 of the Court of First Instance of Negros Monico B. Fuentebella, Jr. in consideration of the sum of
Occidental insofar as it ordered the petitioners to pay P7,000.00. 5 Consequently, on February 20, 1956, TCT
jointly and severally the private respondents the sum of Nos. T-19291 and T-19292 were issued in Fuentebella's
P20,000.00 representing the actual value of Lots Nos. name. 6
773-A and 773-B of the cadastral survey of Murcia,
Negros Occidental and reversing the subject decision
After Fuentebella's death and during the settlement of his
insofar as it awarded the sums of P2,000.00, P5,000.00
estate, the administratrix thereof (Arsenia R. Vda. de
and P2,000.00 as actual damages, moral damages and
Fuentebella, his wife) filed in Special Proceedings No.
attorney's fees, respectively and (b) the resolution of said
4373 in the Court of First Instance of Negros Occidental,
appellate court dated May 30, 1984, denying the motion
a motion requesting authority to sell Lots 773-A and 773-
for reconsideration of its decision.
B. 7 By virtue of a court order granting said motion, 8 on
March 24, 1958, Arsenia Vda. de Fuentebella sold said lots
The real properties involved are two parcels of land for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1,
identified as Lot 773-A and Lot 773-B which were 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-
originally known as Lot 773 of the cadastral survey of A and 773-B were respectively issued to Rosendo
Murcia, Negros Occidental. Lot 773, with an area of Alvarez. 10
156,549 square meters, was registered in the name of the
heirs of Aniceto Yanes under Original Certificate of Title
Two years later or on May 26, 1960, Teodora Yanes and
No. RO-4858 (8804) issued on October 9, 1917 by the
the children of her brother Rufino, namely, Estelita,
Register of Deeds of Occidental Negros (Exh. A).
Iluminado and Jesus, filed in the Court of First Instance
of Negros Occidental a complaint against Fortunato
Aniceto Yanes was survived by his children, Rufino, Felipe Santiago, Arsenia Vda. de Fuentebella, Alvarez and the
and Teodora. Herein private respondents, Estelita, Register of Deeds of Negros Occidental for the "return" of
Iluminado and Jesus, are the children of Rufino who died the ownership and possession of Lots 773 and 823. They
in 1962 while the other private respondents, Antonio and also prayed that an accounting of the produce of the land
Rosario Yanes, are children of Felipe. Teodora was from 1944 up to the filing of the complaint be made by
survived by her child, Jovita (Jovito) Alib. 1 It is not clear the defendants, that after court approval of said
why the latter is not included as a party in this case. accounting, the share or money equivalent due the
plaintiffs be delivered to them, and that defendants be
Aniceto left his children Lots 773 and 823. Teodora ordered to pay plaintiffs P500.00 as damages in the form
cultivated only three hectares of Lot 823 as she could not of attorney's fees. 11
attend to the other portions of the two lots which had a
total area of around twenty-four hectares. The record
During the pendency in court of said case or on November 823, "in good faith and for a valuable consideration
13, 1961, Alvarez sold Lots 773-A, 773-B and another lot without any knowledge of any lien or encumbrances
for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT against said properties"; that the decision in the cadastral
Nos. 30919 and 30920 were issued to Siason, 13 who proceeding 19 could not be enforced against him as he
thereafter, declared the two lots in his name for was not a party thereto; and that the decision in Civil Case
assessment purposes. 14 No. 5022 could neither be enforced against him not only
because he was not a party-litigant therein but also
Meanwhile, on November 6, 1962, Jesus Yanes, in his because it had long become final and
own behalf and in behalf of the other plaintiffs, and executory. 20 Finding said manifestation to be well-
assisted by their counsel, filed a manifestation in Civil founded, the cadastral court, in its order of September 4,
Case No. 5022 stating that the therein plaintiffs 1965, nullified its previous order requiring Siason to
"renounce, forfeit and quitclaims (sic) any claim, surrender the certificates of title mentioned therein. 21
monetary or otherwise, against the defendant Arsenia
Vda. de Fuentebella in connection with the above-entitled In 1968, the Yaneses filed an ex-parte motion for the
case." 15 issuance of an alias writ of execution in Civil Case No.
5022. Siason opposed it. 22 In its order of September 28,
On October 11, 1963, a decision was rendered by the 1968 in Civil Case No. 5022, the lower court, noting that
Court of First Instance of Negros Occidental in Civil Case the Yaneses had instituted another action for the recovery
No. 5022, the dispositive portion of which reads: of the land in question, ruled that at the judgment therein
could not be enforced against Siason as he was not a
WHEREFORE, judgment is rendered, party in the case. 23
ordering the defendant Rosendo Alvarez
to reconvey to the plaintiffs lots Nos. 773 The action filed by the Yaneses on February 21, 1968 was
and 823 of the Cadastral Survey of for recovery of real property with damages. 24 Named
Murcia, Negros Occidental, now covered defendants therein were Dr. Rodolfo Siason, Laura
by Transfer Certificates of Title Nos. T- Alvarez, Flora Alvarez, Raymundo Alvarez and the
23165 and T-23166 in the name of said Register of Deeds of Negros Occidental. The Yaneses
defendant, and thereafter to deliver the prayed for the cancellation of TCT Nos. T-19291 and
possession of said lots to the plaintiffs. 19292 issued to Siason (sic) for being null and void; the
No special pronouncement as to costs. issuance of a new certificate of title in the name of the
Yaneses "in accordance with the sheriffs return of service
SO ORDERED. 16 dated October 20, 1965;" Siason's delivery of possession
of Lot 773 to the Yaneses; and if, delivery thereof could
not be effected, or, if the issuance of a new title could not
It will be noted that the above-mentioned manifestation
be made, that the Alvarez and Siason jointly and severally
of Jesus Yanes was not mentioned in the aforesaid
pay the Yaneses the sum of P45,000.00. They also prayed
decision.
that Siason render an accounting of the fruits of Lot 773
from November 13, 1961 until the filing of the complaint;
However, execution of said decision proved unsuccessful and that the defendants jointly and severally pay the
with respect to Lot 773. In his return of service dated Yaneses moral damages of P20,000.00 and exemplary
October 20, 1965, the sheriff stated that he discovered damages of P10,000.00 plus attorney's fees of P4,
that Lot 773 had been subdivided into Lots 773-A and 000.00. 25
773-B; that they were "in the name" of Rodolfo Siason
who had purchased them from Alvarez, and that Lot 773
In his answer to the complaint, Siason alleged that the
could not be delivered to the plaintiffs as Siason was "not
validity of his titles to Lots 773-A and 773-B, having been
a party per writ of execution." 17
passed upon by the court in its order of September 4,
1965, had become res judicata and the Yaneses were
The execution of the decision in Civil Case No. 5022 estopped from questioning said order. 26 On their part,
having met a hindrance, herein private respondents (the the Alvarez stated in their answer that the Yaneses' cause
Yaneses) filed on July 31, 1965, in the Court of First of action had been "barred by res judicata, statute of
Instance of Negros Occidental a petition for the issuance limitation and estoppel." 27
of a new certificate of title and for a declaration of nullity
of TCT Nos. T-23165 and T-23166 issued to Rosendo
In its decision of July 8, 1974, the lower court found that
Alvarez. 18 Thereafter, the court required Rodolfo Siason
Rodolfo Siason, who purchased the properties in question
to produce the certificates of title covering Lots 773 and
thru an agent as he was then in Mexico pursuing further
823.
medical studies, was a buyer in good faith for a valuable
consideration. Although the Yaneses were negligent in
Expectedly, Siason filed a manifestation stating that he their failure to place a notice of lis pendens "before the
purchased Lots 773-A, 773-B and 658, not Lots 773 and Register of Deeds of Negros Occidental in order to protect
their rights over the property in question" in Civil Case No. of P20,000.00 representing the actual
5022, equity demanded that they recover the actual value value of Lots Nos. 773-A and 773-B of the
of the land because the sale thereof executed between cadastral survey of Murcia, Negros
Alvarez and Siason was without court approval. 28 The Occidental, and is reversed insofar as it
dispositive portion of the decision states: awarded the sums of P2,000.00,
P5,000.00 and P2,000.00 as actual
IN VIEW OF THE FOREGOING damages, moral damages and attorney's
CONSIDERATION, judgment is hereby fees, respectively. No costs.
rendered in the following manner:
SO ORDERED. 32

A. The case against the defendant Dr.


Rodolfo Siason and the Register of Deeds Finding no cogent reason to grant appellants motion for
are (sic) hereby dismmissed, reconsideration, said appellate court denied the same.

B. The defendants, Laura, Flora and Hence, the instant petition. ln their memorandum
Raymundo, all surnamed Alvarez being petitioners raised the following issues:
the legitimate children of the deceased
Rosendo Alvarez are hereby ordered to 1. Whethere or not the defense of
pay jointly and severally the plaintiffs the prescription and estoppel had been
sum of P20,000.00 representing the timely and properly invoked and raised
actual value of Lots Nos. 773-A and 773- by the petitioners in the lower court.
B of Murcia Cadastre, Negros Occidental;
the sum of P2,000.00 as actual damages 2. Whether or not the cause and/or
suffered by the plaintiff; the sum of causes of action of the private
P5,000.00 representing moral damages respondents, if ever there are any, as
and the sum of P2.000 as attorney's fees, alleged in their complaint dated February
all with legal rate of interest from date of 21, 1968 which has been docketed in the
the filing of this complaint up to final trial court as Civil Case No. 8474 supra,
payment. are forever barred by statute of limitation
and/or prescription of action and
C. The cross-claim filed by the defendant estoppel.
Dr. Rodolfo Siason against the
defendants, Laura, Flora and Raymundo, 3. Whether or not the late Rosendo
all surnamed Alvarez is hereby dismissed. Alvarez, a defendant in Civil Case No.
5022, supra and father of the petitioners
D. Defendants, Laura, Flora and become a privy and/or party to the
Raymundo, all surnamed Alvarez are waiver (Exhibit 4-defendant Siason) in
hereby ordered to pay the costs of this Civil Case No. 8474, supra where the
suit. private respondents had unqualifiedly
and absolutely waived, renounced and
SO ORDERED. 29
quitclaimed all their alleged rights and
interests, if ever there is any, on Lots
The Alvarez appealed to the then Intermediate Appellate Nos. 773-A and 773-B of Murcia Cadastre
Court which in its decision of August 31, 1983 30 affirmed as appearing in their written
the lower court's decision "insofar as it ordered manifestation dated November 6, 1962
defendants-appellants to pay jointly and severally the (Exhibits "4" Siason) which had not been
plaintiffs-appellees the sum of P20,000.00 representing controverted or even impliedly or
the actual value of Lots Nos. 773-A and 773-B of the indirectly denied by them.
cadastral survey of Murcia, Negros Occidental, and is
reversed insofar as it awarded the sums of P2,000.00, 4. Whether or not the liability or liabilities
P5,000.00 and P2,000.00 as actual damages, moral of Rosendo Alvarez arising from the sale
damages and attorney's fees, respectively." 31 The of Lots Nos. 773-A and 773-B of Murcia
dispositive portion of said decision reads: Cadastre to Dr. Rodolfo Siason, if ever
there is any, could be legally passed or
WHEREFORE, the decision appealed from transmitted by operations (sic) of law to
is affirmed insofar as it ordered the petitioners without violation of law
defendants-appellants to pay jointly and and due process . 33
severally the plaintiffs- appellees the sum
The petition is devoid of merit. purchaser for value, for damages. 39 "It is one thing to
protect an innocent third party; it is entirely a different
As correctly ruled by the Court of Appeals, it is powerless matter and one devoid of justification if deceit would be
and for that matter so is the Supreme Court, to review rewarded by allowing the perpetrator to enjoy the fruits
the decision in Civil Case No. 5022 ordering Alvarez to of his nefarious decided As clearly revealed by the
reconvey the lots in dispute to herein private respondents. undeviating line of decisions coming from this Court, such
Said decision had long become final and executory and an undesirable eventuality is precisely sought to be
with the possible exception of Dr. Siason, who was not a guarded against." 40
party to said case, the decision in Civil Case No. 5022 is
the law of the case between the parties thereto. It ended The issue on the right to the properties in litigation having
when Alvarez or his heirs failed to appeal the decision been finally adjudicated in Civil Case No. 5022 in favor of
against them. 34 private respondents, it cannot now be reopened in the
instant case on the pretext that the defenses of
Thus, it is axiomatic that when a right or fact has been prescription and estoppel have not been properly
judicially tried and determined by a court of competent considered by the lower court. Petitioners could have
jurisdiction, so long as it remains unreversed, it should be appealed in the former case but they did not. They have
conclusive upon the parties and those in privity with them therefore foreclosed their rights, if any, and they cannot
in law or estate. 35 As consistently ruled by this Court, now be heard to complain in another case in order to
every litigation must come to an end. Access to the court defeat the enforcement of a judgment which has longing
is guaranteed. But there must be a limit to it. Once a become final and executory.
litigant's right has been adjudicated in a valid final
judgment of a competent court, he should not be granted Petitioners further contend that the liability arising from
an unbridled license to return for another try. The the sale of Lots No. 773-A and 773-B made by Rosendo
prevailing party should not be harassed by subsequent Alvarez to Dr. Rodolfo Siason should be the sole liability
suits. For, if endless litigation were to be allowed, of the late Rosendo Alvarez or of his estate, after his
unscrupulous litigations will multiply in number to the death.
detriment of the administration of justice. 36
Such contention is untenable for it overlooks the doctrine
There is no dispute that the rights of the Yaneses to the obtaining in this jurisdiction on the general transmissibility
properties in question have been finally adjudicated in of the rights and obligations of the deceased to his
Civil Case No. 5022. As found by the lower court, from the legitimate children and heirs. Thus, the pertinent
uncontroverted evidence presented, the Yaneses have provisions of the Civil Code state:
been illegally deprived of ownership and possession of the
lots in question. 37 In fact, Civil Case No. 8474 now under Art. 774. Succession is a mode of
review, arose from the failure to execute Civil Case No. acquisition by virtue of which the
5022, as subject lots can no longer be reconveyed to property, rights and obligations to the
private respondents Yaneses, the same having been sold extent of the value of the inheritance, of
during the pendency of the case by the petitioners' father a person are transmitted through his
to Dr. Siason who did not know about the controversy, death to another or others either by his
there being no lis pendens annotated on the titles. Hence, will or by operation of law.
it was also settled beyond question that Dr. Siason is a
purchaser in good faith. Art. 776. The inheritance includes all the
property, rights and obligations of a
Under the circumstances, the trial court did not annul the person which are not extinguished by his
sale executed by Alvarez in favor of Dr. Siason on death.
November 11, 1961 but in fact sustained it. The trial court
ordered the heirs of Rosendo Alvarez who lost in Civil Case Art. 1311. Contract stake effect only
No. 5022 to pay the plaintiffs (private respondents herein) between the parties, their assigns and
the amount of P20,000.00 representing the actual value heirs except in case where the rights and
of the subdivided lots in dispute. It did not order obligations arising from the contract are
defendant Siason to pay said amount. 38 not transmissible by their nature, or by
stipulation or by provision of law. The
As to the propriety of the present case, it has long been heir is not liable beyond the value of the
established that the sole remedy of the landowner whose property received from the decedent.
property has been wrongfully or erroneously registered in
another's name is to bring an ordinary action in the As explained by this Court through Associate Justice J.B.L.
ordinary court of justice for reconveyance or, if the Reyes in the case of Estate of Hemady vs. Luzon Surety
property has passed into the hands of an innocent Co., Inc. 41
The binding effect of contracts upon the SO ORDERED.
heirs of the deceased party is not altered
by the provision of our Rules of Court
that money debts of a deceased must be
liquidated and paid from his estate
before the residue is distributed among
said heirs (Rule 89). The reason is that
whatever payment is thus made from the
state is ultimately a payment by the heirs
or distributees, since the amount of the
paid claim in fact diminishes or reduces
the shares that the heirs would have
been entitled to receive.

Under our law, therefore. the general


rule is that a party's contractual rights
and obligations are transmissible to the
successors.

The rule is a consequence of the


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

xxx xxx xxx

Petitioners being the heirs of the late Rosendo Alvarez,


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

It must, however, be made clear that petitioners are liable


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

WHEREFORE, subject to the clarification herein above


stated, the assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against petitioners.
ARTICLE 774-776 receipt of the down payment above-
stated.

On our presentation of the TCT already


G.R. No. 103577 October 7, 1996 in or name, We will immediately
execute the deed of absolute sale of
ROMULO A. CORONEL, ALARICO A. CORONEL, said property and Miss Ramona
ANNETTE A. CORONEL, ANNABELLE C. Patricia Alcaraz shall immediately pay
GONZALES (for herself and on behalf of Florida C. the balance of the P1,190,000.00.
Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and Clearly, the conditions appurtenant to
CATALINA BALAIS MABANAG, petitioners, the sale are the following:
vs.
THE COURT OF APPEALS, CONCEPCION D. 1. Ramona will make a down payment
ALCARAZ, and RAMONA PATRICIA ALCARAZ, of Fifty Thousand (P50,000.00) Pesos
assisted by GLORIA F. NOEL as attorney-in- upon execution of the document
fact, respondents. aforestated;

2. The Coronels will cause the transfer


MELO, J.:p in their names of the title of the property
registered in the name of their
The petition before us has its roots in a complaint for specific performance to deceased father upon receipt of the
compel herein petitioners (except the last named, Catalina Balais Mabanag)
to consummate the sale of a parcel of land with its improvements located
Fifty Thousand (P50,000.00) Pesos
along Roosevelt Avenue in Quezon City entered into by the parties sometime down payment;
in January 1985 for the price of P1,240,000.00.

3. Upon the transfer in their names of


The undisputed facts of the case were summarized by the subject property, the Coronels will
respondent court in this wise: execute the deed of absolute sale in
favor of Ramona and the latter will pay
On January 19, 1985, defendants- the former the whole balance of One
appellants Romulo Coronel, et al. Million One Hundred Ninety Thousand
(hereinafter referred to as Coronels) (P1,190,000.00) Pesos.
executed a document entitled "Receipt
of Down Payment" (Exh. "A") in favor of On the same date (January 15, 1985),
plaintiff Ramona Patricia Alcaraz plaintiff-appellee Concepcion D.
(hereinafter referred to as Ramona) Alcaraz (hereinafter referred to as
which is reproduced hereunder: Concepcion), mother of Ramona, paid
the down payment of Fifty Thousand
RECEIPT OF DOWN PAYMENT (P50,000.00) Pesos (Exh. "B", Exh.
"2").
P1,240,000.00 — Total amount
On February 6, 1985, the property
50,000 — Down payment originally registered in the name of the
——————————— Coronels' father was transferred in their
P1,190,000.00 — Balance names under TCT
No. 327043 (Exh. "D"; Exh. "4")
Received from Miss Ramona Patricia
Alcaraz of 146 Timog, Quezon City, the On February 18, 1985, the Coronels
sum of Fifty Thousand Pesos purchase sold the property covered by TCT No.
price of our inherited house and lot, 327043 to intervenor-appellant
covered by TCT No. 119627 of the Catalina B. Mabanag (hereinafter
Registry of Deeds of Quezon City, in referred to as Catalina) for One Million
the total amount of P1,240,000.00. Five Hundred Eighty Thousand
(P1,580,000.00) Pesos after the latter
We bind ourselves to effect the transfer has paid Three Hundred Thousand
in our names from our deceased father, (P300,000.00) Pesos (Exhs. "F-3";
Constancio P. Coronel, the transfer Exh. "6-C")
certificate of title immediately upon
For this reason, Coronels canceled and WHEREFORE, judgment for specific
rescinded the contract (Exh. "A") with performance is hereby rendered
Ramona by depositing the down ordering defendant to execute in favor
payment paid by Concepcion in the of plaintiffs a deed of absolute sale
bank in trust for Ramona Patricia covering that parcel of land embraced
Alcaraz. in and covered by Transfer Certificate
of Title No. 327403 (now TCT No.
On February 22, 1985, Concepcion, et 331582) of the Registry of Deeds for
al., filed a complaint for specific Quezon City, together with all the
performance against the Coronels and improvements existing thereon free
caused the annotation of a notice of lis from all liens and encumbrances, and
pendens at the back of TCT No. once accomplished, to immediately
327403 (Exh. "E"; Exh. "5"). deliver the said document of sale to
plaintiffs and upon receipt thereof, the
On April 2, 1985, Catalina caused the said document of sale to plaintiffs and
annotation of a notice of adverse claim upon receipt thereof, the plaintiffs are
covering the same property with the ordered to pay defendants the whole
Registry of Deeds of Quezon City (Exh. balance of the purchase price
"F"; Exh. "6"). amounting to P1,190,000.00 in cash.
Transfer Certificate of Title No. 331582
of the Registry of Deeds for Quezon
On April 25, 1985, the Coronels
City in the name of intervenor is hereby
executed a Deed of Absolute Sale over
canceled and declared to be without
the subject property in favor of Catalina
force and effect. Defendants and
(Exh. "G"; Exh. "7").
intervenor and all other persons
claiming under them are hereby
On June 5, 1985, a new title over the ordered to vacate the subject property
subject property was issued in the and deliver possession thereof to
name of Catalina under TCT No. plaintiffs. Plaintiffs' claim for damages
351582 (Exh. "H"; Exh. "8"). and attorney's fees, as well as the
counterclaims of defendants and
(Rollo, pp. 134-136) intervenors are hereby dismissed.

In the course of the proceedings before the trial court No pronouncement as to costs.
(Branch 83, RTC, Quezon City) the parties agreed to
submit the case for decision solely on the basis of So Ordered.
documentary exhibits. Thus, plaintiffs therein (now
private respondents) proffered their documentary
Macabebe, Pampanga for Quezon
evidence accordingly marked as Exhibits "A" through
City, March 1, 1989.
"J", inclusive of their corresponding submarkings.
Adopting these same exhibits as their own, then
defendants (now petitioners) accordingly offered and (Rollo, p. 106)
marked them as Exhibits "1" through "10", likewise
inclusive of their corresponding submarkings. Upon A motion for reconsideration was filed by petitioner
motion of the parties, the trial court gave them thirty before the new presiding judge of the Quezon City RTC
(30) days within which to simultaneously submit their but the same was denied by Judge Estrella T. Estrada,
respective memoranda, and an additional 15 days thusly:
within which to submit their corresponding comment or
reply thereof, after which, the case would be deemed The prayer contained in the instant
submitted for resolution. motion, i.e., to annul the decision and
to render anew decision by the
On April 14, 1988, the case was submitted for undersigned Presiding Judge should
resolution before Judge Reynaldo Roura, who was be denied for the following reasons: (1)
then temporarily detailed to preside over Branch 82 of The instant case became submitted for
the RTC of Quezon City. On March 1, 1989, judgment decision as of April 14, 1988 when the
was handed down by Judge Roura from his regular parties terminated the presentation of
bench at Macabebe, Pampanga for the Quezon City their respective documentary evidence
branch, disposing as follows: and when the Presiding Judge at that
time was Judge Reynaldo Roura. The
fact that they were allowed to file Judge" dated March 20, 1989 is hereby
memoranda at some future date did not DENIED.
change the fact that the hearing of the
case was terminated before Judge SO ORDERED.
Roura and therefore the same should
be submitted to him for decision; (2) Quezon City, Philippines, July 12,
When the defendants and intervenor 1989.
did not object to the authority of Judge
Reynaldo Roura to decide the case
(Rollo, pp. 108-109)
prior to the rendition of the decision,
when they met for the first time before
the undersigned Presiding Judge at the Petitioners thereupon interposed an appeal, but on
hearing of a pending incident in Civil December 16, 1991, the Court of Appeals (Buena,
Case No. Q-46145 on November 11, Gonzaga-Reyes, Abad Santos (P), JJ.) rendered its
1988, they were deemed to have decision fully agreeing with the trial court.
acquiesced thereto and they are now
estopped from questioning said Hence, the instant petition which was filed on March 5,
authority of Judge Roura after they 1992. The last pleading, private respondents' Reply
received the decision in question which Memorandum, was filed on September 15, 1993. The
happens to be adverse to them; (3) case was, however, re-raffled to
While it is true that Judge Reynaldo undersigned ponente only on August 28, 1996, due to
Roura was merely a Judge-on-detail at the voluntary inhibition of the Justice to whom the case
this Branch of the Court, he was in all was last assigned.
respects the Presiding Judge with full
authority to act on any pending incident While we deem it necessary to introduce certain
submitted before this Court during his refinements in the disquisition of respondent court in
incumbency. When he returned to his the affirmance of the trial court's decision, we definitely
Official Station at Macabebe, find the instant petition bereft of merit.
Pampanga, he did not lose his
authority to decide or resolve such The heart of the controversy which is the ultimate key
cases submitted to him for decision or in the resolution of the other issues in the case at bar
resolution because he continued as is the precise determination of the legal significance of
Judge of the Regional Trial Court and the document entitled "Receipt of Down Payment"
is of co-equal rank with the which was offered in evidence by both parties. There is
undersigned Presiding Judge. The no dispute as to the fact that said document embodied
standing rule and supported by the binding contract between Ramona Patricia Alcaraz
jurisprudence is that a Judge to whom on the one hand, and the heirs of Constancio P.
a case is submitted for decision has the Coronel on the other, pertaining to a particular house
authority to decide the case and lot covered by TCT No. 119627, as defined in
notwithstanding his transfer to another Article 1305 of the Civil Code of the Philippines which
branch or region of the same court reads as follows:
(Sec. 9, Rule 135, Rule of Court).
Art. 1305. A contract is a meeting of
Coming now to the twin prayer for minds between two persons whereby
reconsideration of the Decision dated one binds himself, with respect to the
March 1, 1989 rendered in the instant other, to give something or to render
case, resolution of which now pertains some service.
to the undersigned Presiding Judge,
after a meticulous examination of the While, it is the position of private respondents that the
documentary evidence presented by "Receipt of Down Payment" embodied a perfected
the parties, she is convinced that the contract of sale, which perforce, they seek to enforce
Decision of March 1, 1989 is supported by means of an action for specific performance,
by evidence and, therefore, should not petitioners on their part insist that what the document
be disturbed. signified was a mere executory contract to sell, subject
to certain suspensive conditions, and because of the
IN VIEW OF THE FOREGOING, the absence of Ramona P. Alcaraz, who left for the United
"Motion for Reconsideration and/or to States of America, said contract could not possibly
Annul Decision and Render Anew ripen into a contract absolute sale.
Decision by the Incumbent Presiding
Plainly, such variance in the contending parties' and failure of which is not a breach,
contentions is brought about by the way each interprets casual or serious, but simply an event
the terms and/or conditions set forth in said private that prevented the obligation of the
instrument. Withal, based on whatever relevant and vendor to convey title from acquiring
admissible evidence may be available on record, this, binding force.
Court, as were the courts below, is now called upon to
adjudge what the real intent of the parties was at the Stated positively, upon the fulfillment of the suspensive
time the said document was executed. condition which is the full payment of the purchase
price, the prospective seller's obligation to sell the
The Civil Code defines a contract of sale, thus: subject property by entering into a contract of sale with
the prospective buyer becomes demandable as
Art. 1458. By the contract of sale one provided in Article 1479 of the Civil Code which states:
of the contracting parties obligates
himself to transfer the ownership of and Art. 1479. A promise to buy and sell a
to deliver a determinate thing, and the determinate thing for a price certain is
other to pay therefor a price certain in reciprocally demandable.
money or its equivalent.
An accepted unilateral promise to buy
Sale, by its very nature, is a consensual contract or to sell a determinate thing for a price
because it is perfected by mere consent. The essential certain is binding upon the promissor if
elements of a contract of sale are the following: the promise is supported by a
consideration distinct from the price.
a) Consent or meeting of the minds,
that is, consent to transfer ownership in A contract to sell may thus be defined as a bilateral
exchange for the price; contract whereby the prospective seller, while
expressly reserving the ownership of the subject
b) Determinate subject matter; and property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
c) Price certain in money or its exclusively to the prospective buyer upon fulfillment of
equivalent. the condition agreed upon, that is, full payment of the
purchase price.
Under this definition, a Contract to Sell may not be
considered as a Contract of Sale because the first A contract to sell as defined hereinabove, may not
essential element is lacking. In a contract to sell, the even be considered as a conditional contract of sale
prospective seller explicity reserves the transfer of title where the seller may likewise reserve title to the
to the prospective buyer, meaning, the prospective property subject of the sale until the fulfillment of a
seller does not as yet agree or consent to transfer suspensive condition, because in a conditional contract
ownership of the property subject of the contract to sell of sale, the first element of consent is present, although
until the happening of an event, which for present it is conditioned upon the happening of a contingent
purposes we shall take as the full payment of the event which may or may not occur. If the suspensive
purchase price. What the seller agrees or obliges condition is not fulfilled, the perfection of the contract
himself to do is to fulfill is promise to sell the subject of sale is completely abated (cf. Homesite and housing
property when the entire amount of the purchase price Corp. vs. Court of Appeals, 133 SCRA 777 [1984]).
is delivered to him. In other words the full payment of However, if the suspensive condition is fulfilled, the
the purchase price partakes of a suspensive condition, contract of sale is thereby perfected, such that if there
the non-fulfillment of which prevents the obligation to had already been previous delivery of the property
sell from arising and thus, ownership is retained by the subject of the sale to the buyer, ownership thereto
prospective seller without further remedies by the automatically transfers to the buyer by operation of law
prospective buyer. In Roque vs. Lapuz (96 SCRA 741 without any further act having to be performed by the
[1980]), this Court had occasion to rule: seller.

Hence, We hold that the contract In a contract to sell, upon the fulfillment of the
between the petitioner and the suspensive condition which is the full payment of the
respondent was a contract to sell purchase price, ownership will not automatically
where the ownership or title is retained transfer to the buyer although the property may have
by the seller and is not to pass until the been previously delivered to him. The prospective
full payment of the price, such payment seller still has to convey title to the prospective buyer
being a positive suspensive condition by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell When the "Receipt of Down Payment" is considered in
and a conditional contract of sale specially in cases its entirety, it becomes more manifest that there was a
where the subject property is sold by the owner not to clear intent on the part of petitioners to transfer title to
the party the seller contracted with, but to a third the buyer, but since the transfer certificate of title was
person, as in the case at bench. In a contract to sell, still in the name of petitioner's father, they could not
there being no previous sale of the property, a third fully effect such transfer although the buyer was then
person buying such property despite the fulfillment of willing and able to immediately pay the purchase price.
the suspensive condition such as the full payment of Therefore, petitioners-sellers undertook upon receipt of
the purchase price, for instance, cannot be deemed a the down payment from private respondent Ramona P.
buyer in bad faith and the prospective buyer cannot Alcaraz, to cause the issuance of a new certificate of
seek the relief of reconveyance of the property. There title in their names from that of their father, after which,
is no double sale in such case. Title to the property will they promised to present said title, now in their names,
transfer to the buyer after registration because there is to the latter and to execute the deed of absolute sale
no defect in the owner-seller's title per se, but the latter, whereupon, the latter shall, in turn, pay the entire
of course, may be used for damages by the intending balance of the purchase price.
buyer.
The agreement could not have been a contract to sell
In a conditional contract of sale, however, upon the because the sellers herein made no express
fulfillment of the suspensive condition, the sale reservation of ownership or title to the subject parcel of
becomes absolute and this will definitely affect the land. Furthermore, the circumstance which prevented
seller's title thereto. In fact, if there had been previous the parties from entering into an absolute contract of
delivery of the subject property, the seller's ownership sale pertained to the sellers themselves (the certificate
or title to the property is automatically transferred to the of title was not in their names) and not the full payment
buyer such that, the seller will no longer have any title of the purchase price. Under the established facts and
to transfer to any third person. Applying Article 1544 of circumstances of the case, the Court may safely
the Civil Code, such second buyer of the property who presume that, had the certificate of title been in the
may have had actual or constructive knowledge of names of petitioners-sellers at that time, there would
such defect in the seller's title, or at least was charged have been no reason why an absolute contract of sale
with the obligation to discover such defect, cannot be a could not have been executed and consummated right
registrant in good faith. Such second buyer cannot there and then.
defeat the first buyer's title. In case a title is issued to
the second buyer, the first buyer may seek Moreover, unlike in a contract to sell, petitioners in the
reconveyance of the property subject of the sale. case at bar did not merely promise to sell the properly
to private respondent upon the fulfillment of the
With the above postulates as guidelines, we now suspensive condition. On the contrary, having already
proceed to the task of deciphering the real nature of the agreed to sell the subject property, they undertook to
contract entered into by petitioners and private have the certificate of title changed to their names and
respondents. immediately thereafter, to execute the written deed of
absolute sale.
It is a canon in the interpretation of contracts that the
words used therein should be given their natural and Thus, the parties did not merely enter into a contract to
ordinary meaning unless a technical meaning was sell where the sellers, after compliance by the buyer
intended (Tan vs. Court of Appeals, 212 SCRA 586 with certain terms and conditions, promised to sell the
[1992]). Thus, when petitioners declared in the said property to the latter. What may be perceived from the
"Receipt of Down Payment" that they — respective undertakings of the parties to the contract is
that petitioners had already agreed to sell the house
Received from Miss Ramona Patricia and lot they inherited from their father, completely
Alcaraz of 146 Timog, Quezon City, the willing to transfer full ownership of the subject house
sum of Fifty Thousand Pesos purchase and lot to the buyer if the documents were then in
price of our inherited house and lot, order. It just happened, however, that the transfer
covered by TCT No. 1199627 of the certificate of title was then still in the name of their
Registry of Deeds of Quezon City, in father. It was more expedient to first effect the change
the total amount of P1,240,000.00. in the certificate of title so as to bear their names. That
is why they undertook to cause the issuance of a new
without any reservation of title until full payment transfer of the certificate of title in their names upon
of the entire purchase price, the natural and receipt of the down payment in the amount of
ordinary idea conveyed is that they sold their P50,000.00. As soon as the new certificate of title is
property. issued in their names, petitioners were committed to
immediately execute the deed of absolute sale. Only
then will the obligation of the buyer to pay the Since the condition contemplated by the parties which
remainder of the purchase price arise. is the issuance of a certificate of title in petitioners'
names was fulfilled on February 6, 1985, the respective
There is no doubt that unlike in a contract to sell which obligations of the parties under the contract of sale
is most commonly entered into so as to protect the became mutually demandable, that is, petitioners, as
seller against a buyer who intends to buy the property sellers, were obliged to present the transfer certificate
in installment by withholding ownership over the of title already in their names to private respondent
property until the buyer effects full payment therefor, in Ramona P. Alcaraz, the buyer, and to immediately
the contract entered into in the case at bar, the sellers execute the deed of absolute sale, while the buyer on
were the one who were unable to enter into a contract her part, was obliged to forthwith pay the balance of the
of absolute sale by reason of the fact that the certificate purchase price amounting to P1,190,000.00.
of title to the property was still in the name of their
father. It was the sellers in this case who, as it were, It is also significant to note that in the first paragraph in
had the impediment which prevented, so to speak, the page 9 of their petition, petitioners conclusively
execution of an contract of absolute sale. admitted that:

What is clearly established by the plain language of the 3. The petitioners-sellers Coronel
subject document is that when the said "Receipt of bound themselves "to effect the
Down Payment" was prepared and signed by transfer in our names from our
petitioners Romeo A. Coronel, et al., the parties had deceased father Constancio P.
agreed to a conditional contract of sale, consummation Coronel, the transfer certificate of title
of which is subject only to the successful transfer of the immediately upon receipt of the
certificate of title from the name of petitioners' father, downpayment above-stated". The sale
Constancio P. Coronel, to their names. was still subject to this suspensive
condition. (Emphasis supplied.)
The Court significantly notes this suspensive condition
was, in fact, fulfilled on February 6, 1985 (Exh. "D"; (Rollo, p. 16)
Exh. "4"). Thus, on said date, the conditional contract
of sale between petitioners and private respondent Petitioners themselves recognized that they entered
Ramona P. Alcaraz became obligatory, the only act into a contract of sale subject to a suspensive
required for the consummation thereof being the condition. Only, they contend, continuing in the same
delivery of the property by means of the execution of paragraph, that:
the deed of absolute sale in a public instrument, which
petitioners unequivocally committed themselves to do . . . Had petitioners-sellers not
as evidenced by the "Receipt of Down Payment." complied with this condition of first
transferring the title to the property
Article 1475, in correlation with Article 1181, both of the under their names, there could be no
Civil Code, plainly applies to the case at bench. Thus, perfected contract of sale. (Emphasis
supplied.)
Art. 1475. The contract of sale is
perfected at the moment there is a (Ibid.)
meeting of minds upon the thing which
is the object of the contract and upon not aware that they set their own trap for
the price. themselves, for Article 1186 of the Civil Code
expressly provides that:
From the moment, the parties may
reciprocally demand performance, Art. 1186. The condition shall be
subject to the provisions of the law deemed fulfilled when the obligor
governing the form of contracts. voluntarily prevents its fulfillment.

Art. 1181. In conditional obligations, Besides, it should be stressed and emphasized that
the acquisition of rights, as well as the what is more controlling than these mere hypothetical
extinguishment or loss of those already arguments is the fact that the condition herein referred
acquired, shall depend upon the to was actually and indisputably fulfilled on February 6,
happening of the event which 1985, when a new title was issued in the names of
constitutes the condition. petitioners as evidenced by TCT No. 327403 (Exh. "D";
Exh. "4").
The inevitable conclusion is that on January 19, 1985, succession are transmitted from the moment of
as evidenced by the document denominated as death of the decedent (Article 777, Civil Code;
"Receipt of Down Payment" (Exh. "A"; Exh. "1"), the Cuison vs. Villanueva, 90 Phil. 850 [1952]).
parties entered into a contract of sale subject only to
the suspensive condition that the sellers shall effect the Be it also noted that petitioners' claim that succession
issuance of new certificate title from that of their may not be declared unless the creditors have been
father's name to their names and that, on February 6, paid is rendered moot by the fact that they were able
1985, this condition was fulfilled (Exh. "D"; Exh. "4"). to effect the transfer of the title to the property from the
decedent's name to their names on February 6, 1985.
We, therefore, hold that, in accordance with Article
1187 which pertinently provides — Aside from this, petitioners are precluded from raising
their supposed lack of capacity to enter into an
Art. 1187. The effects of conditional agreement at that time and they cannot be allowed to
obligation to give, once the condition now take a posture contrary to that which they took
has been fulfilled, shall retroact to the when they entered into the agreement with private
day of the constitution of the obligation respondent Ramona P. Alcaraz. The Civil Code
... expressly states that:

In obligation to do or not to do, the Art. 1431. Through estoppel an


courts shall determine, in each case, admission or representation is
the retroactive effect of the condition rendered conclusive upon the person
that has been complied with. making it, and cannot be denied or
disproved as against the person relying
the rights and obligations of the parties with thereon.
respect to the perfected contract of sale
became mutually due and demandable as of Having represented themselves as the true
the time of fulfillment or occurrence of the owners of the subject property at the time of
suspensive condition on February 6, 1985. As sale, petitioners cannot claim now that they
of that point in time, reciprocal obligations of were not yet the absolute owners thereof at that
both seller and buyer arose. time.

Petitioners also argue there could been no perfected Petitioners also contend that although there was in fact
contract on January 19, 1985 because they were then a perfected contract of sale between them and
not yet the absolute owners of the inherited property. Ramona P. Alcaraz, the latter breached her reciprocal
obligation when she rendered impossible the
We cannot sustain this argument. consummation thereof by going to the United States of
America, without leaving her address, telephone
Article 774 of the Civil Code defines Succession as a number, and Special Power of Attorney (Paragraphs
mode of transferring ownership as follows: 14 and 15, Answer with Compulsory Counterclaim to
the Amended Complaint, p. 2; Rollo, p. 43), for which
reason, so petitioners conclude, they were correct in
Art. 774. Succession is a mode of
unilaterally rescinding rescinding the contract of sale.
acquisition by virtue of which the
property, rights and obligations to be
extent and value of the inheritance of a We do not agree with petitioners that there was a valid
person are transmitted through his rescission of the contract of sale in the instant case.
death to another or others by his will or We note that these supposed grounds for petitioners'
by operation of law. rescission, are mere allegations found only in their
responsive pleadings, which by express provision of
the rules, are deemed controverted even if no reply is
Petitioners-sellers in the case at bar being the
filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
sons and daughters of the decedent
Court). The records are absolutely bereft of any
Constancio P. Coronel are compulsory heirs
supporting evidence to substantiate petitioners'
who were called to succession by operation of
allegations. We have stressed time and again that
law. Thus, at the point their father drew his last
allegations must be proven by sufficient evidence (Ng
breath, petitioners stepped into his shoes
Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs.
insofar as the subject property is concerned,
Embisan, 2 SCRA 598 [1961]. Mere allegation is not
such that any rights or obligations pertaining
an evidence (Lagasca vs. De Vera, 79 Phil. 376
thereto became binding and enforceable upon
[1947]).
them. It is expressly provided that rights to the
Even assuming arguendo that Ramona P. Alcaraz was comply or is not ready to comply in a
in the United States of America on February 6, 1985, proper manner with what is incumbent
we cannot justify petitioner-sellers' act of unilaterally upon him. From the moment one of the
and extradicially rescinding the contract of sale, there parties fulfill his obligation, delay by the
being no express stipulation authorizing the sellers to other begins. (Emphasis supplied.)
extarjudicially rescind the contract of sale. (cf. Dignos
vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. de There is thus neither factual nor legal basis to rescind
Leon, 132 SCRA 722 [1984]) the contract of sale between petitioners and
respondents.
Moreover, petitioners are estopped from raising the
alleged absence of Ramona P. Alcaraz because With the foregoing conclusions, the sale to the other
although the evidence on record shows that the sale petitioner, Catalina B. Mabanag, gave rise to a case of
was in the name of Ramona P. Alcaraz as the buyer, double sale where Article 1544 of the Civil Code will
the sellers had been dealing with Concepcion D. apply, to wit:
Alcaraz, Ramona's mother, who had acted for and in
behalf of her daughter, if not also in her own behalf. Art. 1544. If the same thing should
Indeed, the down payment was made by Concepcion have been sold to different vendees,
D. Alcaraz with her own personal check (Exh. "B"; Exh. the ownership shall be transferred to
"2") for and in behalf of Ramona P. Alcaraz. There is the person who may have first taken
no evidence showing that petitioners ever questioned possession thereof in good faith, if it
Concepcion's authority to represent Ramona P. should be movable property.
Alcaraz when they accepted her personal check.
Neither did they raise any objection as regards
Should if be immovable property, the
payment being effected by a third person. Accordingly,
ownership shall belong to the person
as far as petitioners are concerned, the physical
acquiring it who in good faith first
absence of Ramona P. Alcaraz is not a ground to
recorded it in Registry of Property.
rescind the contract of sale.
Should there be no inscription, the
Corollarily, Ramona P. Alcaraz cannot even be
ownership shall pertain to the person
deemed to be in default, insofar as her obligation to pay
who in good faith was first in the
the full purchase price is concerned. Petitioners who
possession; and, in the absence
are precluded from setting up the defense of the
thereof to the person who presents the
physical absence of Ramona P. Alcaraz as above-
oldest title, provided there is good faith.
explained offered no proof whatsoever to show that
they actually presented the new transfer certificate of
title in their names and signified their willingness and The record of the case shows that the Deed of Absolute
readiness to execute the deed of absolute sale in Sale dated April 25, 1985 as proof of the second
accordance with their agreement. Ramona's contract of sale was registered with the Registry of
corresponding obligation to pay the balance of the Deeds of Quezon City giving rise to the issuance of a
purchase price in the amount of P1,190,000.00 (as new certificate of title in the name of Catalina B.
buyer) never became due and demandable and, Mabanag on June 5, 1985. Thus, the second
therefore, she cannot be deemed to have been in paragraph of Article 1544 shall apply.
default.
The above-cited provision on double sale presumes
Article 1169 of the Civil Code defines when a party in a title or ownership to pass to the first buyer, the
contract involving reciprocal obligations may be exceptions being: (a) when the second buyer, in good
considered in default, to wit: faith, registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two
buyers, when the second buyer, in good faith, acquires
Art. 1169. Those obliged to deliver or to
possession of the property ahead of the first buyer.
do something, incur in delay from the
Unless, the second buyer satisfies these requirements,
time the obligee judicially or
title or ownership will not transfer to him to the prejudice
extrajudicially demands from them the
of the first buyer.
fulfillment of their obligation.
In his commentaries on the Civil Code, an accepted
xxx xxx xxx
authority on the subject, now a distinguished member
of the Court, Justice Jose C. Vitug, explains:
In reciprocal obligations, neither party
incurs in delay if the other does not
The governing principle is prius buyer is claiming title to the same property. Petitioner
tempore, potior jure (first in time, Mabanag cannot close her eyes to the defect in
stronger in right). Knowledge by the petitioners' title to the property at the time of the
first buyer of the second sale cannot registration of the property.
defeat the first buyer's rights except
when the second buyer first registers in This Court had occasions to rule that:
good faith the second sale (Olivares vs.
Gonzales, 159 SCRA 33). Conversely, If a vendee in a double sale registers
knowledge gained by the second buyer that sale after he has acquired
of the first sale defeats his rights even knowledge that there was a previous
if he is first to register, since knowledge sale of the same property to a third
taints his registration with bad faith party or that another person claims
(see also Astorga vs. Court of Appeals, said property in a pervious sale, the
G.R. No. 58530, 26 December 1984). registration will constitute a registration
In Cruz vs. Cabana (G.R. No. 56232, in bad faith and will not confer upon him
22 June 1984, 129 SCRA 656), it has any right. (Salvoro vs. Tanega, 87
held that it is essential, to merit the SCRA 349 [1978]; citing Palarca vs.
protection of Art. 1544, second Director of Land, 43 Phil. 146;
paragraph, that the second realty buyer Cagaoan vs. Cagaoan, 43 Phil. 554;
must act in good faith in registering his Fernandez vs. Mercader, 43 Phil. 581.)
deed of sale (citing Carbonell vs. Court
of Appeals, 69 SCRA 99, Crisostomo
Thus, the sale of the subject parcel of land between
vs. CA, G.R. No. 95843, 02 September
petitioners and Ramona P. Alcaraz, perfected on
1992).
February 6, 1985, prior to that between petitioners and
(J. Vitug Compendium of Civil Law and
Catalina B. Mabanag on February 18, 1985, was
Jurisprudence, 1993 Edition, p. 604).
correctly upheld by both the courts below.
Petitioner point out that the notice of lis pendens in the
Although there may be ample indications that there
case at bar was annoted on the title of the subject
was in fact an agency between Ramona as principal
property only on February 22, 1985, whereas, the
and Concepcion, her mother, as agent insofar as the
second sale between petitioners Coronels and
subject contract of sale is concerned, the issue of
petitioner Mabanag was supposedly perfected prior
whether or not Concepcion was also acting in her own
thereto or on February 18, 1985. The idea conveyed is
behalf as a co-buyer is not squarely raised in the
that at the time petitioner Mabanag, the second buyer,
instant petition, nor in such assumption disputed
bought the property under a clean title, she was
between mother and daughter. Thus, We will not touch
unaware of any adverse claim or previous sale, for
this issue and no longer disturb the lower courts' ruling
which reason she is buyer in good faith.
on this point.
We are not persuaded by such argument.
WHEREFORE, premises considered, the instant
petition is hereby DISMISSED and the appealed
In a case of double sale, what finds relevance and judgment AFFIRMED.
materiality is not whether or not the second buyer was
a buyer in good faith but whether or not said second
SO ORDERED.
buyer registers such second sale in good faith, that is,
without knowledge of any defect in the title of the
property sold.

As clearly borne out by the evidence in this case,


petitioner Mabanag could not have in good faith,
registered the sale entered into on February 18, 1985
because as early as February 22, 1985, a notice of lis
pendens had been annotated on the transfer certificate
of title in the names of petitioners, whereas petitioner
Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner
Mabanag knew that the same property had already
been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous
ARTICLE 774-776 contained provisions wherein the parties admitted
knowledge of the fact that their father mortgaged the
G.R. No. 168970 January 15, 2010 subject property to the Bank and that they intended to
redeem the same at the soonest possible time.
CELESTINO BALUS, Petitioner,
vs. Three years after the execution of the Extrajudicial
SATURNINO BALUS and LEONARDA BALUS Settlement, herein respondents bought the subject
VDA. DE CALUNOD, Respondents. property from the Bank. On October 12, 1992, a Deed of
Sale of Registered Land6 was executed by the Bank in
DECISION favor of respondents. Subsequently, Transfer Certificate
of Title (TCT) No. T-39,484(a.f.)7 was issued in the name
of respondents. Meanwhile, petitioner continued
PERALTA, J.:
possession of the subject lot.

Assailed in the present petition for review


On June 27, 1995, respondents filed a Complaint 8 for
on certiorari under Rule 45 of the Rules of Court is the
Recovery of Possession and Damages against petitioner,
Decision1 of the Court of Appeals (CA) dated May 31,
contending that they had already informed petitioner of
2005 in CA-G.R. CV No. 58041 which set aside the
the fact that they were the new owners of the disputed
February 7, 1997 Decision of the Regional Trial Court
property, but the petitioner still refused to surrender
(RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
possession of the same to them. Respondents claimed
that they had exhausted all remedies for the amicable
The facts of the case are as follows: settlement of the case, but to no avail.

Herein petitioner and respondents are the children of the On February 7, 1997, the RTC rendered a
spouses Rufo and Sebastiana Balus. Sebastiana died on Decision9 disposing as follows:
September 6, 1978, while Rufo died on July 6, 1984.
WHEREFORE, judgment is hereby rendered, ordering the
On January 3, 1979, Rufo mortgaged a parcel of land, plaintiffs to execute a Deed of Sale in favor of the
which he owns, as security for a loan he obtained from defendant, the one-third share of the property in
the Rural Bank of Maigo, Lanao del Norte (Bank). The said question, presently possessed by him, and described in
property was originally covered by Original Certificate of the deed of partition, as follows:
Title No. P-439(788) and more particularly described as
follows:
A one-third portion of Transfer Certificate of Title No. T-
39,484 (a.f.), formerly Original Certificate of Title No. P-
A parcel of land with all the improvements thereon, 788, now in the name of Saturnino Balus and Leonarda B.
containing an area of 3.0740 hectares, more or less, Vda. de Calunod, situated at Lagundang, Bunawan, Iligan
situated in the Barrio of Lagundang, Bunawan, Iligan City, City, bounded on the North by Lot 5122; East by shares
and bounded as follows: Bounded on the NE., along line of Saturnino Balus and Leonarda Balus-Calunod; South by
1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan Lot 4649, Dodiongan River; West by Lot 4661, consisting
River; along line 12-13 by Lot 4649, Csd-292; and along of 10,246 square meters, including improvements
line 12-1, by Lot 4661, Csd-292. x x x 2 thereon.

Rufo failed to pay his loan. As a result, the mortgaged and dismissing all other claims of the parties.
property was foreclosed and was subsequently sold to the
Bank as the sole bidder at a public auction held for that
The amount of ₱6,733.33 consigned by the defendant
purpose. On November 20, 1981, a Certificate of
with the Clerk of Court is hereby ordered delivered to the
Sale3 was executed by the sheriff in favor of the Bank.
plaintiffs, as purchase price of the one-third portion of the
The property was not redeemed within the period allowed
land in question.
by law. More than two years after the auction, or on
January 25, 1984, the sheriff executed a Definite Deed of
Sale4 in the Bank's favor. Thereafter, a new title was Plaintiffs are ordered to pay the costs.
issued in the name of the Bank.
SO ORDERED.10
On October 10, 1989, herein petitioner and respondents
executed an Extrajudicial Settlement of The RTC held that the right of petitioner to purchase from
Estate5adjudicating to each of them a specific one-third the respondents his share in the disputed property was
portion of the subject property consisting of 10,246 recognized by the provisions of the Extrajudicial
square meters. The Extrajudicial Settlement also Settlement of Estate, which the parties had executed
before the respondents bought the subject lot from the The Court is not persuaded.
Bank.
Petitioner and respondents are arguing on the wrong
Aggrieved by the Decision of the RTC, herein respondents premise that, at the time of the execution of the
filed an appeal with the CA. Extrajudicial Settlement, the subject property formed part
of the estate of their deceased father to which they may
On May 31, 2005, the CA promulgated the presently lay claim as his heirs.
assailed Decision, reversing and setting aside the Decision
of the RTC and ordering petitioner to immediately At the outset, it bears to emphasize that there is no
surrender possession of the subject property to the dispute with respect to the fact that the subject property
respondents. The CA ruled that when petitioner and was exclusively owned by petitioner and respondents'
respondents did not redeem the subject property within father, Rufo, at the time that it was mortgaged in 1979.
the redemption period and allowed the consolidation of This was stipulated by the parties during the hearing
ownership and the issuance of a new title in the name of conducted by the trial court on October 28,
the Bank, their co-ownership was extinguished. 1996.12 Evidence shows that a Definite Deed of Sale13 was
issued in favor of the Bank on January 25, 1984, after the
Hence, the instant petition raising a sole issue, to wit: period of redemption expired. There is neither any dispute
that a new title was issued in the Bank's name before Rufo
WHETHER OR NOT CO-OWNERSHIP AMONG THE died on July 6, 1984. Hence, there is no question that the
PETITIONER AND THE RESPONDENTS OVER THE Bank acquired exclusive ownership of the contested lot
PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN during the lifetime of Rufo.
AFTER THE TRANSFER OF TITLE TO THE BANK) BY
VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE The rights to a person's succession are transmitted from
REPURCHASE THEREOF BY THE RESPONDENTS; THUS, the moment of his death.14 In addition, the inheritance of
WARRANTING THE PETITIONER'S ACT OF ENFORCING a person consists of the property and transmissible rights
THE AGREEMENT BY REIMBURSING THE RESPONDENTS and obligations existing at the time of his death, as well
OF HIS (PETITIONER'S) JUST SHARE OF THE as those which have accrued thereto since the opening of
REPURCHASE PRICE.11 the succession.15 In the present case, since Rufo lost
ownership of the subject property during his lifetime, it
The main issue raised by petitioner is whether co- only follows that at the time of his death, the disputed
ownership by him and respondents over the subject parcel of land no longer formed part of his estate to which
property persisted even after the lot was purchased by his heirs may lay claim. Stated differently, petitioner and
the Bank and title thereto transferred to its name, and respondents never inherited the subject lot from their
even after it was eventually bought back by the father.
respondents from the Bank.
Petitioner and respondents, therefore, were wrong in
Petitioner insists that despite respondents' full knowledge assuming that they became co-owners of the subject lot.
of the fact that the title over the disputed property was Thus, any issue arising from the supposed right of
already in the name of the Bank, they still proceeded to petitioner as co-owner of the contested parcel of land is
execute the subject Extrajudicial Settlement, having in negated by the fact that, in the eyes of the law, the
mind the intention of purchasing back the property disputed lot did not pass into the hands of petitioner and
together with petitioner and of continuing their co- respondents as compulsory heirs of Rufo at any given
ownership thereof. point in time.

Petitioner posits that the subject Extrajudicial Settlement The foregoing notwithstanding, the Court finds a
is, in and by itself, a contract between him and necessity for a complete determination of the issues
respondents, because it contains a provision whereby the raised in the instant case to look into petitioner's
parties agreed to continue their co-ownership of the argument that the Extrajudicial Settlement is an
subject property by "redeeming" or "repurchasing" the independent contract which gives him the right to enforce
same from the Bank. This agreement, petitioner his right to claim a portion of the disputed lot bought by
contends, is the law between the parties and, as such, respondents.1avvphi1
binds the respondents. As a result, petitioner asserts that
respondents' act of buying the disputed property from the It is true that under Article 1315 of the Civil Code of the
Bank without notifying him inures to his benefit as to give Philippines, contracts are perfected by mere consent; and
him the right to claim his rightful portion of the property, from that moment, the parties are bound not only to the
comprising 1/3 thereof, by reimbursing respondents the fulfillment of what has been expressly stipulated but also
equivalent 1/3 of the sum they paid to the Bank. to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Article 1306 of the same Code also provides that the and title to the property was already transferred to the
contracting parties may establish such stipulations, Bank does not give them the right or the authority to
clauses, terms and conditions as they may deem unilaterally declare themselves as co-owners of the
convenient, provided these are not contrary to law, disputed property; otherwise, the disposition of the case
morals, good customs, public order or public policy. would be made to depend on the belief and conviction of
the party-litigants and not on the evidence adduced and
In the present case, however, there is nothing in the the law and jurisprudence applicable thereto.
subject Extrajudicial Settlement to indicate any express
stipulation for petitioner and respondents to continue with Furthermore, petitioner's contention that he and his
their supposed co-ownership of the contested lot. siblings intended to continue their supposed co-ownership
of the subject property contradicts the provisions of the
On the contrary, a plain reading of the provisions of the subject Extrajudicial Settlement where they clearly
Extrajudicial Settlement would not, in any way, support manifested their intention of having the subject property
petitioner's contention that it was his and his sibling's divided or partitioned by assigning to each of the
intention to buy the subject property from the Bank and petitioner and respondents a specific 1/3 portion of the
continue what they believed to be co-ownership thereof. same. Partition calls for the segregation and conveyance
It is a cardinal rule in the interpretation of contracts that of a determinate portion of the property owned in
the intention of the parties shall be accorded primordial common. It seeks a severance of the individual interests
consideration.16 It is the duty of the courts to place a of each co-owner, vesting in each of them a sole estate
practical and realistic construction upon it, giving due in a specific property and giving each one a right to enjoy
consideration to the context in which it is negotiated and his estate without supervision or interference from the
the purpose which it is intended to serve.17 Such intention other.20 In other words, the purpose of partition is to put
is determined from the express terms of their agreement, an end to co-ownership,21 an objective which negates
as well as their contemporaneous and subsequent petitioner's claims in the present case.
acts.18 Absurd and illogical interpretations should also be
avoided.19 WHEREFORE, the instant petition is DENIED. The
assailed Decision of the Court of Appeals, dated May 31,
For petitioner to claim that the Extrajudicial Settlement is 2005 in CA-G.R. CV No. 58041, is AFFIRMED.
an agreement between him and his siblings to continue
what they thought was their ownership of the subject SO ORDERED
property, even after the same had been bought by the
Bank, is stretching the interpretation of the said
Extrajudicial Settlement too far.

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


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

Moreover, petitioner's asseveration of his and


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

In addition, it appears from the recitals in the Extrajudicial


Settlement that, at the time of the execution thereof, the
parties were not yet aware that the subject property was
already exclusively owned by the Bank. Nonetheless, the
lack of knowledge on the part of petitioner and
respondents that the mortgage was already foreclosed
G.R. No. 125888 August 13, 1998 The donees (Montinola's grandchildren) opposed the
petition. In their opposition dated August 29, 1990,
SPOUSES ERNESTO and EVELYN they averred that the donation in their favor was
SICAD, petitioners, one inter vivos which, having fully complied with the
vs. requirements therefor set out in Article 729 of the Civil
COURT OF APPEALS, CATALINO VALDERRAMA, Code, was perfectly valid and efficacious. They also
JUDY CRISTINA M. VALDERRAMA and JESUS expressed doubt about the sincerity of their
ANTONIO VALDERRAMA, respondents. grandmother's intention to recover the donated
property, since she had not pursued the matter of its
revocation after having it annotated as an adverse
claim.

The case, originally treated as a special proceeding,


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

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


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

The donation in question, though denominated inter


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

WHEREFORE, the Decision of the Court of Appeals


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

SO ORDERED.