SUCCESSION FULL TEXT (1-10)
1. [G. R. No. 123968. April 24, 2003]
GANUELAS v. CAWED
CARPIO-MORALES, J.:
The present petition for review under Rule 45 of the Rules of Court
assails, on a question of law, the February 22, 1996 decision 1 of the
Regional Trial Court of San Fernando, La Union, Branch 29, in Civil
Case No. 3947, an action for declaration of nullity of a deed of
donation.
The facts, as culled from the records of the case, are as follows:
On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina)
executed a Deed of Donation of Real Property2covering seven parcels
of land in favor of her niece Ursulina Ganuelas (Ursulina), one of
herein petitioners.
The pertinent provision of the deed of donation reads,
quoted verbatim:
xxx
That, for and in consideration of the love and affection which the
DONOR has for the DONEE, and of the faithful services the latter has
rendered in the past to the former, the said DONOR does by these
presents transfer and convey, by way of DONATION, unto the DONEE
the property above, described, to become effective upon the death of
the DONOR; but in the event that the DONEE should die before the
DONOR, the present donation shall be deemed rescinded and of no
further force and effect.
x x x.3cräläwvirtualibräry
On June 10, 1967, Celestina executed a document denominated as
Revocation of Donation4 purporting to set aside the deed of donation.
More than a month later or on August 18, 1967, Celestina died
without issue and any surviving ascendants and siblings.
After Celestinas death, Ursulina had been sharing the produce of the
donated properties with private respondents Leocadia G. Flores, et al.,
nieces of Celestina.
In 1982, or twenty-four years after the execution of the Deed of
Donation, Ursulina secured the corresponding tax declarations, in her
name, over the donated properties, to wit: Tax Declarations Nos.
18108, 18109, 18110, 18111, 18112, 18113 and 18114, and since then,
she refused to give private respondents any share in the produce of
the properties despite repeated demands.
Private respondents were thus prompted to file on May 26, 1986 with
the RTC of San Fernando, La Union a complaint5against Ursulina, along
with Metodio Ganuelas and Antonio Ganuelas who were alleged to be
unwilling plaintiffs. The complaint alleged that the Deed of Donation
1
executed by Celestina in favor of Ursulina was void for lack of
acknowledgment by the attesting witnesses thereto before notary
public Atty. Henry Valmonte, and the donation was a
disposition mortis causa which failed to comply with the provisions of
the Civil Code regarding formalities of wills and testaments, hence, it
was void. The plaintiffs-herein private respondents thus prayed that
judgment be rendered ordering Ursulina to return to them as
intestate heirs the possession and ownership of the properties. They
likewise prayed for the cancellation of the tax declarations secured in
the name of Ursulina, the partition of the properties among the
intestate heirs of Celestina, and the rendering by Ursulina of an
accounting of all the fruits of the properties since 1982 and for her to
return or pay the value of their shares.
The defendants-herein petitioners alleged in their Answer 6that the
donation in favor of Ursulina was inter vivos as contemplated under
Article 729 of the Civil Code,7 hence, the deed did not have to comply
with the requirements for the execution of a valid will; the Revocation
of Donation is null and void as the ground mentioned therein is not
among those provided by law to be the basis thereof; and at any rate,
the revocation could only be legally enforced upon filing of the
appropriate complaint in court within the prescriptive period provided
by law, which period had, at the time the complaint was filed, already
lapsed.
By Decision of February 22, 1996, the trial court, holding that the
provision in the Deed of Donation that in the event that the DONEE
should predecease the DONOR, the donation shall be deemed
rescinded and of no further force and effect is an explicit indication
that the deed is a donation mortis causa,8 found for the
plaintiffs-herein private respondents, thus:
WHEREFORE the Court renders judgment declaring null and void the
Deed of Donation of Real Property executed by Celestina Ganuelas,
and orders the partition of the estate of Celestina among the intestate
heirs.
SO ORDERED.9cräläwvirtualibräry
The trial court also held that the absence of a reservation clause in the
deed implied that Celestina retained complete dominion over her
properties, thus supporting the conclusion that the donation is mortis
causa,10 and that while the deed contained an attestation clause and
an acknowledgment showing the intent of the donor to effect a
postmortem disposition, the acknowledgment was defective as only
the donor and donee appear to have acknowledged the deed before
the notary public, thereby rendering the entire document
void.11cräläwvirtualibräry
Lastly, the trial court held that the subsequent execution by Celestina
of the Revocation of Donation showed that the donor intended the
revocability of the donation ad nutum, thus sustaining its finding that
the conveyance was mortis causa.12cräläwvirtualibräry
On herein petitioners argument that the Revocation of Donation was
void as the ground mentioned therein is not one of those allowed by
SUCCESSION FULL TEXT (1-10)
law to be a basis for revocation, the trial court held that the legal
grounds for such revocation as provided under the Civil Code arise
only in cases of donations inter vivos, but not in donations mortis
causa which are revocable at will during the lifetime of the donor. The
trial court held, in any event, that given the nullity of the
disposition mortis causa in view of a failure to comply with the
formalities required therefor, the Deed of Revocation was a
superfluity.13cräläwvirtualibräry
Hence, the instant petition for review, petitioners contending that the
trial court erred:
I. . . . WHEN IT DECLARED NULL AND VOID THE DONATION
EXECUTED BY CELESTINA GANUELAS;
II. . . . WHEN IT UPHELD THE REVOCATION OF DONATION;
III. . . . IN RENDERING ITS DECISION ADVERSE TO
PETITIONER URSULINA
GANUELAS.14cräläwvirtualibräry
Petitioners argue that the donation contained in the deed is inter
vivos as the main consideration for its execution was the donors
affection for the donee rather than the donors death;15 that the
provision on the effectivity of the donationafter the donors
deathsimply meant that absolute ownership would pertain to the
donee on the donors death;16 and that since the donation is inter
vivos, it may be revoked only for the reasons provided in Articles
760,1776418 and 76519 of the Civil Code.
In a letter of March 16, 1998,20 private respondent Corazon Sipalay,
reacting to this Courts January 28, 1998 Resolution requiring private
respondents to SHOW CAUSE why they should not be disciplinarily
dealt with or held in contempt for failure to submit the name and
address of their new counsel, explains that they are no longer
interested in pursuing the case and are willing and ready to waive
whatever rights they have over the properties subject of the donation.
Petitioners, who were required to comment on the letter, by
Comment of October 28, 1998,21 welcome private respondents
gesture but pray that for the sake of enriching jurisprudence, their
[p]etition be given due course and resolved.
The issue is thus whether the donation is inter vivos or mortis causa.
Crucial in the resolution of the issue is the determination of whether
the donor intended to transfer the ownership over the properties
upon the execution of the deed.22cräläwvirtualibräry
Donation inter vivos differs from donation mortis causa in that in the
former, the act is immediately operative even if the actual execution
may be deferred until the death of the donor, while in the latter,
nothing is conveyed to or acquired by the donee until the death of the
donor-testator.23 The following ruling of this Court in Alejandro v.
Geraldez is illuminating:24cräläwvirtualibräry
2
If the donation is made in contemplation of the donors death,
meaning that the full or naked ownership of the donated properties
will pass to the donee only because of the donors death, then it is at
that time that the donation takes effect, and it is a donation mortis
causa which should be embodied in a last will and testament.
But if the donation takes effect during the donors lifetime or
independently of the donors death, meaning that the full or naked
ownership (nuda proprietas) of the donated properties passes to the
donee during the donors lifetime, not by reason of his death but
because of the deed of donation, then the donation is inter vivos.
The distinction between a transfer inter vivos and mortis causa is
important as the validity or revocation of the donation depends upon
its nature. If the donation is inter vivos, it must be executed and
accepted with the formalities prescribed by Articles 748 25 and 74926 of
the Civil Code, except when it is onerous in which case the rules on
contracts will apply. If it is mortis causa, the donation must be in the
form of a will, with all the formalities for the validity of wills,
otherwise it is void and cannot transfer
ownership.27cräläwvirtualibräry
The distinguishing characteristics of a donation mortis causa are the
following:
1. It conveys no title or ownership to the transferee before the death
of the transferor; or, what amounts to the same thing, that the
transferor should retain the ownership (full or naked) and control of
the property while alive;
2. That before his death, the transfer should be revocable by the
transferor at will, ad nutum; but revocability may be provided for
indirectly by means of a reserved power in the donor to dispose of the
properties conveyed;
3. That the transfer should be void if the transferor should survive the
transferee.28cräläwvirtualibräry
In the donation subject of the present case, there is nothing therein
which indicates that any right, title or interest in the donated
properties was to be transferred to Ursulina prior to the death of
Celestina.
The phrase to become effective upon the death of the DONOR admits
of no other interpretation but that Celestina intended to transfer the
ownership of the properties to Ursulina on her death, not during her
lifetime.29cräläwvirtualibräry
More importantly, the provision in the deed stating that if the donee
should die before the donor, the donation shall be deemed rescinded
and of no further force and effect shows that the donation is a
postmortem disposition.
SUCCESSION FULL TEXT (1-10)
As stated in a long line of cases, one of the decisive characteristics of a
donation mortis causa is that the transfer should be considered void if
the donor should survive the donee.30cräläwvirtualibräry
More. The deed contains an attestation clause expressly confirming
the donation as mortis causa:
SIGNED by the above-named donor, Celestina Ganuelas, at the foot
of this deed of donation mortis causa, consisting of two (2) pages and
on the left margin of each and every page thereof in the joint
presence of all of us who at her request and in her presence and that
of each other have in like manner subscribed our names as
witnesses.31 (Emphasis supplied)
To classify the donation as inter vivos simply because it is founded on
considerations of love and affection is erroneous. That the donation
was prompted by the affection of the donor for the donee and the
services rendered by the latter is of no particular significance in
determining whether the deed constitutes a transfer inter vivos or not,
because a legacy may have an identical motivation.32 In other words,
love and affection may also underline transfers mortis
causa.33cräläwvirtualibräry
In Maglasang v. Heirs of Cabatingan,34 the deeds of donation
contained provisions almost identical to those found in the deed
subject of the present case:
That for and in consideration of the love and affection of the DONOR
for the DONEE, x x x the DONOR does hereby, by these presents,
transfer, convey, by way of donation, unto the DONEE the
above-described property, together with the buildings and all
improvements existing thereon, to become effective upon the death
of the DONOR; PROVIDED, HOWEVER, that in the event that the
DONEE should die before the DONOR, the present donation shall be
deemed automatically rescinded and of no further force and
effect. (Underscoring supplied)
In that case, this Court held that the donations were mortis causa, for
the above-quoted provision conclusively establishes the donors
intention to transfer the ownership and possession of the donated
property to the donee only after the formers death. Like in the
present case, the deeds therein did not contain any clear provision
that purports to pass proprietary rights to the donee prior to the
donors death.
As the subject deed then is in the nature of a mortis causadisposition,
the formalities of a will under Article 728 of the Civil Code should have
been complied with, failing which the donation is void and produces
no effect.35cräläwvirtualibräry
As noted by the trial court, the attesting witnesses failed to
acknowledge the deed before the notary public, thus violating Article
806 of the Civil Code which provides:
3
Art. 806. Every will must be acknowledged before a notary public by
the testator and the witnesses. The notary public shall not be
required to retain a copy of the will, or file another with the office of
the Clerk of Court. (Emphasis supplied)
The trial court did not thus commit any reversible error in declaring
the Deed of Donation to be mortis causa.
WHEREFORE, the petition is hereby DENIED for lack of merit.
SO ORDERED.
2. G.R. No. 172804 January 24, 2011
GONZALO VILLANUEVA v.BRANOCO
CARPIO, J.:
The Case
This resolves the petition for review1 of the ruling2 of the Court of
Appeals dismissing a suit to recover a realty.
The Facts
Petitioner Gonzalo Villanueva (petitioner), here represented by his
heirs,3 sued respondents, spouses Froilan and Leonila Branoco
(respondents), in the Regional Trial Court of Naval, Biliran (trial court)
to recover a 3,492 square-meter parcel of land in Amambajag, Culaba,
Leyte (Property) and collect damages. Petitioner claimed ownership
over the Property through purchase in July 1971 from Casimiro Vere
(Vere), who, in turn, bought the Property from Alvegia Rodrigo
(Rodrigo) in August 1970. Petitioner declared the Property in his name
for tax purposes soon after acquiring it.
In their Answer, respondents similarly claimed ownership over the
Property through purchase in July 1983 from Eufracia Rodriguez
(Rodriguez) to whom Rodrigo donated the Property in May 1965. The
two-page deed of donation (Deed), signed at the bottom by the
parties and two witnesses, reads in full:
KNOW ALL MEN BY THESE PRESENTS:
That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan
Arcillas, a resident of Barrio Bool, municipality of Culaba, subprovince
of Biliran, Leyte del Norte, Philippines, hereby depose and say:
That as we live[d] together as husband and wife with Juan Arcillas, we
begot children, namely: LUCIO, VICENTA, SEGUNDINA, and ADELAIDA,
all surnamed ARCILLAS, and by reason of poverty which I suffered
while our children were still young; and because my husband Juan
Arcillas aware as he was with our destitution separated us [sic] and
left for Cebu; and from then on never cared what happened to his
family; and because of that one EUFRACIA RODRIGUEZ, one of my
SUCCESSION FULL TEXT (1-10)
nieces who also suffered with our poverty, obedient as she was to all
the works in our house, and because of the love and affection which I
feel [for] her, I have one parcel of land located at Sitio Amambajag,
Culaba, Leyte bearing Tax Decl. No. 1878 declared in the name of
Alvegia Rodrigo, I give (devise) said land in favor of EUFRACIA
RODRIGUEZ, her heirs, successors, and assigns together with all the
improvements existing thereon, which parcel of land is more or less
described and bounded as follows:
1. Bounded North by Amambajag River; East, Benito Picao; South,
Teofilo Uyvico; and West, by Public land; 2. It has an area of 3,492
square meters more or less; 3. It is planted to coconuts now bearing
fruits; 4. Having an assessed value of ₱240.00; 5. It is now in the
possession of EUFRACIA RODRIGUEZ since May 21, 1962 in the
concept of an owner, but the Deed of Donation or that ownership be
vested on her upon my demise.
That I FURTHER DECLARE, and I reiterate that the land above
described, I already devise in favor of EUFRACIA RODRIGUEZ since
May 21, 1962, her heirs, assigns, and that if the herein Donee
predeceases me, the same land will not be reverted to the Donor, but
will be inherited by the heirs of EUFRACIA RODRIGUEZ;
That I EUFRACIA RODRIGUEZ, hereby accept the land above described
from Inay Alvegia Rodrigo and I am much grateful to her and praying
further for a longer life; however, I will give one half (1/2) of the
produce of the land to Apoy Alve during her lifetime.4
Respondents entered the Property in 1983 and paid taxes afterwards.
The Ruling of the Trial Court
The trial court ruled for petitioner, declared him owner of the
Property, and ordered respondents to surrender possession to
petitioner, and to pay damages, the value of the Property’s produce
since 1982 until petitioner’s repossession and the costs.5 The trial
court rejected respondents’ claim of ownership after treating the
Deed as a donation mortis causa which Rodrigo effectively cancelled
by selling the Property to Vere in 1970.6 Thus, by the time Rodriguez
sold the Property to respondents in 1983, she had no title to transfer.
Respondents appealed to the Court of Appeals (CA), imputing error in
the trial court’s interpretation of the Deed as a testamentary
disposition instead of an inter vivos donation, passing title to
Rodriguez upon its execution.
Ruling of the Court of Appeals
The CA granted respondents’ appeal and set aside the trial court’s
ruling. While conceding that the "language of the [Deed is] x x x
confusing and which could admit of possible different
interpretations,"7 the CA found the following factors pivotal to its
reading of the Deed as donation inter vivos: (1) Rodriguez had been in
possession of the Property as owner since 21 May 1962, subject to the
delivery of part of the produce to Apoy Alve; (2) the Deed’s
4
consideration was not Rodrigo’s death but her "love and affection" for
Rodriguez, considering the services the latter rendered; (3) Rodrigo
waived dominion over the Property in case Rodriguez predeceases her,
implying its inclusion in Rodriguez’s estate; and (4) Rodriguez
accepted the donation in the Deed itself, an act necessary to
effectuate donations inter vivos, not devises.8 Accordingly, the CA
upheld the sale between Rodriguez and respondents, and, conversely
found the sale between Rodrigo and petitioner’s
predecessor-in-interest, Vere, void for Rodrigo’s lack of title.
In this petition, petitioner seeks the reinstatement of the trial court’s
ruling. Alternatively, petitioner claims ownership over the Property
through acquisitive prescription, having allegedly occupied it for more
than 10 years.9
Respondents see no reversible error in the CA’s ruling and pray for its
affirmance.
The Issue
The threshold question is whether petitioner’s title over the Property
is superior to respondents’. The resolution of this issue rests, in turn,
on whether the contract between the parties’
predecessors-in-interest, Rodrigo and Rodriguez, was a donation or a
devise. If the former, respondents hold superior title, having bought
the Property from Rodriguez. If the latter, petitioner prevails, having
obtained title from Rodrigo under a deed of sale the execution of
which impliedly revoked the earlier devise to Rodriguez.
The Ruling of the Court
We find respondents’ title superior, and thus, affirm the CA.
Naked Title Passed from Rodrigo to Rodriguez Under a Perfected
Donation
We examine the juridical nature of the Deed – whether it passed title
to Rodriguez upon its execution or is effective only upon Rodrigo’s
death – using principles distilled from relevant jurisprudence.
Post-mortem dispositions typically –
(1) Convey no title or ownership to the transferee before the death of
the transferor; or, what amounts to the same thing, that the
transferor should retain the ownership (full or naked) and control of
the property while alive;
(2) That before the [donor’s] death, the transfer should be revocable
by the transferor at will, ad nutum; but revocability may be provided
for indirectly by means of a reserved power in the donor to dispose of
the properties conveyed;
(3) That the transfer should be void if the transferor should survive
the transferee.10
Further –
SUCCESSION FULL TEXT (1-10)
[4] [T]he specification in a deed of the causes whereby the act may be
revoked by the donor indicates that the donation is inter vivos, rather
than a disposition mortis causa[;]
[5] That the designation of the donation as mortis causa, or a
provision in the deed to the effect that the donation is "to take effect
at the death of the donor" are not controlling criteria; such
statements are to be construed together with the rest of the
instrument, in order to give effect to the real intent of the transferor[;]
[and]
(6) That in case of doubt, the conveyance should be deemed
donation inter vivos rather than mortis causa, in order to avoid
uncertainty as to the ownership of the property subject of the deed.11
It is immediately apparent that Rodrigo passed naked title to
Rodriguez under a perfected donation inter vivos. First. Rodrigo
stipulated that "if the herein Donee predeceases me, the [Property]
will not be reverted to the Donor, but will be inherited by the heirs of
x x x Rodriguez," signaling the irrevocability of the passage of title to
Rodriguez’s estate, waiving Rodrigo’s right to reclaim title. This
transfer of title was perfected the moment Rodrigo learned of
Rodriguez’s acceptance of the disposition12 which, being reflected in
the Deed, took place on the day of its execution on 3 May 1965.
Rodrigo’s acceptance of the transfer underscores its essence as a
gift in presenti, not in futuro, as only donations inter vivos need
acceptance by the recipient.13 Indeed, had Rodrigo wished to retain
full title over the Property, she could have easily stipulated, as the
testator did in another case, that "the donor, may transfer, sell, or
encumber to any person or entity the properties here donated x x
x"14 or used words to that effect. Instead, Rodrigo expressly waived
title over the Property in case Rodriguez predeceases her.
In a bid to diffuse the non-reversion stipulation’s damning effect on
his case, petitioner tries to profit from it, contending it is a
fideicommissary substitution clause.15 Petitioner assumes the fact he
is laboring to prove. The question of the Deed’s juridical nature,
whether it is a will or a donation, is the crux of the present
controversy. By treating the clause in question as mandating
fideicommissary substitution, a mode of testamentary disposition by
which the first heir instituted is entrusted with the obligation to
preserve and to transmit to a second heir the whole or part of the
inheritance,16 petitioner assumes that the Deed is a will. Neither the
Deed’s text nor the import of the contested clause supports
petitioner’s theory.
Second. What Rodrigo reserved for herself was only the beneficial title
to the Property, evident from Rodriguez’s undertaking to "give one
[half] x x x of the produce of the land to Apoy Alve during her
lifetime."17 Thus, the Deed’s stipulation that "the ownership shall be
vested on [Rodriguez] upon my demise," taking into account the
non-reversion clause, could only refer to Rodrigo’s beneficial title. We
arrived at the same conclusion in Balaqui v. Dongso18 where, as here,
the donor, while "b[inding] herself to answer to the [donor] and her
heirs x x x that none shall question or disturb [the donee’s] right," also
stipulated that the donation "does not pass title to [the donee] during
5
my lifetime; but when I die, [the donee] shall be the true owner" of
the donated parcels of land. In finding the disposition as a gift inter
vivos, the Court reasoned:
Taking the deed x x x as a whole, x x x x it is noted that in the same
deed [the donor] guaranteed to [the donee] and her heirs and
successors, the right to said property thus conferred. From the
moment [the donor] guaranteed the right granted by her to [the
donee] to the two parcels of land by virtue of the deed of gift, she
surrendered such right; otherwise there would be no need to
guarantee said right. Therefore, when [the donor] used the words
upon which the appellants base their contention that the gift in
question is a donation mortis causa [that the gift "does not pass title
during my lifetime; but when I die, she shall be the true owner of the
two aforementioned parcels"] the donor meant nothing else than
that she reserved of herself the possession and usufruct of said two
parcels of land until her death, at which time the donee would be
able to dispose of them freely.19 (Emphasis supplied)
Indeed, if Rodrigo still retained full ownership over the Property, it
was unnecessary for her to reserve partial usufructuary right over it.20
Third. The existence of consideration other than the donor’s death,
such as the donor’s love and affection to the donee and the services
the latter rendered, while also true of devises, nevertheless
"corroborates the express irrevocability of x x x [inter vivos]
transfers."21 Thus, the CA committed no error in giving weight to
Rodrigo’s statement of "love and affection" for Rodriguez, her niece,
as consideration for the gift, to underscore its finding.
It will not do, therefore, for petitioner to cherry-pick stipulations from
the Deed tending to serve his cause (e.g. "the ownership shall be
vested on [Rodriguez] upon my demise" and "devise"). Dispositions
bearing contradictory stipulations are interpreted wholistically, to give
effect to the donor’s intent. In no less than seven cases featuring
deeds of donations styled as "mortis causa" dispositions, the Court,
after going over the deeds, eventually considered the transfers inter
vivos,22 consistent with the principle that "the designation of the
donation as mortis causa, or a provision in the deed to the effect that
the donation is ‘to take effect at the death of the donor’ are not
controlling criteria [but] x x x are to be construed together with the
rest of the instrument, in order to give effect to the real intent of the
transferor."23 Indeed, doubts on the nature of dispositions are
resolved to favor inter vivos transfers "to avoid uncertainty as to the
ownership of the property subject of the deed."24
Nor can petitioner capitalize on Rodrigo’s post-donation transfer of
the Property to Vere as proof of her retention of ownership. If such
were the barometer in interpreting deeds of donation, not only will
great legal uncertainty be visited on gratuitous dispositions, this will
give license to rogue property owners to set at naught perfected
transfers of titles, which, while founded on liberality, is a valid mode
of passing ownership. The interest of settled property dispositions
counsels against licensing such practice.25
SUCCESSION FULL TEXT (1-10)
Accordingly, having irrevocably transferred naked title over the
Property to Rodriguez in 1965, Rodrigo "cannot afterwards revoke the
donation nor dispose of the said property in favor of another."26 Thus,
Rodrigo’s post-donation sale of the Property vested no title to Vere.
As Vere’s successor-in-interest, petitioner acquired no better right
than him. On the other hand, respondents bought the Property from
Rodriguez, thus acquiring the latter’s title which they may invoke
against all adverse claimants, including petitioner.
Petitioner Acquired No Title Over the Property
Alternatively, petitioner grounds his claim of ownership over the
Property through his and Vere’s combined possession of the Property
for more than ten years, counted from Vere’s purchase of the
Property from Rodrigo in 1970 until petitioner initiated his suit in the
trial court in February 1986.27 Petitioner anchors his contention on an
unfounded legal assumption. The ten year ordinary prescriptive
period to acquire title through possession of real property in the
concept of an owner requires uninterrupted possession coupled with
just title and good faith.28 There is just title when the adverse claimant
came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights,
but the grantor was not the owner or could not transmit any
right.29 Good faith, on the other hand, consists in the reasonable
belief that the person from whom the possessor received the thing
was the owner thereof, and could transmit his ownership.30
Although Vere and petitioner arguably had just title having
successively acquired the Property through sale, neither was a good
faith possessor. As Rodrigo herself disclosed in the Deed, Rodriguez
already occupied and possessed the Property "in the concept of an
owner" ("como tag-iya"31) since 21 May 1962, nearly three years
before Rodrigo’s donation in 3 May 1965 and seven years before Vere
bought the Property from Rodrigo. This admission against interest
binds Rodrigo and all those tracing title to the Property through her,
including Vere and petitioner. Indeed, petitioner’s insistent claim that
Rodriguez occupied the Property only in 1982, when she started
paying taxes, finds no basis in the records. In short, when Vere bought
the Property from Rodrigo in 1970, Rodriguez was in possession of the
Property, a fact that prevented Vere from being a buyer in good faith.
Lacking good faith possession, petitioner’s only other recourse to
maintain his claim of ownership by prescription is to show open,
continuous and adverse possession of the Property for 30
years.32 Undeniably, petitioner is unable to meet this
requirement.1avvphil
Ancillary Matters Petitioner Raises Irrelevant
Petitioner brings to the Court’s attention facts which, according to him,
support his theory that Rodrigo never passed ownership over the
Property to Rodriguez, namely, that Rodriguez registered the Deed
and paid taxes on the Property only in 1982 and Rodriguez obtained
from Vere in 1981 a waiver of the latter’s "right of ownership" over
the Property. None of these facts detract from our conclusion that
under the text of the Deed and based on the contemporaneous acts
6
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.
3. G.R. No. 149926 February 23, 2005
UNION BANK OF THE PHILIPPINES v. SANTIBAÑEZ
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the
Revised Rules of Court which seeks the reversal of the Decision1 of the
Court of Appeals dated May 30, 2001 in CA-G.R. CV No. 48831
affirming the dismissal2 of the petitioner’s complaint in Civil Case No.
18909 by the Regional Trial Court (RTC) of Makati City, Branch 63.
The antecedent facts are as follows:
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and
Efraim M. Santibañez entered into a loan agreement3 in the amount
of ₱128,000.00. The amount was intended for the payment of the
purchase price of one (1) unit Ford 6600 Agricultural All-Purpose
Diesel Tractor. In view thereof, Efraim and his son, Edmund, executed
a promissory note in favor of the FCCC, the principal sum payable in
five equal annual amortizations of ₱43,745.96 due on May 31, 1981
and every May 31st thereafter up to May 31, 1985.
On December 13, 1980, the FCCC and Efraim entered into another
loan agreement,4 this time in the amount of ₱123,156.00. It was
intended to pay the balance of the purchase price of another unit of
Ford 6600 Agricultural All-Purpose Diesel Tractor, with accessories,
and one (1) unit Howard Rotamotor Model AR 60K. Again, Efraim and
his son, Edmund, executed a promissory note for the said amount in
favor of the FCCC. Aside from such promissory note, they also signed a
Continuing Guaranty Agreement5 for the loan dated December 13,
1980.
Sometime in February 1981, Efraim died, leaving a holographic will.6
Subsequently in March 1981, testate proceedings commenced before
the RTC of Iloilo City, Branch 7, docketed as Special Proceedings No.
2706. On April 9, 1981, Edmund, as one of the heirs, was appointed as
the special administrator of the estate of the decedent.7 During the
pendency of the testate proceedings, the surviving heirs, Edmund and
his sister Florence Santibañez Ariola, executed a Joint Agreement8
dated July 22, 1981, wherein they agreed to divide between
SUCCESSION FULL TEXT (1-10)
themselves and take possession of the three (3) tractors; that is, two
(2) tractors for Edmund and one (1) tractor for Florence. Each of them
was to assume the indebtedness of their late father to FCCC,
corresponding to the tractor respectively taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of
Liabilities9 was executed by and between FCCC and Union Savings and
Mortgage Bank, wherein the FCCC as the assignor, among others,
assigned all its assets and liabilities to Union Savings and Mortgage
Bank.
Demand letters10 for the settlement of his account were sent by
petitioner Union Bank of the Philippines (UBP) to Edmund, but the
latter failed to heed the same and refused to pay. Thus, on February 5,
1988, the petitioner filed a Complaint11 for sum of money against the
heirs of Efraim Santibañez, Edmund and Florence, before the RTC of
Makati City, Branch 150, docketed as Civil Case No. 18909.
Summonses were issued against both, but the one intended for
Edmund was not served since he was in the United States and there
was no information on his address or the date of his return to the
Philippines.12 Accordingly, the complaint was narrowed down to
respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her
Answer13 and alleged that the loan documents did not bind her since
she was not a party thereto. Considering that the joint agreement
signed by her and her brother Edmund was not approved by the
probate court, it was null and void; hence, she was not liable to the
petitioner under the joint agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC
of Makati City, Branch 63.14 Consequently, trial on the merits ensued
and a decision was subsequently rendered by the court dismissing the
complaint for lack of merit. The decretal portion of the RTC decision
reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint
for lack of merit.15
The trial court found that the claim of the petitioner should have been
filed with the probate court before which the testate estate of the late
Efraim Santibañez was pending, as the sum of money being claimed
was an obligation incurred by the said decedent. The trial court also
found that the Joint Agreement apparently executed by his heirs,
Edmund and Florence, on July 22, 1981, was, in effect, a partition of
the estate of the decedent. However, the said agreement was void,
considering that it had not been approved by the probate court, and
that there can be no valid partition until after the will has been
probated. The trial court further declared that petitioner failed to
prove that it was the now defunct Union Savings and Mortgage Bank
to which the FCCC had assigned its assets and liabilities. The court also
agreed to the contention of respondent Florence S. Ariola that the list
of assets and liabilities of the FCCC assigned to Union Savings and
Mortgage Bank did not clearly refer to the decedent’s account. Ruling
that the joint agreement executed by the heirs was null and void, the
7
trial court held that the petitioner’s cause of action against
respondent Florence S. Ariola must necessarily fail.
The petitioner appealed from the RTC decision and elevated its case
to the Court of Appeals (CA), assigning the following as errors of the
trial court:
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT
(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO
VALID PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS
BEEN PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT
HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE
ESTATE PROCEEDING.16
The petitioner asserted before the CA that the obligation of the
deceased had passed to his legitimate children and heirs, in this case,
Edmund and Florence; the unconditional signing of the joint
agreement marked as Exhibit "A" estopped respondent Florence S.
Ariola, and that she cannot deny her liability under the said document;
as the agreement had been signed by both heirs in their personal
capacity, it was no longer necessary to present the same before the
probate court for approval; the property partitioned in the agreement
was not one of those enumerated in the holographic will made by the
deceased; and the active participation of the heirs, particularly
respondent Florence S. Ariola, in the present ordinary civil action was
tantamount to a waiver to re-litigate the claim in the estate
proceedings.
On the other hand, respondent Florence S. Ariola maintained that the
money claim of the petitioner should have been presented before the
probate court.17
The appellate court found that the appeal was not meritorious and
held that the petitioner should have filed its claim with the probate
court as provided under Sections 1 and 5, Rule 86 of the Rules of
Court. It further held that the partition made in the agreement was
null and void, since no valid partition may be had until after the will
has been probated. According to the CA, page 2, paragraph (e) of the
holographic will covered the subject properties (tractors) in generic
terms when the deceased referred to them as "all other properties."
Moreover, the active participation of respondent Florence S. Ariola in
the case did not amount to a waiver. Thus, the CA affirmed the RTC
decision, viz.:
WHEREFORE, premises considered, the appealed Decision of the
Regional Trial Court of Makati City, Branch 63, is hereby AFFIRMED in
toto. SO ORDERED.18
In the present recourse, the petitioner ascribes the following errors to
the CA:
SUCCESSION FULL TEXT (1-10)
I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING
THAT THE JOINT AGREEMENT SHOULD BE APPROVED BY
THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT THERE
CAN BE NO VALID PARTITION AMONG THE HEIRS OF THE
LATE EFRAIM SANTIBAÑEZ UNTIL AFTER THE WILL HAS BEEN
PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
RESPONDENT HAD WAIVED HER RIGHT TO HAVE THE CLAIM
RE-LITIGATED IN THE ESTATE PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND
SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE LATE
EFRAIM SANTIBAÑEZ ON THE STRENGTH OF THE
CONTINUING GUARANTY AGREEMENT EXECUTED IN FAVOR
OF PETITIONER-APPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM
OF ₱128,000.00 AND DECEMBER 13, 1980 IN THE AMOUNT
OF ₱123,000.00 CATEGORICALLY ESTABLISHED THE FACT
THAT THE RESPONDENTS BOUND THEMSELVES JOINTLY
AND SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM
SANTIBAÑEZ IN FAVOR OF PETITIONER UNION BANK.19
The petitioner claims that the obligations of the deceased were
transmitted to the heirs as provided in Article 774 of the Civil Code;
there was thus no need for the probate court to approve the joint
agreement where the heirs partitioned the tractors owned by the
deceased and assumed the obligations related thereto. Since
respondent Florence S. Ariola signed the joint agreement without any
condition, she is now estopped from asserting any position contrary
thereto. The petitioner also points out that the holographic will of the
deceased did not include nor mention any of the tractors subject of
the complaint, and, as such was beyond the ambit of the said will. The
active participation and resistance of respondent Florence S. Ariola in
the ordinary civil action against the petitioner’s claim amounts to a
waiver of the right to have the claim presented in the probate
proceedings, and to allow any one of the heirs who executed the joint
agreement to escape liability to pay the value of the tractors under
consideration would be equivalent to allowing the said heirs to enrich
themselves to the damage and prejudice of the petitioner.
8
The petitioner, likewise, avers that the decisions of both the trial and
appellate courts failed to consider the fact that respondent Florence S.
Ariola and her brother Edmund executed loan documents, all
establishing the vinculum jurisor the legal bond between the late
Efraim Santibañez and his heirs to be in the nature of a solidary
obligation. Furthermore, the Promissory Notes dated May 31, 1980
and December 13, 1980 executed by the late Efraim Santibañez,
together with his heirs, Edmund and respondent Florence, made the
obligation solidary as far as the said heirs are concerned. The
petitioner also proffers that, considering the express provisions of the
continuing guaranty agreement and the promissory notes executed by
the named respondents, the latter must be held liable jointly and
severally liable thereon. Thus, there was no need for the petitioner to
file its money claim before the probate court. Finally, the petitioner
stresses that both surviving heirs are being sued in their respective
personal capacities, not as heirs of the deceased.
In her comment to the petition, respondent Florence S. Ariola
maintains that the petitioner is trying to recover a sum of money from
the deceased Efraim Santibañez; thus the claim should have been filed
with the probate court. She points out that at the time of the
execution of the joint agreement there was already an existing
probate proceedings of which the petitioner knew about. However, to
avoid a claim in the probate court which might delay payment of the
obligation, the petitioner opted to require them to execute the said
agreement.1a\^/phi1.net
According to the respondent, the trial court and the CA did not err in
declaring that the agreement was null and void. She asserts that even
if the agreement was voluntarily executed by her and her brother
Edmund, it should still have been subjected to the approval of the
court as it may prejudice the estate, the heirs or third parties.
Furthermore, she had not waived any rights, as she even stated in her
answer in the court a quo that the claim should be filed with the
probate court. Thus, the petitioner could not invoke or claim that she
is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed
any continuing guaranty agreement, nor was there any document
presented as evidence to show that she had caused herself to be
bound by the obligation of her late father.
The petition is bereft of merit.
The Court is posed to resolve the following issues: a) whether or not
the partition in the Agreement executed by the heirs is valid; b)
whether or not the heirs’ assumption of the indebtedness of the
deceased is valid; and c) whether the petitioner can hold the heirs
liable on the obligation of the deceased.1awphi1.nét
At the outset, well-settled is the rule that a probate court has the
jurisdiction to determine all the properties of the deceased, to
determine whether they should or should not be included in the
inventory or list of properties to be administered.20 The said court is
primarily concerned with the administration, liquidation and
distribution of the estate.21
SUCCESSION FULL TEXT (1-10)
In our jurisdiction, the rule is that there can be no valid partition
among the heirs until after the will has been probated:
In testate succession, there can be no valid partition among the heirs
until after the will has been probated. The law enjoins the probate of
a will and the public requires it, because unless a will is probated and
notice thereof given to the whole world, the right of a person to
dispose of his property by will may be rendered nugatory. The
authentication of a will decides no other question than such as touch
upon the capacity of the testator and the compliance with those
requirements or solemnities which the law prescribes for the validity
of a will.22
This, of course, presupposes that the properties to be partitioned are
the same properties embraced in the will.23 In the present case, the
deceased, Efraim Santibañez, left a holographic will24 which
contained, inter alia, the provision which reads as follows:
(e) All other properties, real or personal, which I own and may be
discovered later after my demise, shall be distributed in the
proportion indicated in the immediately preceding paragraph in favor
of Edmund and Florence, my children.
We agree with the appellate court that the above-quoted is an
all-encompassing provision embracing all the properties left by the
decedent which might have escaped his mind at that time he was
making his will, and other properties he may acquire thereafter.
Included therein are the three (3) subject tractors. This being so, any
partition involving the said tractors among the heirs is not valid. The
joint agreement25 executed by Edmund and Florence, partitioning the
tractors among themselves, is invalid, specially so since at the time of
its execution, there was already a pending proceeding for the probate
of their late father’s holographic will covering the said tractors.
It must be stressed that the probate proceeding had already acquired
jurisdiction over all the properties of the deceased, including the three
(3) tractors. To dispose of them in any way without the probate
court’s approval is tantamount to divesting it with jurisdiction which
the Court cannot allow.26 Every act intended to put an end to
indivision among co-heirs and legatees or devisees is deemed to be a
partition, although it should purport to be a sale, an exchange, a
compromise, or any other transaction.27 Thus, in executing any joint
agreement which appears to be in the nature of an extra-judicial
partition, as in the case at bar, court approval is imperative, and the
heirs cannot just divest the court of its jurisdiction over that part of
the estate. Moreover, it is within the jurisdiction of the probate court
to determine the identity of the heirs of the decedent.28 In the instant
case, there is no showing that the signatories in the joint agreement
were the only heirs of the decedent. When it was executed, the
probate of the will was still pending before the court and the latter
had yet to determine who the heirs of the decedent were. Thus, for
Edmund and respondent Florence S. Ariola to adjudicate unto
themselves the three (3) tractors was a premature act, and prejudicial
to the other possible heirs and creditors who may have a valid claim
against the estate of the deceased.
9
The question that now comes to fore is whether the heirs’ assumption
of the indebtedness of the decedent is binding. We rule in the
negative. Perusing the joint agreement, it provides that the heirs as
parties thereto "have agreed to divide between themselves and take
possession and use the above-described chattel and each of them to
assume the indebtedness corresponding to the chattel taken as herein
after stated which is in favor of First Countryside Credit Corp."29 The
assumption of liability was conditioned upon the happening of an
event, that is, that each heir shall take possession and use of their
respective share under the agreement. It was made dependent on the
validity of the partition, and that they were to assume the
indebtedness corresponding to the chattel that they were each to
receive. The partition being invalid as earlier discussed, the heirs in
effect did not receive any such tractor. It follows then that the
assumption of liability cannot be given any force and effect.
The Court notes that the loan was contracted by the
decedent.l^vvphi1.net The petitioner, purportedly a creditor of the
late Efraim Santibañez, should have thus filed its money claim with
the probate court in accordance with Section 5, Rule 86 of the Revised
Rules of Court, which provides:
Section 5. Claims which must be filed under the notice. If not filed
barred; exceptions. — All claims for money against the decedent,
arising from contract, express or implied, whether the same be due,
not due, or contingent, all claims for funeral expenses for the last
sickness of the decedent, and judgment for money against the
decedent, must be filed within the time limited in the notice;
otherwise they are barred forever, except that they may be set forth
as counterclaims in any action that the executor or administrator may
bring against the claimants. Where an executor or administrator
commences an action, or prosecutes an action already commenced by
the deceased in his lifetime, the debtor may set forth by answer the
claims he has against the decedent, instead of presenting them
independently to the court as herein provided, and mutual claims may
be set off against each other in such action; and if final judgment is
rendered in favor of the defendant, the amount so determined shall
be considered the true balance against the estate, as though the claim
had been presented directly before the court in the administration
proceedings. Claims not yet due, or contingent, may be approved at
their present value.
The filing of a money claim against the decedent’s estate in the
probate court is mandatory.30 As we held in the vintage case of Py Eng
Chong v. Herrera:31
… This requirement is for the purpose of protecting the estate of the
deceased by informing the executor or administrator of the claims
against it, thus enabling him to examine each claim and to determine
whether it is a proper one which should be allowed. The plain and
obvious design of the rule is the speedy settlement of the affairs of
the deceased and the early delivery of the property to the distributees,
legatees, or heirs. `The law strictly requires the prompt presentation
and disposition of the claims against the decedent's estate in order to
settle the affairs of the estate as soon as possible, pay off its debts
and distribute the residue.32
SUCCESSION FULL TEXT (1-10)
Perusing the records of the case, nothing therein could hold private
respondent Florence S. Ariola accountable for any liability incurred by
her late father. The documentary evidence presented, particularly the
promissory notes and the continuing guaranty agreement, were
executed and signed only by the late Efraim Santibañez and his son
Edmund. As the petitioner failed to file its money claim with the
probate court, at most, it may only go after Edmund as co-maker of
the decedent under the said promissory notes and continuing
guaranty, of course, subject to any defenses Edmund may have as
against the petitioner. As the court had not acquired jurisdiction over
the person of Edmund, we find it unnecessary to delve into the matter
further.
We agree with the finding of the trial court that the petitioner had not
sufficiently shown that it is the successor-in-interest of the Union
Savings and Mortgage Bank to which the FCCC assigned its assets and
liabilities.33 The petitioner in its complaint alleged that "by virtue of
the Deed of Assignment dated August 20, 1981 executed by and
between First Countryside Credit Corporation and Union Bank of the
Philippines…"34 However, the documentary evidence35 clearly reflects
that the parties in the deed of assignment with assumption of
liabilities were the FCCC, and the Union Savings and Mortgage Bank,
with the conformity of Bancom Philippine Holdings, Inc. Nowhere can
the petitioner’s participation therein as a party be found. Furthermore,
no documentary or testimonial evidence was presented during trial to
show that Union Savings and Mortgage Bank is now, in fact, petitioner
Union Bank of the Philippines. As the trial court declared in its
decision:
… [T]he court also finds merit to the contention of defendant that
plaintiff failed to prove or did not present evidence to prove that
Union Savings and Mortgage Bank is now the Union Bank of the
Philippines. Judicial notice does not apply here. "The power to take
judicial notice is to [be] exercised by the courts with caution; care
must be taken that the requisite notoriety exists; and every
reasonable doubt upon the subject should be promptly resolved in the
negative." (Republic vs. Court of Appeals, 107 SCRA 504).36
This being the case, the petitioner’s personality to file the complaint is
wanting. Consequently, it failed to establish its cause of action. Thus,
the trial court did not err in dismissing the complaint, and the CA in
affirming the same.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The
assailed Court of Appeals Decision is AFFIRMED. No costs. SO
ORDERED.
4. [G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court of First
Instance of Rizal, presided by Judge Hermogenes Caluag, dismissing its
10
claim against the Estate of K. H. Hemady (Special Proceeding No.
Q-293) for failure to state a cause of action.
The Luzon Surety Co. had filed a claim against the Estate based on
twenty different indemnity agreements, or counter bonds, each
subscribed by a distinct principal and by the deceased K. H. Hemady, a
surety solidary guarantor) in all of them, in consideration of the Luzon
Surety Co.’s of having guaranteed, the various principals in favor of
different creditors. The twenty counterbonds, or indemnity
agreements, all contained the following
stipulations:chanroblesvirtuallawlibrary
“Premiums. — As consideration for this suretyship, the undersigned
jointly and severally, agree to pay the COMPANY the sum of
________________ (P______) pesos, Philippines Currency, in advance
as premium there of for every __________ months or fractions
thereof, this ________ or any renewal or substitution thereof is in
effect.
Indemnity. — The undersigned, jointly and severally, agree at all times
to indemnify the COMPANY and keep it indemnified and hold and
save it harmless from and against any and all damages, losses, costs,
stamps, taxes, penalties, charges, and expenses of whatsoever kind
and nature which the COMPANY shall or may, at any time sustain or
incur in consequence of having become surety upon this bond or any
extension, renewal, substitution or alteration thereof made at the
instance of the undersigned or any of them or any order executed on
behalf of the undersigned or any of them; yand to pay, reimburse and
make good to the COMPANY, its successors and assigns, all sums and
amount of money which it or its representatives shall pay or cause to
be paid, or become liable to pay, on account of the undersigned or
any of them, of whatsoever kind and nature, including 15% of the
amount involved in the litigation or other matters growing out of or
connected therewith for counsel or attorney’s fees, but in no case less
than P25. It is hereby further agreed that in case of extension or
renewal of this ________ we equally bind ourselves for the payment
thereof under the same terms and conditions as above mentioned
without the necessity of executing another indemnity agreement for
the purpose and that we hereby equally waive our right to be notified
of any renewal or extension of this ________ which may be granted
under this indemnity agreement.
Interest on amount paid by the Company. — Any and all sums of
money so paid by the company shall bear interest at the rate of
12% per annum which interest, if not paid, will be accummulated and
added to the capital quarterly order to earn the same interests as the
capital and the total sum thereof, the capital and interest, shall be
paid to the COMPANY as soon as the COMPANY shall have become
liable therefore, whether it shall have paid out such sums of money or
any part thereof or not.
xxx xxx xxx
Waiver. It is hereby agreed upon by and between the undersigned
that any question which may arise between them by reason of this
document and which has to be submitted for decision to Courts of
Justice shall be brought before the Court of competent jurisdiction in
the City of Manila, waiving for this purpose any other venue. Our right
to be notified of the acceptance and approval of this indemnity
agreement is hereby likewise waived.
xxx xxx xxx
Our Liability Hereunder. — It shall not be necessary for the COMPANY
to bring suit against the principal upon his default, or to exhaust the
SUCCESSION FULL TEXT (1-10)
property of the principal, but the liability hereunder of the
undersigned indemnitor shall be jointly and severally, a primary one,
the same as that of the principal, and shall be exigible immediately
upon the occurrence of such default.” (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent claim, of
the value of the twenty bonds it had executed in consideration of the
counterbonds, and further asked for judgment for the unpaid
premiums and documentary stamps affixed to the bonds, with 12 per
cent interest thereon.
Before answer was filed, and upon motion of the administratrix of
Hemady’s estate, the lower court, by order of September 23, 1953,
dismissed the claims of Luzon Surety Co., on two grounds: (1) that the
premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since they were not liabilities
incurred after the execution of the counterbonds;yand (2) that
“whatever losses may occur after Hemady’s death, are not chargeable
to his estate, because upon his death he ceased to be guarantor.”
Taking up the latter point first, since it is the one more far reaching in
effects, the reasoning of the court below ran as
follows:chanroblesvirtuallawlibrary
“The administratrix further contends that upon the death of Hemady,
his liability as a guarantor terminated, and therefore, in the absence
of a showing that a loss or damage was suffered, the claim cannot be
considered contingent. This Court believes that there is merit in this
contention and finds support in Article 2046 of the new Civil Code. It
should be noted that a new requirement has been added for a person
to qualify as a guarantor, that is: integrity. As correctly pointed out by
the Administratrix, integrity is something purely personal and is not
transmissible. Upon the death of Hemady, his integrity was not
transmitted to his estate or successors. Whatever loss therefore, may
occur after Hemady’s death, are not chargeable to his estate because
upon his death he ceased to be a guarantor.
Another clear and strong indication that the surety company has
exclusively relied on the personality, character, honesty and integrity
of the now deceased K. H. Hemady, was the fact that in the printed
form of the indemnity agreement there is a paragraph entitled
‘Security by way of first mortgage, which was expressly waived and
renounced by the security company. The security company has not
demanded from K. H. Hemady to comply with this requirement of
giving security by way of first mortgage. In the supporting papers of
the claim presented by Luzon Surety Company, no real property was
mentioned in the list of properties mortgaged which appears at the
back of the indemnity agreement.” (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present Civil Code
(Article 1311), as well as under the Civil Code of 1889 (Article 1257),
the rule is that
“Contracts take effect only as between the parties, their assigns and
heirs, except in the case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or
by provision of law.”
While in our successional system the responsibility of the heirs for the
debts of their decedent cannot exceed the value of the inheritance
they receive from him, the principle remains intact that these heirs
succeed not only to the rights of the deceased but also to his
obligations. Articles 774 and 776 of the New Civil Code (and Articles
11
659 and 661 of the preceding one) expressly so provide, thereby
confirming Article 1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by virtue of which
the property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another
or others either by his will or by operation of law.”
“ART. 776. — The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
ruled:chanroblesvirtuallawlibrary
“Under the Civil Code the heirs, by virtue of the rights of succession
are subrogated to all the rights and obligations of the deceased
(Article 661) and cannot be regarded as third parties with respect to a
contract to which the deceased was a party, touching the estate of the
deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected by the
provisions of the new Code of Civil Procedure, and, in accordance with
that principle, the heirs of a deceased person cannot be held to be
“third persons” in relation to any contracts touching the real estate of
their decedent which comes in to their hands by right of
inheritance;ythey take such property subject to all the obligations
resting thereon in the hands of him from whom they derive their
rights.”
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de
Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party is
not altered by the provision in our Rules of Court that money debts of
a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the estate is ultimately a
payment by the heirs and distributees, since the amount of the paid
claim in fact diminishes or reduces the shares that the heirs would
have been entitled to receive.
Under our law, therefore, the general rule is that a party’s contractual
rights and obligations are transmissible to the successors. The rule is a
consequence of the progressive “depersonalization” of patrimonial
rights and duties that, as observed by Victorio Polacco, has
characterized the history of these institutions. From the Roman
concept of a relation from person to person, the obligation has
evolved into a relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those rare cases
where the obligation is strictly personal, i.e., is contracted intuitu
personae, in consideration of its performance by a specific person and
by no other. The transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the
obligation of the surety or guarantor does not warrant the conclusion
that his peculiar individual qualities are contemplated as a principal
inducement for the contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the latter as surety in the
counterbonds? Nothing but the reimbursement of the moneys that
the Luzon Surety Co. might have to disburse on account of the
obligations of the principal debtors. This reimbursement is a payment
of a sum of money, resulting from an obligation to give;ryand to the
Luzon Surety Co., it was indifferent that the reimbursement should be
SUCCESSION FULL TEXT (1-10)
made by Hemady himself or by some one else in his behalf, so long as
the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by
stipulation of the parties. Being exceptional and contrary to the
general rule, this intransmissibility should not be easily implied, but
must be expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the
agreements sued upon nowhere indicate that they are
non-transferable.
“(b) Intransmisibilidad por pacto. — Lo general es la transmisibilidad
de darechos y obligaciones;yle excepcion, la intransmisibilidad.
Mientras nada se diga en contrario impera el principio de la
transmision, como elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester el pacto
expreso, porque si no, lo convenido entre partes trasciende a sus
herederos.
Siendo estos los continuadores de la personalidad del causante, sobre
ellos recaen los efectos de los vinculos juridicos creados por sus
antecesores, y para evitarlo, si asi se quiere, es indespensable
convension terminante en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir más allá de las
personas que les dieron vida, y a ejercer presion sobre los sucesores
de esa persona;rycuando no se quiera esto, se impone una
estipulacion limitativa expresamente de la transmisibilidad o de cuyos
tirminos claramente se deduzca la concresion del concreto a las
mismas personas que lo otorgon.” (Scaevola, Codigo Civil, Tomo XX, p.
541-542)
Because under the law (Article 1311), a person who enters into a
contract is deemed to have contracted for himself and his heirs and
assigns, it is unnecessary for him to expressly stipulate to that
effect;hence, his failure to do so is no sign that he intended his
bargain to terminate upon his death. Similarly, that the Luzon Surety
Co., did not require bondsman Hemady to execute a mortgage
indicates nothing more than the company’s faith and confidence in
the financial stability of the surety, but not that his obligation was
strictly personal.
The third exception to the transmissibility of obligations under Article
1311 exists when they are “not transmissible by operation of law”.
The provision makes reference to those cases where the law
expresses that the rights or obligations are extinguished by death, as
is the case in legal support (Article 300), parental authority (Article
327), usufruct (Article 603), contracts for a piece of work (Article
1726), partnership (Article 1830 and agency (Article 1919). By contract,
the articles of the Civil Code that regulate guaranty or suretyship
(Articles 2047 to 2084) contain no provision that the guaranty is
extinguished upon the death of the guarantor or the surety.
The lower court sought to infer such a limitation from Art. 2056, to
the effect that “one who is obliged to furnish a guarantor must
present a person who possesses integrity, capacity to bind himself,
and sufficient property to answer for the obligation which he
guarantees”. It will be noted, however, that the law requires these
qualities to be present only at the time of the perfection of the
contract of guaranty. It is self-evident that once the contract has
become perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the eventual liability
he has contracted;yand if that be true of his capacity to bind himself,
it should also be true of his integrity, which is a quality mentioned in
the article alongside the capacity.
12
The foregoing concept is confirmed by the next Article 2057, that runs
as follows:chanroblesvirtuallawlibrary
“ART. 2057. — If the guarantor should be convicted in first instance of
a crime involving dishonesty or should become insolvent, the creditor
may demand another who has all the qualifications required in the
preceding article. The case is excepted where the creditor has
required and stipulated that a specified person should be guarantor.”
From this article it should be immediately apparent that the
supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound) does not
terminate the contract but merely entitles the creditor to demand a
replacement of the guarantor. But the step remains optional in the
creditor: it is his right, not his duty; yhe may waive it if he chooses,
and hold the guarantor to his bargain. Hence Article 2057 of the
present Civil Code is incompatible with the trial court’s stand that the
requirement of integrity in the guarantor or surety makes the latter’s
undertaking strictly personal, so linked to his individuality that the
guaranty automatically terminates upon his death.
The contracts of suretyship entered into by K. H. Hemady in favor of
Luzon Surety Co. not being rendered intransmissible due to the nature
of the undertaking, nor by the stipulations of the contracts themselves,
nor by provision of law, his eventual liability thereunder necessarily
passed upon his death to his heirs. The contracts, therefore, give rise
to contingent claims provable against his estate under section 5, Rule
87 (2 Moran, 1952 ed., p. 437;ryGaskell & Co. vs. Tan Sit, 43 Phil. 810,
814).
“The most common example of the contigent claim is that which
arises when a person is bound as surety or guarantor for a principal
who is insolvent or dead. Under the ordinary contract of suretyship
the surety has no claim whatever against his principal until he himself
pays something by way of satisfaction upon the obligation which is
secured. When he does this, there instantly arises in favor of the
surety the right to compel the principal to exonerate the surety. But
until the surety has contributed something to the payment of the debt,
or has performed the secured obligation in whole or in part, he has no
right of action against anybody — no claim that could be reduced to
judgment.(May vs. Vann, 15 Pla., 553;yGibson vs. Mithell, 16 Pla.,
519;yMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt.
[Tenn.], 119; yErnst vs. Nou, 63 Wis., 134.)”
For Defendant administratrix it is averred that the above doctrine
refers to a case where the surety files claims against the estate of the
principal debtor;yand it is urged that the rule does not apply to the
case before us, where the late Hemady was a surety, not a principal
debtor. The argument evinces a superficial view of the relations
between parties. If under the Gaskell ruling, the Luzon Surety Co., as
guarantor, could file a contingent claim against the estate of the
principal debtors if the latter should die, there is absolutely no reason
why it could not file such a claim against the estate of Hemady, since
Hemady is a solidary co-debtor of his principals. What the Luzon
Surety Co. may claim from the estate of a principal debtor it may
equally claim from the estate of Hemady, since, in view of the existing
solidarity, the latter does not even enjoy the benefit of exhaustion of
the assets of the principal debtor.
The foregoing ruling is of course without prejudice to the remedies of
the administratrix against the principal debtors under Articles 2071
and 2067 of the New Civil Code.
Our conclusion is that the solidary guarantor’s liability is not
extinguished by his death, and that in such event, the Luzon Surety
SUCCESSION FULL TEXT (1-10)
Co., had the right to file against the estate a contingent claim for
reimbursement. It becomes unnecessary now to discuss the estate’s
liability for premiums and stamp taxes, because irrespective of the
solution to this question, the Luzon Surety’s claim did state a cause of
action, and its dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the records are
ordered remanded to the court of origin, with instructions to proceed
in accordance with law. Costs against the Administratrix- Appellee. SO
ORDERED.
5. G.R. No. L-68053 May 7, 1990
ALVAREZ v. IAC
FERNAN, C.J.:
This is a petition for review on certiorari seeking the reversal of: (a)
the decision of the Fourth Civil Cases Division of the Intermediate
Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626
entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason et al." affirming the
decision dated July 8, 1974 of the Court of First Instance of Negros
Occidental insofar as it ordered the petitioners to pay jointly and
severally the private respondents the sum of P20,000.00 representing
the actual value of Lots Nos. 773-A and 773-B of the cadastral survey
of Murcia, Negros Occidental and reversing the subject decision
insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00
as actual damages, moral damages and attorney's fees, respectively
and (b) the resolution of said appellate court dated May 30, 1984,
denying the motion for reconsideration of its decision.
The real properties involved are two parcels of land identified as Lot
773-A and Lot 773-B which were originally known as Lot 773 of the
cadastral survey of Murcia, Negros Occidental. Lot 773, with an area
of 156,549 square meters, was registered in the name of the heirs of
Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804)
issued on October 9, 1917 by the Register of Deeds of Occidental
Negros (Exh. A).
Aniceto Yanes was survived by his children, Rufino, Felipe and
Teodora. Herein private respondents, Estelita, Iluminado and Jesus,
are the children of Rufino who died in 1962 while the other private
respondents, Antonio and Rosario Yanes, are children of Felipe.
Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear
why the latter is not included as a party in this case.
Aniceto left his children Lots 773 and 823. Teodora cultivated only
three hectares of Lot 823 as she could not attend to the other
portions of the two lots which had a total area of around twenty-four
hectares. The record does not show whether the children of Felipe
also cultivated some portions of the lots but it is established that
Rufino and his children left the province to settle in other places as a
result of the outbreak of World War II. According to Estelita, from the
"Japanese time up to peace time", they did not visit the parcels of
land in question but "after liberation", when her brother went there
to get their share of the sugar produced therein, he was informed that
13
Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in
possession of Lot 773. 2
It is on record that on May 19, 1938, Fortunato D. Santiago was issued
Transfer Certificate of Title No. RF 2694 (29797) covering Lot 773-A
with an area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot
773-A as a portion of Lot 773 of the cadastral survey of Murcia and as
originally registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of 118,831 square meters
was also registered in the name of Fortunato D. Santiago on
September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer
certificate of title also contains a certification to the effect that Lot
773-B was originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B.
Fuentebella, Jr. in consideration of the sum of
P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291
and T-19292 were issued in Fuentebella's name. 6
After Fuentebella's death and during the settlement of his estate, the
administratrix thereof (Arsenia R. Vda. de Fuentebella, his wife) filed
in Special Proceedings No. 4373 in the Court of First Instance of
Negros Occidental, a motion requesting authority to sell Lots 773-A
and 773-B. 7 By virtue of a court order granting said motion, 8 on
March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for
P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos.
T-23165 and T-23166 covering Lots 773-A and 773-B were respectively
issued to Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora Yanes and the children
of her brother Rufino, namely, Estelita, Iluminado and Jesus, filed in
the Court of First Instance of Negros Occidental a complaint against
Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the
Register of Deeds of Negros Occidental for the "return" of the
ownership and possession of Lots 773 and 823. They also prayed that
an accounting of the produce of the land from 1944 up to the filing of
the complaint be made by the defendants, that after court approval of
said accounting, the share or money equivalent due the plaintiffs be
delivered to them, and that defendants be ordered to pay plaintiffs
P500.00 as damages in the form of attorney's fees. 11
During the pendency in court of said case or on November 13, 1961,
Alvarez sold Lots 773-A, 773-B and another lot for P25,000.00 to Dr.
Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued
to Siason, 13 who thereafter, declared the two lots in his name for
assessment purposes. 14
Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and
in behalf of the other plaintiffs, and assisted by their counsel, filed a
manifestation in Civil Case No. 5022 stating that the therein plaintiffs
"renounce, forfeit and quitclaims (sic) any claim, monetary or
otherwise, against the defendant Arsenia Vda. de Fuentebella in
connection with the above-entitled case." 15
SUCCESSION FULL TEXT (1-10)
On October 11, 1963, a decision was rendered by the Court of First
Instance of Negros Occidental in Civil Case No. 5022, the dispositive
portion of which reads:
WHEREFORE, judgment is rendered, ordering the defendant Rosendo
Alvarez to reconvey to the plaintiffs lots Nos. 773 and 823 of the
Cadastral Survey of Murcia, Negros Occidental, now covered by
Transfer Certificates of Title Nos. T-23165 and T-23166 in the name of
said defendant, and thereafter to deliver the possession of said lots to
the plaintiffs. No special pronouncement as to costs. SO ORDERED. 16
It will be noted that the above-mentioned manifestation of Jesus
Yanes was not mentioned in the aforesaid decision.
However, execution of said decision proved unsuccessful with respect
to Lot 773. In his return of service dated October 20, 1965, the sheriff
stated that he discovered that Lot 773 had been subdivided into Lots
773-A and 773-B; that they were "in the name" of Rodolfo Siason who
had purchased them from Alvarez, and that Lot 773 could not be
delivered to the plaintiffs as Siason was "not a party per writ of
execution." 17
The execution of the decision in Civil Case No. 5022 having met a
hindrance, herein private respondents (the Yaneses) filed on July 31,
1965, in the Court of First Instance of Negros Occidental a petition for
the issuance of a new certificate of title and for a declaration of nullity
of TCT Nos. T-23165 and T-23166 issued to Rosendo
Alvarez. 18 Thereafter, the court required Rodolfo Siason to produce
the certificates of title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he purchased Lots
773-A, 773-B and 658, not Lots 773 and 823, "in good faith and for a
valuable consideration without any knowledge of any lien or
encumbrances against said properties"; that the decision in the
cadastral proceeding 19 could not be enforced against him as he was
not a party thereto; and that the decision in Civil Case No. 5022 could
neither be enforced against him not only because he was not a
party-litigant therein but also because it had long become final and
executory. 20 Finding said manifestation to be well-founded, the
cadastral court, in its order of September 4, 1965, nullified its previous
order requiring Siason to surrender the certificates of title mentioned
therein. 21
In 1968, the Yaneses filed an ex-parte motion for the issuance of an
alias writ of execution in Civil Case No. 5022. Siason opposed it. 22 In
its order of September 28, 1968 in Civil Case No. 5022, the lower court,
noting that the Yaneses had instituted another action for the recovery
of the land in question, ruled that at the judgment therein could not
be enforced against Siason as he was not a party in the case. 23
The action filed by the Yaneses on February 21, 1968 was for recovery
of real property with damages. 24 Named defendants therein were Dr.
Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and
the Register of Deeds of Negros Occidental. The Yaneses prayed for
the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic)
for being null and void; the issuance of a new certificate of title in the
14
name of the Yaneses "in accordance with the sheriffs return of service
dated October 20, 1965;" Siason's delivery of possession of Lot 773 to
the Yaneses; and if, delivery thereof could not be effected, or, if the
issuance of a new title could not be made, that the Alvarez and Siason
jointly and severally pay the Yaneses the sum of P45,000.00. They also
prayed that Siason render an accounting of the fruits of Lot 773 from
November 13, 1961 until the filing of the complaint; and that the
defendants jointly and severally pay the Yaneses moral damages of
P20,000.00 and exemplary damages of P10,000.00 plus attorney's fees
of P4, 000.00. 25
In his answer to the complaint, Siason alleged that the validity of his
titles to Lots 773-A and 773-B, having been passed upon by the court
in its order of September 4, 1965, had become res judicata and the
Yaneses were estopped from questioning said order. 26 On their part,
the Alvarez stated in their answer that the Yaneses' cause of action
had been "barred by res judicata, statute of limitation and
estoppel." 27
In its decision of July 8, 1974, the lower court found that Rodolfo
Siason, who purchased the properties in question thru an agent as he
was then in Mexico pursuing further medical studies, was a buyer in
good faith for a valuable consideration. Although the Yaneses were
negligent in their failure to place a notice of lis pendens "before the
Register of Deeds of Negros Occidental in order to protect their rights
over the property in question" in Civil Case No. 5022, equity
demanded that they recover the actual value of the land because the
sale thereof executed between Alvarez and Siason was without court
approval. 28 The dispositive portion of the decision states:
IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby
rendered in the following manner:
A. The case against the defendant Dr. Rodolfo Siason and the Register
of Deeds are (sic) hereby dismmissed,
B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez
being the legitimate children of the deceased Rosendo Alvarez are
hereby ordered to pay jointly and severally the plaintiffs the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B
of Murcia Cadastre, Negros Occidental; the sum of P2,000.00 as actual
damages suffered by the plaintiff; the sum of P5,000.00 representing
moral damages and the sum of P2.000 as attorney's fees, all with legal
rate of interest from date of the filing of this complaint up to final
payment.
C. The cross-claim filed by the defendant Dr. Rodolfo Siason against
the defendants, Laura, Flora and Raymundo, all surnamed Alvarez is
hereby dismissed.
D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are
hereby ordered to pay the costs of this suit. SO ORDERED. 29
The Alvarez appealed to the then Intermediate Appellate Court which
in its decision of August 31, 1983 30 affirmed the lower court's decision
SUCCESSION FULL TEXT (1-10)
"insofar as it ordered defendants-appellants to pay jointly and
severally the plaintiffs-appellees the sum of P20,000.00 representing
the actual value of Lots Nos. 773-A and 773-B of the cadastral survey
of Murcia, Negros Occidental, and is reversed insofar as it awarded
the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages,
moral damages and attorney's fees, respectively." 31 The dispositive
portion of said decision reads:
WHEREFORE, the decision appealed from is affirmed insofar as it
ordered defendants-appellants to pay jointly and severally the
plaintiffs- appellees the sum of P20,000.00 representing the actual
value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia,
Negros Occidental, and is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral
damages and attorney's fees, respectively. No costs.
SO ORDERED. 32
Finding no cogent reason to grant appellants motion for
reconsideration, said appellate court denied the same.
Hence, the instant petition. ln their memorandum petitioners raised
the following issues:
1. Whethere or not the defense of prescription and estoppel had been
timely and properly invoked and raised by the petitioners in the lower
court.
2. Whether or not the cause and/or causes of action of the private
respondents, if ever there are any, as alleged in their complaint dated
February 21, 1968 which has been docketed in the trial court as Civil
Case No. 8474 supra, are forever barred by statute of limitation
and/or prescription of action and estoppel.
3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case
No. 5022, supra and father of the petitioners become a privy and/or
party to the waiver (Exhibit 4-defendant Siason) in Civil Case No.
8474, supra where the private respondents had unqualifiedly and
absolutely waived, renounced and quitclaimed all their alleged rights
and interests, if ever there is any, on Lots Nos. 773-A and 773-B of
Murcia Cadastre as appearing in their written manifestation dated
November 6, 1962 (Exhibits "4" Siason) which had not been
controverted or even impliedly or indirectly denied by them.
4. Whether or not the liability or liabilities of Rosendo Alvarez arising
from the sale of Lots Nos. 773-A and 773-B of Murcia Cadastre to Dr.
Rodolfo Siason, if ever there is any, could be legally passed or
transmitted by operations (sic) of law to the petitioners without
violation of law and due process . 33
The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is powerless and for that
matter so is the Supreme Court, to review the decision in Civil Case No.
5022 ordering Alvarez to reconvey the lots in dispute to herein private
15
respondents. Said decision had long become final and executory and
with the possible exception of Dr. Siason, who was not a party to said
case, the decision in Civil Case No. 5022 is the law of the case between
the parties thereto. It ended when Alvarez or his heirs failed to appeal
the decision against them. 34
Thus, it is axiomatic that when a right or fact has been judicially tried
and determined by a court of competent jurisdiction, so long as it
remains unreversed, it should be conclusive upon the parties and
those in privity with them in law or estate. 35 As consistently ruled by
this Court, every litigation must come to an end. Access to the court is
guaranteed. But there must be a limit to it. Once a litigant's right has
been adjudicated in a valid final judgment of a competent court, he
should not be granted an unbridled license to return for another try.
The prevailing party should not be harassed by subsequent suits. For,
if endless litigation were to be allowed, unscrupulous litigations will
multiply in number to the detriment of the administration of justice. 36
There is no dispute that the rights of the Yaneses to the properties in
question have been finally adjudicated in Civil Case No. 5022. As
found by the lower court, from the uncontroverted evidence
presented, the Yaneses have been illegally deprived of ownership and
possession of the lots in question. 37 In fact, Civil Case No. 8474 now
under review, arose from the failure to execute Civil Case No. 5022, as
subject lots can no longer be reconveyed to private respondents
Yaneses, the same having been sold during the pendency of the case
by the petitioners' father to Dr. Siason who did not know about the
controversy, there being no lis pendens annotated on the titles. Hence,
it was also settled beyond question that Dr. Siason is a purchaser in
good faith.
Under the circumstances, the trial court did not annul the sale
executed by Alvarez in favor of Dr. Siason on November 11, 1961 but
in fact sustained it. The trial court ordered the heirs of Rosendo
Alvarez who lost in Civil Case No. 5022 to pay the plaintiffs (private
respondents herein) the amount of P20,000.00 representing the
actual value of the subdivided lots in dispute. It did not order
defendant Siason to pay said amount. 38
As to the propriety of the present case, it has long been established
that the sole remedy of the landowner whose property has been
wrongfully or erroneously registered in another's name is to bring an
ordinary action in the ordinary court of justice for reconveyance or, if
the property has passed into the hands of an innocent purchaser for
value, for damages. 39 "It is one thing to protect an innocent third
party; it is entirely a different matter and one devoid of justification if
deceit would be rewarded by allowing the perpetrator to enjoy the
fruits of his nefarious decided As clearly revealed by the undeviating
line of decisions coming from this Court, such an undesirable
eventuality is precisely sought to be guarded against." 40
The issue on the right to the properties in litigation having been finally
adjudicated in Civil Case No. 5022 in favor of private respondents, it
cannot now be reopened in the instant case on the pretext that the
defenses of prescription and estoppel have not been properly
considered by the lower court. Petitioners could have appealed in the
SUCCESSION FULL TEXT (1-10)
former case but they did not. They have therefore foreclosed their
rights, if any, and they cannot now be heard to complain in another
case in order to defeat the enforcement of a judgment which has
longing become final and executory.
Petitioners further contend that the liability arising from the sale of
Lots No. 773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo
Siason should be the sole liability of the late Rosendo Alvarez or of his
estate, after his death.
Such contention is untenable for it overlooks the doctrine obtaining in
this jurisdiction on the general transmissibility of the rights and
obligations of the deceased to his legitimate children and heirs. Thus,
the pertinent provisions of the Civil Code state:
Art. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another
or others either by his will or by operation of law.
Art. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.
Art. 1311. Contract stake effect only between the parties, their assigns
and heirs except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or
by provision of law. The heir is not liable beyond the value of the
property received from the decedent.
As explained by this Court through Associate Justice J.B.L. Reyes in the
case of Estate of Hemady vs. Luzon Surety Co., Inc. 41
The binding effect of contracts upon the heirs of the deceased party is
not altered by the provision of our Rules of Court that money debts of
a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the state is ultimately a
payment by the heirs or distributees, since the amount of the paid
claim in fact diminishes or reduces the shares that the heirs would
have been entitled to receive.
Under our law, therefore. the general rule is that a party's contractual
rights and obligations are transmissible to the successors.
The rule is a consequence of the progressive "depersonalization" of
patrimonial rights and duties that, as observed by Victorio Polacco has
characterized the history of these institutions. From the Roman
concept of a relation from person to person, the obligation has
evolved into a relation from patrimony to patrimony with the persons
occupying only a representative position, barring those rare cases
where the obligation is strictly personal, i.e., is contracted intuitu
personae, in consideration of its performance by a specific person and
by no other.
xxx xxx xxx
16
Petitioners being the heirs of the late Rosendo Alvarez, they cannot
escape the legal consequences of their father's transaction, which
gave rise to the present claim for damages. That petitioners did not
inherit the property involved herein is of no moment because by legal
fiction, the monetary equivalent thereof devolved into the mass of
their father's hereditary estate, and we have ruled that the hereditary
assets are always liable in their totality for the payment of the debts
of the estate. 42
It must, however, be made clear that petitioners are liable only to the
extent of the value of their inheritance. With this clarification and
considering petitioners' admission that there are other properties left
by the deceased which are sufficient to cover the amount adjudged in
favor of private respondents, we see no cogent reason to disturb the
findings and conclusions of the Court of Appeals.
WHEREFORE, subject to the clarification herein above stated, the
assailed decision of the Court of Appeals is hereby AFFIRMED. Costs
against petitioners. SO ORDERED.
6. G.R. No. 103577 October 7, 1996
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL,
ANNABELLE C. GONZALES (for herself and on behalf of Florida C.
Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A.
ALMONTE, and CATALINA BALAIS MABANAG v. THE COURT OF
APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIA
ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact
MELO, J.:p
The petition before us has its roots in a complaint for specific
performance to compel herein petitioners (except the last named,
Catalina Balais Mabanag) to consummate the sale of a parcel of land
with its improvements located along Roosevelt Avenue in Quezon City
entered into by the parties sometime in January 1985 for the price of
P1,240,000.00.
The undisputed facts of the case were summarized by respondent
court in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et al.
(hereinafter referred to as Coronels) executed a document entitled
"Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona
Patricia Alcaraz (hereinafter referred to as Ramona) which is
reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 — Total amount
SUCCESSION FULL TEXT (1-10)
50,000 — Down payment
———————————
P1,190,000.00 — Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon
City, the sum of Fifty Thousand Pesos purchase price of our inherited
house and lot, covered by TCT No. 119627 of the Registry of Deeds of
Quezon City, in the total amount of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our
deceased father, Constancio P. Coronel, the transfer certificate of title
immediately upon receipt of the down payment above-stated.
On our presentation of the TCT already in or name, We will
immediately execute the deed of absolute sale of said property and
Miss Ramona Patricia Alcaraz shall immediately pay the balance of the
P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00)
Pesos upon execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of
the property registered in the name of their deceased father upon
receipt of the Fifty Thousand (P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the
Coronels will execute the deed of absolute sale in favor of Ramona
and the latter will pay the former the whole balance of One Million
One Hundred Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D.
Alcaraz (hereinafter referred to as Concepcion), mother of Ramona,
paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh.
"B", Exh. "2").
On February 6, 1985, the property originally registered in the name of
the Coronels' father was transferred in their names under TCT
No. 327043 (Exh. "D"; Exh. "4")
On February 18, 1985, the Coronels sold the property covered by TCT
No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter
referred to as Catalina) for One Million Five Hundred Eighty Thousand
(P1,580,000.00) Pesos after the latter has paid Three Hundred
Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")
For this reason, Coronels canceled and rescinded the contract (Exh.
"A") with Ramona by depositing the down payment paid by
Concepcion in the bank in trust for Ramona Patricia Alcaraz.
On February 22, 1985, Concepcion, et al., filed a complaint for specific
performance against the Coronels and caused the annotation of a
notice of lis pendens at the back of TCT No. 327403 (Exh. "E"; Exh.
"5").
17
On April 2, 1985, Catalina caused the annotation of a notice of
adverse claim covering the same property with the Registry of Deeds
of Quezon City (Exh. "F"; Exh. "6").
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over
the subject property in favor of Catalina (Exh. "G"; Exh. "7").
On June 5, 1985, a new title over the subject property was issued in
the name of Catalina under TCT No. 351582 (Exh. "H"; Exh. "8").
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83, RTC,
Quezon City) the parties agreed to submit the case for decision solely
on the basis of documentary exhibits. Thus, plaintiffs therein (now
private respondents) proffered their documentary evidence
accordingly marked as Exhibits "A" through "J", inclusive of their
corresponding submarkings. Adopting these same exhibits as their
own, then defendants (now petitioners) accordingly offered and
marked them as Exhibits "1" through "10", likewise inclusive of their
corresponding submarkings. Upon motion of the parties, the trial
court gave them thirty (30) days within which to simultaneously
submit their respective memoranda, and an additional 15 days within
which to submit their corresponding comment or reply thereof, after
which, the case would be deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge
Reynaldo Roura, who was then temporarily detailed to preside over
Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment
was handed down by Judge Roura from his regular bench at
Macabebe, Pampanga for the Quezon City branch, disposing as
follows:
WHEREFORE, judgment for specific performance is hereby rendered
ordering defendant to execute in favor of plaintiffs a deed of absolute
sale covering that parcel of land embraced in and covered by Transfer
Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of
Deeds for Quezon City, together with all the improvements existing
thereon free from all liens and encumbrances, and once accomplished,
to immediately deliver the said document of sale to plaintiffs and
upon receipt thereof, the said document of sale to plaintiffs and upon
receipt thereof, the plaintiffs are ordered to pay defendants the
whole balance of the purchase price amounting to P1,190,000.00 in
cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds
for Quezon City in the name of intervenor is hereby canceled and
declared to be without force and effect. Defendants and intervenor
and all other persons claiming under them are hereby ordered to
vacate the subject property and deliver possession thereof to
plaintiffs. Plaintiffs' claim for damages and attorney's fees, as well as
the counterclaims of defendants and intervenors are hereby
dismissed.
No pronouncement as to costs.
So Ordered.
SUCCESSION FULL TEXT (1-10)
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioner before the new
presiding judge of the Quezon City RTC but the same was denied by
Judge Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision
and to render anew decision by the undersigned Presiding Judge
should be denied for the following reasons: (1) The instant case
became submitted for decision as of April 14, 1988 when the parties
terminated the presentation of their respective documentary
evidence and when the Presiding Judge at that time was Judge
Reynaldo Roura. The fact that they were allowed to file memoranda at
some future date did not change the fact that the hearing of the case
was terminated before Judge Roura and therefore the same should be
submitted to him for decision; (2) When the defendants and
intervenor did not object to the authority of Judge Reynaldo Roura to
decide the case prior to the rendition of the decision, when they met
for the first time before the undersigned Presiding Judge at the
hearing of a pending incident in Civil Case No. Q-46145 on November
11, 1988, they were deemed to have acquiesced thereto and they are
now estopped from questioning said authority of Judge Roura after
they received the decision in question which happens to be adverse to
them; (3) While it is true that Judge Reynaldo Roura was merely a
Judge-on-detail at this Branch of the Court, he was in all respects the
Presiding Judge with full authority to act on any pending incident
submitted before this Court during his incumbency. When he returned
to his Official Station at Macabebe, Pampanga, he did not lose his
authority to decide or resolve such cases submitted to him for
decision or resolution because he continued as Judge of the Regional
Trial Court and is of co-equal rank with the undersigned Presiding
Judge. The standing rule and supported by jurisprudence is that a
Judge to whom a case is submitted for decision has the authority to
decide the case notwithstanding his transfer to another branch or
region of the same court (Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision
dated March 1, 1989 rendered in the instant case, resolution of which
now pertains to the undersigned Presiding Judge, after a meticulous
examination of the documentary evidence presented by the parties,
she is convinced that the Decision of March 1, 1989 is supported by
evidence and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or
to Annul Decision and Render Anew Decision by the Incumbent
Presiding Judge" dated March 20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
18
Petitioners thereupon interposed an appeal, but on December 16,
1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad Santos (P),
JJ.) rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last
pleading, private respondents' Reply Memorandum, was filed on
September 15, 1993. The case was, however, re-raffled to
undersigned ponente only on August 28, 1996, due to the voluntary
inhibition of the Justice to whom the case was last assigned.
While we deem it necessary to introduce certain refinements in the
disquisition of respondent court in the affirmance of the trial court's
decision, we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the
resolution of the other issues in the case at bar is the precise
determination of the legal significance of the document entitled
"Receipt of Down Payment" which was offered in evidence by both
parties. There is no dispute as to the fact that said document
embodied the binding contract between Ramona Patricia Alcaraz on
the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as
defined in Article 1305 of the Civil Code of the Philippines which reads
as follows:
Art. 1305. A contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give
something or to render some service.
While, it is the position of private respondents that the "Receipt of
Down Payment" embodied a perfected contract of sale, which
perforce, they seek to enforce by means of an action for specific
performance, petitioners on their part insist that what the document
signified was a mere executory contract to sell, subject to certain
suspensive conditions, and because of the absence of Ramona P.
Alcaraz, who left for the United States of America, said contract could
not possibly ripen into a contract absolute sale.
Plainly, such variance in the contending parties' contentions is
brought about by the way each interprets the terms and/or conditions
set forth in said private instrument. Withal, based on whatever
relevant and admissible evidence may be available on record, this,
Court, as were the courts below, is now called upon to adjudge what
the real intent of the parties was at the time the said document was
executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
SUCCESSION FULL TEXT (1-10)
Sale, by its very nature, is a consensual contract because it is
perfected by mere consent. The essential elements of a contract of
sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a
contract to sell, the prospective seller explicity reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does
not as yet agree or consent to transfer ownership of the property
subject of the contract to sell until the happening of an event, which
for present purposes we shall take as the full payment of the purchase
price. What the seller agrees or obliges himself to do is to fulfill is
promise to sell the subject property when the entire amount of the
purchase price is delivered to him. In other words the full payment of
the purchase price partakes of a suspensive condition, the
non-fulfillment of which prevents the obligation to sell from arising
and thus, ownership is retained by the prospective seller without
further remedies by the prospective buyer. In Roque vs. Lapuz (96
SCRA 741 [1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the
respondent was a contract to sell where the ownership or title is
retained by the seller and is not to pass until the full payment of the
price, such payment being a positive suspensive condition and failure
of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring
binding force.
Stated positively, upon the fulfillment of the suspensive condition
which is the full payment of the purchase price, the prospective
seller's obligation to sell the subject property by entering into a
contract of sale with the prospective buyer becomes demandable as
provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing
for a price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby
the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer,
binds himself to sell the said property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
19
A contract to sell as defined hereinabove, may not even be considered
as a conditional contract of sale where the seller may likewise reserve
title to the property subject of the sale until the fulfillment of a
suspensive condition, because in a conditional contract of sale, the
first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the
suspensive condition is not fulfilled, the perfection of the contract of
sale is completely abated (cf. Homesite and housing Corp. vs. Court of
Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition
is fulfilled, the contract of sale is thereby perfected, such that if there
had already been previous delivery of the property subject of the sale
to the buyer, ownership thereto automatically transfers to the buyer
by operation of law without any further act having to be performed by
the seller.
In a contract to sell, upon the fulfillment of the suspensive condition
which is the full payment of the purchase price, ownership will not
automatically transfer to the buyer although the property may have
been previously delivered to him. The prospective seller still has to
convey title to the prospective buyer by entering into a contract of
absolute sale.
It is essential to distinguish between a contract to sell and a
conditional contract of sale specially in cases where the subject
property is sold by the owner not to the party the seller contracted
with, but to a third person, as in the case at bench. In a contract to sell,
there being no previous sale of the property, a third person buying
such property despite the fulfillment of the suspensive condition such
as the full payment of the purchase price, for instance, cannot be
deemed a buyer in bad faith and the prospective buyer cannot seek
the relief of reconveyance of the property. There is no double sale in
such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-seller's title per se,
but the latter, of course, may be used for damages by the intending
buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will
definitely affect the seller's title thereto. In fact, if there had been
previous delivery of the subject property, the seller's ownership or
title to the property is automatically transferred to the buyer such
that, the seller will no longer have any title to transfer to any third
person. Applying Article 1544 of the Civil Code, such second buyer of
the property who may have had actual or constructive knowledge of
such defect in the seller's title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith.
Such second buyer cannot defeat the first buyer's title. In case a title is
issued to the second buyer, the first buyer may seek reconveyance of
the property subject of the sale.
With the above postulates as guidelines, we now proceed to the task
of deciphering the real nature of the contract entered into by
petitioners and private respondents.
It is a canon in the interpretation of contracts that the words used
therein should be given their natural and ordinary meaning unless a
SUCCESSION FULL TEXT (1-10)
technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA
586 [1992]). Thus, when petitioners declared in the said "Receipt of
Down Payment" that they —
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon
City, the sum of Fifty Thousand Pesos purchase price of our inherited
house and lot, covered by TCT No. 1199627 of the Registry of Deeds of
Quezon City, in the total amount of P1,240,000.00.
without any reservation of title until full payment of the entire
purchase price, the natural and ordinary idea conveyed is that they
sold their property.
When the "Receipt of Down Payment" is considered in its entirety, it
becomes more manifest that there was a clear intent on the part of
petitioners to transfer title to the buyer, but since the transfer
certificate of title was still in the name of petitioner's father, they
could not fully effect such transfer although the buyer was then
willing and able to immediately pay the purchase price. Therefore,
petitioners-sellers undertook upon receipt of the down payment from
private respondent Ramona P. Alcaraz, to cause the issuance of a new
certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter
and to execute the deed of absolute sale whereupon, the latter shall,
in turn, pay the entire balance of the purchase price.
The agreement could not have been a contract to sell because the
sellers herein made no express reservation of ownership or title to the
subject parcel of land. Furthermore, the circumstance which
prevented the parties from entering into an absolute contract of sale
pertained to the sellers themselves (the certificate of title was not in
their names) and not the full payment of the purchase price. Under
the established facts and circumstances of the case, the Court may
safely presume that, had the certificate of title been in the names of
petitioners-sellers at that time, there would have been no reason why
an absolute contract of sale could not have been executed and
consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did
not merely promise to sell the properly to private respondent upon
the fulfillment of the suspensive condition. On the contrary, having
already agreed to sell the subject property, they undertook to have
the certificate of title changed to their names and immediately
thereafter, to execute the written deed of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the
sellers, after compliance by the buyer with certain terms and
conditions, promised to sell the property to the latter. What may be
perceived from the respective undertakings of the parties to the
contract is that petitioners had already agreed to sell the house and
lot they inherited from their father, completely willing to transfer full
ownership of the subject house and lot to the buyer if the documents
were then in order. It just happened, however, that the transfer
certificate of title was then still in the name of their father. It was
more expedient to first effect the change in the certificate of title so
as to bear their names. That is why they undertook to cause the
20
issuance of a new transfer of the certificate of title in their names
upon receipt of the down payment in the amount of P50,000.00. As
soon as the new certificate of title is issued in their names, petitioners
were committed to immediately execute the deed of absolute sale.
Only then will the obligation of the buyer to pay the remainder of the
purchase price arise.
There is no doubt that unlike in a contract to sell which is most
commonly entered into so as to protect the seller against a buyer who
intends to buy the property in installment by withholding ownership
over the property until the buyer effects full payment therefor, in the
contract entered into in the case at bar, the sellers were the one who
were unable to enter into a contract of absolute sale by reason of the
fact that the certificate of title to the property was still in the name of
their father. It was the sellers in this case who, as it were, had the
impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject
document is that when the said "Receipt of Down Payment" was
prepared and signed by petitioners Romeo A. Coronel, et al., the
parties had agreed to a conditional contract of sale, consummation of
which is subject only to the successful transfer of the certificate of
title from the name of petitioners' father, Constancio P. Coronel, to
their names.
The Court significantly notes this suspensive condition was, in fact,
fulfilled on February 6, 1985 (Exh. "D"; Exh. "4"). Thus, on said date,
the conditional contract of sale between petitioners and private
respondent Ramona P. Alcaraz became obligatory, the only act
required for the consummation thereof being the delivery of the
property by means of the execution of the deed of absolute sale in a
public instrument, which petitioners unequivocally committed
themselves to do as evidenced by the "Receipt of Down Payment."
Article 1475, in correlation with Article 1181, both of the Civil Code,
plainly applies to the case at bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract
and upon the price.
From the moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well
as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance
of a certificate of title in petitioners' names was fulfilled on February 6,
1985, the respective obligations of the parties under the contract of
sale became mutually demandable, that is, petitioners, as sellers,
were obliged to present the transfer certificate of title already in their
names to private respondent Ramona P. Alcaraz, the buyer, and to
SUCCESSION FULL TEXT (1-10)
immediately execute the deed of absolute sale, while the buyer on
her part, was obliged to forthwith pay the balance of the purchase
price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of
their petition, petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves "to effect the
transfer in our names from our deceased father Constancio P. Coronel,
the transfer certificate of title immediately upon receipt of the
downpayment above-stated". The sale was still subject to this
suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of
sale subject to a suspensive condition. Only, they contend, continuing
in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first
transferring the title to the property under their names, there could
be no perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they set their own trap for themselves, for Article 1186
of the Civil Code expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more
controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled
on February 6, 1985, when a new title was issued in the names of
petitioners as evidenced by TCT No. 327403 (Exh. "D"; Exh. "4").
The inevitable conclusion is that on January 19, 1985, as evidenced by
the document denominated as "Receipt of Down Payment" (Exh. "A";
Exh. "1"), the parties entered into a contract of sale subject only to
the suspensive condition that the sellers shall effect the issuance of
new certificate title from that of their father's name to their names
and that, on February 6, 1985, this condition was fulfilled (Exh. "D";
Exh. "4").
We, therefore, hold that, in accordance with Article 1187 which
pertinently provides —
Art. 1187. The effects of conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of the
constitution of the obligation . . .
In obligation to do or not to do, the courts shall determine, in each
case, the retroactive effect of the condition that has been complied
with.
21
the rights and obligations of the parties with respect to the perfected
contract of sale became mutually due and demandable as of the time
of fulfillment or occurrence of the suspensive condition on February 6,
1985. As of that point in time, reciprocal obligations of both seller and
buyer arose.
Petitioners also argue there could been no perfected contract on
January 19, 1985 because they were then not yet the absolute owners
of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of
transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to be extent and value of the
inheritance of a person are transmitted through his death to another
or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of
the decedent Constancio P. Coronel are compulsory heirs who were
called to succession by operation of law. Thus, at the point their
father drew his last breath, petitioners stepped into his shoes insofar
as the subject property is concerned, such that any rights or
obligations pertaining thereto became binding and enforceable upon
them. It is expressly provided that rights to the succession are
transmitted from the moment of death of the decedent (Article 777,
Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners' claim that succession may not be
declared unless the creditors have been paid is rendered moot by the
fact that they were able to effect the transfer of the title to the
property from the decedent's name to their names on February 6,
1985.
Aside from this, petitioners are precluded from raising their supposed
lack of capacity to enter into an agreement at that time and they
cannot be allowed to now take a posture contrary to that which they
took when they entered into the agreement with private respondent
Ramona P. Alcaraz. The Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon.
Having represented themselves as the true owners of the subject
property at the time of sale, petitioners cannot claim now that they
were not yet the absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected
contract of sale between them and Ramona P. Alcaraz, the latter
breached her reciprocal obligation when she rendered impossible the
consummation thereof by going to the United States of America,
without leaving her address, telephone number, and Special Power of
SUCCESSION FULL TEXT (1-10)
Attorney (Paragraphs 14 and 15, Answer with Compulsory
Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which
reason, so petitioners conclude, they were correct in unilaterally
rescinding rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of
the contract of sale in the instant case. We note that these supposed
grounds for petitioners' rescission, are mere allegations found only in
their responsive pleadings, which by express provision of the rules,
are deemed controverted even if no reply is filed by the plaintiffs (Sec.
11, Rule 6, Revised Rules of Court). The records are absolutely bereft
of any supporting evidence to substantiate petitioners' allegations.
We have stressed time and again that allegations must be proven by
sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961];
Recaro vs. Embisan, 2 SCRA 598 [1961]. Mere allegation is not an
evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United
States of America on February 6, 1985, we cannot justify
petitioner-sellers' act of unilaterally and extradicially rescinding the
contract of sale, there being no express stipulation authorizing the
sellers to extarjudicially rescind the contract of sale. (cf. Dignos vs. CA,
158 SCRA 375 [1988]; Taguba vs. Vda. de Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence
of Ramona P. Alcaraz because although the evidence on record shows
that the sale was in the name of Ramona P. Alcaraz as the buyer, the
sellers had been dealing with Concepcion D. Alcaraz, Ramona's
mother, who had acted for and in behalf of her daughter, if not also in
her own behalf. Indeed, the down payment was made by Concepcion
D. Alcaraz with her own personal check (Exh. "B"; Exh. "2") for and in
behalf of Ramona P. Alcaraz. There is no evidence showing that
petitioners ever questioned Concepcion's authority to represent
Ramona P. Alcaraz when they accepted her personal check. Neither
did they raise any objection as regards payment being effected by a
third person. Accordingly, as far as petitioners are concerned, the
physical absence of Ramona P. Alcaraz is not a ground to rescind the
contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default,
insofar as her obligation to pay the full purchase price is concerned.
Petitioners who are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-explained offered no
proof whatsoever to show that they actually presented the new
transfer certificate of title in their names and signified their
willingness and readiness to execute the deed of absolute sale in
accordance with their agreement. Ramona's corresponding obligation
to pay the balance of the purchase price in the amount of
P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract
involving reciprocal obligations may be considered in default, to wit:
22
Art. 1169. Those obliged to deliver or to do something, incur in delay
from the time the obligee judicially or extrajudicially demands from
them the fulfillment of their obligation.
xxx xxx xxx
In reciprocal obligations, neither party incurs in delay if the other does
not comply or is not ready to comply in a proper manner with what is
incumbent upon him. From the moment one of the parties fulfill his
obligation, delay by the other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of
sale between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner,
Catalina B. Mabanag, gave rise to a case of double sale where Article
1544 of the Civil Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be
movable property.
Should if be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in Registry of
Property.
Should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession; and, in the
absence thereof to the person who presents the oldest title, provided
there is good faith.
The record of the case shows that the Deed of Absolute Sale dated
April 25, 1985 as proof of the second contract of sale was registered
with the Registry of Deeds of Quezon City giving rise to the issuance of
a new certificate of title in the name of Catalina B. Mabanag on June 5,
1985. Thus, the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership
to pass to the first buyer, the exceptions being: (a) when the second
buyer, in good faith, registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two buyers, when the
second buyer, in good faith, acquires possession of the property
ahead of the first buyer. Unless, the second buyer satisfies these
requirements, title or ownership will not transfer to him to the
prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the
subject, now a distinguished member of the Court, Justice Jose C.
Vitug, explains:
The governing principle is prius tempore, potior jure (first in time,
stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyer's rights except when the second buyer
first registers in good faith the second sale (Olivares vs. Gonzales, 159
SUCCESSION FULL TEXT (1-10)
SCRA 33). Conversely, knowledge gained by the second buyer of the
first sale defeats his rights even if he is first to register, since
knowledge taints his registration with bad faith (see also Astorga vs.
Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz
vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it has held
that it is essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in
registering his deed of sale (citing Carbonell vs. Court of Appeals, 69
SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).
(J. Vitug Compendium of Civil Law and Jurisprudence, 1993 Edition, p.
604).
Petitioner point out that the notice of lis pendens in the case at bar
was annoted on the title of the subject property only on February 22,
1985, whereas, the second sale between petitioners Coronels and
petitioner Mabanag was supposedly perfected prior thereto or on
February 18, 1985. The idea conveyed is that at the time petitioner
Mabanag, the second buyer, bought the property under a clean title,
she was unaware of any adverse claim or previous sale, for which
reason she is buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not
whether or not the second buyer was a buyer in good faith but
whether or not said second buyer registers such second sale in good
faith, that is, without knowledge of any defect in the title of the
property sold.
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 buyer is claiming title to
the same property. Petitioner Mabanag cannot close her eyes to the
defect in petitioners' title to the property at the time of the
registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a
third party or that another person claims said property in a pervious
sale, the registration will constitute a registration in bad faith and will
not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs.
Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and
Ramona P. Alcaraz, perfected on February 6, 1985, prior to that
between petitioners and Catalina B. Mabanag on February 18, 1985,
was correctly upheld by both the courts below.
23
Although there may be ample indications that there was in fact an
agency between Ramona as principal and Concepcion, her mother, as
agent insofar as the subject contract of sale is concerned, the issue of
whether or not Concepcion was also acting in her own behalf as a
co-buyer is not squarely raised in the instant petition, nor in such
assumption disputed between mother and daughter. Thus, We will
not touch this issue and no longer disturb the lower courts' ruling on
this point.
WHEREFORE, premises considered, the instant petition is hereby
DISMISSED and the appealed judgment AFFIRMED. SO ORDERED.
7. G.R. No. 168970 January 15, 2010
CELESTINO BALUS vs. SATURNINO BALUS and LEONARDA BALUS VDA.
DE CALUNOD
PERALTA, J.:
Assailed in the present petition for review on certiorari under Rule 45
of the Rules of Court is the Decision1 of the Court of Appeals (CA)
dated May 31, 2005 in CA-G.R. CV No. 58041 which set aside the
February 7, 1997 Decision of the Regional Trial Court (RTC) of Lanao
del Norte, Branch 4 in Civil Case No. 3263.
The facts of the case are as follows:
Herein petitioner and respondents are the children of the spouses
Rufo and Sebastiana Balus. Sebastiana died on September 6, 1978,
while Rufo died on July 6, 1984.
On January 3, 1979, Rufo mortgaged a parcel of land, which he owns,
as security for a loan he obtained from the Rural Bank of Maigo, Lanao
del Norte (Bank). The said property was originally covered by Original
Certificate of Title No. P-439(788) and more particularly described as
follows:
A parcel of land with all the improvements thereon, containing an
area of 3.0740 hectares, more or less, situated in the Barrio of
Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded
on the NE., along line 1-2, by Lot 5122, Csd-292; along line 2-12, by
Dodiongan River; along line 12-13 by Lot 4649, Csd-292; and along line
12-1, by Lot 4661, Csd-292. x x x 2
Rufo failed to pay his loan. As a result, the mortgaged property was
foreclosed and was subsequently sold to the Bank as the sole bidder
at a public auction held for that purpose. On November 20, 1981, a
Certificate of Sale3 was executed by the sheriff in favor of the Bank.
The property was not redeemed within the period allowed by law.
More than two years after the auction, or on January 25, 1984, the
sheriff executed a Definite Deed of Sale4 in the Bank's favor.
Thereafter, a new title was issued in the name of the Bank.
SUCCESSION FULL TEXT (1-10)
On October 10, 1989, herein petitioner and respondents executed an
Extrajudicial Settlement of Estate5adjudicating to each of them a
specific one-third portion of the subject property consisting of 10,246
square meters. The Extrajudicial Settlement also contained provisions
wherein the parties admitted knowledge of the fact that their father
mortgaged the subject property to the Bank and that they intended to
redeem the same at the soonest possible time.
Three years after the execution of the Extrajudicial Settlement, herein
respondents bought the subject property from the Bank. On October
12, 1992, a Deed of Sale of Registered Land6 was executed by the
Bank in favor of respondents. Subsequently, Transfer Certificate of
Title (TCT) No. T-39,484(a.f.)7 was issued in the name of respondents.
Meanwhile, petitioner continued possession of the subject lot.
On June 27, 1995, respondents filed a Complaint8 for Recovery of
Possession and Damages against petitioner, contending that they had
already informed petitioner of the fact that they were the new
owners of the disputed property, but the petitioner still refused to
surrender possession of the same to them. Respondents claimed that
they had exhausted all remedies for the amicable settlement of the
case, but to no avail.
On February 7, 1997, the RTC rendered a Decision9 disposing as
follows:
WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to
execute a Deed of Sale in favor of the defendant, the one-third share
of the property in question, presently possessed by him, and
described in the deed of partition, as follows:
A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.),
formerly Original Certificate of Title No. P-788, now in the name of
Saturnino Balus and Leonarda B. Vda. de Calunod, situated at
Lagundang, Bunawan, Iligan City, bounded on the North by Lot 5122;
East by shares of Saturnino Balus and Leonarda Balus-Calunod; South
by Lot 4649, Dodiongan River; West by Lot 4661, consisting of 10,246
square meters, including improvements thereon.
and dismissing all other claims of the parties.
The amount of ₱6,733.33 consigned by the defendant with the Clerk
of Court is hereby ordered delivered to the plaintiffs, as purchase
price of the one-third portion of the land in question.
Plaintiffs are ordered to pay the costs.
SO ORDERED.10
The RTC held that the right of petitioner to purchase from the
respondents his share in the disputed property was recognized by the
provisions of the Extrajudicial Settlement of Estate, which the parties
had executed before the respondents bought the subject lot from the
Bank.
24
Aggrieved by the Decision of the RTC, herein respondents filed an
appeal with the CA.
On May 31, 2005, the CA promulgated the presently assailed Decision,
reversing and setting aside the Decision of the RTC and ordering
petitioner to immediately surrender possession of the subject
property to the respondents. The CA ruled that when petitioner and
respondents did not redeem the subject property within the
redemption period and allowed the consolidation of ownership and
the issuance of a new title in the name of the Bank, their
co-ownership was extinguished.
Hence, the instant petition raising a sole issue, to wit:
WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND
THE RESPONDENTS OVER THE PROPERTY PERSISTED/CONTINUED TO
EXIST (EVEN AFTER THE TRANSFER OF TITLE TO THE BANK) BY VIRTUE
OF THE PARTIES' AGREEMENT PRIOR TO THE REPURCHASE THEREOF
BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S ACT
OF ENFORCING THE AGREEMENT BY REIMBURSING THE
RESPONDENTS OF HIS (PETITIONER'S) JUST SHARE OF THE
REPURCHASE PRICE.11
The main issue raised by petitioner is whether co-ownership by him
and respondents over the subject property persisted even after the
lot was purchased by the Bank and title thereto transferred to its
name, and even after it was eventually bought back by the
respondents from the Bank.
Petitioner insists that despite respondents' full knowledge of the fact
that the title over the disputed property was already in the name of
the Bank, they still proceeded to execute the subject Extrajudicial
Settlement, having in mind the intention of purchasing back the
property together with petitioner and of continuing their
co-ownership thereof.
Petitioner posits that the subject Extrajudicial Settlement is, in and by
itself, a contract between him and respondents, because it contains a
provision whereby the parties agreed to continue their co-ownership
of the subject property by "redeeming" or "repurchasing" the same
from the Bank. This agreement, petitioner contends, is the law
between the parties and, as such, binds the respondents. As a result,
petitioner asserts that respondents' act of buying the disputed
property from the Bank without notifying him inures to his benefit as
to give him the right to claim his rightful portion of the property,
comprising 1/3 thereof, by reimbursing respondents the equivalent
1/3 of the sum they paid to the Bank.
The Court is not persuaded.
Petitioner and respondents are arguing on the wrong premise that, at
the time of the execution of the Extrajudicial Settlement, the subject
property formed part of the estate of their deceased father to which
they may lay claim as his heirs.
SUCCESSION FULL TEXT (1-10)
At the outset, it bears to emphasize that there is no dispute with
respect to the fact that the subject property was exclusively owned by
petitioner and respondents' father, Rufo, at the time that it was
mortgaged in 1979. This was stipulated by the parties during the
hearing conducted by the trial court on October 28, 1996.12 Evidence
shows that a Definite Deed of Sale13 was issued in favor of the Bank on
January 25, 1984, after the period of redemption expired. There is
neither any dispute that a new title was issued in the Bank's name
before Rufo died on July 6, 1984. Hence, there is no question that the
Bank acquired exclusive ownership of the contested lot during the
lifetime of Rufo.
The rights to a person's succession are transmitted from the moment
of his death.14 In addition, the inheritance of a person consists of the
property and transmissible rights and obligations existing at the time
of his death, as well as those which have accrued thereto since the
opening of the succession.15 In the present case, since Rufo lost
ownership of the subject property during his lifetime, it only follows
that at the time of his death, the disputed parcel of land no longer
formed part of his estate to which his heirs may lay claim. Stated
differently, petitioner and respondents never inherited the subject lot
from their father.
Petitioner and respondents, therefore, were wrong in assuming that
they became co-owners of the subject lot. Thus, any issue arising from
the supposed right of petitioner as co-owner of the contested parcel
of land is negated by the fact that, in the eyes of the law, the disputed
lot did not pass into the hands of petitioner and respondents as
compulsory heirs of Rufo at any given point in time.
The foregoing notwithstanding, the Court finds a necessity for a
complete determination of the issues raised in the instant case to look
into petitioner's argument that the Extrajudicial Settlement is an
independent contract which gives him the right to enforce his right to
claim a portion of the disputed lot bought by respondents.1avvphi1
It is true that under Article 1315 of the Civil Code of the Philippines,
contracts are perfected by mere consent; and from that moment, the
parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according
to their nature, may be in keeping with good faith, usage and law.
Article 1306 of the same Code also provides that the contracting
parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided these are not contrary to law,
morals, good customs, public order or public policy.
In the present case, however, there is nothing in the subject
Extrajudicial Settlement to indicate any express stipulation for
petitioner and respondents to continue with their supposed
co-ownership of the contested lot.
On the contrary, a plain reading of the provisions of the Extrajudicial
Settlement would not, in any way, support petitioner's contention
that it was his and his sibling's intention to buy the subject property
from the Bank and continue what they believed to be co-ownership
25
thereof. It is a cardinal rule in the interpretation of contracts that the
intention of the parties shall be accorded primordial
consideration.16 It is the duty of the courts to place a practical and
realistic construction upon it, giving due consideration to the context
in which it is negotiated and the purpose which it is intended to
serve.17 Such intention is determined from the express terms of their
agreement, as well as their contemporaneous and subsequent
acts.18 Absurd and illogical interpretations should also be avoided. 19
For petitioner to claim that the Extrajudicial Settlement is an
agreement between him and his siblings to continue what they
thought was their ownership of the subject property, even after the
same had been bought by the Bank, is stretching the interpretation of
the said Extrajudicial Settlement too far.
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 and title
to the property was already transferred to the Bank does not give
them the right or the authority to unilaterally declare themselves as
co-owners of the disputed property; otherwise, the disposition of the
case would be made to depend on the belief and conviction of the
party-litigants and not on the evidence adduced and the law and
jurisprudence applicable thereto.
Furthermore, petitioner's contention that he and his siblings intended
to continue their supposed co-ownership of the subject property
contradicts the provisions of the subject Extrajudicial Settlement
where they clearly manifested their intention of having the subject
property divided or partitioned by assigning to each of the petitioner
and respondents a specific 1/3 portion of the same. Partition calls for
the segregation and conveyance of a determinate portion of the
property owned in common. It seeks a severance of the individual
interests of each co-owner, vesting in each of them a sole estate in a
specific property and giving each one a right to enjoy his estate
without supervision or interference from the other.20 In other words,
the purpose of partition is to put an end to co-ownership,21 an
objective which negates petitioner's claims in the present case.
SUCCESSION FULL TEXT (1-10)
WHEREFORE, the instant petition is DENIED. The assailed Decision of
the Court of Appeals, dated May 31, 2005 in CA-G.R. CV No. 58041,
is AFFIRMED. SO ORDERED.
8. G.R. No. 125888 August 13, 1998
SPOUSES ERNESTO and EVELYN SICAD, v. COURT OF APPEALS,
CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA and
JESUS ANTONIO VALDERRAMA
NARVASA, C.J.:
The issue raised in the appeal by certiorari at bar centers on the
character of a deed of donation executed by the late Aurora Virto DA.
de Motinola of the City of Iloilo — as either inter vivos or mortis causa.
That deed, entitled "DEED OF DONATION INTER VIVOS," 1 was
executed by Montinola on December 11, 1979. It named as donees
her grandchildren, namely: Catalino Valderrama, Judy Cristina
Valderrama and Jesus Antonio Valderrama: and treated of a parcel of
land, Lot 3231 of the Cadastral Survey of Panay, located at Brgy. Pawa,
Panay, Capiz, covered by Transfer Certificate of Title No. T-16105 in
the name of Montinola. The deed also contained the signatures of the
donees in acknowledgment of their acceptance of the donation.
Montinola's Secretary, Gloria Salvilla, afterwards presented the deed
for recording in the Property Registry, and the Register of Deeds
cancelled TCT No. T-16105 (the donor's title) and, in its place, issued
TCT No. T-16622 on February 7, 1980, in the names of the
donees.2 Montinola however retained the owner's duplicate copy of
the new title (No. T-16622), as well as the property itself, until she
transferred the same ten (10) years later, on July 10, 1990, to the
spouses, Ernesto and Evelyn Sicad.
On March 12, 1987, Aurora Montinola drew up a deed of revocation
of the donation, 3 and caused it to be annotated as an adverse claim
on TCT No. T-16622 (issued, as aforestated, in her grandchildren's
names). Then, on August 24, 1990, she filed a petition with the
Regional Trial Court in Roxas City for the cancellation of said TCT No.
T-16622 and the reinstatement of TCT No. T- 16105 (in her name), the
case being docketed as Special Proceeding No. 3311. Her petition was
founded on the theory that the donation to her three (3)
grandchildren was one mortis causa which thus had to comply with
the formalities of a will; and since it had not, the donation was void
and could not effectively serve as basis for the cancellation of TCT No.
T-16105 and the issuance in its place of TCT No. T-16622.
The donees (Montinola's grandchildren) opposed the petition. In their
opposition dated August 29, 1990, they averred that the donation in
their favor was one inter vivos which, having fully complied with the
requirements therefor set out in Article 729 of the Civil Code, was
perfectly valid and efficacious. They also expressed doubt about the
sincerity of their grandmother's intention to recover the donated
26
property, since she had not pursued the matter of its revocation after
having it annotated as an adverse claim.
The case, originally treated as a special proceeding, was subsequently
considered by the lower Court as an ordinary civil action in view of the
allegations and issues raised in the pleadings. Pre-trial was had,
followed by trial on the merits which was concluded with the filing of
the parties' memoranda. The Trial Court then rendered judgment on
March 27, 1991, holding that the donation was indeed one inter vivos,
and dismissing Aurora Montinola's petition for lack of merit. 4 The
matter of its revocation was not passed upon.
Montinola elevated the case to the Court of Appeals, her appeal being
docketed as CA-G.R. CV No. 33202. She however died on March 10,
1993, 5 while the appeal was pending.
Shortly after Montinola's demise, a "Manifestation and Motion" dated
March 31, 1993 was filed by Ernesto Sicad and Evelyn Bofill-Sicad,
herein petitioners, 6 in which they (a) alleged that they had become
the owners of the property covered by TCT No. T-16622 in virtue of a
"deed of definite sale dated May 25, 1992" accomplished by
Montinola in their favor, which was confirmed by "an affidavit dated
November 26, 1997 also executed by the latter, and (b) prayed that
they be substituted as appellants and allowed to prosecute the case in
their own behalf.
Another motion was subsequently presented under date of April 7,
1993, this time by the legal heirs of Aurora Montinola, namely: Ofelia
M. de Leon, Estela M. Jaen and Teresita M. Valderama. They declared
that they were not interested in pursuing the case, and asked that the
appeal be withdrawn. Montinola's counsel opposed the motion.
On June 21, 1993, the Court of Appeals issued a Resolution: (a)
ordering the substitution of the persons above mentioned — Ofelia de
Leon, Estela M, Jaen, and Teresita M. Valderama — as
plaintiffs-appellants in place of the late Aurora Montinola, as well as
the joinder of the spouses Ernesto and Evelyn Bofill-Sicad as additional
appellants; 7 and (b) denying the motion for the withdrawal of the
appeal.
On June 30, 1995, the Eighth Division of the Court of Appeals
promulgated its Decision on the case affirming the judgment of the
Regional Trial Court; 8 and on July 31, 1996, it denied the separate
motions for reconsideration filed by Ofelia M. de Leon, Estela M. Jaen,
and Teresita M. Valderrama, on the one hand, and by the spouses,
Ernest and Evelyn Sicad, on the other. 9
The Sicad Spouses have appealed to this Court; and here, they
contend that the following errors were committed by the Appellate
Tribunal, to wit:
1) ** in ruling that the donation was inter vivos and in not giving due
weight to the revocation of the donation; and
SUCCESSION FULL TEXT (1-10)
2) ** in not ordering that the case be remanded for further reception
of evidence. 10
The Comment filed for private respondents (the donees) under date
of December 19, 1996 deals with what they consider the "principal
issue in this case ** (i.e.) whether the donation is mortis causa or inter
vivos," and sets forth the argument that the "donor clearly intended
to effect the immediate transfer of ownership to the donees." that the
prohibition in the deed of donation "against selling the property
within ten (10) years after the death of the donor does not indicate
that the donation is mortis causa," that the donor's "alleged act of
physically keeping the title does not suggest any intention to defer the
effectivity of the donation," that the "payment of real property taxes
is consistent with the donor's' reservation of the right of usufruct,"
that the donor's intent "is not determined by ** (her) self-serving
post-execution declarations," the "donation was never effectively
revoked," and petitioners "have waived their right to question the
proceedings in the trial court." 11
The Reply of the Sicad Spouses dated March 14, 1997 reiterates their
thesis that the donation was mortis causa, that "the provisions of the
deed of donation indicate that it was intended to take effect upon the
death of the donor," that "the circumstances surrounding the
execution of the deed, and the subsequent actions of the donor
incontrovertibly signify the donor's intent to transfer the property
only after her death," that the donor "did not intend to give effect to
the donation," and that the procedure adopted by the Trial Court in
the case was fatally defective. 12A "Rejoinder" dated April 3, 1997 was
then submitted by the Valderramas, traversing the assertions of the
Reply. 13
Considering the focus of the opposing parties, and their conflicting
theories, on the intention of Aurora Montinola in executing the
document entitled "Deed of Donation Inter Vivos," it is needful to
review the circumstances of the signing of that document by
Montinola, as ostensible donor, and her grandchildren, as ostensible
donees.
The evidence establishes that on December 11, 1979, when the deed
of donation prepared by Montinola's lawyer (Atty. Treñas) was read
and explained by the latter to the parties, Montinola expressed her
wish that the donation take effect only after ten (10) years from her
death, and that the deed include a prohibition on the sale of the
property for such period. Accordingly, a new proviso was inserted in
the deed reading: "however, the donees shall not sell or encumber
the properties herein donated within 10 years after the death of the
donor." 14 The actuality of the subsequent insertion of this new
proviso is apparent on the face of the instrument: the intercalation is
easily perceived and identified — it was clearly typed on a different
machine, and is crammed into the space between the penultimate
paragraph of the deed and that immediately preceding it. 15
Not only did Aurora Montinola order the insertion in the deed of that
restrictive proviso, but also, after recordation of the deed of donation,
she never stopped treating the property as her own. She continued, as
explicity authorized in the deed itself, to possess the property, enjoy
27
its fruits and otherwise exercise the rights of dominion, paying the
property taxes as they fell due — all these she did until she
transferred the Property to the Sicad Spouses on July 10, 1990. She
did not give the new certificate of title to the ostensible donees but
retained it, too, until she delivered it to the Sicads on the occasion of
the sale of the property to them. In any event, the delivery of the title
to the donees would have served no useful purpose since, as just
stated, they were prohibited to effect any sale or encumbrance
thereof for a period of ten (10) years after the ostensible donor's
decease. And consistent with these acts denoting retention of
ownership of the property was Montinola's openly expressed view
that the donation was ineffectual and could not be given effect even
after ten (10) years from her death. For this view she sought to obtain
judicial approval. She brought suit on August 24, 1990 to cancel TCT
No. T-16622 (issued to her grandchildren) premised precisely on the
invalidity of the donation for failure to comply with the requisites of
testamentary dispositions. Before that, she attempted to undo the
conveyance to her grandchildren by executing a deed of revocation of
the donation on March 12, 1987, and causing annotation thereof as
an adverse claim on said TCT No. T-16622. She also exercised
indisputable acts of ownership over said property by executing, as just
stated, deeds intended to pass title over it to third parties —
petitioners herein. 16
As already intimated, the real nature of a deed is to be ascertained by
both its language and the intention of the parties as demonstrated by
the circumstances attendant upon its execution. In this respect, case
law has laid down significant parameters. Thus, in a decision handed
down in 1946, 17 this Court construed a deed purporting to be a
donation inter vivos to be in truth one mortis causa because it
stipulated (like the one now being inquired into) "that all rents,
proceeds, fruits, of the donated properties shall remain for the
exclusive benefit and disposal of the donor, Margarita David, during
her lifetime; and that, without the knowledge and consent of the
donor, the donated properties could not be disposed of in any way,
whether by sale, mortgage, barter, or in any other way possible," On
these essential premises, the Court said, such a donation must be
deemed one "mortis causa, because the combined effect of the
circumstances surrounding the execution of the deed of donation and
of the above-quoted clauses thereof ** (was that) the most essential
elements of ownership — the right to dispose of the donated
properties and the right to enjoy the products, profits, possession —
remained with Margarita David during her lifetime, and would accrue
to the donees only after Margarita David's death." So, too, in the case
at bar, did these rights remain with Aurora Montinola during her
lifetime, and could not pass to the donees until ten (10) years after
her death.
In another case decided in 1954 involving a similar issue, Bonsato v.
Court of Appeals, 18 this Court emphasized that the decisive
characteristics of a donation mortis causa, which it had taken into
account in David v. Sison, were that "the donor not only reserved for
herself all the fruits of the property allegedly conveyed, but what is
even more important, specially provided that "without the knowledge
and consent of the donor, the donated properties could not be
disposed of in any way,; thereby denying to the transferees the most
SUCCESSION FULL TEXT (1-10)
essential attribute of ownership, the power to dispose of the
properties."
A donation which purports to be one inter vivos but withholds from
the donee the right to dispose of the donated property during the
donor's lifetime is in truth one mortis causa. In a donation mortis
causa "the right of disposition is not transferred to the donee while
the donor is still alive." 19
In the instant case, nothing of any consequence was transferred by
the deed of donation in question to Montinola's grandchildren, the
ostensible donees. They did not get possession of the property
donated. They did not acquire the right to the fruits thereof, or any
other right of dominion over the property. More importantly, they did
not acquire the right to dispose of the property — this would accrue
to them only after ten (10) years from Montinola's death. Indeed, they
never even laid hands on the certificate of title to the same. They
were therefore simply "paper owners" of the donated property. All
these circumstances, including, to repeat, the explicit provisions of the
deed of donation — reserving the exercise of rights of ownership to
the donee and prohibiting the sale or encumbrance of the property
until ten (10) years after her death — ineluctably lead to the
conclusion that the donation in question was a donation mortis causa,
contemplating a transfer of ownership to the donees only after the
donor's demise.
The case of Alejandro v. Geraldez 20 cited by the Court of Appeals in
support of its challenged judgment is not quite relevant. For in the
deed of donation there in issue, there was a partial relinquishment of
the right to dispose of the property, in the event only that this
became necessary "to defray the expenses and support of the
donors." That limited right to dispose of the donated lots, said this
Court, "implies that ownership had passed to ** (the donees) by
means of the donation and **, therefore, the donation was already
effective during the donors' lifetime. That is a characteristic of a
donation inter vivos." On the other hand, in the case at bar, the
donees were expressly prohibited to make any disposition of any
nature or for any purpose whatever during the donor's lifetime, and
until ten (10) years after her death — a prohibition which, it may be
added, makes inapplicable the ruling in Castro v. Court of
Appeals, 21 where no such prohibition was imposed, and the donor
retained only the usufruct over the property.
The Valderramas' argument that the donation is inter vivos in
character and that the prohibition against their disposition of the
donated property is merely a condition which, if violated, would give
cause for its revocation, begs the question. It assumes that they have
the right to make a disposition of the property, which they do not. The
argument also makes no sense, because if they had the right to
dispose of the property and did in fact dispose of it to a third person,
the revocation of the donation they speak of would be of no utility or
benefit to the donor, since such a revocation would not necessarily
result in the restoration of the donor's ownership and enjoyment of
the property.
28
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.
9. G.R. No. L-4963 January 29, 1953
MARIA USON v. MARIA DEL ROSARIO, CONCEPCION NEBREDA,
CONRADO NEBREDA, DOMINADOR NEBREDA, AND FAUSTINO
NEBREDA, Jr.,
BAUTISTA ANGELO, J.:
This is an action for recovery of the ownership and possession of five
(5) parcels of land situated in the Municipality of Labrador, Province of
Pangasinan, filed by Maria Uson against Maria del Rosario and her
four children named Concepcion, Conrado, Dominador, and Faustino,
surnamed Nebreda, who are all of minor age, before the Court of First
Instance of Pangasinan.
Maria Uson was the lawful wife of Faustino Nebreda who upon his
death in 1945 left the lands involved in this litigation. Faustino
Nebreda left no other heir except his widow Maria Uson. However,
plaintiff claims that when Faustino Nebreda died in 1945, his
SUCCESSION FULL TEXT (1-10)
common-law wife Maria del Rosario took possession illegally of said
lands thus depriving her of their possession and enjoyment.
Defendants in their answer set up as special defense that on February
21, 1931, Maria Uson and her husband, the late Faustino Nebreda,
executed a public document whereby they agreed to separate as
husband and wife and, in consideration of their separation, Maria
Uson was given a parcel of land by way of alimony and in return she
renounced her right to inherit any other property that may be left by
her husband upon his death (Exhibit 1).
After trial, at which both parties presented their respective evidence,
the court rendered decision ordering the defendants to restore to the
plaintiff the ownership and possession of the lands in dispute without
special pronouncement as to costs. Defendants interposed the
present appeal.
There is no dispute that Maria Uson, plaintiff-appellee, is the lawful
wife of Faustino Nebreda, former owner of the five parcels of lands
litigated in the present case. There is likewise no dispute that Maria
del Rosario, one of the defendants-appellants, was merely a
common-law wife of the late Faustino Nebreda with whom she had
four illegitimate children, her now co-defendants. It likewise appears
that Faustino Nebreda died in 1945 much prior to the effectivity of the
new Civil Code. With this background, it is evident that when Faustino
Nebreda died in 1945 the five parcels of land he was seized of at the
time passed from the moment of his death to his only heir, his widow
Maria Uson (Article 657, old Civil Code).As this Court aptly said, "The
property belongs to the heirs at the moment of the death of the
ancestor as completely as if the ancestor had executed and delivered
to them a deed for the same before his death" (Ilustre vs. Alaras
Frondosa, 17 Phil., 321). From that moment, therefore, the rights of
inheritance of Maria Uson over the lands in question became vested.
The claim of the defendants that Maria Uson had relinquished her
right over the lands in question because she expressly renounced to
inherit any future property that her husband may acquire and leave
upon his death in the deed of separation they had entered into on
February 21, 1931, cannot be entertained for the simple reason that
future inheritance cannot be the subject of a contract nor can it be
renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p.
12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).
But defendants contend that, while it is true that the four minor
defendants are illegitimate children of the late Faustino Nebreda and
under the old Civil Code are not entitled to any successional rights,
however, under the new Civil Code which became in force in June,
1950, they are given the status and rights of natural children and are
entitled to the successional rights which the law accords to the latter
(article 2264 and article 287, new Civil Code), and because these
successional rights were declared for the first time in the new code,
they shall be given retroactive effect even though the event which
gave rise to them may have occurred under the prior legislation
(Article 2253, new Civil Code).
29
There is no merit in this claim. Article 2253 above referred to provides
indeed that rights which are declared for the first time shall have
retroactive effect even though the event which gave rise to them may
have occurred under the former legislation, but this is so only when
the new rights do not prejudice any vested or acquired right of the
same origin. Thus, said article provides that "if a right should be
declared for the first time in this Code, it shall be effective at once,
even though the act or event which gives rise thereto may have been
done or may have occurred under the prior legislation, provided said
new right does not prejudice or impair any vested or acquired right, of
the same origin." As already stated in the early part of this decision,
the right of ownership of Maria Uson over the lands in question
became vested in 1945 upon the death of her late husband and this is
so because of the imperative provision of the law which commands
that the rights to succession are transmitted from the moment of
death (Article 657, old Civil Code). The new right recognized by the
new Civil Code in favor of the illegitimate children of the deceased
cannot, therefore, be asserted to the impairment of the vested right
of Maria Uson over the lands in dispute.
As regards the claim that Maria Uson, while her deceased husband
was lying in state, in a gesture of pity or compassion, agreed to assign
the lands in question to the minor children for the reason that they
were acquired while the deceased was living with their mother and
Maria Uson wanted to assuage somewhat the wrong she has done to
them, this much can be said; apart from the fact that this claim is
disputed, we are of the opinion that said assignment, if any, partakes
of the nature of a donation of real property, inasmuch as it involves
no material consideration, and in order that it may be valid it shall be
made in a public document and must be accepted either in the same
document or in a separate one (Article 633, old Civil Code). Inasmuch
as this essential formality has not been followed, it results that the
alleged assignment or donation has no valid effect.
WHEREFORE, the decision appealed from is affirmed, without costs.
10. G.R. No. L-28040 August 18, 1972
DE BORJA v. DE BORJA
REYES, J.B.L., J.:p
Of these cases, the first, numbered L-28040 is an appeal by Tasiana
Ongsingco Vda. de de Borja, special administratrix of the testate
estate of Francisco de Borja,1 from the approval of a compromise
agreement by the Court of First Instance of Rizal, Branch I, in its
Special Proceeding No. R-7866, entitled, "Testate Estate of Josefa
Tangco, Jose de Borja, Administrator".
Case No. L-28568 is an appeal by administrator Jose Borja from the
disapproval of the same compromise agreement by the Court of First
Instance of Nueva Ecija, Branch II, in its Special Proceeding No. 832,
SUCCESSION FULL TEXT (1-10)
entitled, "Testate Estate of Francisco de Borja, Tasiana O. Vda. de de
Borja, Special Administratrix".
And Case No. L-28611 is an appeal by administrator Jose de Borja
from the decision of the Court of First Instance of Rizal, Branch X, in its
Civil Case No. 7452, declaring the Hacienda Jalajala Poblacion, which is
the main object of the aforesaid compromise agreement, as the
separate and exclusive property of the late Francisco de Borja and not
a conjugal asset of the community with his first wife, Josefa Tangco,
and that said hacienda pertains exclusively to his testate estate, which
is under administrator in Special Proceeding No. 832 of the Court of
First Instance of Nueva Ecija, Branch II.
It is uncontested that Francisco de Borja, upon the death of his wife
Josefa Tangco on 6 October 1940, filed a petition for the probate of
her will which was docketed as Special Proceeding No. R-7866 of the
Court of First Instance of Rizal, Branch I. The will was probated on 2
April 1941. In 1946, Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was appointed
co-administrator. When Francisco died, on 14 April 1954, Jose became
the sole administrator of the testate estate of his mother, Josefa
Tangco. While a widower Francisco de Borja allegedly took unto
himself a second wife, Tasiana Ongsingco. Upon Francisco's death,
Tasiana instituted testate proceedings in the Court of First Instance of
Nueva Ecija, where, in 1955, she was appointed special administratrix.
The validity of Tasiana's marriage to Francisco was questioned in said
proceeding.
The relationship between the children of the first marriage and
Tasiana Ongsingco has been plagued with several court suits and
counter-suits; including the three cases at bar, some eighteen (18)
cases remain pending determination in the courts. The testate estate
of Josefa Tangco alone has been unsettled for more than a quarter of
a century. In order to put an end to all these litigations, a compromise
agreement was entered into on 12 October 1963,2 by and between
"[T]he heir and son of Francisco de Borja by his first marriage, namely,
Jose de Borja personally and as administrator of the Testate Estate of
Josefa Tangco," and "[T]he heir and surviving spouse of Francisco de
Borja by his second marriage, Tasiana Ongsingco Vda. de Borja,
assisted by her lawyer, Atty. Luis Panaguiton Jr." The terms and
conditions of the compromise agreement are as follows:
AGREEMENT
THIS AGREEMENT made and entered into by and between
The heir and son of Francisco de Borja by his first marriage, namely,
Jose de Borja personally and as administrator of the Testate Estate of
Josefa Tangco,
AND
The heir and surviving spouse of Francisco de Borja by his second
marriage, Tasiana Ongsingco Vda. de Borja, assisted by her lawyer,
Atty. Luis Panaguiton Jr.
30
WITNESSETH
THAT it is the mutual desire of all the parties herein terminate and
settle, with finality, the various court litigations, controversies, claims,
counterclaims, etc., between them in connection with the
administration, settlement, partition, adjudication and distribution of
the assets as well as liabilities of the estates of Francisco de Borja and
Josefa Tangco, first spouse of Francisco de Borja.
THAT with this end in view, the parties herein have agreed voluntarily
and without any reservations to enter into and execute this
agreement under the following terms and conditions:
1. That the parties agree to sell the Poblacion portion of the Jalajala
properties situated in Jalajala, Rizal, presently under administration in
the Testate Estate of Josefa Tangco (Sp. Proc. No. 7866, Rizal), more
specifically described as follows:
Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del
Municipio de Pililla de la Provincia de Rizal, y con el pico del Monte
Zambrano; al Oeste con Laguna de Bay; por el Sur con los herederos
de Marcelo de Borja; y por el Este con los terrenos de la Familia
Maronilla
with a segregated area of approximately 1,313 hectares at the
amount of P0.30 per square meter.
2. That Jose de Borja agrees and obligates himself to pay Tasiana
Ongsingco Vda. de de Borja the total amount of Eight Hundred
Thousand Pesos (P800,000) Philippine Currency, in cash, which
represent P200,000 as his share in the payment and P600,000 as
pro-rata shares of the heirs Crisanto, Cayetano and Matilde, all
surnamed de Borja and this shall be considered as full and complete
payment and settlement of her hereditary share in the estate of the
late Francisco de Borja as well as the estate of Josefa Tangco, Sp. Proc.
No. 832-Nueva Ecija and Sp. Proc. No. 7866-Rizal, respectively, and to
any properties bequeathed or devised in her favor by the late
Francisco de Borja by Last Will and Testament or by Donation Inter
Vivos or Mortis Causa or purportedly conveyed to her for
consideration or otherwise. The funds for this payment shall be taken
from and shall depend upon the receipt of full payment of the
proceeds of the sale of Jalajala, "Poblacion."
3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment
of that particular obligation incurred by the late Francisco de Borja in
favor of the Rehabilitation Finance Corporation, now Development
Bank of the Philippines, amounting to approximately P30,000.00 and
also assumes payment of her 1/5 share of the Estate and Inheritance
taxes on the Estate of the late Francisco de Borja or the sum of
P3,500.00, more or less, which shall be deducted by the buyer of
Jalajala, "Poblacion" from the payment to be made to Tasiana
Ongsingco Vda. de Borja under paragraph 2 of this Agreement and
paid directly to the Development Bank of the Philippines and the
heirs-children of Francisco de Borja.
SUCCESSION FULL TEXT (1-10)
4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to
pay directly to Tasiana Ongsingco Vda. de de Borja the balance of the
payment due her under paragraph 2 of this Agreement
(approximately P766,500.00) and issue in the name of Tasiana
Ongsingco Vda. de de Borja, corresponding certified checks/treasury
warrants, who, in turn, will issue the corresponding receipt to Jose de
Borja.
5. In consideration of above payment to Tasiana Ongsingco Vda. de de
Borja, Jose de Borja personally and as administrator of the Testate
Estate of Josefa Tangco, and Tasiana Ongsingco Vda. de de Borja, for
themselves and for their heirs, successors, executors, administrators,
and assigns, hereby forever mutually renounce, withdraw, waive,
remise, release and discharge any and all manner of action or actions,
cause or causes of action, suits, debts, sum or sums of money,
accounts, damages, claims and demands whatsoever, in law or in
equity, which they ever had, or now have or may have against each
other, more specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal,
and Sp. Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI Nueva Ecija
and Civil Case No. 7452-CFI, Rizal, as well as the case filed against
Manuel Quijal for perjury with the Provincial Fiscal of Rizal, the
intention being to completely, absolutely and finally release each
other, their heirs, successors, and assigns, from any and all liability,
arising wholly or partially, directly or indirectly, from the
administration, settlement, and distribution of the assets as well as
liabilities of the estates of Francisco de Borja and Josefa Tangco, first
spouse of Francisco de Borja, and lastly, Tasiana Ongsingco Vda. de de
Borja expressly and specifically renounce absolutely her rights as heir
over any hereditary share in the estate of Francisco de Borja.
6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the
payment under paragraph 4 hereof, shall deliver to the heir Jose de
Borja all the papers, titles and documents belonging to Francisco de
Borja which are in her possession and said heir Jose de Borja shall
issue in turn the corresponding receive thereof.
7. That this agreement shall take effect only upon the fulfillment of
the sale of the properties mentioned under paragraph 1 of this
agreement and upon receipt of the total and full payment of the
proceeds of the sale of the Jalajala property "Poblacion", otherwise,
the non-fulfillment of the said sale will render this instrument NULL
AND VOID AND WITHOUT EFFECT THEREAFTER.
IN WITNESS WHEREOF, the parties hereto have her unto set their
hands in the City of Manila, Philippines, the 12th of October, 1963.
On 16 May 1966, Jose de Borja submitted for Court approval the
agreement of 12 October 1963 to the Court of First Instance of Rizal,
in Special Proceeding No. R-7866; and again, on 8 August 1966, to the
Court of First Instance of Nueva Ecija, in Special Proceeding No. 832.
Tasiana Ongsingco Vda. de de Borja opposed in both instances. The
Rizal court approved the compromise agreement, but the Nueva Ecija
court declared it void and unenforceable. Special administratrix
Tasiana Ongsingco Vda. de de Borja appealed the Rizal Court's order
of approval (now Supreme Court G.R. case No. L-28040), while
31
administrator Jose de Borja appealed the order of disapproval (G.R.
case No. L-28568) by the Court of First Instance of Nueva Ecija.
The genuineness and due execution of the compromised agreement
of 12 October 1963 is not disputed, but its validity is, nevertheless,
attacked by Tasiana Ongsingco on the ground that: (1) the heirs
cannot enter into such kind of agreement without first probating the
will of Francisco de Borja; (2) that the same involves a compromise on
the validity of the marriage between Francisco de Borja and Tasiana
Ongsingco; and (3) that even if it were valid, it has ceased to have
force and effect.
In assailing the validity of the agreement of 12 October 1963, Tasiana
Ongsingco and the Probate Court of Nueva Ecija rely on this Court's
decision in Guevara vs. Guevara. 74 Phil. 479, wherein the Court's
majority held the view that the presentation of a will for probate is
mandatory and that the settlement and distribution of an estate on
the basis of intestacy when the decedent left a will, is against the law
and public policy. It is likewise pointed out by appellant Tasiana
Ongsingco that Section 1 of Rule 74 of the Revised Rules explicitly
conditions the validity of an extrajudicial settlement of a decedent's
estate by agreement between heirs, upon the facts that "(if) the
decedent left no will and no debts, and the heirs are all of age, or the
minors are represented by their judicial and legal representatives ..."
The will of Francisco de Borja having been submitted to the Nueva
Ecija Court and still pending probate when the 1963 agreement was
made, those circumstances, it is argued, bar the validity of the
agreement.
Upon the other hand, in claiming the validity of the compromise
agreement, Jose de Borja stresses that at the time it was entered into,
on 12 October 1963, the governing provision was Section 1, Rule 74 of
the original Rules of Court of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person regardless of whether
he left a will or not. He also relies on the dissenting opinion of Justice
Moran, in Guevara vs. Guevara, 74 Phil. 479, wherein was expressed
the view that if the parties have already divided the estate in
accordance with a decedent's will, the probate of the will is a useless
ceremony; and if they have divided the estate in a different manner,
the probate of the will is worse than useless.
The doctrine of Guevara vs. Guevara, ante, is not applicable to the
case at bar. This is apparent from an examination of the terms of the
agreement between Jose de Borja and Tasiana Ongsingco. Paragraph
2 of said agreement specifically stipulates that the sum of P800,000
payable to Tasiana Ongsingco —
shall be considered as full — complete payment — settlement of her
hereditary share in the estate of the late Francisco de Borja as well as
the estate of Josefa Tangco, ... and to any properties bequeathed or
devised in her favor by the late Francisco de Borja by Last Will and
Testament or by Donation Inter Vivos or Mortis Causa or purportedly
conveyed to her for consideration or otherwise.
This provision evidences beyond doubt that the ruling in the Guevara
case is not applicable to the cases at bar. There was here no attempt
SUCCESSION FULL TEXT (1-10)
to settle or distribute the estate of Francisco de Borja among the heirs
thereto before the probate of his will. The clear object of the contract
was merely the conveyance by Tasiana Ongsingco of any and all her
individual share and interest, actual or eventual in the estate of
Francisco de Borja and Josefa Tangco. There is no stipulation as to any
other claimant, creditor or legatee. And as a hereditary share in a
decedent's estate is transmitted or vested immediately from the
moment of the death of such causante or predecessor in interest (Civil
Code of the Philippines, Art. 777)3 there is no legal bar to a successor
(with requisite contracting capacity) disposing of her or his hereditary
share immediately after such death, even if the actual extent of such
share is not determined until the subsequent liquidation of the
estate.4 Of course, the effect of such alienation is to be deemed
limited to what is ultimately adjudicated to the vendor heir. However,
the aleatory character of the contract does not affect the validity of
the transaction; neither does the coetaneous agreement that the
numerous litigations between the parties (the approving order of the
Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82) are to
be considered settled and should be dismissed, although such
stipulation, as noted by the Rizal Court, gives the contract the
character of a compromise that the law favors, for obvious reasons, if
only because it serves to avoid a multiplicity of suits.
It is likewise worthy of note in this connection that as the surviving
spouse of Francisco de Borja, Tasiana Ongsingco was his compulsory
heir under article 995 et seq. of the present Civil Code. Wherefore,
barring unworthiness or valid disinheritance, her successional interest
existed independent of Francisco de Borja's last will and testament
and would exist even if such will were not probated at all. Thus, the
prerequisite of a previous probate of the will, as established in the
Guevara and analogous cases, can not apply to the case of Tasiana
Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered into by and
between "Jose de Borja personally and as administrator of the Testate
Estate of Josefa Tangco" on the one hand, and on the other, "the heir
and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear that the transaction
was binding on both in their individual capacities, upon the perfection
of the contract, even without previous authority of the Court to enter
into the same. The only difference between an extrajudicial
compromise and one that is submitted and approved by the Court, is
that the latter can be enforced by execution proceedings. Art. 2037 of
the Civil Code is explicit on the point:
8. Art. 2037. A compromise has upon the parties the effect and
authority of res judicata; but there shall be no execution except in
compliance with a judicial compromise.
It is argued by Tasiana Ongsingco that while the agreement Annex A
expressed no definite period for its performance, the same
was intended to have a resolutory period of 60 days for its
effectiveness. In support of such contention, it is averred that such a
limit was expressly stipulated in an agreement in similar terms
entered into by said Ongsingco with the brothers and sister of Jose de
Borja, to wit, Crisanto, Matilde and Cayetano, all surnamed de Borja,
32
except that the consideration was fixed at P600,000 (Opposition,
Annex/Rec. of Appeal, L-28040, pp. 39- 46) and which contained the
following clause:
III. That this agreement shall take effect only upon the consummation
of the sale of the property mentioned herein and upon receipt of the
total and full payment of the proceeds of the sale by the herein owner
heirs-children of Francisco de Borja, namely, Crisanto, Cayetano and
Matilde, all surnamed de Borja; Provided that if no sale of the said
property mentioned herein is consummated, or the non-receipt of the
purchase price thereof by the said owners within the period of sixty
(60) days from the date hereof, this agreement will become null and
void and of no further effect.
Ongsingco's argument loses validity when it is considered that Jose de
Borja was not a party to this particular contract (Annex 1), and that
the same appears not to have been finalized, since it bears no date,
the day being left blank "this — day of October 1963"; and while
signed by the parties, it was not notarized, although plainly intended
to be so done, since it carries a proposed notarial ratification clause.
Furthermore, the compromise contract with Jose de Borja (Annex A),
provides in its par. 2 heretofore transcribed that of the total
consideration of P800, 000 to be paid to Ongsingco, P600,000
represent the "prorata share of the heirs Crisanto, Cayetano and
Matilde all surnamed de Borja" which corresponds to the
consideration of P600,000 recited in Annex 1, and that circumstance is
proof that the duly notarized contract entered into wit Jose de Borja
under date 12 October 1963 (Annex A), was designed to absorb and
supersede the separate unformalize agreement with the other three
Borja heirs. Hence, the 60 days resolutory term in the contract with
the latter (Annex 1) not being repeated in Annex A, can not apply to
the formal compromise with Jose de Borja. It is moreover manifest
that the stipulation that the sale of the Hacienda de Jalajala was to be
made within sixty days from the date of the agreement with Jose de
Borja's co-heirs (Annex 1) was plainly omitted in Annex A as improper
and ineffective, since the Hacienda de Jalajala (Poblacion) that was to
be sold to raise the P800,000 to be paid to Ongsingco for her share
formed part of the estate of Francisco de Borja and could not be sold
until authorized by the Probate Court. The Court of First Instance of
Rizal so understood it, and in approving the compromise it fixed a
term of 120 days counted from the finality of the order now under
appeal, for the carrying out by the parties for the terms of the
contract.
This brings us to the plea that the Court of First Instance of Rizal had
no jurisdiction to approve the compromise with Jose de Borja (Annex
A) because Tasiana Ongsingco was not an heir in the estate of Josefa
Tangco pending settlement in the Rizal Court, but she was an heir of
Francisco de Borja, whose estate was the object of Special Proceeding
No. 832 of the Court of First Instance of Nueva Ecija. This
circumstance is irrelevant, since what was sold by Tasiana Ongsingco
was only her eventual share in the estate of her late husband, not the
estate itself; and as already shown, that eventual share she owned
from the time of Francisco's death and the Court of Nueva Ecija could
not bar her selling it. As owner of her undivided hereditary share,
Tasiana could dispose of it in favor of whomsoever she chose. Such
SUCCESSION FULL TEXT (1-10)
alienation is expressly recognized and provided for by article 1088 of
the present Civil Code:
Art. 1088. Should any of the heirs sell his hereditary rights to a
stranger before the partition, any or all of the co-heirs may be
subrogated to the rights of the purchaser by reimbursing him for the
price of the sale, provided they do so within the period of one month
from the time they were notified in writing of the sale of the vendor.
If a sale of a hereditary right can be made to a stranger, then a
fortiori sale thereof to a coheir could not be forbidden.
Tasiana Ongsingco further argues that her contract with Jose de Borja
(Annex "A") is void because it amounts to a compromise as to her
status and marriage with the late Francisco de Borja. The point is
without merit, for the very opening paragraph of the agreement with
Jose de Borja (Annex "A") describes her as "the heir and surviving
spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", which is in itself definite admission of
her civil status. There is nothing in the text of the agreement that
would show that this recognition of Ongsingco's status as the
surviving spouse of Francisco de Borja was only made in consideration
of the cession of her hereditary rights.
It is finally charged by appellant Ongsingco, as well as by the Court of
First Instance of Nueva Ecija in its order of 21 September 1964, in
Special Proceedings No. 832 (Amended Record on Appeal in L-28568,
page 157), that the compromise agreement of 13 October 1963
(Annex "A") had been abandoned, as shown by the fact that, after its
execution, the Court of First Instance of Nueva Ecija, in its order of 21
September 1964, had declared that "no amicable settlement had been
arrived at by the parties", and that Jose de Borja himself, in a motion
of 17 June 1964, had stated that the proposed amicable settlement
"had failed to materialize".
It is difficult to believe, however, that the amicable settlement
referred to in the order and motion above-mentioned was the
compromise agreement of 13 October 1963, which already had been
formally signed and executed by the parties and duly notarized. What
the record discloses is that some time after its formalization,
Ongsingco had unilaterally attempted to back out from the
compromise agreement, pleading various reasons restated in the
opposition to the Court's approval of Annex "A" (Record on Appeal,
L-20840, page 23): that the same was invalid because of the lapse of
the allegedly intended resolutory period of 60 days and because the
contract was not preceded by the probate of Francisco de Borja's will,
as required by this Court's Guevarra vs. Guevara ruling; that Annex
"A" involved a compromise affecting Ongsingco's status as wife and
widow of Francisco de Borja, etc., all of which objections have been
already discussed. It was natural that in view of the widow's attitude,
Jose de Borja should attempt to reach a new settlement or novatory
agreement before seeking judicial sanction and enforcement of Annex
"A", since the latter step might ultimately entail a longer delay in
attaining final remedy. That the attempt to reach another settlement
failed is apparent from the letter of Ongsingco's counsel to Jose de
Borja quoted in pages 35-36 of the brief for appellant Ongsingco in
33
G.R. No. 28040; and it is more than probable that the order of 21
September 1964 and the motion of 17 June 1964 referred to the
failure of the parties' quest for a more satisfactory compromise. But
the inability to reach a novatory accord can not invalidate the original
compromise (Annex "A") and justifies the act of Jose de Borja in finally
seeking a court order for its approval and enforcement from the Court
of First Instance of Rizal, which, as heretofore described, decreed that
the agreement be ultimately performed within 120 days from the
finality of the order, now under appeal.
We conclude that in so doing, the Rizal court acted in accordance with
law, and, therefore, its order should be upheld, while the contrary
resolution of the Court of First Instance of Nueva Ecija should be, and
is, reversed.
In her brief, Tasiana Ongsingco also pleads that the time elapsed in
the appeal has affected her unfavorably, in that while the purchasing
power of the agreed price of P800,000 has diminished, the value of
the Jalajala property has increased. But the fact is that her delay in
receiving the payment of the agreed price for her hereditary interest
was primarily due to her attempts to nullify the agreement (Annex "A")
she had formally entered into with the advice of her counsel, Attorney
Panaguiton. And as to the devaluation de facto of our currency, what
We said in Dizon Rivera vs. Dizon, L-24561, 30 June 1970, 33 SCRA 554,
that "estates would never be settled if there were to be a revaluation
with every subsequent fluctuation in the values of currency and
properties of the estate", is particularly opposite in the present case.
Coming now to Case G.R. No. L-28611, the issue is whether the
Hacienda de Jalajala (Poblacion), concededly acquired by Francisco de
Borja during his marriage to his first wife, Josefa Tangco, is the
husband's private property (as contended by his second spouse,
Tasiana Ongsingco), or whether it forms part of the conjugal
(ganancial) partnership with Josefa Tangco. The Court of First Instance
of Rizal (Judge Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in favor of its
conjugal character established by Article 160 of the Civil Code.
We are of the opinion that this question as between Tasiana
Ongsingco and Jose de Borja has become moot and academic, in view
of the conclusion reached by this Court in the two preceding cases
(G.R. No. L-28568), upholding as valid the cession of Tasiana
Ongsingco's eventual share in the estate of her late husband,
Francisco de Borja, for the sum of P800,000 with the accompanying
reciprocal quit-claims between the parties. But as the question may
affect the rights of possible creditors and legatees, its resolution is still
imperative.
It is undisputed that the Hacienda Jalajala, of around 4,363 hectares,
had been originally acquired jointly by Francisco de Borja, Bernardo de
Borja and Marcelo de Borja and their title thereto was duly registered
in their names as co-owners in Land Registration Case No. 528 of the
province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil.
465). Subsequently, in 1931, the Hacienda was partitioned among the
co-owners: the Punta section went to Marcelo de Borja; the
Bagombong section to Bernardo de Borja, and the part in Jalajala
SUCCESSION FULL TEXT (1-10)
proper (Poblacion) corresponded to Francisco de Borja (V. De Borja vs.
De Borja 101 Phil. 911, 932).
The lot allotted to Francisco was described as —
Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E.
Hermogena Romero; S. Heirs of Marcelo de Borja O. Laguna de Bay;
containing an area of 13,488,870 sq. m. more or less, assessed at
P297,410. (Record on Appeal, pages 7 and 105)
On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of
the Testate Estate of Francisco de Borja, instituted a complaint in the
Court of First Instance of Rizal (Civil Case No. 7452) against Jose de
Borja, in his capacity as Administrator of Josefa Tangco (Francisco de
Borja's first wife), seeking to have the Hacienda above described
declared exclusive private property of Francisco, while in his answer
defendant (now appellant) Jose de Borja claimed that it was conjugal
property of his parents (Francisco de Borja and Josefa Tangco),
conformably to the presumption established by Article 160 of the
Philippine Civil Code (reproducing Article 1407 of the Civil Code of
1889), to the effect that:
Art. 160. All property of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively to
the husband or to the wife.
Defendant Jose de Borja further counterclaimed for damages,
compensatory, moral and exemplary, as well as for attorney's fees.
After trial, the Court of First Instance of Rizal, per Judge Herminio
Mariano, held that the plaintiff had adduced sufficient evidence to
rebut the presumption, and declared the Hacienda de Jalajala
(Poblacion) to be the exclusive private property of the late Francisco
de Borja, and his Administratrix, Tasiana Ongsingco Vda. de Borja, to
be entitled to its possession. Defendant Jose de Borja then appealed
to this Court.
The evidence reveals, and the appealed order admits, that the
character of the Hacienda in question as owned by the conjugal
partnership De Borja-Tangco was solemnly admitted by the late
Francisco de Borja no less than two times: first, in the Reamended
Inventory that, as executor of the estate of his deceased wife Josefa
Tangco, he filed in the Special Proceedings No. 7866 of the Court of
First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the
Reamended Accounting of the same date, also filed in the proceedings
aforesaid (Exhibit "7"). Similarly, the plaintiff Tasiana O. Vda. de Borja,
herself, as oppositor in the Estate of Josefa Tangco, submitted therein
an inventory dated 7 September 1954 (Exhibit "3") listing the Jalajala
property among the "Conjugal Properties of the Spouses Francisco de
Borja and Josefa Tangco". And once more, Tasiana Ongsingco, as
administratrix of the Estate of Francisco de Borja, in Special
Proceedings No. 832 of the Court of First Instance of Nueva Ecija,
submitted therein in December, 1955, an inventory wherein she listed
the Jalajala Hacienda under the heading "Conjugal Property of the
Deceased Spouses Francisco de Borja and Josefa Tangco, which are in
the possession of the Administrator of the Testate Estate of the
34
Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court
of First Instance of Rizal" (Exhibit "4").
Notwithstanding the four statements aforesaid, and the fact that they
are plain admissions against interest made by both Francisco de Borja
and the Administratrix of his estate, in the course of judicial
proceedings in the Rizal and Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal community, the Court below
declared that the Hacienda de Jalajala (Poblacion) was not conjugal
property, but the private exclusive property of the late Francisco de
Borja. It did so on the strength of the following evidences: (a) the
sworn statement by Francis de Borja on 6 August 1951 (Exhibit "F")
that —
He tomado possession del pedazo de terreno ya delimitado
(equivalente a 1/4 parte, 337 hectareas) adjunto a mi terreno
personal y exclusivo (Poblacion de Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja,
that the entire Hacienda had been bought at a foreclosure sale for
P40,100.00, of which amount P25,100 was contributed by Bernardo
de Borja and P15,000. by Marcelo de Borja; that upon receipt of a
subsequent demand from the provincial treasurer for realty taxes the
sum of P17,000, Marcelo told his brother Bernardo that Francisco (son
of Marcelo) wanted also to be a co-owner, and upon Bernardo's
assent to the proposal, Marcelo issue a check for P17,000.00 to pay
the back taxes and said that the amount would represent Francisco's
contribution in the purchase of the Hacienda. The witness further
testified that —
Marcelo de Borja said that that money was entrusted to him by
Francisco de Borja when he was still a bachelor and which he derived
from his business transactions. (Hearing, 2 February 1965, t.s.n., pages
13-15) (Emphasis supplied)
The Court below, reasoning that not only Francisco's sworn statement
overweighed the admissions in the inventories relied upon by
defendant-appellant Jose de Borja since probate courts can not finally
determine questions of ownership of inventoried property, but that
the testimony of Gregorio de Borja showed that Francisco de Borja
acquired his share of the original Hacienda with his private funds, for
which reason that share can not be regarded as conjugal partnership
property, but as exclusive property of the buyer, pursuant to Article
1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of
the Philippines.
The following shall be the exclusive property of each spouse:
xxx xxx xxx
(4) That which is purchased with exclusive money of the wife or of the
husband.
We find the conclusions of the lower court to be untenable. In the first
place, witness Gregorio de Borja's testimony as to the source of the
SUCCESSION FULL TEXT (1-10)
money paid by Francisco for his share was plain hearsay, hence
inadmissible and of no probative value, since he was merely repeating
what Marcelo de Borja had told him (Gregorio). There is no way of
ascertaining the truth of the statement, since both Marcelo and
Francisco de Borja were already dead when Gregorio testified. In
addition, the statement itself is improbable, since there was no need
or occasion for Marcelo de Borja to explain to Gregorio how and when
Francisco de Borja had earned the P17,000.00 entrusted to Marcelo. A
ring of artificiality is clearly discernible in this portion of Gregorio's
testimony.
As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion
thereof (ante, page 14) does not clearly demonstrate that the "mi
terreno personal y exclusivo (Poblacion de Jalajala, Rizal) " refers
precisely to the Hacienda in question. The inventories (Exhibits 3 and
4) disclose that there were two real properties in Jalajala owned by
Francisco de Borja, one of 72.038 sq. m., assessed at P44,600, and a
much bigger one of 1,357.260.70 sq. m., which is evidently the
Hacienda de Jalajala (Poblacion). To which of these lands did the
affidavit of Francisco de Borja (Exhibit "F") refer to? In addition,
Francisco's characterization of the land as "mi terreno personal y
exclusivo" is plainly self-serving, and not admissible in the absence of
cross examination.
It may be true that the inventories relied upon by defendant-appellant
(Exhibits "2", "3", "4" and "7") are not conclusive on the conjugal
character of the property in question; but as already noted, they are
clear admissions against the pecuniary interest of the declarants,
Francisco de Borja and his executor-widow, Tasiana Ongsingco, and as
such of much greater probative weight than the self-serving
statement of Francisco (Exhibit "F"). Plainly, the legal presumption in
favor of the conjugal character of the Hacienda de Jalajala (Poblacion)
now in dispute has not been rebutted but actually confirmed by proof.
Hence, the appealed order should be reversed and the Hacienda de
Jalajala (Poblacion) declared property of the conjugal partnership of
Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the lower court
that claims for damages should be ventilated in the corresponding
special proceedings for the settlement of the estates of the deceased,
the same requires no pro announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed order of the Court of First
Instance of Rizal in Case No. L-28040 is hereby affirmed; while those
involved in Cases Nos. L-28568 and L-28611 are reversed and set aside.
Costs against the appellant Tasiana Ongsingco Vda. de Borja in all
three (3) cases.
11. G.R. No. L-41715 June 18, 1976
ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and
PONCIANO BONILLA (their father) who represents the minors, v.
LEON BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA,
35
MANUEL BARCENA, AGUSTINA NERI, widow of JULIAN TAMAYO and
HON. LEOPOLDO GIRONELLA of the Court of First Instance of Abra
MARTIN, J:
This is a petition for review 1 of the Order of the Court of First Instance
of Abra in Civil Case No. 856, entitled Fortunata Barcena vs. Leon
Barcena, et al., denying the motions for reconsideration of its order
dismissing the complaint in the aforementioned case.
On March 31, 1975 Fortunata Barcena, mother of minors Rosalio
Bonilla and Salvacion Bonilla and wife of Ponciano Bonilla, instituted a
civil action in the Court of First Instance of Abra, to quiet title over
certain parcels of land located in Abra.
On May 9, 1975, defendants filed a written motion to dismiss the
complaint, but before the hearing of the motion to dismiss, the
counsel for the plaintiff moved to amend the complaint in order to
include certain allegations therein. The motion to amend the
complaint was granted and on July 17, 1975, plaintiffs filed their
amended complaint.
On August 4, 1975, the defendants filed another motion to dismiss the
complaint on the ground that Fortunata Barcena is dead and,
therefore, has no legal capacity to sue. Said motion to dismiss was
heard on August 14, 1975. In said hearing, counsel for the plaintiff
confirmed the death of Fortunata Barcena, and asked for substitution
by her minor children and her husband, the petitioners herein; but the
court after the hearing immediately dismissed the case on the ground
that a dead person cannot be a real party in interest and has no legal
personality to sue.
On August 19, 1975, counsel for the plaintiff received a copy of the
order dismissing the complaint and on August 23, 1975, he moved to
set aside the order of the dismissal pursuant to Sections 16 and 17 of
Rule 3 of the Rules of Court. 2
On August 28, 1975, the court denied the motion for reconsideration
filed by counsel for the plaintiff for lack of merit. On September 1,
1975, counsel for deceased plaintiff filed a written manifestation
praying that the minors Rosalio Bonilla and Salvacion Bonilla be
allowed to substitute their deceased mother, but the court denied the
counsel's prayer for lack of merit. From the order, counsel for the
deceased plaintiff filed a second motion for reconsideration of the
order dismissing the complaint claiming that the same is in violation of
Sections 16 and 17 of Rule 3 of the Rules of Court but the same was
denied.
Hence, this petition for review.
The Court reverses the respondent Court and sets aside its order
dismissing the complaint in Civil Case No. 856 and its orders denying
the motion for reconsideration of said order of dismissal. While it is
true that a person who is dead cannot sue in court, yet he can be
substituted by his heirs in pursuing the case up to its completion. The
SUCCESSION FULL TEXT (1-10)
records of this case show that the death of Fortunata Barcena took
place on July 9, 1975 while the complaint was filed on March 31, 1975.
This means that when the complaint was filed on March 31, 1975,
Fortunata Barcena was still alive, and therefore, the court had
acquired jurisdiction over her person. If thereafter she died, the Rules
of Court prescribes the procedure whereby a party who died during
the pendency of the proceeding can be substituted. Under Section 16,
Rule 3 of the Rules of Court "whenever a party to a pending case
dies ... it shall be the duty of his attorney to inform the court promptly
of such death ... and to give the name and residence of his executor,
administrator, guardian or other legal representatives." This duty was
complied with by the counsel for the deceased plaintiff when he
manifested before the respondent Court that Fortunata Barcena died
on July 9, 1975 and asked for the proper substitution of parties in the
case. The respondent Court, however, instead of allowing the
substitution, dismissed the complaint on the ground that a dead
person has no legal personality to sue. This is a grave error. Article 777
of the Civil Code provides "that the rights to the succession are
transmitted from the moment of the death of the decedent." From
the moment of the death of the decedent, the heirs become the
absolute owners of his property, subject to the rights and obligations
of the decedent, and they cannot be deprived of their rights thereto
except by the methods provided for by law. 3 The moment of death is
the determining factor when the heirs acquire a definite right to the
inheritance whether such right be pure or contingent. 4 The right of
the heirs to the property of the deceased vests in them even before
judicial declaration of their being heirs in the testate or intestate
proceedings. 5 When Fortunata Barcena, therefore, died her claim or
right to the parcels of land in litigation in Civil Case No. 856, was not
extinguished by her death but was transmitted to her heirs upon her
death. Her heirs have thus acquired interest in the properties in
litigation and became parties in interest in the case. There is,
therefore, no reason for the respondent Court not to allow their
substitution as parties in interest for the deceased plaintiff.
Under Section 17, Rule 3 of the Rules of Court "after a party dies and
the claim is not thereby extinguished, the court shall order, upon
proper notice, the legal representative of the deceased to appear and
be substituted for the deceased, within such time as may be
granted ... ." The question as to whether an action survives or not
depends on the nature of the action and the damage sued for. 6 In the
causes of action which survive the wrong complained affects primarily
and principally property and property rights, the injuries to the person
being merely incidental, while in the causes of action which do not
survive the injury complained of is to the person, the property and
rights of property affected being incidental. 7 Following the foregoing
criterion the claim of the deceased plaintiff which is an action to quiet
title over the parcels of land in litigation affects primarily and
principally property and property rights and therefore is one that
survives even after her death. It is, therefore, the duty of the
respondent Court to order the legal representative of the deceased
plaintiff to appear and to be substituted for her. But what the
respondent Court did, upon being informed by the counsel for the
deceased plaintiff that the latter was dead, was to dismiss the
complaint. This should not have been done for under the same
Section 17, Rule 3 of the Rules of Court, it is even the duty of the court,
if the legal representative fails to appear, to order the opposing party
36
to procure the appointment of a legal representative of the deceased.
In the instant case the respondent Court did not have to bother
ordering the opposing party to procure the appointment of a legal
representative of the deceased because her counsel has not only
asked that the minor children be substituted for her but also
suggested that their uncle be appointed as guardian ad litem for them
because their father is busy in Manila earning a living for the family.
But the respondent Court refused the request for substitution on the
ground that the children were still minors and cannot sue in court.
This is another grave error because the respondent Court ought to
have known that under the same Section 17, Rule 3 of the Rules of
Court, the court is directed to appoint a guardian ad litem for the
minor heirs. Precisely in the instant case, the counsel for the deceased
plaintiff has suggested to the respondent Court that the uncle of the
minors be appointed to act as guardian ad litem for them.
Unquestionably, the respondent Court has gravely abused its
discretion in not complying with the clear provision of the Rules of
Court in dismissing the complaint of the plaintiff in Civil Case No. 856
and refusing the substitution of parties in the case.
IN VIEW OF THE FOREGOING, the order of the respondent Court
dismissing the complaint in Civil Case No. 856 of the Court of First
Instance of Abra and the motions for reconsideration of the order of
dismissal of said complaint are set aside and the respondent Court is
hereby directed to allow the substitution of the minor children, who
are the petitioners therein for the deceased plaintiff and to appoint a
qualified person as guardian ad litem for them. Without
pronouncement as to costs. SO ORDERED.
12. G. R. No. 171701 February 8, 2012
REPUBLIC OF THE PHILIPPINES v. MARCOS
SERENO, J.:
Before this Court is a Petition for Review filed by the Republic of the
Philippines assailing the Resolutions1 issued by the Sandiganbayan in
connection with an alleged portion of the Marcoses’ supposed
ill-gotten wealth.
This case involves ₱200 billion of the Marcoses’ alleged accumulated
ill-gotten wealth. It also includes the alleged use of the media
networks IBC-13, BBC-2 and RPN-9 for the Marcos family’s personal
benefit; the alleged use of De Soleil Apparel for dollar salting; and the
alleged illegal acquisition and operation of the bus company
Pantranco North Express, Inc. (Pantranco).
The Facts
After the EDSA People Power Revolution in 1986, the first executive
act of then President Corazon C. Aquino was to create the Presidential
Commission on Good Government (PCGG). Pursuant to Executive
Order No. 1, the PCGG was given the following mandate:
SUCCESSION FULL TEXT (1-10)
Sec. 2. The Commission shall be charged with the task of assisting the
President in regard to the following matters:
(a) The recovery of all ill-gotten wealth accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located in the Philippines
or abroad, including the takeover or sequestration of all business
enterprises and entities owned or controlled by them, during his
administration, directly or through nominees, by taking undue
advantage of their public office and/or using their powers, authority,
influence, connections or relationship.
(b) The investigation of such cases of graft and corruption as the
President may assign to the Commission from time to time.
(c) The adoption of safeguards to ensure that the above practices shall
not be repeated in any manner under the new government, and the
institution of adequate measures to prevent the occurrence of
corruption.
Sec. 3. The Commission shall have the power and authority:
(a) To conduct investigation as may be necessary in order to
accomplish and carry out the purposes of this order.
(b) To sequester or place or cause to be placed under its control or
possession any building or office wherein any ill-gotten wealth or
properties may be found, and any records pertaining thereto, in order
to prevent their destruction, concealment or disappearance which
would frustrate or hamper the investigation or otherwise prevent the
Commission from accomplishing its task.
(c) To provisionally take over in the public interest or to prevent its
disposal or dissipation, business enterprises and properties taken over
by the government of the Marcos Administration or by entities or
persons close to former President Marcos, until the transactions
leading to such acquisition by the latter can be disposed of by the
appropriate authorities.
(d) To enjoin or restrain any actual or threatened commission of facts
by any person or entity that may render moot and academic, or
frustrate, or otherwise make ineffectual the efforts of the Commission
to carry out its tasks under this order.
(e) To administer oaths, and issue subpoena requiring the attendance
and testimony of witnesses and/or the production of such books,
papers, contracts, records, statement of accounts and other
documents as may be material to the investigation conducted by the
Commission.
(f) To hold any person in direct or indirect contempt and impose the
appropriate penalties, following the same procedures and penalties
provided in the Rules of Court.
37
(g) To seek and secure the assistance of any office, agency or
instrumentality of the government.
(h) To promulgate such rules and regulations as may be necessary to
carry out the purpose of this order.
Thus, numerous civil and criminal cases were subsequently filed. One
of the civil cases filed before the Sandiganbayan to recover the
Marcoses’ alleged ill-gotten wealth was Civil Case No. 0002, now
subject of this Petition.
On 16 July 1987, the PCGG, acting on behalf of the Republic and
assisted by the Office of the Solicitor General (OSG), filed a Complaint
for Reversion, Reconveyance, Restitution, Accounting and Damages
against Ferdinand E. Marcos, who was later substituted by his estate
upon his death; Imelda R. Marcos; and herein respondents Imee
Marcos-Manotoc, Irene Marcos-Araneta, Bongbong Marcos, Tomas
Manotoc, and Gregorio Araneta III.
On 1 October 1987, the PCGG filed an amended Complaint to add
Constante Rubio as defendant.
Again on 9 February 1988, it amended the Complaint, this time to
include as defendants Nemesio G. Co and herein respondents Yeung
Chun Kam, Yeung Chun Ho, and Yeung Chun Fan.
For the third time, on 23 April 1990, the PCGG amended its Complaint,
adding to its growing list of defendants Imelda Cojuangco, the estate
of Ramon Cojuangco, and Prime Holdings, Inc.2
The PCGG filed a fourth amended Complaint, which was later denied
by the Sandiganbayan in its Resolution dated 2 September 1998.
The allegations contained in the Complaint specific to herein
respondents are the following:3
29. Defendants Imelda (IMEE) R. Marcos-Manotoc, Tomas Manotoc,
Irene R. Manotoc (sic) Araneta, Gregorio Ma. Araneta III, and
Ferdinand R. Marcos, Jr., actively collaborated, with Defendants
Ferdinand E. Marcos and Imelda R. Marcos among others, in
confiscating and/or unlawfully appropriating funds and other property,
and in concealing the same as described above. In addition, each of
the said Defendants, either by taking undue advantage of their
relationship with Defendants Ferdinand E. Marcos and Imelda R.
Marcos, or by reason of the above-described active collaboration,
unlawfully acquired or received property, shares of stocks in
corporations, illegal payments such as commissions, bribes or
kickbacks, and other forms of improper privileges, income, revenues
and benefits. Defendant Araneta in particular made use of Asialand
Development Corporation which is included in Annex "A" hereof as
corporate vehicle to benefit in the manner stated above.
31. Defendants Nemesio G. Co, Yeung Chun Kam, Yeung Chun Ho and
Yeung Chun Fan are the controlling stockholders of Glorious Sun
Fashion Manufacturing Corporation (Phils.). Through Glorious Sun
SUCCESSION FULL TEXT (1-10)
(Phils.), they acted as fronts or dummies, cronies or otherwise willing
tools of spouses Ferdinand and Imelda Marcos and/or the family,
particularly of Defendant Imelda (Imee) Marcos-Manotoc, in the
illegal salting of foreign exchange4 by importing denim fabrics from
only one supplier – a Hong Kong based corporation which was also
owned and controlled by defendant Hong Kong investors, at prices
much higher than those being paid by other users of similar materials
to the grave and irreparable damage of Plaintiff.
Thus, petitioner set forth the following causes of action in its
Complaint:5
32. First Cause of Action: BREACH OF PUBLIC TRUST – A public office is
a public trust.1avvphi1 By committing all the acts described above,
Defendants repeatedly breached public trust and the law, making
them liable solidarily to Plaintiff. The funds and other property
acquired by Defendants following, or as a result of, their breach of
public trust, some of which are mentioned or described above,
estimated to amount to ₱ 200 billion are deemed to have been
acquired for the benefit of Plaintiff and are, therefore, impressed with
constructive trust in favor of Plaintiff and the Filipino people.
Consequently, Defendants are solidarily liable to restore or reconvey
to Plaintiff all such funds and property thus impressed with
constructive trust for the benefit of Plaintiff and the Filipino people.
33. Second Cause of Action: ABUSE OF RIGHT AND POWER –
(a) Defendants, in perpetrating the unlawful acts described above,
committed abuse of right and power which caused untold misery,
sufferings and damages to Plaintiff. Defendants violated, among
others Articles 19, 20, and 21 of the Civil Code of the Philippines;
(b) As a result of the foregoing acts, Defendants acquired the title to
the beneficial interest in funds and other property and concealed such
title, funds and interest through the use of relatives, business
associates, nominees, agents, or dummies. Defendants are, therefore,
solidarily liable to Plaintiff to return and reconvey all such funds and
other property unlawfully acquired by them estimated at TWO
HUNDRED BILLION PESOS, or alternatively, to pay Plaintiff, solidarily,
by way of indemnity, the damage caused to Plaintiff equivalent to the
amount of such funds or the value of other property not returned or
restored to Plaintiff, plus interest thereon from the date of unlawful
acquisition until full payment thereof.
34. Third Cause of Action: UNJUST ENRICHMENT –
Defendants illegally accumulated funds and other property whose
estimated value is ₱ 200 billion in violation of the laws of the
Philippines and in breach of their official functions and fiduciary
obligations. Defendants, therefore, have unjustly enriched themselves
to the grave and irreparable damage and prejudice of Plaintiff.
Defendants have an obligation at law, independently of breach of
trust and abuse of right and power, and as an alternative, to solidarily
return to Plaintiff such funds and other property with which
Defendants, in gross evident bad faith, have unjustly enriched
themselves or, in default thereof, restore to Plaintiff the amount of
38
such funds and the value of the other property including those which
may have been wasted, and/or lost estimated at ₱ 200 billion with
interest thereon from the date of unlawful acquisition until full
payment thereof.
35. Fourth Cause of Action: ACCOUNTING –
The Commission, acting pursuant to the provisions of the applicable
law, believe that Defendants, acting singly or collectively, in unlawful
concert with one another, and with the active collaboration of third
persons, subject of separate suits, acquired funds, assets and property
during the incumbency of Defendant public officers, manifestly out of
proportion to their salaries, to their other lawful income and income
from legitimately acquired property. Consequently, they are required
to show to the satisfaction of this Honorable Court that they have
lawfully acquired all such funds, assets and property which are in
excess of their legal net income, and for this Honorable Court to
decree that the Defendants are under obligation to account to
Plaintiff with respect to all legal or beneficial interests in funds,
properties and assets of whatever kind and wherever located in
excess of the lawful earnings or lawful income from legitimately
acquired property.
36. Fifth Cause of Action – LIABILITY FOR DAMAGES –
(a) By reason of the unlawful acts set forth above, Plaintiff and the
Filipino people have suffered actual damages in an amount
representing the pecuniary loss sustained by the latter as a result of
the Defendants’ unlawful acts, the approximate value and interest of
which, from the time of their wrongful acquisition, are estimated at ₱
200 billion plus expenses which Plaintiff has been compelled to incur
and shall continue to incur in its effort to recover Defendants’
ill-gotten wealth all over the world, which expenses are reasonably
estimated at ₱ 250 million. Defendants are, therefore, jointly and
severally liable to Plaintiff for actual damages in an amount
reasonably estimated at ₱ 200 Billion Pesos and to reimburse
expenses for recovery of Defendants’ ill-gotten wealth estimated to
cost ₱ 250 million or in such amount as are proven during the trial.
(b) As a result of Defendants’ acts described above, Plaintiff and the
Filipino people had painfully endured and suffered moral damages for
more than twenty long years, anguish, fright, sleepless nights, serious
anxiety, wounded feelings and moral shock as well as besmirched
reputation and social humiliation before the international community.
(c) In addition, Plaintiff and the Filipino people are entitled to
temperate damages for their sufferings which, by their very nature
are incapable of pecuniary estimation, but which this Honorable Court
may determine in the exercise of its sound discretion.
(d) Defendants, by reason of the above described unlawful acts, have
violated and invaded the inalienable right of Plaintiff and the Filipino
people to a fair and decent way of life befitting a Nation with rich
natural and human resources. This basic and fundamental right of
Plaintiff and the Filipino people should be recognized and vindicated
SUCCESSION FULL TEXT (1-10)
by awarding nominal damages in an amount to be determined by the
Honorable Court in the exercise of its sound discretion.
(e) By way of example and correction for the public good and in order
to ensure that Defendants’ unlawful, malicious, immoral and wanton
acts are not repeated, said Defendants are solidarily liable to Plaintiff
for exemplary damages.
In the meantime, the Pantranco Employees Association-PTGWO
(PEA-PTGWO), a union of Pantranco employees, moved to intervene
before the Sandiganbayan. The former alleged that the trust funds in
the account of Pantranco North Express, Inc. (Pantranco) amounting
to ₱ 55 million rightfully belonged to the Pantranco employees,
pursuant to the money judgment the National Labor Relations
Commission (NLRC) awarded in favor of the employees and against
Pantranco. Thus, PEA-PTGWO contested the allegation of petitioner
that the assets of Pantranco were ill-gotten because, otherwise, these
assets would be returned to the government and not to the
employees.
Thereafter, petitioner presented and formally offered its evidence
against herein respondents. However, the latter objected to the offer
primarily on the ground that the documents violated the best
evidence rule of the Rules of Court, as these documents were
unauthenticated; moreover, petitioner had not provided any reason
for its failure to present the originals.
On 11 March 2002, the Sandiganbayan issued a Resolution6 admitting
the pieces of evidence while expressing some reservation, to wit:
WHEREFORE, taking note of the objections of accused Marcoses and
the reply thereto by the plaintiff, all the documentary exhibits
formally offered by the prosecution are hereby admitted in evidence;
however, their evidentiary value shall be left to the determination of
the Court.
SO ORDERED.
Imelda R. Marcos; Imee Marcos-Manotoc and Bongbong Marcos, Jr.;
Irene Marcos-Araneta and Gregorio Ma. Araneta III; Yeung Chun Kam,
Yeung Chun Ho and Yeung Chun Fan; and the PEA-PTGWO
subsequently filed their respective Demurrers to Evidence.
On 6 December 2005, the Sandiganbayan issued the assailed
Resolution,7 which granted all the Demurrers to Evidence except the
one filed by Imelda R. Marcos. The dispositive portion reads:
WHEREFORE, premises considered, the Demurrer to Evidence filed by
defendant Imelda R. Marcos is hereby DENIED. The Demurrer to
Evidence filed by defendants Maria Imelda Marcos Manotoc,
Ferdinand Marcos, Jr., Irene Marcos Araneta, Gregorio Maria Araneta
III, Yeung Chun Kam, Yeung Chun Fan, Yeung Chun Ho, and intervenor
PEA-PTGWO, are hereby GRANTED. The sequestration orders on the
properties in the name of defendant Gregorio Maria Araneta III, are
accordingly ordered lifted.
39
SO ORDERED.
The Sandiganbayan denied Imelda R. Marcos’ Demurrer primarily
because she had categorically admitted that she and her husband
owned properties enumerated in the Complaint, while stating that
these properties had been lawfully acquired. The court held that the
evidence presented by petitioner constituted a prima facie case
against her, considering that the value of the properties involved was
grossly disproportionate to the Marcos spouses’ lawful income. Thus,
this admission and the fact that Imelda R. Marcos was the compulsory
heir and administratrix of the Marcos estate were the primary reasons
why the court held that she was responsible for accounting for the
funds and properties alleged to be ill-gotten.
Secondly, the court pointed out that Rolando Gapud, whose
deposition was taken in Hong Kong, referred to her as one directly
involved in amassing ill-gotten wealth. The court also considered the
compromise agreement between petitioner and Antonio O. Floirendo,
who disclosed that he had performed several business transactions
upon the instructions of the Marcos spouses.
With regard to the siblings Imee Marcos-Manotoc and Bongbong
Marcos, Jr., the court noted that their involvement in the alleged
illegal activities was never established. In fact, they were never
mentioned by any of the witnesses presented. Neither did the
documentary evidence pinpoint any specific involvement of the
Marcos children.
Moreover, the court held that the evidence, in particular, exhibits
"P,"8 "Q,"9 "R,"10 "S,"11 and "T,"12 were considered hearsay, because
their originals were not presented in court, nor were they
authenticated by the persons who executed them. Furthermore, the
court pointed out that petitioner failed to provide any valid reason
why it did not present the originals in court. These exhibits were
supposed to show the interests of Imee Marcos-Manotok in the media
networks IBC-13, BBC-2 and RPN-9, all three of which she had
allegedly acquired illegally. These exhibits also sought to prove her
alleged participation in dollar salting through De Soleil Apparel.
Finally, the court held that the relationship of respondents to the
Marcos spouses was not enough reason to hold the former liable.
In the matter of the spouses Irene Marcos and Gregorio Araneta III,
the court similarly held that there was no testimonial or documentary
evidence that supported petitioner’s allegations against the couple.
Again, petitioner failed to present the original documents that
supposedly supported the allegations against them. Instead, it merely
presented photocopies of documents that sought to prove how the
Marcoses used the Potencianos13 as dummies in acquiring and
operating the bus company Pantranco.
Meanwhile, as far as the Yeungs were concerned, the court found the
allegations against them baseless. Petitioner failed to demonstrate
how their business, Glorious Sun Fashion Garments Manufacturing, Co.
Phils. (Glorious Sun), was used as a vehicle for dollar salting; or to
show that they themselves were dummies of the Marcoses. Again, the
SUCCESSION FULL TEXT (1-10)
court held that the documentary evidence relevant to this allegation
was inadmissible for being mere photocopies, and that the affiants
had not been presented as witnesses.
Finally, the court also granted the Demurrer filed by PEA-PTGWO.
While the court held that there was no evidence to show that
Pantranco was illegally acquired, the former nevertheless held that
there was a need to first determine the ownership of the disputed
funds before they could be ordered released to the rightful owner.
On 20 December 2005, petitioner filed its Motion for Partial
Reconsideration, insisting that there was a preponderance of evidence
to show that respondents Marcos siblings and Gregorio Araneta III
had connived with their parents in acquiring ill-gotten wealth. It
pointed out that respondents were compulsory heirs to the deposed
President and were thus obliged to render an accounting and to
return the ill-gotten wealth.
Moreover, petitioner asserted that the evidence established that the
Yeungs were dummies of the Marcoses, and that the Pantranco assets
were part of the Marcoses’ alleged ill-gotten wealth.
Finally, petitioner questioned the court’s ruling that the evidence
previously admitted was later held to be inadmissible in evidence
against respondents, thus, depriving the former of due process.
Inadvertently, petitioner was not able to serve a copy of the motion
on respondents Imee Marcos-Manotoc and Bongbong Marcos, Jr. But
upon realizing the oversight, it immediately did so and filed the
corresponding Manifestation and Motion before the court.
Nonetheless, this inadvertence prompted Imee Marcos-Manotoc and
Bongbong Marcos, Jr. to file their Motion for Entry of Judgment.
On 2 March 2006, the court issued the second assailed Resolution, 14
denying petitioner’s Motion. The court pointed out its reservation in
its Resolution dated 12 March 2002, wherein it said that it would still
assess and weigh the evidentiary value of the admitted evidence.
Furthermore, it said that even if it included the testimonies of
petitioner’s witnesses, these were not substantial to hold respondents
liable. Thus, the court said:
WHEREFORE, there being no sufficient reason to set aside the
resolution dated December 6, 2005, the plaintiff’s Motion for Partial
Reconsideration is hereby DENIED. The plaintiff’s Motion and
Manifestation dated January 18, 2006 is GRANTED in the interest of
justice. The Motion for Entry of Judgment filed by defendants Imee
Marcos and Bongbong Marcos is DENIED.
SO ORDERED.
Hence, this Petition.
Petitioner raises the same issues it raised in its Motion for
Reconsideration filed before the Sandiganbayan, to wit:15
40
I. THE SANDIGANBAYAN ERRED IN GRANTING THE DEMURRER TO
EVIDENCE FILED BY RESPONDENTS MA. IMELDA (IMEE) R. MARCOS
AND FERDINAND (BONGBONG) R. MARCOS, JR., CONSIDERING THAT
MORE THAN PREPONDERANT EVIDENCE ON RECORD CLEARLY
DEMONSTRATES THEIR CONNIVANCE WITH FORMER PRESIDENT
FERDINAND E. MARCOS AND OTHER MARCOS DUMMIES AND ABUSED
THEIR POWER AND INFLUENCE IN UNLAWFULLY AMASSING FUNDS
FROM THE NATIONAL TREASURY.
II. PETITION PROVED, BY MORE THAN PREPONDERANT EVIDENCE,
THAT RESPONDENT-SPOUSES GREGORIO ARANETA III AND IRENE
MARCOS ARANETA CONNIVED WITH FORMER PRESIDENT MARCOS IN
UNLAWFULLY ACQUIRING BUSINESS INTERESTS WHICH ARE GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT, AND IN A MANNER
PROHIBITED UNDER THE CONSTITUTION AND ANTI-GRAFT STATUTES.
III. RESPONDENTS IMEE, BONGBONG, AND IRENE MARCOS ARE
COMPULSORY HEIRS OF FORMER PRESIDENT MARCOS AND ARE
EQUALLY OBLIGED TO RENDER AN ACCOUNTING AND RETURN THE
ALLEGED ILL-GOTTEN WEALTH OF THE MARCOSES.
IV. THERE EXISTS CONCRETE EVIDENCE PROVING THAT RESPONDENTS
YEUNG CHUN KAM, YEUNG CHUN FAN, AND YEUNG CHUN HO ACTED
AS DUMMIES FOR THE MARCOSES, AND USED THE CORPORATION,
GLORIOUS SUN, AS A CONDUIT IN AMASSING THE ILL-GOTTEN
WEALTH. ACCORDINGLY, THE SANDIGANBAYAN ERRED IN GRANTING
THEIR DEMURRER TO EVIDENCE.
V. THE DEMURRER TO EVIDENCE FILED BY INTERVENOR PEA-PTGWO
WITH RESPECT TO THE PANTRANCO ASSETS SHOULD NOT HAVE BEEN
GRANTED SINCE AMPLE EVIDENCE PROVES THAT THE SAID ASSETS
INDUBITABLY FORM PART OF THE MARCOS ILL-GOTTEN WEALTH, AS
BUTTRESSED BY THE FACT THAT NO JUDICIAL DETERMINATION HAS
BEEN MADE AS TO WHOM THESE ASSETS RIGHTFULLY BELONG.
VI. THE SANDIGANBAYAN’S RULING WHICH REJECTED PEITITONER’S
DOCUMENTARY EXHIBITS ALLEGEDLY FOR BEING "INADMISSIBLE"
DIRECTLY CONTRADICTS ITS EARLIER RULING ADMITTING ALL SAID
DOCUMENTARY EVIDENCE AND WAS RENDERED IN A MANNER THAT
DEPRIVED PETITIONER’S RIGHT TO DUE PROCESS OF LAW.
There is some merit in petitioner’s contention.
The Marcos Siblings and
Gregorio Araneta III
Closely analyzing petitioner’s Complaint and the present Petition for
Review, it is clear that the Marcos siblings are being sued in two
capacities: first, as co-conspirators in the alleged accumulation of
ill-gotten wealth; and second, as the compulsory heirs of their father,
Ferdinand E. Marcos.16
With regard to the first allegation, as contained in paragraph 29 of its
Third Amended Complaint quoted above, petitioner accused the
Marcos siblings of having collaborated with, participated in, and/or
SUCCESSION FULL TEXT (1-10)
benefitted from their parents’ alleged accumulation of ill-gotten
wealth. In particular, as far as Imee Marcos-Manotoc was concerned,
she was accused of dollar salting by using Glorious Sun to import
denim fabrics from one supplier at prices much higher than those paid
by other users of similar materials. It was also alleged that the
Marcoses personally benefitted from the sequestered media networks
IBC-13, BBC-2, and RPN-9, in which Imee Marcos had a substantial
interest.
Irene Marcos-Araneta, on the other hand, was accused of having
conspired with her husband, respondent Gregorio Araneta III, in his
being President Marcos’ conduit to Pantranco, thereby paving the way
for the President’s ownership of the company in violation of Article VII,
Section 4, paragraph 2 of the 1973 Constitution.17
To prove the general allegations against the Marcos siblings,
petitioner primarily relied on the Sworn Statement18and the
Deposition19 of one of the financial advisors of President Marcos,
Rolando C. Gapud, taken in Hong Kong on various dates.
Meanwhile, to prove the participation and interests of Imee
Marcos-Manotoc in De Soleil Apparel and the media networks,
petitioner relied on the Affidavits of Ramon S. Monzon,20 Yeung Kwok
Ying,21 and Rodolfo V. Puno;22 and the transcript of stenographic
notes (TSN) taken during the PCGG hearing held on 8 June 1987. 23
As to spouses Irene Marcos-Araneta and Gregorio Araneta III,
petitioner submitted the Articles of Incorporation of Northern Express
Transport, Inc.;24 the Memorandum of Agreement25 and the Purchase
Agreement26 between Pantranco and Batangas Laguna Tayabas Bus
Company, Inc. (BLTBCo.); the Confidential Memorandum regarding
the sale of the Pantranco assets;27 the Affidavit28 and the letter to the
PCGG29 of Dolores A. Potenciano, owner of BLTBCo.; the Affidavit30
and the Memorandum31 of Eduardo Fajardo, who was then the Senior
Vice-President of the Account Management Group of the Philippine
National Bank (PNB), which was in turn the creditor for the Pantranco
sale; and the Affidavit of Florencio P. Lucio, who was the Senior
Account Specialist of the National Investment and Development
Corporation.32
Petitioner contends that these documents fall under the Rule’s third
exception, that is, these documents are public records in the custody
of a public officer or are recorded in a public office. It is its theory that
since these documents were collected by the PCGG, then, necessarily,
the conditions for the exception to apply had been met. Alternatively,
it asserts that the "documents were offered to prove not only the
truth of the recitals of the documents, but also of other external or
collateral facts."33
The Court’s Ruling
Petitioner failed to observe the
best evidence rule.
41
It is petitioner’s burden to prove the allegations in its Complaint. For
relief to be granted, the operative act on how and in what manner the
Marcos siblings participated in and/or benefitted from the acts of the
Marcos couple must be clearly shown through a preponderance of
evidence. Should petitioner fail to discharge this burden, the Court is
constrained and is left with no choice but to uphold the Demurrer to
Evidence filed by respondents.
First, petitioner does not deny that what should be proved are the
contents of the documents themselves. It is imperative, therefore, to
submit the original documents that could prove petitioner’s
allegations.
Thus, the photocopied documents are in violation Rule 130, Sec. 3 of
the Rules of Court, otherwise known as the best evidence rule, which
mandates that the evidence must be the original document itself. The
origin of the best evidence rule can be found and traced to as early as
the 18th century in Omychund v. Barker,34 wherein the Court of
Chancery said:
The judges and sages of the law have laid it down that there is but
one general rule of evidence, the best that the nature of the case will
admit.
The rule is, that if the writings have subscribing witnesses to them,
they must be proved by those witnesses.
The first ground judges have gone upon in departing from strict rules,
is an absolute strict necessity. Secondly, a presumed necessity. In the
case of writings, subscribed by witnesses, if all are dead, the proof of
one of their hands is sufficient to establish the deed: where an original
is lost, a copy may be admitted; if no copy, then a proof by witnesses
who have heard the deed, and yet it is a thing the law abhors to admit
the memory of man for evidence.
Petitioner did not even attempt to provide a plausible reason why the
originals were not presented, or any compelling ground why the court
should admit these documents as secondary evidence absent the
testimony of the witnesses who had executed them.
In particular, it may not insist that the photocopies of the documents
fall under Sec. 7 of Rule 130, which states:
Evidence admissible when original document is a public record. ─
When the original of a document is in the custody of a public officer or
is recorded in a public office, its contents may be proved be a certified
copy issued by the public officer in custody thereof.
Secs. 19 and 20 of Rule 132 provide:
SECTION 19. Classes of documents. ─ For the purpose of their
presentation in evidence, documents are either public or private.
Public documents are:
SUCCESSION FULL TEXT (1-10)
(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and public officers,
whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills
and testaments; and
(c) Public records, kept in the Philippines, of private documents
required by law to be entered therein.
All other writings are private.
SECTION 20. Proof of private document. — Before any private
document offered as authentic is received in evidence, its due
execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of
the maker.
Any other private document need only be identified as that which it is
claimed to be.
The fact that these documents were collected by the PCGG in the
course of its investigations does not make them per se public records
referred to in the quoted rule.
Petitioner presented as witness its records officer, Maria Lourdes
Magno, who testified that these public and private documents had
been gathered by and taken into the custody of the PCGG in the
course of the Commission’s investigation of the alleged ill-gotten
wealth of the Marcoses. However, given the purposes for which these
documents were submitted, Magno was not a credible witness who
could testify as to their contents. To reiterate, "[i]f the writings have
subscribing witnesses to them, they must be proved by those
witnesses." Witnesses can testify only to those facts which are of their
personal knowledge; that is, those derived from their own
perception.35 Thus, Magno could only testify as to how she obtained
custody of these documents, but not as to the contents of the
documents themselves.
Neither did petitioner present as witnesses the affiants of these
Affidavits or Memoranda submitted to the court. Basic is the rule that,
while affidavits may be considered as public documents if they are
acknowledged before a notary public, these Affidavits are still
classified as hearsay evidence. The reason for this rule is that they are
not generally prepared by the affiant, but by another one who uses
his or her own language in writing the affiant's statements, parts of
which may thus be either omitted or misunderstood by the one
writing them. Moreover, the adverse party is deprived of the
opportunity to cross-examine the affiants. For this reason, affidavits
are generally rejected for being hearsay, unless the affiants
themselves are placed on the witness stand to testify thereon. 36
42
As to the copy of the TSN of the proceedings before the PCGG, while it
may be considered as a public document since it was taken in the
course of the PCGG’s exercise of its mandate, it was not attested to by
the legal custodian to be a correct copy of the original. This omission
falls short of the requirement of Rule 132, Secs. 24 and 25 of the Rules
of Court.37
In summary, we adopt the ruling of the Sandiganbayan, to wit:
Further, again contrary to the theory of the plaintiff, the presentation
of the originals of the aforesaid exhibits is not validly excepted under
Rule 130, Section 3 (a), (b), and (d) of the Rules of Court. Under
paragraph (d), when ‘the original document is a public record in the
custody of a public officer or is recorded in a public office,’
presentation of the original thereof is excepted. However, as earlier
observed, all except one of the exhibits introduced by the plaintiff
were not necessarily public documents. The transcript of stenographic
notes (TSN) of the proceedings purportedly before the PCGG, the
plaintiff’s exhibit "Q", may be a public document, but what was
presented by the plaintiff was a mere photocopy of the purported TSN.
The Rules provide that when the original document is in the custody
of a public officer or is recorded in a public office, its contents may be
proved by a certified copy issued by the public officer in custody
thereof. Exhibit "Q" was not a certified copy and it was not even
signed by the stenographer who supposedly took down the
proceedings.
The rest of the above-mentioned exhibits cannot likewise be excepted
under paragraphs (a) and (b) of Section 3. Section 5 of the same Rule
provides that ‘when the original documents has been lost or
destroyed, or cannot be produced in court, the offeror, upon proof of
its execution or existence and the cause of its unavailability without
bad faith on his part, may prove its contents by a copy, or by a recital
of its contents in some authentic document, or by the testimony of
witnesses in the order stated.’ Thus, in order that secondary evidence
may be admissible, there must be proof by satisfactory evidence of (1)
due execution of the original; (2) loss, destruction or unavailability of
all such originals and (3) reasonable diligence and good faith in the
search for or attempt to produce the original. None of these
requirements were complied with by the plaintiff. Similar to exhibit
‘Q’, exhibits ‘P’, ‘R’, ‘S’, and ‘T’ were all photocopies. ‘P’, ‘R’, and ‘T’
were affidavits of persons who did not testify before the Court. Exhibit
‘S’ is a letter which is clearly a private document. Not only does it not
fall within the exceptions of Section 3, it is also a mere photocopy. As
We previously emphasized, even if originals of these affidavits were
presented, they would still be considered hearsay evidence if the
affiants do not testify and identify them.38
Thus, absent any convincing evidence to hold otherwise, it follows
that petitioner failed to prove that the Marcos siblings and Gregorio
Araneta III collaborated with former President Marcos and Imelda R.
Marcos and participated in the first couple’s alleged accumulation of
ill-gotten wealth insofar as the specific allegations herein were
concerned.
The Marcos siblings are compulsory heirs.
SUCCESSION FULL TEXT (1-10)
To reiterate, in its third Amended Complaint, petitioner prays that the
Marcos respondents be made to (1) pay for the value of the alleged
ill-gotten wealth with interest from the date of acquisition; (2) render
a complete accounting and inventory of all funds and other pieces of
property legally or beneficially held and/or controlled by them, as well
as their legal and beneficial interest therein; (3) pay actual damages
estimated at ₱200 billion and additional actual damages to reimburse
expenses for the recovery of the alleged ill-gotten wealth estimated at
₱250 million or in such amount as may be proven during trial; (4) pay
moral damages amounting to ₱50 billion; (5) pay temperate and
nominal damages, as well as attorney’s fees and litigation expenses in
an amount to be proven during the trial; (6) pay exemplary damages
in the amount of ₱1 billion; and (7) pay treble judicial costs.39
It must be stressed that we are faced with exceptional circumstances,
given the nature and the extent of the properties involved in the case
pending with the Sandiganbayan. It bears emphasis that the
Complaint is one for the reversion, the reconveyance, the restitution
and the accounting of alleged ill-gotten wealth and the payment of
damages. Based on the allegations of the Complaint, the court is
charged with the task of (1) determining the properties in the Marcos
estate that constitute the alleged ill-gotten wealth; (2) tracing where
these properties are; (3) issuing the appropriate orders for the
accounting, the recovery, and the payment of these properties; and,
finally, (4) determining if the award of damages is proper.
Since the pending case before the Sandiganbayan survives the death
of Ferdinand E. Marcos, it is imperative therefore that the estate be
duly represented. The purpose behind this rule is the protection of the
right to due process of every party to a litigation who may be affected
by the intervening death. The deceased litigant is himself protected,
as he continues to be properly represented in the suit through the
duly appointed legal representative of his estate. 40 On that note, we
take judicial notice of the probate proceedings regarding the will of
Ferdinand E. Marcos. In Republic of the Philippines v. Marcos II,41 we
upheld the grant by the Regional Trial Court (RTC) of letters
testamentary in solidum to Ferdinand R. Marcos, Jr. and Imelda
Romualdez-Marcos as executors of the last will and testament of the
late Ferdinand E. Marcos.
Unless the executors of the Marcos estate or the heirs are ready to
waive in favor of the state their right to defend or protect the estate
or those properties found to be ill-gotten in their possession, control
or ownership, then they may not be dropped as defendants in the civil
case pending before the Sandiganbayan.
Rule 3, Sec. 7 of the Rules of Court defines indispensable parties as
those parties-in-interest without whom there can be no final
determination of an action. They are those parties who possess such
an interest in the controversy that a final decree would necessarily
affect their rights, so that the courts cannot proceed without their
presence. Parties are indispensable if their interest in the subject
matter of the suit and in the relief sought is inextricably intertwined
with that of the other parties.42
43
In order to reach a final determination of the matters concerning the
estate of Ferdinand E. Marcos – that is, the accounting and the
recovery of ill-gotten wealth – the present case must be maintained
against Imelda Marcos and herein respondent Ferdinand "Bongbong"
R. Marcos, Jr., as executors of the Marcos estate pursuant to Sec. 1 of
Rule 87 of the Rules of Court. According to this provision, actions may
be commenced to recover from the estate, real or personal property,
or an interest therein, or to enforce a lien thereon; and actions to
recover damages for an injury to person or property, real or personal,
may be commenced against the executors.
We also hold that the action must likewise be maintained against
Imee Marcos-Manotoc and Irene Marcos-Araneta on the basis of the
non-exhaustive list attached as Annex "A" to the Third Amended
Complaint, which states that the listed properties therein were owned
by Ferdinand and Imelda Marcos and their immediate family.43 It is
only during the trial of Civil Case No. 0002 before the Sandiganbayan
that there could be a determination of whether these properties are
indeed ill-gotten or were legitimately acquired by respondents and
their predecessors. Thus, while it was not proven that respondents
conspired in accumulating ill-gotten wealth, they may be in possession,
ownership or control of such ill-gotten properties or the proceeds
thereof as heirs of the Marcos couple. Thus, their lack of participation
in any illegal act does not remove the character of the property as
ill-gotten and, therefore, as rightfully belonging to the State.
Secondly, under the rules of succession, the heirs instantaneously
became co-owners of the Marcos properties upon the death of the
President. The property rights and obligations to the extent of the
value of the inheritance of a person are transmitted to another
through the decedent’s death.44 In this concept, nothing prevents the
heirs from exercising their right to transfer or dispose of the
properties that constitute their legitimes, even absent their
declaration or absent the partition or the distribution of the estate. In
Jakosalem v. Rafols,45 we said:
Article 440 of the Civil Code provides that "the possession of
hereditary property is deemed to be transmitted to the heir without
interruption from the instant of the death of the decedent, in case
the inheritance be accepted." And Manresa with reason states
that upon the death of a person, each of his heirs "becomes the
undivided owner of the whole estate left with respect to the part or
portion which might be adjudicated to him, a community of
ownership being thus formed among the coowners of the estate
while it remains undivided." (3 Manresa, 357; Alcala vs. Alcala, 35 Phil.
679.) And according to article 399 of the Civil Code, every part owner
may assign or mortgage his part in the common property, and the
effect of such assignment or mortgage shall be limited to the portion
which may be allotted him in the partition upon the dissolution of the
community. Hence, in the case of Ramirez vs. Bautista, 14 Phil. 528,
where some of the heirs, without the concurrence of the others, sold
a property left by their deceased father, this Court, speaking thru its
then Chief Justice Cayetano Arellano, said that the sale was valid,
but that the effect thereof was limited to the share which may be
allotted to the vendors upon the partition of the estate. (Emphasis
supplied)
SUCCESSION FULL TEXT (1-10)
Lastly, petitioner’s prayer in its Third Amended Complaint directly
refers to herein respondents, to wit:
1. AS TO THE FIRST SECOND AND THIRD CAUSES OF ACTION – To
return and reconvey to Plaintiff all funds and other property
acquired by Defendants during their incumbency as public officers,
which funds and other property are manifestly out of proportion to
their salaries, other lawful income and income from legitimately
acquired property which Defendants have failed to establish as having
been, in fact, lawfully acquired by them, alternatively, to solidarily pay
Plaintiff the value thereof with interest thereon from the date of
acquisition until full payment.
2. AS TO THE FOURTH CAUSE OF ACTION – to individually render to
this Honorable Court a complete accounting and inventory, subject
to evaluation of Court-appointed assessors, of all funds and other
property legally or beneficially held and/or controlled by them, as well
as their legal and beneficial interest in such funds and other property.
(Emphasis supplied)
In sum, the Marcos siblings are maintained as respondents, because
(1) the action pending before the Sandiganbayan is one that survives
death, and, therefore, the rights to the estate must be duly protected;
(2) they allegedly control, possess or own ill-gotten wealth, though
their direct involvement in accumulating or acquiring such wealth may
not have been proven.
Yeung Chun Kam, Yeung Chun
Ho And Yeung Chun Fan
It is worthy to note that respondents draw our attention to American
Inter-Fashion Corporation v. Office of the President46 in which they
contend that this Court considered the allegation of dollar salting as
baseless. The cited case, however, finds no application herein as the
former merely ruled that Glorious Sun was denied due process when
it was not furnished by the Garments and Textile Export Board (GTEB)
any basis for the cancellation of the export quota because of
allegations of dollar salting. That Decision did not prevent petitioner
from adducing evidence to support its allegation in Civil Case No. 0002
before the Sandiganbayan under a different cause of action.
Nevertheless, the allegations against Yeung Chun Kam, Yeung Chun Ho
and Yeung Chun Fan in the case at bar were also proved to be
baseless. Again, petitioner failed to illustrate how respondents herein
acted as dummies of the Marcoses in acquiring ill-gotten wealth. This
Court notes that the Complaint against the Yeungs alleges that the
Marcoses used Glorious Sun – the garment company in which the
Yeungs are controlling stockholders – for illegal dollar salting through
the company’s importation of denim fabrics from only one supplier at
prices much higher than those being paid by other users of similar
materials. Notably, no mention of De Soleil Apparel was made.
To prove its allegations, petitioner submitted the controverted
Exhibits "P," "Q," "R," "S," and "T." As earlier discussed in detail, these
pieces of evidence were mere photocopies of the originals and were
unauthenticated by the persons who executed them; thus, they have
44
no probative value. Even the allegations of petitioner itself in its
Petition for Review are bereft of any factual basis for holding that
these documents undoubtedly show respondents’ participation in the
alleged dollar salting. The pertinent portion of the Petition reads:
To illustrate, the Affidavit dated May 29, 1987 executed by Mr. Ramon
Monzon which was submitted as Exhibit P, showed that respondent
Imee Marcos-Manotoc owns and controls IBC-13, BBC-2 and (R)PN-9,
and has interest in the De Soleil Apparel. The testimony of Mr. Ramon
Monzon during the hearing on June 8, 1987 before the Presidential
Commission on Good Government as shown in the Transcript of
Stenographic Notes also affirmed his declarations in the Affidavit
dated May 29, 1987. The Transcript of Stenographic Notes dated June
8, 1987 was presented as Exhibit Q. Moreover, the Affidavit dated
March 21, 1986 of Yeung Kwok Ying which was presented as Exhibit
R disclosed that Imee Marcos-Manotoc is the owner of 67% equity of
De Soleil Apparel. The letter dated July 17, 1984 signed by seven (7)
incorporators of De Soleil Apparel, addressed to Hongkong investors
which was presented as Exhibit S confirmed that the signatories hold
or own 67% equity of the corporation in behalf of the beneficial
owners previously disclosed to the addressees. In addition to the
foregoing documents, petitioner presented the Affidavit of Rodolfo V.
Puno, Chairman of the Garments and Textile Export Group (GTEB)
as Exhibit T wherein he categorically declared that the majority of De
Soleil Apparel was actually owned by respondent Imee
Marcos-Manotoc.47
The foregoing quotation from the Petition is bereft of any factual
matter that warrants a consideration by the Court. Straight from the
horse’s mouth, these documents are only meant to show the
ownership and interest of Imee Marcos Manotoc in De Soleil – and
not how respondent supposedly participated in dollar salting or in the
accumulation of ill-gotten wealth.
PEA-PTGWO
The PEA-PTGWO Demurrer to Evidence was granted primarily as a
consequence of the prosecution’s failure to establish that the assets
of Pantranco were ill-gotten, as discussed earlier. Thus, we find no
error in the assailed Order of the Sandiganbayan.
A Final Note
As earlier adverted to, the best evidence rule has been recognized as
an evidentiary standard since the 18th century. For three centuries, it
has been practiced as one of the most basic rules in law. It is difficult
to conceive that one could have finished law school and passed the
bar examinations without knowing such elementary rule. Thus, it is
deeply disturbing that the PCGG and the Office of the Solicitor General
(OSG) – the very agencies sworn to protect the interest of the state
and its people – could conduct their prosecution in the manner that
they did. To emphasize, the PCGG is a highly specialized office focused
on the recovery of ill-gotten wealth, while the OSG is the principal
legal defender of the government. The lawyers of these government
agencies are expected to be the best in the legal profession.
SUCCESSION FULL TEXT (1-10) 45

However, despite having the expansive resources of government, the
members of the prosecution did not even bother to provide any
reason whatsoever for their failure to present the original documents
or the witnesses to support the government’s claims. Even worse was
presenting in evidence a photocopy of the TSN of the PCGG
proceedings instead of the original, or a certified true copy of the
original, which the prosecutors themselves should have had in their
custody. Such manner of legal practice deserves the reproof of this
Court. We are constrained to call attention to this apparently serious
failure to follow a most basic rule in law, given the special
circumstances surrounding this case.
The public prosecutors should employ and use all government
resources and powers efficiently, effectively, honestly and
economically, particularly to avoid wastage of public funds and
revenues. They should perform and discharge their duties with the
highest degree of excellence, professionalism, intelligence and skill.48
The basic ideal of the legal profession is to render service and secure
justice for those seeking its aid.49 In order to do this, lawyers are
required to observe and adhere to the highest ethical and
professional standards. The legal profession is so imbued with public
interest that its practitioners are accountable not only to their clients,
but to the public as well.
Nevertheless, given the particular context of this case, the failure of
the prosecution to adhere to something as basic as the best evidence
rule raises serious doubts on the level and quality of effort given to
the government’s cause. Thus, we highly encourage the Office of the
President, the OSG, and the PCGG to conduct the appropriate
investigation and consequent action on this matter.
WHEREFORE, in view of the foregoing, the Petition is
PARTIALLY GRANTED. The assailed Sandiganbayan Resolution dated 6
December 2005 is AFFIRMED with MODIFICATION. For the reasons
stated herein, respondents Imelda Marcos-Manotoc, Irene
Marcos-Araneta, and Ferdinand R. Marcos, Jr. shall be maintained as
defendants in Civil Case No. 0002 pending before the Sandiganbayan.
Let a copy of this Decision be furnished to the Office of the President
so that it may look into the circumstances of this case and determine
the liability, if any, of the lawyers of the Office of the Solicitor General
and the Presidential Commission on Good Government in the manner
by which this case was handled in the Sandiganbayan. SO ORDERED.

The public prosecutors, aside from being representatives of the

government and the state, are, first and foremost, officers of the
court. They took the oath to exert every effort and to consider it their
duty to assist in the speedy and efficient administration of justice. 50
Lawyers owe fidelity to the cause of the client and should be mindful
of the trust and confidence reposed in them.51 Hence, should serve
with competence and diligence.52

We note that there are instances when this Court may overturn the
dismissal of the lower courts in instances when it is shown that the
prosecution has deprived the parties their due process of law. In
Merciales v. Court of Appeals,53we reversed the Decision of the RTC in
dismissing the criminal case for rape with homicide. In that case, it
was very apparent that the public prosecutor violated the due process
rights of the private complainant owing to its blatant disregard of
procedural rules and the failure to present available crucial evidence,
which would tend to prove the guilt or innocence of the accused
therein. Moreover, we likewise found that the trial court was gravely
remiss in its duty to ferret out the truth and, instead, just "passively
watched as the public prosecutor bungled the case."

However, it must be emphasized that Merciales was filed exactly to

determine whether the prosecution and the trial court gravely abused
their discretion in the proceedings of the case, thus resulting in the
denial of the offended party’s due process. Meanwhile, the present
case merely alleges that there was an error in the Sandiganbayan’s
consideration of the probative value of evidence. We also note that in
Merciales, both the prosecution and the trial court were found to be
equally guilty of serious nonfeasance, which prompted us to remand
the case to the trial court for further proceedings and reception of
evidence. Merciales is thus inapplicable to the case at bar.