ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA (their father) who represents the minors, petitioners, vs. LEON BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA, MANUEL BARCENA, AGUSTINA NERI, widow of JULIAN TAMAYO and HON. LEOPOLDO GIRONELLA of the Court of First Instance of Abra, respondents. Federico Paredes for petitioners. Demetrio V. Pre for private respondents.
MARTIN, J : This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil Case No. 856, entitled Fortunata Barcena vs. Leon Barcena, et al., denying the motions for reconsideration of its order dismissing the complaint in the aforementioned case. On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion Bonilla and wife of Ponciano Bonilla, instituted a civil action in the Court of First Instance of Abra, to quiet title over certain parcels of land located in Abra. On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before the hearing of the motion to dismiss, the counsel for the plaintiff moved to amend the complaint in order to include certain allegations therein. The motion to amend the complaint was granted and on July 17, 1975, plaintiffs filed their amended complaint. On August 4, 1975, the defendants filed another motion to dismiss the complaint on the ground that Fortunata Barcena is dead and, therefore, has no legal capacity to sue. Said motion to dismiss was heard on August 14, 1975. In said hearing, counsel for the plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her minor children and her husband, the petitioners herein; but the court after the hearing immediately dismissed the case on the ground that a dead person cannot be a real party in interest and has no legal personality to sue. On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the complaint and on August 23, 1975, he moved to set aside the order of the dismissal pursuant to Sections 16 and 17 of Rule 3 of the Rules of Court. 2
On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the plaintiff for lack of merit. On September 1, 1975, counsel for deceased plaintiff filed a written manifestation praying that the minors Rosalio Bonilla and Salvacion Bonilla be allowed to substitute their deceased mother, but the court denied the counsel's prayer for lack of merit. From the order, counsel for the deceased plaintiff filed a second motion for reconsideration of the order dismissing the complaint claiming that the same is in violation of Sections 16 and 17 of Rule 3 of the Rules of Court but the same was denied. Hence, this petition for review. The Court reverses the respondent Court and sets aside its order dismissing the complaint in Civil Case No. 856 and its orders denying the motion for reconsideration of said order of dismissal. While it is true that a person who is dead cannot sue in court, yet he can be substituted by his heirs in pursuing the case up to its completion. The records of this case show that the death of Fortunata Barcena took place on July 9, 1975 while the complaint was filed on March 31, 1975. This means that when the complaint was filed on March 31, 1975, Fortunata Barcena was still alive, and therefore, the court had acquired jurisdiction over her person. If thereafter she died, the Rules of Court prescribes the procedure whereby a party who died during the pendency of the proceeding can be substituted. Under Section 16, Rule 3 of the Rules of Court "whenever a party to a pending case dies ... it shall be the duty of his attorney to inform the court promptly of such death ... and to give the name and residence of his executor, administrator, guardian or other legal representatives." This duty was complied with by the counsel for the deceased plaintiff when he manifested before the respondent Court that Fortunata Barcena died on July 9, 1975 and asked for the proper substitution of parties in the case. The respondent Court, however, instead of allowing the substitution, dismissed the complaint on the ground that a dead person has no legal personality to sue. This is a grave error. Article 777 of the Civil Code provides "that the rights to the succession are transmitted from the moment of the death of the decedent." From the moment of the death of the decedent, the heirs become the absolute owners of his property, subject to the rights and obligations of the decedent, and they cannot be deprived of their rights thereto except by the methods provided for by law. 3
The moment of death is the determining factor when the heirs acquire a definite right to the inheritance whether such right be pure or contingent. 4 The right of the heirs to the property of the deceased vests in them even before judicial declaration of their being heirs in the testate or intestate proceedings. 5 When Fortunata Barcena, therefore, died her claim or right to the parcels of land in litigation in Civil Case No. 856, was not extinguished by her death but was transmitted to her heirs upon her death. Her heirs have thus acquired interest in the properties in litigation and became parties in interest in the case. There is, therefore, no reason for the respondent Court not to allow their substitution as parties in interest for the deceased plaintiff. Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and be substituted for the deceased, within such time as may be granted ... ." The question as to whether an action survives or not depends on the nature of the action and the damage sued for. 6 In the causes of action which survive the wrong complained affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive the injury complained of is to the person, the property and rights of property affected being incidental. 7 Following the foregoing criterion the claim of the deceased plaintiff which is an action to quiet title over the parcels of land in litigation affects primarily and principally property and property rights and therefore is one that survives even after her death. It is, therefore, the duty of the respondent Court to order the legal representative of the deceased plaintiff to appear and to be substituted for her. But what the respondent Court did, upon being informed by the counsel for the deceased plaintiff that the latter was dead, was to dismiss the complaint. This should not have been done for under the same Section 17, Rule 3 of the Rules of Court, it is even the duty of the court, if the legal representative fails to appear, to order the opposing party to procure the appointment of a legal representative of the deceased. In the instant case the respondent Court did not have to bother ordering the opposing party to procure the appointment of a legal representative of the deceased because her counsel has not only asked that the minor children be substituted for her but also suggested that their uncle be appointed as guardian ad litem for them because their father is busy in Manila earning a living for the family. But the respondent Court refused the request for substitution on the ground that the children were still minors and cannot sue in court. This is another grave error because the respondent Court ought to have known that under the same Section 17, Rule 3 of the Rules of Court, the court is directed to appoint a guardian ad litem for the minor heirs. Precisely in the instant case, the counsel for the deceased plaintiff has suggested to the respondent Court that the uncle of the minors be appointed to act as guardian ad litem for them. Unquestionably, the respondent Court has gravely abused its discretion in not complying with the clear provision of the Rules of Court in dismissing the complaint of the plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case. IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in Civil Case No. 856 of the Court of First Instance of Abra and the motions for reconsideration of the order of dismissal of said complaint are set aside and the respondent Court is hereby directed to allow the substitution of the minor children, who are the petitioners therein for the deceased plaintiff and to appoint a qualified person as guardian ad litem for them. Without pronouncement as to costs. SO ORDERED. Teehankee (Chairman), Makasiar, Esguerra and Muoz Palma, JJ., concur. Footnotes 1 Which this Court treats as special civil action as per its Resolution dated February 11, 1976. 2 Section 16. Duty of Attorney upon which death, incapacity or incompetency of party. - Whenever a party to a pending case dies, becomes incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly of such death, incapacity or incompetency, and to give the name and residence of his executor, administrator, guardian or other legal representative. Section 17. Death of party.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 to be substituted for deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs. 3 Buan vs. Heirs of Buan, 53 Phil. 654. 4 Ibarle vs. Po, 92 Phil. 721. 5 Morales, et al. vs. Ybanez, 98 Phil. 677. 6 Iron Gate Bank vs. Brady, 184 U.S. 665, 22 SCT 529, 46 L. ed. 739. 7 Wenber vs. St. Paul City Co., 97 Feb. 140 R. 39 C.C.A. 79. EN BANC [G.R. No. L-8437. November 28, 1956.] ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC., claimant-Appellant.
D E C I S I O N REYES, J. B. L., J .: Appeal by Luzon Surety Co., Inc., from an order of the Court of First Instance of Rizal, presided by Judge Hermogenes Caluag, dismissing its claim against the Estate of K. H. Hemady (Special Proceeding No. Q-293) for failure to state a cause of action. The Luzon Surety Co. had filed a claim against the Estate based on twenty different indemnity agreements, or counter bonds, each subscribed by a distinct principal and by the deceased K. H. Hemady, a surety solidary guarantor) in all of them, in consideration of the Luzon Surety Co.s of having guaranteed, the various principals in favor of different creditors. The twenty counterbonds, or indemnity agreements, all contained the following stipulations:chanroblesvirtuallawlibrary Premiums. As consideration for this suretyship, the undersigned jointly and severally, agree to pay the COMPANY the sum of ________________ (P______) pesos, Philippines Currency, in advance as premium there of for every __________ months or fractions thereof, this ________ or any renewal or substitution thereof is in effect. Indemnity. The undersigned, jointly and severally, agree at all times to indemnify the COMPANY and keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges, and expenses of whatsoever kind and nature which the COMPANY shall or may, at any time sustain or incur in consequence of having become surety upon this bond or any extension, renewal, substitution or alteration thereof made at the instance of the undersigned or any of them or any order executed on behalf of the undersigned or any of them; chan roblesvirtualawlibraryand to pay, reimburse and make good to the COMPANY, its successors and assigns, all sums and amount of money which it or its representatives shall pay or cause to be paid, or become liable to pay, on account of the undersigned or any of them, of whatsoever kind and nature, including 15% of the amount involved in the litigation or other matters growing out of or connected therewith for counsel or attorneys 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. x x x x x x x x x 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. x x x x x x x x x Our Liability Hereunder. It shall not be necessary for the COMPANY to bring suit against the principal upon his default, or to exhaust the property of the principal, but the liability hereunder of the undersigned indemnitor shall be jointly and severally, a primary one, the same as that of the principal, and shall be exigible immediately upon the occurrence of such default. (Rec. App. pp. 98- 102.) The Luzon Surety Co., prayed for allowance, as a contingent claim, of the value of the twenty bonds it had executed in consideration of the counterbonds, and further asked for judgment for the unpaid premiums and documentary stamps affixed to the bonds, with 12 per cent interest thereon. Before answer was filed, and upon motion of the administratrix of Hemadys estate, the lower court, by order of September 23, 1953, dismissed the claims of Luzon Surety Co., on two grounds:chanroblesvirtuallawlibrary (1) that the premiums due and cost of documentary stamps were not contemplated under the indemnity agreements to be a part of the undertaking of the guarantor (Hemady), since they were not liabilities incurred after the execution of the counterbonds; chan roblesvirtualawlibraryand (2) that whatever losses may occur after Hemadys death, are not chargeable to his estate, because upon his death he ceased to be guarantor. Taking up the latter point first, since it is the one more far reaching in effects, the reasoning of the court below ran as follows:chanroblesvirtuallawlibrary The administratrix further contends that upon the death of Hemady, his liability as a guarantor terminated, and therefore, in the absence of a showing that a loss or damage was suffered, the claim cannot be considered contingent. This Court believes that there is merit in this contention and finds support in Article 2046 of the new Civil Code. It should be noted that a new requirement has been added for a person to qualify as a guarantor, that is:chanroblesvirtuallawlibrary integrity. As correctly pointed out by the Administratrix, integrity is something purely personal and is not transmissible. Upon the death of Hemady, his integrity was not transmitted to his estate or successors. Whatever loss therefore, may occur after Hemadys death, are not chargeable to his estate because upon his death he ceased to be a guarantor. Another clear and strong indication that the surety company has exclusively relied on the personality, character, honesty and integrity of the now deceased K. H. Hemady, was the fact that in the printed form of the indemnity agreement there is a paragraph entitled Security by way of first mortgage, which was expressly waived and renounced by the security company. The security company has not demanded from K. H. Hemady to comply with this requirement of giving security by way of first mortgage. In the supporting papers of the claim presented by Luzon Surety Company, no real property was mentioned in the list of properties mortgaged which appears at the back of the indemnity agreement. (Rec. App., pp. 407-408). We find this reasoning untenable. Under the present Civil Code (Article 1311), as well as under the Civil Code of 1889 (Article 1257), the rule is that Contracts take effect only as between the parties, their assigns and heirs, except in the case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. While in our successional system the responsibility of the heirs for the debts of their decedent cannot exceed the value of the inheritance they receive from him, the principle remains intact that these heirs succeed not only to the rights of the deceased but also to his obligations. Articles 774 and 776 of the New Civil Code (and Articles 659 and 661 of the preceding one) expressly so provide, thereby confirming Article 1311 already quoted. ART. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. ART. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled: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). x x x x x x x x x The principle on which these decisions rest is not affected by the provisions of the new Code of Civil Procedure, and, in accordance with that principle, the heirs of a deceased person cannot be held to be third persons in relation to any contracts touching the real estate of their decedent which comes in to their hands by right of inheritance; chan roblesvirtualawlibrarythey take such property subject to all the obligations resting thereon in the hands of him from whom they derive their rights. (See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman vs. Salak, 91 Phil., 265). The binding effect of contracts upon the heirs of the deceased party is not altered by the provision in our Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from the estate is ultimately a payment by the heirs and distributees, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive. Under our law, therefore, the general rule is that a partys contractual rights and obligations are transmissible to the successors. The rule is a consequence of the progressive depersonalization of patrimonial rights and duties that, as observed by Victorio Polacco, has characterized the history of these institutions. From the Roman concept of a relation from person to person, the obligation has evolved into a relation from patrimony to patrimony, with the persons occupying only a representative position, barring those rare cases where the obligation is strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific person and by no other. The transition is marked by the disappearance of the imprisonment for debt. Of the three exceptions fixed by Article 1311, the nature of the obligation of the surety or guarantor does not warrant the conclusion that his peculiar individual qualities are contemplated as a principal inducement for the contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady when it accepted the latter as surety in the counterbonds? Nothing but the reimbursement of the moneys that the Luzon Surety Co. might have to disburse on account of the obligations of the principal debtors. This reimbursement is a payment of a sum of money, resulting from an obligation to give; chan roblesvirtualawlibraryand to the Luzon Surety Co., it was indifferent that the reimbursement should be made by Hemady himself or by some one else in his behalf, so long as the money was paid to it. The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the parties. Being exceptional and contrary to the general rule, this intransmissibility should not be easily implied, but must be expressly established, or at the very least, clearly inferable from the provisions of the contract itself, and the text of the agreements sued upon nowhere indicate that they are non-transferable. (b) Intransmisibilidad por pacto. Lo general es la transmisibilidad de darechos y obligaciones; chan roblesvirtualawlibraryle excepcion, la intransmisibilidad. Mientras nada se diga en contrario impera el principio de la transmision, como elemento natural a toda relacion juridica, salvo las personalisimas. Asi, para la no transmision, es menester el pacto expreso, porque si no, lo convenido entre partes trasciende a sus herederos. Siendo estos los continuadores de la personalidad del causante, sobre ellos recaen los efectos de los vinculos juridicos creados por sus antecesores, y para evitarlo, si asi se quiere, es indespensable convension terminante en tal sentido. Por su esencia, el derecho y la obligacion tienden a ir ms all de las personas que les dieron vida, y a ejercer presion sobre los sucesores de esa persona; chan roblesvirtualawlibrarycuando no se quiera esto, se impone una estipulacion limitativa expresamente de la transmisibilidad o de cuyos tirminos claramente se deduzca la concresion del concreto a las mismas personas que lo otorgon. (Scaevola, Codigo Civil, Tomo XX, p. 541-542) (Emphasis supplied.) Because under the law (Article 1311), a person who enters into a contract is deemed to have contracted for himself and his heirs and assigns, it is unnecessary for him to expressly stipulate to that effect; chan roblesvirtualawlibraryhence, his failure to do so is no sign that he intended his bargain to terminate upon his death. Similarly, that the Luzon Surety Co., did not require bondsman Hemady to execute a mortgage indicates nothing more than the companys faith and confidence in the financial stability of the surety, but not that his obligation was strictly personal. The third exception to the transmissibility of obligations under Article 1311 exists when they are not transmissible by operation of law. The provision makes reference to those cases where the law expresses that the rights or obligations are extinguished by death, as is the case in legal support (Article 300), parental authority (Article 327), usufruct (Article 603), contracts for a piece of work (Article 1726), partnership (Article 1830 and agency (Article 1919). By contract, the articles of the Civil Code that regulate guaranty or suretyship (Articles 2047 to 2084) contain no provision that the guaranty is extinguished upon the death of the guarantor or the surety. The lower court sought to infer such a limitation from Art. 2056, to the effect that one who is obliged to furnish a guarantor must present a person who possesses integrity, capacity to bind himself, and sufficient property to answer for the obligation which he guarantees. It will be noted, however, that the law requires these qualities to be present only at the time of the perfection of the contract of guaranty. It is self- evident that once the contract has become perfected and binding, the supervening incapacity of the guarantor would not operate to exonerate him of the eventual liability he has contracted; chan roblesvirtualawlibraryand if that be true of his capacity to bind himself, it should also be true of his integrity, which is a quality mentioned in the article alongside the capacity. The foregoing concept is confirmed by the next Article 2057, that runs as follows:chanroblesvirtuallawlibrary ART. 2057. If the guarantor should be convicted in first instance of a crime involving dishonesty or should become insolvent, the creditor may demand another who has all the qualifications required in the preceding article. The case is excepted where the creditor has required and stipulated that a specified person should be guarantor. From this article it should be immediately apparent that the supervening dishonesty of the guarantor (that is to say, the disappearance of his integrity after he has become bound) does not terminate the contract but merely entitles the creditor to demand a replacement of the guarantor. But the step remains optional in the creditor:chanroblesvirtuallawlibrary it is his right, not his duty; chan roblesvirtualawlibraryhe may waive it if he chooses, and hold the guarantor to his bargain. Hence Article 2057 of the present Civil Code is incompatible with the trial courts stand that the requirement of integrity in the guarantor or surety makes the latters undertaking strictly personal, so linked to his individuality that the guaranty automatically terminates upon his death. The contracts of suretyship entered into by K. H. Hemady in favor of Luzon Surety Co. not being rendered intransmissible due to the nature of the undertaking, nor by the stipulations of the contracts themselves, nor by provision of law, his eventual liability thereunder necessarily passed upon his death to his heirs. The contracts, therefore, give rise to contingent claims provable against his estate under section 5, Rule 87 (2 Moran, 1952 ed., p. 437; chan roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil. 810, 814). The most common example of the contigent claim is that which arises when a person is bound as surety or guarantor for a principal who is insolvent or dead. Under the ordinary contract of suretyship the surety has no claim whatever against his principal until he himself pays something by way of satisfaction upon the obligation which is secured. When he does this, there instantly arises in favor of the surety the right to compel the principal to exonerate the surety. But until the surety has contributed something to the payment of the debt, or has performed the secured obligation in whole or in part, he has no right of action against anybody no claim that could be reduced to judgment. (May vs. Vann, 15 Pla., 553; chan roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs. Nou, 63 Wis., 134.) For Defendant administratrix it is averred that the above doctrine refers to a case where the surety files claims against the estate of the principal debtor; chan roblesvirtualawlibraryand it is urged that the rule does not apply to the case before us, where the late Hemady was a surety, not a principal debtor. The argument evinces a superficial view of the relations between parties. If under the Gaskell ruling, the Luzon Surety Co., as guarantor, could file a contingent claim against the estate of the principal debtors if the latter should die, there is absolutely no reason why it could not file such a claim against the estate of Hemady, since Hemady is a solidary co-debtor of his principals. What the Luzon Surety Co. may claim from the estate of a principal debtor it may equally claim from the estate of Hemady, since, in view of the existing solidarity, the latter does not even enjoy the benefit of exhaustion of the assets of the principal debtor. The foregoing ruling is of course without prejudice to the remedies of the administratrix against the principal debtors under Articles 2071 and 2067 of the New Civil Code. Our conclusion is that the solidary guarantors liability is not extinguished by his death, and that in such event, the Luzon Surety Co., had the right to file against the estate a contingent claim for reimbursement. It becomes unnecessary now to discuss the estates liability for premiums and stamp taxes, because irrespective of the solution to this question, the Luzon Suretys 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.
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION
G.R. No. L-68053 May 7, 1990 LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners, vs. THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, respondents. Francisco G. Banzon for petitioner. Renecio R. Espiritu for private respondents.
FERNAN, C.J .: This is a petition for review on certiorari seeking the reversal of: (a) the decision of the Fourth Civil Cases Division of the Intermediate Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason et al." affirming the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as it ordered the petitioners to pay jointly and severally the private respondents the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the subject decision insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for reconsideration of its decision. The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were originally known as Lot 773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square meters, was registered in the name of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on October 9, 1917 by the Register of Deeds of Occidental Negros (Exh. A). Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962 while the other private respondents, Antonio and Rosario Yanes, are children of Felipe. Teodora was survived by her child, Jovita (Jovito) Alib. 1
It is not clear why the latter is not included as a party in this case. Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823 as she could not attend to the other portions of the two lots which had a total area of around twenty-four hectares. The record does not show whether the children of Felipe also cultivated some portions of the lots but it is established that Rufino and his children left the province to settle in other places as a result of the outbreak of World War II. According to Estelita, from the "Japanese time up to peace time", they did not visit the parcels of land in question but "after liberation", when her brother went there to get their share of the sugar produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot 773. 2
It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797) covering Lot 773-A with an area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot 773-A as a portion of Lot 773 of the cadastral survey of Murcia and as originally registered under OCT No. 8804. The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in the name of Fortunato D. Santiago on September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to the effect that Lot 773-B was originally registered under OCT No. 8804. On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuentebella's name. 6
After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a motion requesting authority to sell Lots 773-A and 773-B. 7 By virtue of a court order granting said motion, 8 on March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely, Estelita, Iluminado and Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return" of the ownership and possession of Lots 773 and 823. They also prayed that an accounting of the produce of the land from 1944 up to the filing of the complaint be made by the defendants, that after court approval of said accounting, the share or money equivalent due the plaintiffs be delivered to them, and that defendants be ordered to pay plaintiffs P500.00 as damages in the form of attorney's fees. 11
During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B and another lot for P25,000.00 to Dr. Rodolfo Siason. 12
Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13 who thereafter, declared the two lots in his name for assessment purposes. 14
Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No. 5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim, monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection with the above- entitled case." 15
On October 11, 1963, a decision was rendered by the Court of First Instance of Negros Occidental in Civil Case No. 5022, the dispositive portion of which reads: WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to reconvey to the plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia, Negros Occidental, now covered by Transfer Certificates of Title Nos. T-23165 and T-23166 in the name of said defendant, and thereafter to deliver the possession of said lots to the plaintiffs. No special pronouncement as to costs. SO ORDERED. 16
It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in the aforesaid decision. However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of service dated October 20, 1965, the sheriff stated that he discovered that Lot 773 had been subdivided into Lots 773-A and 773-B; that they were "in the name" of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as Siason was "not a party per writ of execution." 17
The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private respondents (the Yaneses) filed on July 31, 1965, in the Court of First Instance of Negros Occidental a petition for the issuance of a new certificate of title and for a declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo Siason to produce the certificates of title covering Lots 773 and 823. Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823, "in good faith and for a valuable consideration without any knowledge of any lien or encumbrances against said properties"; that the decision in the cadastral proceeding 19 could not be enforced against him as he was not a party thereto; and that the decision in Civil Case No. 5022 could neither be enforced against him not only because he was not a party-litigant therein but also because it had long become final and executory. 20 Finding said manifestation to be well- founded, the cadastral court, in its order of September 4, 1965, nullified its previous order requiring Siason to surrender the certificates of title mentioned therein. 21
In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in Civil Case No. 5022. Siason opposed it. 22 In its order of September 28, 1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted another action for the recovery of the land in question, ruled that at the judgment therein could not be enforced against Siason as he was not a party in the case. 23
The action filed by the Yaneses on February 21, 1968 was for recovery of real property with damages. 24
Named defendants therein were Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros Occidental. The Yaneses prayed for the cancellation of TCT Nos. T- 19291 and 19292 issued to Siason (sic) for being null and void; the issuance of a new certificate of title in the name of the Yaneses "in accordance with the sheriffs return of service dated October 20, 1965;" Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery thereof could not be effected, or, if the issuance of a new title could not be made, that the Alvarez and Siason jointly and severally pay the Yaneses the sum of P45,000.00. They also prayed that Siason render an accounting of the fruits of Lot 773 from November 13, 1961 until the filing of the complaint; and that the defendants jointly and severally pay the Yaneses moral damages of P20,000.00 and exemplary damages of P10,000.00 plus attorney's fees of P4, 000.00. 25
In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and 773-B, having been passed upon by the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped from questioning said order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause of action had been "barred by res judicata, statute of limitation and estoppel." 27
In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties in question thru an agent as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration. Although the Yaneses were negligent in their failure to place a notice of lis pendens "before the Register of Deeds of Negros Occidental in order to protect their rights over the property in question" in Civil Case No. 5022, equity demanded that they recover the actual value of the land because the sale thereof executed between Alvarez and Siason was without court approval. 28 The dispositive portion of the decision states: IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the following manner: A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic) hereby dismmissed, B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate children of the deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros Occidental; the sum of P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00 representing moral damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from date of the filing of this complaint up to final payment. C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora and Raymundo, all surnamed Alvarez is hereby dismissed. D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to pay the costs of this suit. SO ORDERED. 29
The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed the lower court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively." 31 The dispositive portion of said decision reads: WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively. No costs. SO ORDERED. 32
Finding no cogent reason to grant appellants motion for reconsideration, said appellate court denied the same. Hence, the instant petition. ln their memorandum petitioners raised the following issues: 1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and raised by the petitioners in the lower court. 2. Whether or not the cause and/or causes of action of the private respondents, if ever there are any, as alleged in their complaint dated February 21, 1968 which has been docketed in the trial court as Civil Case No. 8474 supra, are forever barred by statute of limitation and/or prescription of action and estoppel. 3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the petitioners become a privy and/or party to the waiver (Exhibit 4-defendant Siason) in Civil Case No. 8474, supra where the private respondents had unqualifiedly and absolutely waived, renounced and quitclaimed all their alleged rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of Murcia Cadastre as appearing in their written manifestation dated November 6, 1962 (Exhibits "4" Siason) which had not been controverted or even impliedly or indirectly denied by them. 4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or transmitted by operations (sic) of law to the petitioners without violation of law and due process . 33
The petition is devoid of merit. As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the Supreme Court, to review the decision in Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said decision had long become final and executory and with the possible exception of Dr. Siason, who was not a party to said case, the decision in Civil Case No. 5022 is the law of the case between the parties thereto. It ended when Alvarez or his heirs failed to appeal the decision against them. 34
Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate. 35 As consistently ruled by this Court, every litigation must come to an end. Access to the court is guaranteed. But there must be a limit to it. Once a litigant's right has been adjudicated in a valid final judgment of a competent court, he should not be granted an unbridled license to return for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigation were to be allowed, unscrupulous litigations will multiply in number to the detriment of the administration of justice. 36
There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil Case No. 5022. As found by the lower court, from the uncontroverted evidence presented, the Yaneses have been illegally deprived of ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review, arose from the failure to execute Civil Case No. 5022, as subject lots can no longer be reconveyed to private respondents Yaneses, the same having been sold during the pendency of the case by the petitioners' father to Dr. Siason who did not know about the controversy, there being no lis pendens annotated on the titles. Hence, it was also settled beyond question that Dr. Siason is a purchaser in good faith. Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason on November 11, 1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who lost in Civil Case No. 5022 to pay the plaintiffs (private respondents herein) the amount of P20,000.00 representing the actual value of the subdivided lots in dispute. It did not order defendant Siason to pay said amount. 38
As to the propriety of the present case, it has long been established that the sole remedy of the landowner whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 39 "It is one thing to protect an innocent third party; it is entirely a different matter and one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against." 40
The issue on the right to the properties in litigation having been finally adjudicated in Civil Case No. 5022 in favor of private respondents, it cannot now be reopened in the instant case on the pretext that the defenses of prescription and estoppel have not been properly considered by the lower court. Petitioners could have appealed in the former case but they did not. They have therefore foreclosed their rights, if any, and they cannot now be heard to complain in another case in order to defeat the enforcement of a judgment which has longing become final and executory. Petitioners further contend that the liability arising from the sale of Lots No. 773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his estate, after his death. Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the general transmissibility of the rights and obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the Civil Code state: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property received from the decedent. As explained by this Court through Associate Justice J.B.L. Reyes in the case of Estate of Hemady vs. Luzon Surety Co., Inc. 41
The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from the state is ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive. Under our law, therefore. the general rule is that a party's contractual rights and obligations are transmissible to the successors. The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as observed by Victorio Polacco has characterized the history of these institutions. From the Roman concept of a relation from person to person, the obligation has evolved into a relation from patrimony to patrimony with the persons occupying only a representative position, barring those rare cases where the obligation is strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific person and by no other. xxx xxx xxx Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's transaction, which gave rise to the present claim for damages. That petitioners did not inherit the property involved herein is of no moment because by legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary estate, and we have ruled that the hereditary assets are always liable in their totality for the payment of the debts of the estate. 42
It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With this clarification and considering petitioners' admission that there are other properties left by the deceased which are sufficient to cover the amount adjudged in favor of private respondents, we see no cogent reason to disturb the findings and conclusions of the Court of Appeals. WHEREFORE, subject to the clarification herein above stated, the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs against petitioners. SO ORDERED. Gutierrez, Jr., Feliciano and Cortes, JJ., concur. Bidin J., took no part. [G.R. No. 146006. August 22, 2005] LEE vs. QUEZON CITY RTC THIRD DIVISION Sirs/Mesdames: Quoted hereunder, for your information, is a resolution of this Court dated AUG 22 2005. G.R. No. 146006 (JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and corporate Secretary, respectively, of the Philippine International Life Insurance Company, and FILIPINO LOAN ASSISTANCE GROUP, vs. REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 85 presided by JUDGE PEDRO M. AREOLA, BRANCH CLERK OF COURT JANICE Y. ANTERO, DEPUTY SHERIFFS ADENAUER G. RIVERA and PEDRO L. BORJA, all of the Regional Trial Court of Quezon City Branch 85, MA. DIVINA ENDERES claiming to be Special Administratrix, and other persons/public officers acting for and in their behalf.) This resolves the motion for reconsideration filed by petitioners Jose C. Lee and Alma Aggabao of our resolution dated April 22, 2005 [1] cralaw finding the petitioners guilty of indirect contempt. Petitioners were cited for contempt for their refusal to comply with the final and executory decision of this Court dated February 23, 2004. Petitioners' non- compliance, as president and corporate secretary, respectively, of Philippine International Life Insurance Company (Philinterlife), with the directives stated in the orders we affirmed in our February 23, 2004 decision was evident from the sheriff's report [2] cralaw and the dilatory motion to suspend execution/period of compliance by reason of alleged "supervening events" which they filed [3] cralaw with the probate court. Petitioners now come to us again, raising arguments which have already been passed upon. Therefore, this motion for reconsideration must be denied with finality. At the outset, we must emphasize that petitioners have already paid the fine imposed on them. [4] cralaw They are bound by such payment which was made unconditionally. Petitioners dispute the following statement in our April 22, 2005 resolution: We call particular attention to the fact that in our February 23, 2004 decision, we noted that petitioners, with the rest of the FLAG-controlled directors and stockholders, increased the authorized capital stock of Philinterlife, diluting in the process the 2,029 shares of the estate representing 50.725% of Philinterlife. We observed that this was obviously calculated to make it difficult for the estate to reassume its controlling interest in Philinterlife. Thus, we ruled that, considering the nullity of the sale of the 2,029 shares to FLAG, the increase in Philinterlife's authorized capital stock was void ab initio. Consequently, any approval by the Securities and Exchange Commission of this increase would likewise be void ab initio. [5] cralaw Petitioners take issue with the "50.725%" [6] cralaw figure and claim that this is an "additional declaration" which still has to be proved. This claim is incorrect. This figure [7] cralaw is not an "additional declaration" as it was mentioned in our February 23, 2004 decision. [8] cralaw It was never challenged nor disputed. Next, they assail our ruling that the increase in Philinterlife's authorized capital stock was void ab initio. Again, this is not the first time this matter was taken up. As stated in our April 22, 2005 resolution, our February 23, 2004 decision held that: It goes without saying that the increase in Philinterlife's authorized capital stock, approved on the vote of petitioners' non-existent shareholdings and obviously calculated to make it difficult for Dr. Ortaez's estate to reassume its controlling interest in Philinterlife, was likewise void ab initio. [9] cralaw In fact, petitioners questioned this when they sought a reconsideration [10] cralaw of our February 23, 2004 decision. We denied their motion for reconsideration for lack of merit in a resolution dated May 26, 2004. [11] cralaw Petitioners argue that the nullification of the increase in authorized capital stock of Philinterlife will adversely affect the interests of stockholders who were not parties to this case and are independent of petitioner Filipino Loan Assistance Group (FLAG). [12] cralaw To nullify the increase will deprive them of their property without due process. [13] cralaw In addition, they assert that the increases in authorized capital stock in 1987 and 2001 were done in compliance with governmental requirements for insurance companies. [14] cralaw By petitioners' own allegation, the so-called "independent stockholders" [15] cralaw acquired their shares in 1983. [16] cralaw Petitioners named the following as stockholders independent and separate from FLAG: Jose C. Lee, Rodrigo Gatchalian (predecessor of Carmelita Tan), Benjamin Lee, Angel Ong, Amparo Sarmiento, Jose Gachalian, Antonio Gatchalian, Luis Gatchalia, Brenda Ortaez, Manuel Hizon and Ma. Paz Lee. Obviously, Jose C. Lee is a party to this case and cannot escaped its effects. [17] cralaw The others, although not parties to this case, cannot claim to be unaware of the probate proceedings which commenced in 1980 and which involved a big chunk of Philinterlife's shares. Petitioners themselves admit that in 1983, the estate's 2,029 shares represented 40.58% interest in the company. [18] cralaw Moreover, these stockholders participated in the management of the company: in 1983, Rodrigo Gatchalian was Philinerlife's president and chairman of the board of directors while Amparo Sarmiento was its corporate secretary and Benjamin Lee, Jose Gatchalian and Brenda Ortaez were members of the board [19] cralaw; in 1989, Angel Ong and Ma. Paz Lee were also members of the board. [20] cralaw It is incredible that they now claim to have no knowledge of this case. Even if they were not part of Philinterlife's management, it is difficult to believe that they, as stockholders, never bothered to inquire from their board and corporate officers, who were all embroiled in the controversy (nor were they apprised by these officers) of the circumstances surrounding the 2,029 shares under litigation. In any case, the information could have been easily obtained by them since these facts appeared in public judicial records. They were charged with knowledge and could not feign ignorance of these facts so as to escape the legal effects of the eventual outcome of the controversy. Besides, the time-honored legal maxim of caveat emptor [21] cralaw should have placed these stockholders on guard. They bought their shares, which could be affected by the litigation embroiling Philinterlife, at their own risk. It is safe to presume that, as prudent business investors, they bought into the company only after a due diligence audit and therefore should have been aware of the legal consequences that could normally come with the purchase of shares in a corporation entangled in a bitter suit. Since they claim to be stockholders since 1983, they cannot now belatedly protest after the case, which they had knowledge of, has been finally resolved. The declaration that the increase in authorized capital stock was void ab initio flows naturally from our ruling that the ownership of the 2,029 shares never left the estate. Throughout the pendency of these proceedings which commenced in 1980, the estate of Dr. Ortaez, including the 2,029 shares of stock in Philinterlife, was in custodia legis or under the custody and jurisdiction of the court. [22] cralaw Where the estate of the deceased person is already the subject of a testate or in testate proceeding, the administrator cannot enter into any transaction involving it without prior approval of the probate court. [23] cralaw Clearly, the intention is to protect the interests of the estate while the respective rights of the parties are being litigated. As shown by the figures provided by the petitioners, the increases in authorized capital stock in 1987 and 2001, both carried out without the approval of the probate court, diluted the interest of the estate in Philinterlife. For still unexplained reasons, the shares of the estate of Dr. Ortaez in Philinterlife went down from 50.725% [24] cralaw in 1980 to 40.58% in 1983. [25] cralaw Philinterlife's authorized capital stock was increased from P5 million to P10 million in 1987. Consequently, in 1989, the estate's interest went down to 20.29%. [26] cralaw In 2001, the authorized capital stock was again increased to P50 million. As a result, the estate now owns a miniscule 4.05%. [27] cralaw The law provides a mechanism by which the estate could have preserved its proportionate interest in the company. [28] cralaw For unexplained reasons, the estate's interest was wittingly or unwittingly allowed to shrink. To tolerate this situation will not only negate the control of the probate court over assets brought into custodia legis but will also frustrate the protection given them. We need not discuss the other issues raised for they have already been exhaustively discussed in our April 22, 2005 resolution. ACCORDINGLY, the motion for reconsideration is hereby DENIED WITH FINALITY. No further pleadings shall be entertained. SO ORDERED. Very truly yours, (Sgd.) LUCITA ABJELINA-SORIANO Clerk of Court Republic of the Philippines SUPREME COURT Manila EN BANC
G.R. No. L-28040 August 18, 1972 TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee; JOSE DE BORJA, as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and CRISANTO DE BORJA (deceased) as Children of Josefa Tangco, appellees, vs. TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco de Borja, appellant. . G.R. No L-28568 August 18, 1972 TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O. VDA. DE DE BORJA, special Administratrix appellee, vs. JOSE DE BORJA, oppositor-appellant. G.R. No. L-28611 August 18, 1972 TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate Estate of the late Francisco de Borja, plaintiff-appellee, vs. JOSE DE BORJA, as Administrator of the Testate Estate of the late Josefa Tangco, defendant-appellant. L-28040 Pelaez, Jalandoni & Jamir for administrator-appellee. Quiogue & Quiogue for appellee Matilde de Borja. Andres Matias for appellee Cayetano de Borja. Sevilla & Aquino for appellant. L-28568 Sevilla & Aquino for special administratrix-appellee. Pelaez, Jalandoni & Jamir for oppositor-appellant. L-28611 Sevilla & Aquino for plaintiff-appellee. Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.
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, 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: A G R E E M E N T 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, A N D 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. W I T N E S S E T H 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. 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 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 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, 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 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 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 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 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 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. Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur. Fernando, J., took no part.
Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-15499 February 28, 1962 ANGELA M. BUTTE, plaintiff-appellant, vs. MANUEL UY and SONS, INC., defendant-appellee. Delgado, Flores and Macapagal for plaintiff-appellant. Pelaez and Jalandoni for defendant-appellee. REYES, J.B.L., J .: Appeal from a decision of the Court of First instance of Manila dismissing the action for legal redemption filed by plaintiff-appellant. It appears that Jose V. Ramirez, during his lifetime, was a co-owner of a house and lot located at Sta. Cruz, Manila, as shown by Transfer Certificate of Title No. 52789, issued in the name of the following co-owners: Marie Garnier Vda. de Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6; Rita de Ramirez, 1/6; and Jose Ma. Ramirez, 1/6. On October 20, 1951, Jose V. Ramirez died. Subsequently, Special Proceeding No. 15026 was instituted to settle his estate, that included the one-sixth (1/6) undivided share in the aforementioned property. And although his last will and testament, wherein he bequeathed his estate to his children and grandchildren and one-third (1/3) of the free portion to Mrs. Angela M. Butte, hereinafter referred to as plaintiff-appellant, has been admitted to probate, the estate proceedings are still pending up to the present on account of the claims of creditors which exceed the assets of the deceased. The Bank of the Philippine Islands was appointed judicial administrator. Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de Ramirez, one of the co-owners of the late Jose V. Ramirez in the Sta. Cruz property, sold her undivided 1/6 share to Manuel Uy & Sons, Inc. defendant- appellant herein, for the sum of P500,000.00. After the execution by her attorney-in-fact, Mrs. Elsa R. Chambers, of an affidavit to the effect that formal notices of the sale had been sent to all possible redemptioners, the deed of sale was duly registered and Transfer Certificate of Title No. 52789 was cancelled in lieu of which a new one was issued in the name of the vendee and the other-co-owners. On the same day (December 9, 1958), Manuel Uy & Sons, Inc. sent a letter to the Bank of the Philippine Islands as judicial administrator of the estate of the late Jose V. Ramirez informing it of the above-mentioned sale. This letter, together with that of the bank, was forwarded by the latter to Mrs. Butte c/o her counsel Delgado, Flores & Macapagal, Escolta, Manila, and having received the same on December 10, 1958, said law office delivered them to plaintiff-appellant's son, Mr. Miguel Papa, who in turn personally handed the letters to his mother, Mrs. Butte, on December 11 and 12, 1958. Aside from this letter of defendant-appellant, the vendor, thru her attorney-in-fact Mrs. Chambers, wrote said bank on December 11, 1958 confirming vendee's letter regarding the sale of her 1/6 share in the Sta. Cruz property for the sum of P500,000.00. Said letter was received by the bank on December 15, 1958 and having endorsed it to Mrs. Butte's counsel, the latter received the same on December 16, 1958. Appellant received the letter on December 19, 1958. On January 15, 1959, Mrs. Angela M. Butte, thru Atty. Resplandor Sobretodo, sent a letter and a Philippine National Bank cashier's check in the amount of P500,000.00 to Manuel Uy & Sons, Inc. offering to redeem the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez. This tender having been refused, plaintiff on the same day consigned the amount in court and filed the corresponding action for legal redemption. Without prejudice to the determination by the court of the reasonable and fair market value of the property sold which she alleged to be grossly excessive, plaintiff prayed for conveyance of the property, and for actual, moral and exemplary damages. After the filing by defendant of its answer containing a counterclaim, and plaintiff's reply thereto, trial was held, after which the court rendered decision on May 13, 1959, dismissing plaintiff's complaint on the grounds that she has no right to redeem the property and that, if ever she had any, she exercised the same beyond the statutory 30-day period for legal redemptions provided by the Civil Code. The counterclaim of defendant for damages was likewise dismissed for not being sufficiently established. Both parties appealed directly to this Court. Based on the foregoing facts, the main issues posed in this appeal are: (1) whether or not plaintiff-appellant, having been bequeathed 1/3 of the free portion of the estate of Jose V. Ramirez, can exercise the right of legal redemption over the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez despite the presence of the judicial administrator and pending the final distribution of her share in the testate proceedings; and (2) whether or not she exercised the right of legal redemption within the period prescribed by law. The applicable law involved in the present case is contained in Articles 1620, p. 1, and 1623 of the Civil Code of the Philippines, which read as follows: ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other-co- owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. (1522a) ART. 1623. The right of legal predemption or redemption shall not be exercised except within thirty days from the notice in writing by the respective vendor, or by the vendor, as the case may be. The deed of sale shall not be accorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof at all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners. (1524a) That the appellant Angela M. Butte is entitled to exercise the right of legal redemption is clear. As testamentary heir of the estate of J.V. Ramirez, she and her co-heirs acquired an interest in the undivided one- sixth (1/6) share owned by her predecessor (causante) in the Santa Cruz property, from the moment of the death of the aforesaid co-owner, J.V. Ramirez. By law, the rights to the succession of a deceased persons are transmitted to his heirs from the moment of his death, and the right of succession includes all property rights and obligations that survive the decedent. ART. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. (659) ART. 777. The rights to the succession are transmitted from the moment of the death of the decedent. (657a) ART. 947. The legatee or devisee acquires a right to the pure and simple legacies or devisees from the death of the testator, and transmits it to his heirs. (881a) The principle of transmission as of the time of the predecessor's death is basic in our Civil Code, and is supported by other related articles. Thus, the capacity of the heir is determined as of the time the decedent died (Art. 1034); the legitime is to be computed as of the same moment(Art. 908), and so is the in officiousness of the donation inter vivos (Art. 771). Similarly, the legacies of credit and remission are valid only in the amount due and outstanding at the death of the testator (Art. 935),and the fruits accruing after that instant are deemed to pertain to the legatee (Art. 948). As a consequence of this fundamental rule of succession, the heirs of Jose V. Ramirez acquired his undivided share in the Sta. Cruz property from the moment of his death, and from that instant, they became co-owners in the aforesaid property, together with the original surviving co-owners of their decedent (causante). A co-owner of an undivided share is necessarily a co-owner of the whole. Wherefore, any one of the Ramirez heirs, as such co-owner, became entitled to exercise the right of legal redemption (retracto de comuneros) as soon as another co-owner (Maria Garnier Vda. de Ramirez) had sold her undivided share to a stranger, Manuel Uy & Sons, Inc. This right of redemption vested exclusively in consideration of the redemptioner's share which the law nowhere takes into account. The situation is in no wise altered by the existence of a judicial administrator of the estate of Jose V. Ramirez while under the Rules of Court the administrator has the right to the possession of the real and personal estate of the deceased, so far as needed for the payment of the decedent's debts and the expenses of administration (sec. 3, Rule 85), and the administrator may bring or defend actions for the recovery or protection of the property or rights of the deceased (sec. 2, Rule 88), such rights of possession and administration do not include the right of legal redemption of the undivided share sold to Uy & Company by Mrs. Garnier Ramirez. The reason is obvious: this right of legal redemption only came into existence when the sale to Uy & Sons, Inc. was perfected, eight (8) years after the death of Jose V. Ramirez, and formed no part of his estate. The redemption right vested in the heirs originally, in their individual capacity, they did not derivatively acquire it from their decedent, for when Jose V. Ramirez died, none of the other co-owners of the Sta. Cruz property had as yet sold his undivided share to a stranger. Hence, there was nothing to redeem and no right of redemption; and if the late Ramirez had no such right at his death, he could not transmit it to his own heirs. Much less could Ramirez acquire such right of redemption eight years after his death, when the sale to Uy & Sons, Inc. was made; because death extinguishes civil personality, and, therefore, all further juridical capacity to acquire or transmit rights and obligations of any kind (Civil Code of the Phil., Art. 42). It is argued that the actual share of appellant Mrs. Butte in the estate of Jose V. Ramirez has not been specifically determined as yet, that it is still contingent; and that the liquidation of estate of Jose V. Ramirez may require the alienation of the decedent's undivided portion in the Sta. Cruz property, in which event Mrs. Butte would have no interest in said undivided portion. Even if it were true, the fact would remain that so long as that undivided share remains in the estate, the heirs of Jose V. Ramirez own it, as the deceased did own it before his demise, so that his heirs are now as much co-owners of the Sta. Cruz property as Jose V. Ramirez was himself a co-owner thereof during his lifetime. As co-owners of the property, the heirs of Jose V. Ramirez, or any one of them, became personally vested with right of legal redemption as soon as Mrs. Garnier sold her own pro-indiviso interest to Uy & Sons. Even if subsequently, the undivided share of Ramirez (and of his heirs) should eventually be sold to satisfy the creditors of the estate, it would not destroy their ownership of it before the sale, but would only convey or transfer it as in turn sold (of it actually is sold) to pay his creditors. Hence, the right of any of the Ramirez heirs to redeem the Garnier share will not be retroactively affected. All that the law requires is that the legal redemptioner should be a co-owner at the time the undivided share of another co-owner is sold to a stranger. Whether or not the redemptioner will continue being a co-owner after exercising the legal redemptioner is irrelevant for the purposes of law. Nor it can be argued that if the original share of Ramirez is sold by the administrator, his heirs would stand in law as never having acquired that share. This would only be true if the inheritance is repudiated or the heir's quality as such is voided. But where the heirship is undisputed, the purchaser of hereditary property is not deemed to have acquired the title directly from the deceased Ramirez, because a dead man can not convey title, nor from the administrator who owns no part of the estate; the purchaser can only derive his title from the Ramirez heirs, represented by the administrator, as their trustee or legal representative. The right of appellant Angela M. Butte to make the redemption being established, the next point of inquiry is whether she had made or tendered the redemption price within the 30 days from notices as prescribed by law. This period, be it noted, is peremptory, because the policy of the law is not to leave the purchaser's title in uncertainty beyond the established 30-day period. In considering whether or not the offer to redeem was timely, we think that the notice given by the vendee (buyer) should not be taken into account. The text of Article 1623 clearly and expressly prescribes that the thirty days for making the redemption are to be counted from notice in writing by the vendor. Under the old law (Civ. Code of 1889, Art. 1524), it was immaterial who gave the notice; so long as the redeeming co-owner learned of the alienation in favor of the stranger, the redemption period began to run. It is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that method must be deemed exclusive (39 Am. Jur., 237; Payne vs. State, 12 S.W. [2d] 528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275) Why these provisions were inserted in the statute we are not informed, but we may assume until the contrary is shown, that a state of facts in respect thereto existed, which warranted the legislature in so legislating. The reasons for requiring that the notice should be given by the seller, and not by the buyer, are easily divined. The seller of an undivided interest is in the best position to know who are his co-owners that under the law must be notified of the sale. Also, the notice by the seller removes all doubts as to the fact of the sale, its perfection; and its validity, the notice being a reaffirmation thereof, so that the party need not entertain doubt that the seller may still contest the alienation. This assurance would not exist if the notice should be given by the buyer. The notice which became operative is that given by Mrs. Chambers, in her capacity as attorney-in-fact of the vendor Marie Garnier Vda. de Ramirez. Under date of December 11, 1958, she wrote the Administrator Bank of the Philippine Islands that her principal's one-sixth (1/6) share in the Sta. Cruz property had been sold to Manuel Uy & Sons, Inc. for P500,000.00. The Bank received this notice on December 15, 1958, and on the same day endorsed it to Mrs. Butte, care of Delgado, Flores and Macapagal (her attorneys), who received the same on December 16, 1958. Mrs. Butte tendered redemption and upon the vendee's refusal, judicially consigned the price of P500,000.00 on January 15, 1959. The latter date was the last one of the thirty days allowed by the Code for the redemption, counted by excluding December 16, 1958 and including January 15, 1959, pursuant to Article 13 of the Civil Code. Therefore, the redemption was made in due time. The date of receipt of the vendor's notice by the Administrator Bank (December 15) can not be counted as determining the start of thirty days; for the Administrator of the estate was not a proper redemptioner, since, as previously shown, the right to redeem the share of Marie Garnier did not form part of the estate of Jose V. Ramirez. We find no jurisdiction for appellant's claim that the P500,000,00. paid by Uy & Sons, Inc. for the Garnier share is grossly excessive. Gross excess cannot be predicated on mere individual estimates of market price by a single realtor. The redemption and consignation having been properly made, the Uy counterclaim for damages and attorney's fees predicated on the assumption that plaintiff's action was clearly unfounded, becomes untenable. PREMISES CONSIDERED, the judgment appealed from is hereby reversed and set aside, and another one entered: (a) Declaring the consignation of P500,000,00 made by appellant Angela M. Butte duly and properly made; (b) Declaring that said appellant properly exercised in due time the legal redemption of the one-sixth (1/6) undivided portion of the land covered by Certificate of Title No. 59363 of the Office of the Register of Deeds of the City of Manila, sold on December 9, 1958 by Marie Garnier Vda. de Ramirez to appellant Manuel Uy & Sons, Inc. (c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned price and to convey to Angela M. Butte the undivided portion above referred to, within 30 days from the time our decision becomes final, and subsequently to account for the rentals and fruits of the redeemed share from and after January 15, 1958, until its conveyance; and. (d) Ordering the return of the records to the court of origin for further proceedings conformable to this opinion. Without finding as to costs. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Dizon, JJ., concur. Paredes and De Leon, JJ., took no part. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-4963 January 29, 1953 MARIA USON, plaintiff-appellee, vs. MARIA DEL ROSARIO, CONCEPCION NEBREDA, CONRADO NEBREDA, DOMINADOR NEBREDA, AND FAUSTINO NEBREDA, Jr., defendants- appellants. Priscilo Evangelista for appellee. Brigido G. Estrada for appellant. BAUTISTA ANGELO, J .: This is an action for recovery of the ownership and possession of five (5) parcels of land situated in the Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario and her four children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda, who are all of minor age, before the Court of First Instance of Pangasinan. Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands involved in this litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However, plaintiff claims that when Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took possession illegally of said lands thus depriving her of their possession and enjoyment. Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson and her husband, the late Faustino Nebreda, executed a public document whereby they agreed to separate as husband and wife and, in consideration of their separation, Maria Uson was given a parcel of land by way of alimony and in return she renounced her right to inherit any other property that may be left by her husband upon his death (Exhibit 1). After trial, at which both parties presented their respective evidence, the court rendered decision ordering the defendants to restore to the plaintiff the ownership and possession of the lands in dispute without special pronouncement as to costs. Defendants interposed the present appeal. There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, former owner of the five parcels of lands litigated in the present case. There is likewise no dispute that Maria del Rosario, one of the defendants-appellants, was merely a common-law wife of the late Faustino Nebreda with whom she had four illegitimate children, her now co-defendants. It likewise appears that Faustino Nebreda died in 1945 much prior to the effectivity of the new Civil Code. With this background, it is evident that when Faustino Nebreda died in 1945 the five parcels of land he was seized of at the time passed from the moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil Code).As this Court aptly said, "The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the rights of inheritance of Maria Uson over the lands in question became vested. The claim of the defendants that Maria Uson had relinquished her right over the lands in question because she expressly renounced to inherit any future property that her husband may acquire and leave upon his death in the deed of separation they had entered into on February 21, 1931, cannot be entertained for the simple reason that future inheritance cannot be the subject of a contract nor can it be renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531). But defendants contend that, while it is true that the four minor defendants are illegitimate children of the late Faustino Nebreda and under the old Civil Code are not entitled to any successional rights, however, under the new Civil Code which became in force in June, 1950, they are given the status and rights of natural children and are entitled to the successional rights which the law accords to the latter (article 2264 and article 287, new Civil Code), and because these successional rights were declared for the first time in the new code, they shall be given retroactive effect even though the event which gave rise to them may have occurred under the prior legislation (Article 2253, new Civil Code). There is no merit in this claim. Article 2253 above referred to provides indeed that rights which are declared for the first time shall have retroactive effect even though the event which gave rise to them may have occurred under the former legislation, but this is so only when the new rights do not prejudice any vested or acquired right of the same origin. Thus, said article provides that "if a right should be declared for the first time in this Code, it shall be effective at once, even though the act or event which gives rise thereto may have been done or may have occurred under the prior legislation, provided said new right does not prejudice or impair any vested or acquired right, of the same origin." As already stated in the early part of this decision, the right of ownership of Maria Uson over the lands in question became vested in 1945 upon the death of her late husband and this is so because of the imperative provision of the law which commands that the rights to succession are transmitted from the moment of death (Article 657, old Civil Code). The new right recognized by the new Civil Code in favor of the illegitimate children of the deceased cannot, therefore, be asserted to the impairment of the vested right of Maria Uson over the lands in dispute. As regards the claim that Maria Uson, while her deceased husband was lying in state, in a gesture of pity or compassion, agreed to assign the lands in question to the minor children for the reason that they were acquired while the deceased was living with their mother and Maria Uson wanted to assuage somewhat the wrong she has done to them, this much can be said; apart from the fact that this claim is disputed, we are of the opinion that said assignment, if any, partakes of the nature of a donation of real property, inasmuch as it involves no material consideration, and in order that it may be valid it shall be made in a public document and must be accepted either in the same document or in a separate one (Article 633, old Civil Code). Inasmuch as this essential formality has not been followed, it results that the alleged assignment or donation has no valid effect. WHEREFORE, the decision appealed from is affirmed, without costs. Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, Jugo and Labrador, JJ., concur. BLAS VS. SANTOS 1 SCRA 899 SCRA 899 Succession Promise Sometime before 1898, Simeon Blas married Marta Cruz with whom he had three children. He also had grandchildren from his children with Marta Cruz. In 1898, Marta Cruz died. In 1899, Blas married Maxima Santos (they had no children) but the properties he and his former wife acquired during the first marriage were not liquidated. In 1936, Simeon Blas executed a will disposing half of his properties in favor of Maxima the other half for payment of debts, Blas also named a few devisees and legatees therein. In lieu of this, Maxima executed a document whereby she intimated that she understands the will of her husband; that she promises that shell be giving, upon her death, one-half of the properties shell be acquiring to the heirs and legatees named in the will of his husband; that she can select or choose any of them depending upon the respect, service, and treatment accorded to her by said legatees/heirs/devisees. In 1937, Simeon Blas died. In 1956, Maxima died and Rosalina Santos became administratrix of her estate. In the same year, Maria Gervacio Blas, child of Simeon Blas in his first marriage, together with three other grandchildren of Simeon Blas (heirs of Simeon Blas), learned that Maxima did not fulfill her promise as it was learned that Maxima only disposed not even one-tenth of the properties she acquired from Simeon Blas. The heirs are now contending that they did not partition Simeon Blas property precisely because Maxima promised that theyll be receiving properties upon her death. ISSUE: Whether or not the heirs should receive properties based on the promise of Maxima. HELD: Yes. The promise is valid and enforceable upon her death. Though it is not a will (it lacks the formality) nor a donation, it is still enforceable because said promise was actually executed to avoid litigation (partition of Simeon Blas estate) hence it is a compromise. It is not disputed that this document was prepared at the instance of Simeon Blas for the reason that the conjugal properties of his first marriage had not been liquidated. It is an obligation or promise made by the maker to transmit one-half of her share in the conjugal properties acquired with her husband, which properties are stated or declared to be conjugal properties in the will of the husband. Justice Bautista Angelo, dissenting: It should be noted that Maxima Santos promise to transmit is predicated on the condition that she can freely choose and select from among the heirs and legatees of her husband those to whom she would like to give and bequeath depending on the respect, service and companionship that they may render to her. Her commitment is not an absolute promise to give to all but only to whom she may choose and select. And here this promise has been substantially complied with when she disposed one-tenth of the property to some legatees named in Simeons will. PhilippineLaw.info Jurisprudence 1970 June PhilippineLaw.info Jurisprudence SCRA Vol. 33
THIRD DIVISION [G.R. No. 125888. August 13, 1998] SPOUSES ERNESTO and EVELYN SICAD, petitioners, vs. COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA and JESUS ANTONIO VALDERRAMA, respondents. DECISION 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 Vda. De Montinola of the City of Iloilo as either inter vivos or mortis causa. That deed, entitled DEED OF DONATION INTER VIVOS,i[1] was executed by Montinola on December 11, 1979. It named as donees her grandchildren, namely: Catalino Valderrama, Judy Cristina M. Valderrama and Jesus Antonio Valderrama; and treated of a parcel of land, Lot 3231 of the Cadastral Survey of Panay, Capiz, covered by Transfer Certificate Title No. T-16105 in the name of Montinola. The deed also contained the signatures of the donees in acknowledgment of the acceptance of the donation. Montinolas Secretary, Gloria Salvilla, afterwards presented the deed for recording in the Property Registry, and the Register of Deeds cancelled TCT No. T-16105 (the donors title) and, in it place, issued TCT No. T-16622 on February 7, 1980, in the names of the donees.ii[2] Montinola however retained the owners 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,iii[3] and caused it to be annotated as an adverse claim on TCT No. T-16622 (issued, as aforestated, in her grandchildrens 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 (Montinolas 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 grandmothers intention to recover the donated property, since she had not pursued the matter of its revocation after having it annotated as an adverse claim. The case, originally treated as a special proceeding, was subsequently considered by the lower Court as an ordinary civil action in view of the allegations and issues raised in the pleadings. Pre-trial was had, followed by trial on the merits which was concluded with the filing of the parties memoranda. The Trial Court then rendered judgment on March 27, 1991, holding that the donation was indeed one inter vivos, and dismissing Aurora Montinolas petition for lack of merit.iv[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,v[5] while appeal was pending. Shortly after Montinolas demise, a Manifestation and Motion dated March 31, 1993 was filed by Ernesto Sicad and Evelyn Bofill-Sicad, herein petitioners,vi[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. Valderrma. They declared that they were not interested in pursuing the case, and asked that the appeal be withdrawn. Montinolas 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 M. de Leon, Estela M. Jaen and Teresita M. Valderama as plaintiffs-appellant in place of the late Aurora Montinola, as well as the joinder of the spouses Ernesto and Evelyn Bofill-Sicad as additional appellants;vii[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;viii[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.ix[9] The Sicad Spouses have appealed to this Court; and here, they contend that the following errors were committed by the Appellate Tribunal, to wit: 1) ** in ruling that the donation was inter vivos and in not giving due weight to the revocation of the donation; and 2) ** in not ordering that the case be remanded for further reception of evidence.x[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 set 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 donors 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 donors reservation of the right of usufruct, that the donors 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.xi[11] The Reply of the Sicad Spouses dated March 14, 1997 reiterates their thesis that the donation was mortis causa, that the circumstances surrounding the execution of the deed, and the subsequent actions of the donor incontrovertibly signify the donors 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.xii[12] A Rejoinder dated April 3, 1997 was then submitted by the Valderamas, traversing the assertions of the Reply.xiii[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 Montinols lawyer (Atty. Treas) 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 poperty 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.xiv[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.xv[15] Not only did Aurora Montinola ordered 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 explicitly authorized in the deed itself, to possess he property, enjoy its fruits and otherwise exercise the rights of dominion, paying the property taxes as they fell due all these she did until she transferred the property to the Sicad Spouses on July 10, 1990. She did not give the new certificate of title to the ostensible donees but retained 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 donors decease. And consistent with these acts denoting retention of ownership of the property was Montinolas openly expressed view that the donation was ineffectual and could not be given affect 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 execution 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 petitioner herein.xvi[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,xvii[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 Davids 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 similar issue, Bonsato v. Court of Appeals,xviii[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, especially provided that without knowledge and consent of the donor, the donated properties could not be disposed of in any way,; thereby denying to the transferees the most essential attribute of ownership, the power to dispose of the properties. A donation which purports to be one inter vivos but withholds form the donee that right to dispose of the donated property during the donors 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.xix[19] In the instant case, nothing of any consequence was transferred by the deed of donation in question to Montinolas 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 Montinolas 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 donors demise. The case of Alejandro v. Geraldezxx[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 the 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 donors 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 Appealsxxi[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 donors ownership and enjoyment of the property. It is also error to suppose that the donation under review should be deemed one inter vivos simply because founded on considerations of love and affection. In Alejandro v. Geraldez, supra,xxii[22] this Court also observed that the fact that the donation is given in consideration of love and affection ** is not a characteristic of donation 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 to the donees and services rendered by the latter,is of no particular significance in determining whether the deeds, Exh. 1 and 2, constitute transfers inter vivos or not, because a legacy may have identical motivation.xxiii[23] Finally, it is germane to advert to the legal principle in Article 1378 of the Civil Code to the effect that in the case of doubt relative to a gratuitous contract, the construction must be that entailing the least transmission of rights and interests.xxiv[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 Deed 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. Romero, Kapunan, and Purisima, JJ., concur.
G.R. No. L-24561, Dizon-Rivera v. Dizon et al., 33 SCRA 554 Republic of the Philippines SUPREME COURT Manila EN BANC DECISION June 30, 1970 G.R. No. L-24561 MARINA DIZON-RIVERA, executrix-appellee, vs. ESTELA DIZON, TOMAS V. DIZON, BERNARDITA DIZON, JOSEFINA DIZON, ANGELINA DIZON and LILIA DIZON, oppositors-appellants. Punzalan, Yabut & Eusebio for executrix-appellee. Leonardo Abola for oppositors-appellants. Teehankee, J .: Appeal from orders of the Court of First Instance of Pampanga approving the Executrix-appellee's project of partition instead of Oppositors-Appellants' proposed counter-project of partition. 1 On January 28, 1961, the testatrix, Agripina J. Valdez, a widow, died in Angeles, Pampanga, and was survived by seven compulsory heirs, to wit, six legitimate children named Estela Dizon, Tomas V. Dizon, Bernardita Dizon, Marina Dizon (herein executrix-appellee), Angelina Dizon and Josefina Dizon, and a legitimate granddaughter named Lilia Dizon, who is the only legitimate child and heir of Ramon Dizon, a pre- deceased legitimate son of the said decedent. Six of these seven compulsory heirs (except Marina Dizon, the executrix-appellee) are the oppositors-appellants. The deceased testatrix left a last will executed on February 2, 1960 and written in the Pampango dialect. Named beneficiaries in her will were the above-named compulsory heirs, together with seven other legitimate grandchildren, namely Pablo Rivera, Jr., Gilbert D. Garcia, Cayetano Dizon, Francisco Rivera, Agripina Ayson, Jolly Jimenez and Laureano Tiambon. In her will, the testatrix divided, distributed and disposed of all her properties appraised at P1,801,960.00 (except two small parcels of land appraised at P5,849.60, household furniture valued at P2,500.00, a bank deposit in the sum of P409.95 and ten shares of Pampanga Sugar Development Company valued at P350.00) among her above-named heirs. Testate proceedings were in due course commenced 2 and by order dated March 13, 1961, the last will and testament of the decedent was duly allowed and admitted to probate, and the appellee Marina Dizon- Rivera was appointed executrix of the testatrix' estate, and upon her filing her bond and oath of office, letters testamentary were duly issued to her. After the executrix filed her inventory of the estate, Dr. Adelaido Bernardo of Angeles, Pampanga was appointed commissioner to appraise the properties of the estate. He filed in due course his report of appraisal and the same was approved in toto by the lower court on December 12, 1963 upon joint petition of the parties. The real and personal properties of the testatrix at the time of her death thus had a total appraised value of P1,811,695.60, and the legitime of each of the seven compulsory heirs amounted to P129,362.11. 3 (/7 of the half of the estate reserved for the legitime of legitimate children and descendants). 4 In her will, the testatrix "commanded that her property be divided" in accordance with her testamentary disposition, whereby she devised and bequeathed specific real properties comprising practically the entire bulk of her estate among her six children and eight grandchildren. The appraised values of the real properties thus respectively devised by the testatrix to the beneficiaries named in her will, are as follows: 1. Estela Dizon ....................................... P 98,474.80 2. Angelina Dizon .................................. 106,307.06 3. Bernardita Dizon .................................. 51,968.17 4. Josefina Dizon ...................................... 52,056.39 5. Tomas Dizon ....................................... 131,987.41 6. Lilia Dizon .............................................. 72,182.47 7. Marina Dizon ..................................... 1,148,063.71 8. Pablo Rivera, Jr. ...................................... 69,280.00 9. Lilia Dizon, Gilbert Garcia, Cayetano Dizon, Francisco Rivera, Agripina Ayson, Dioli or Jolly Jimenez, Laureano Tiamzon ................. 72,540.00 Total Value ...................... P1,801,960.01 The executrix filed her project of partition dated February 5, 1964, in substance adjudicating the estate as follows: (1) with the figure of P129,254.96 as legitime for a basis Marina (exacultrix-appellee) and Tomas (appellant) are admittedly considered to have received in the will more than their respective legitime, while the rest of the appellants, namely, Estela, Bernardita, Angelina, Josefina and Lilia received less than their respective legitime; (2) thus, to each of the latter are adjudicated the properties respectively given them in the will, plus cash and/or properties, to complete their respective legitimes to P129,254.96; (3) on the other hand, Marina and Tomas are adjudicated the properties that they received in the will less the cash and/or properties necessary to complete the prejudiced legitime mentioned in number 2 above; (4) the adjudications made in the will in favor of the grandchildren remain untouched. On the other hand oppositors submitted their own counter-project of partition dated February 14, 1964, wherein they proposed the distribution of the estate on the following basis: (a) all the testamentary dispositions were proportionally reduced to the value of one-half () of the entire estate, the value of the said one-half () amounting to P905,534.78; (b) the shares of the Oppositors- Appellants should consist of their legitime, plus the devises in their favor proportionally reduced; (c) in payment of the total shares of the appellants in the entire estate, the properties devised to them plus other properties left by the Testatrix and/or cash are adjudicated to them; and (d) to the grandchildren who are not compulsory heirs are adjudicated the properties respectively devised to them subject to reimbursement by Gilbert D. Garcia, et al., of the sums by which the devise in their favor should be proportionally reduced. Under the oppositors' counter-project of partition, the testamentary disposition made by the testatrix of practically her whole estate of P1,801,960.01, as above stated, were proposed to be reduced to the amounts set forth after the names of the respective heirs and devisees totalling one-half thereof as follows: 1. Estela Dizon ........................................... P 49,485.56 2. Angelina Dizon ......................................... 53,421.42 3. Bernardita Dizon ....................................... 26,115.04 4. Josefina Dizon .......................................... 26,159.38 5. Tomas V. Dizon ......................................... 65,874.04 6. Lilia Dizon .................................................. 36,273.13 7. Marina Dizon ........................................... 576,938.82 8. Pablo Rivera, Jr. ......................................... 34,814.50 9. Grandchildren Gilbert Garcia et al .......... 36,452.80 T o t a l ................................................... P905,534.78 while the other half of the estate (P905,534.78) would be deemed as constituting the legitime of the executrix- appellee and oppositors-appellants, to be divided among them in seven equal parts of P129,362.11 as their respective legitimes. The lower court, after hearing, sustained and approved the executrix' project of partition, ruling that "(A)rticles 906 and 907 of the New Civil Code specifically provide that when the legitime is impaired or prejudiced, the same shall be completed and satisfied. While it is true that this process has been followed and adhered to in the two projects of partition, it is observed that the executrix and the oppositors differ in respect to the source from which the portion or portions shall be taken in order to fully restore the impaired legitime. The proposition of the oppositors, if upheld, will substantially result in a distribution of intestacy, which is in controversion of Article 791 of the New Civil Code" adding that "the testatrix has chosen to favor certain heirs in her will for reasons of her own, cannot be doubted. This is legally permissible within the limitation of the law, as aforecited." With reference to the payment in cash of some P230,552.38, principally by the executrix as the largest beneficiary of the will to be paid to her five co-heirs, the oppositors (excluding Tomas Dizon), to complete their impaired legitimes, the lower court ruled that "(T)he payment in cash so as to make the proper adjustment to meet with the requirements of the law in respect to legitimes which have been impaired is, in our opinion, a practical and valid solution in order to give effect to the last wishes of the testatrix." From the lower court's orders of approval, oppositors- appellants have filed this appeal, and raise anew the following issues: . 1. Whether or not the testamentary dispositions made in the testatrix' will are in the nature of devises imputable to the free portion of her estate, and therefore subject to reduction; 2. Whether the appellants are entitled to the devise plus their legitime under Article 1063, or merely to demand completion of their legitime under Article 906 of the Civil Code; and 3. Whether the appellants may be compelled to accept payment in cash on account of their legitime, instead of some of the real properties left by the Testatrix; which were adversely decided against them in the proceedings below. The issues raised present a matter of determining the avowed intention of the testatrix which is "the life and soul of a will." 5 In consonance therewith, our Civil Code included the new provisions found in Articles 788 and 791 thereof that "(I)f a testamentary disposition admits of different interpretations, in case of doubt, that interpretation by which the disposition is to be operative shall be preferred" and "(T)he words of a will are to receive an interpretation which will give to every expression some effect, rather than one which will render any of the expressions inoperative; and of two modes of interpreting a will, that is to be preferred which will prevent intestacy." In Villanueva vs. Juico 6 for violation of these rules of interpretation as well as of Rule 123, section 59 of the old Rules of Court, 7 the Court, speaking through Mr. Justice J.B.L. Reyes, overturned the lower court's decision and stressed that "the intention and wishes of the testator, when clearly expressed in his will, constitute the fixed law of interpretation, and all questions raised at the trial, relative to its execution and fulfillment, must be settled in accordance therewith, following the plain and literal meaning of the testator's words, unless it clearly appears that his intention was otherwise." 8 The testator's wishes and intention constitute the first and principal law in the matter of testaments, and to paraphrase an early decision of the Supreme Court of Spain, 9 when expressed clearly and precisely in his last will amount to the only law whose mandate must imperatively be faithfully obeyed and complied with by his executors, heirs and devisees and legatees, and neither these interested parties nor the courts may substitute their own criterion for the testator's will. Guided and restricted by these fundamental premises, the Court finds for the appellee. 1. Decisive of the issues at bar is the fact that the testatrix' testamentary disposition was in the nature of a partition of her estate by will. Thus, in the third paragraph of her will, after commanding that upon her death all her obligations as well as the expenses of her last illness and funeral and the expenses for probate of her last will and for the administration of her property in accordance with law, be paid, she expressly provided that "it is my wish and I command that my property be divided" in accordance with the dispositions immediately thereafter following, whereby she specified each real property in her estate and designated the particular heir among her seven compulsory heirs and seven other grandchildren to whom she bequeathed the same. This was a valid partition 10 of her estate, as contemplated and authorized in the first paragraph of Article 1080 of the Civil Code, providing that "(S)hould a person make a partition of his estate by an act inter vivos or by will, such partition shall be respected, insofar as it does not prejudice the legitime of the compulsory heirs." This right of a testator to partition his estate is subject only to the right of compulsory heirs to their legitime. The Civil Code thus provides the safeguard for the right of such compulsory heirs: ART. 906. Any compulsory heir to whom the testator has left by any title less than the legitime belonging to him may demand that the same be fully satisfied. ART. 907. Testamentary dispositions that impair or diminish the legitime of the compulsory heirs shall be reduced on petition of the same, insofar as they may be inofficious or excessive. This was properly complied with in the executrix- appellee's project of partition, wherein the five oppositors-appellants namely Estela, Bernardita, Angelina, Josefina and Lilia, were adjudicated the properties respectively distributed and assigned to them by the testatrix in her will, and the differential to complete their respective legitimes of P129,362.11 each were taken from the cash and/or properties of the executrix-appellee, Marina, and their co-oppositor- appellant, Tomas, who admittedly were favored by the testatrix and received in the partition by will more than their respective legitimes. 2. This right of a testator to partition his estate by will was recognized even in Article 1056 of the old Civil Code which has been reproduced now as Article 1080 of the present Civil Code. The only amendment in the provision was that Article 1080 "now permits any person (not a testator, as under the old law) to partition his estate by act inter vivos." 11 This was intended to repeal the then prevailing doctrine 12 that for a testator to partition his estate by an act inter vivos, he must first make a will with all the formalities provided by law. Authoritative commentators doubt the efficacy of the amendment 13 but the question does not here concern us, for this is a clear case of partition by will, duly admitted to probate, which perforce must be given full validity and effect. Aside from the provisions of Articles 906 and 907 above quoted, other codal provisions support the executrix-appellee's project of partition as approved by the lower court rather than the counter- project of partition proposed by oppositors-appellants whereby they would reduce the testamentary disposition or partition made by the testatrix to one-half and limit the same, which they would consider as mere devises or legacies, to one-half of the estate as the disposable free portion, and apply the other half of the estate to payment of the legitimes of the seven compulsory heirs. Oppositors' proposal would amount substantially to a distribution by intestacy and pro tanto nullify the testatrix' will, contrary to Article 791 of the Civil Code. It would further run counter to the provisions of Article 1091 of the Civil Code that "(A) partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him." 3. In Habana vs. Imbo, 14 the Court upheld the distribution made in the will of the deceased testator Pedro Teves of two large coconut plantations in favor of his daughter, Concepcion, as against adverse claims of other compulsory heirs, as being a partition by will, which should be respected insofar as it does not prejudice the legitime of the compulsory heirs, in accordance with Article 1080 of the Civil Code. In upholding the sale made by Concepcion to a stranger of the plantations thus partitioned in her favor in the deceased's will which was being questioned by the other compulsory heirs, the Court ruled that "Concepcion Teves by operation of law, became the absolute owner of said lots because 'A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him' (Article 1091, New Civil Code), from the death of her ancestors, subject to rights and obligations of the latter, and, she can not be deprived of her rights thereto except by the methods provided for by law (Arts. 657, 659, and 661, Civil Code). 15 Concepcion Teves could, as she did, sell the lots in question as part of her share of the proposed partition of the properties, especially when, as in the present case, the sale has been expressly recognized by herself and her co-heirs ..." 4. The burden of oppositors' contention is that the testamentary dispositions in their favor are in the nature of devises of real property, citing the testatrix' repeated use of the words "I bequeath" in her assignment or distribution of her real properties to the respective heirs. From this erroneous premise, they proceed to the equally erroneous conclusion that "the legitime of the compulsory heirs passes to them by operation of law and that the testator can only dispose of the free portion, that is, the remainder of the estate after deducting the legitime of the compulsory heirs ... and all testamentary dispositions, either in the nature of institution of heirs or of devises or legacies, have to be taken from the remainder of the testator's estate constituting the free portion." 16 Oppositors err in their premises, for the adjudications and assignments in the testatrix' will of specific properties to specific heirs cannot be considered all devises, for it clearly appear from the whole context of the will and the disposition by the testatrix of her whole estate (save for some small properties of little value already noted at the beginning of this opinion) that her clear intention was to partition her whole estate through her will. The repeated use of the words "I bequeath" in her testamentary dispositions acquire no legal significance, such as to convert the same into devises to be taken solely from the free one-half disposable portion of the estate. Furthermore, the testatrix' intent that her testamentary dispositions were by way of adjudications to the beneficiaries as heirs and not as mere devisees, and that said dispositions were therefore on account of the respective legitimes of the compulsory heirs is expressly borne out in the fourth paragraph of her will, immediately following her testamentary adjudications in the third paragraph in this wise: "FOURTH: I likewise command that in case any of those I named as my heirs in this testament any of them shall die before I do, his forced heirs under the law enforced at the time of my death shall inherit the properties I bequeath to said deceased." 17 Oppositors' conclusions necessarily are in error. The testamentary dispositions of the testatrix, being dispositions in favor of compulsory heirs, do not have to be taken only from the free portion of the estate, as contended, for the second paragraph of Article 842 of the Civil Code precisely provides that "(O)ne who has compulsory heirs may dispose of his estate provided he does not contravene the provisions of this Code with regard to the legitime of said heirs." And even going by oppositors' own theory of bequests, the second paragraph of Article 912 Civil Code covers precisely the case of the executrix-appellee, who admittedly was favored by the testatrix with the large bulk of her estate in providing that "(T)he devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime." For "diversity of apportionment is the usual reason for making a testament; otherwise, the decedent might as well die intestate." 18 Fundamentally, of course, the dispositions by the testatrix constituted a partition by will, which by mandate of Article 1080 of the Civil Code and of the other cited codal provisions upholding the primacy of the testator's last will and testament, have to be respected insofar as they do not prejudice the legitime of the other compulsory heirs. Oppositors' invoking of Article 1063 of the Civil Code that "(P)roperty left by will is not deemed subject to collation, if the testator has not otherwise provided, but the legitime shall in any case remain unimpaired" and invoking of the construction thereof given by some authorities that "'not deemed subject to collation' in this article really means not imputable to or chargeable against the legitime", while it may have some plausibility 19 in an appropriate case, has no application in the present case. Here, we have a case of a distribution and partition of the entire estate by the testatrix, without her having made any previous donations during her lifetime which would require collation to determine the legitime of each heir nor having left merely some properties by will which would call for the application of Articles 1061 to 1063 of the Civil Code on collation. The amount of the legitime of the heirs is here determined and undisputed. 5. With this resolution of the decisive issue raised by oppositors-appellants, the secondary issues are likewise necessarily resolved. Their right was merely to demand completion of their legitime under Article 906 of the Civil Code and this has been complied with in the approved project of partition, and they can no longer demand a further share from the remaining portion of the estate, as bequeathed and partitioned by the testatrix principally to the executrix-appellee. Neither may the appellants legally insist on their legitime being completed with real properties of the estate instead of being paid in cash, per the approved project of partition. The properties are not available for the purpose, as the testatrix had specifically partitioned and distributed them to her heirs, and the heirs are called upon, as far as feasible to comply with and give effect to the intention of the testatrix as solemnized in her will, by implementing her manifest wish of transmitting the real properties intact to her named beneficiaries, principally the executrix-appellee. The appraisal report of the properties of the estate as filed by the commissioner appointed by the lower court was approved in toto upon joint petition of the parties, and hence, there cannot be said to be any question - and none is presented - as to fairness of the valuation thereof or that the legitime of the heirs in terms of cash has been understated. The plaint of oppositors that the purchasing value of the Philippine peso has greatly declined since the testatrix' death in January, 1961 provides no legal basis or justification for overturning the wishes and intent of the testatrix. The transmission of rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code) and accordingly, the value thereof must be reckoned as of then, as otherwise, estates would never be settled if there were to be a revaluation with every subsequent fluctuation in the values of the currency and properties of the estate. There is evidence in the record that prior to November 25, 1964, one of the oppositors, Bernardita, accepted the sum of P50,000.00 on account of her inheritance, which, per the parties' manifestation, 20 "does not in any way affect the adjudication made to her in the projects of partition of either party as the same is a mere advance of the cash that she should receive in both projects of partition." The payment in cash by way of making the proper adjustments in order to meet the requirements of the law on non-impairment of legitimes as well as to give effect to the last will of the testatrix has invariably been availed of and sanctioned. 21 That her co-oppositors would receive their cash differentials only now when the value of the currency has declined further, whereas they could have received them earlier, like Bernardita, at the time of approval of the project of partition and when the peso's purchasing value was higher, is due to their own decision of pursuing the present appeal. ACCORDINGLY, the orders appealed from are hereby affirmed. Without cost. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Barredo and Villamor, JJ., concur. # Footnotes 1 Appeal was directed to this Court, as the value of the estate exceeded P200,000.00, in accordance with the then subsisting provisions of Sec. 17, third paragraph, subsec. 5, now eliminated by Rep. Act 5440 enacted on Sept. 9, 1968. 2 Sp. Proc. No. 1582 of the Court of First Instance of Pampanga. 3 These figures are those of oppositors-appellants which are adopted for purposes of this decision. Per appellee's brief, p. 3, executrix-appellee sums up the value of the estate P1,809,569.55, and therefore the legitime of each of the seven (7) forced heirs at P129,254.96. While there is thus a slight difference in the valuation of the estate and legitime of the forced heirs (a difference of P2,126.05 for the whole estate and of P107.15 in each legitime), the same is of no importance... because the issue involved in this appeal is not the value of the estate but the manner it should be distributed among the heirs." (Notes in parentheses supplied) 4 Art. 888, Civil Code. 5 Santos vs. Madarang, 27 Phil. 209. 6 L-15737, Feb. 28, 1962; 4 SCRA 550. 7 "SEC. 59. Instrument construed so as to give effect to all provisions. - In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." (now Rule 130, sec. 9) 8 Citing in In re Estate of Calderon, 26 Phil. 333. 9 Tribunal Supremo of Spain, sentencia of 20 Marzo 1918. 10 ART. 1079. Partition, in general, is the separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself may be divided, or its value. (n) 11 Romero vs. Villamor, 102 Phil. 641 (1957). 12 Legasto vs. Versoza, 54 Phil. 766 (1930); Fajardo vs. Fajardo, 54 Phil. 842 (1930). 13 Reyes and Puno, Vol. III, p. 216; Tolentino, Vol. III, pp. 538-540. 14 L-15598 and L-16726, March 31, 1964; 10 SCRA 471. 15 See Arts. 776 and 777 Phil. Civil Code. The latter article provides that "(T)he rights to the succession are transmitted from the moment of the death of the decedent." 16 Appellants' brief, pp. 15-16. 17 Rec. on Appeal, p. 20; emphasis supplied. 18 Icasiano vs. Icasiano, L-18979, June 30, 1964; 11 SCRA 422. 19 III Tolentino's Civil Code, 1961 ed., p. 518. 20 Record on Appeal, p. 107. 21 See Arts. 955, 1080 and 1104, Civil Code. G.R. No. L-23678 June 6, 1967 TESTATE ESTATE OF AMOS G. BELLIS, deceased. PEOPLE'S BANK and TRUST COMPANY, executor. MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants, vs. EDWARD A. BELLIS, ET AL., heirs-appellees. Vicente R. Macasaet and Jose D. Villena for oppositors appellants. Paredes, Poblador, Cruz and Nazareno for heirs- appellees E. A. Bellis, et al. Quijano and Arroyo for heirs-appellees W. S. Bellis, et al. J. R. Balonkita for appellee People's Bank & Trust Company. Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman. BENGZON, J.P., J .: This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in Civil Case No. 37089 therein.1wph1.t The facts of the case are as follows: Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis. On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after all taxes, obligations, and expenses of administration are paid for, his distributable estate should be divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the remainder shall go to his seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will was admitted to probate in the Court of First Instance of Manila on September 15, 1958. The People's Bank and Trust Company, as executor of the will, paid all the bequests therein including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of P120,000.00, which it released from time to time according as the lower court approved and allowed the various motions or petitions filed by the latter three requesting partial advances on account of their respective legacies. On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its "Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition, the executor pursuant to the "Twelfth" clause of the testator's Last Will and Testament divided the residuary estate into seven equal portions for the benefit of the testator's seven legitimate children by his first and second marriages. On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of the deceased. Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is evidenced by the registry receipt submitted on April 27, 1964 by the executor. 1
After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on April 30, 1964, issued an order overruling the oppositions and approving the executor's final account, report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it applied the national law of the decedent, which in this case is Texas law, which did not provide for legitimes. Their respective motions for reconsideration having been denied by the lower court on June 11, 1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply Texas law or Philippine law. In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually pertinent where the decedent is a national of one country, and a domicile of another. In the present case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the time of his death. 2 So that even assuming Texas has a conflict of law rule providing that the domiciliary system (law of the domicile) should govern, the same would not result in a reference back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the place where the properties are situated, renvoi would arise, since the properties here involved are found in the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it should not be presumed different from ours. 3 Appellants' position is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they argue that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil Code. Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent, in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b) the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the capacity to succeed. They provide that ART. 16. Real property as well as personal property is subject to the law of the country where it is situated. However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may he the nature of the property and regardless of the country wherein said property may be found. ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent. Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct. Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself which must be applied in testate and intestate succession. As further indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be governed by the national law of the decedent. It is therefore evident that whatever public policy or good customs may be involved in our System of legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national law. Specific provisions must prevail over general ones. Appellants would also point out that the decedent executed two wills one to govern his Texas estate and the other his Philippine estate arguing from this that he intended Philippine law to govern his Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those matters that Article 10 now Article 16 of the Civil Code states said national law should govern. The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis. Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.
Footnotes 1 He later filed a motion praying that as a legal heir he be included in this case as one of the oppositors- appellants; to file or adopt the opposition of his sisters to the project of partition; to submit his brief after paying his proportionate share in the expenses incurred in the printing of the record on appeal; or to allow him to adopt the briefs filed by his sisters but this Court resolved to deny the motion. 2 San Antonio, Texas was his legal residence. 3 Lim vs. Collector, 36 Phil. 472; In re Testate Estate of Suntay, 95 Phil. 500. G.R. No. L-25966 November 1, 1926 In the matter of the estate of Tomas Rodriguez, deceased. MANUEL TORRES, special administrator, and LUZ LOPEZ DE BUENO, heir, appellee, vs. MARGARITA LOPEZ, opponent-appellant. Marcaida, Capili and Ocampo and Camus, Delgado and Recto for appellant. Araneta and Zaragoza for appellee.
STREET, J .: This appeal involves a controversy over one-half of the estate of Tomas Rodriguez, decedent. The appellant, Margarita Lopez, claims said half by the intestate succession as next of kin and nearest heir; while the appellee, Luz Lopez de Bueno, claims the same by accredition and in the character of universal heir the will of the decedent. The trial court decided the point of controversy in favor of Luz Lopez de Bueno, and Margariat Lopez appealed. The facts necessary to an understanding of the case are these: On January 3, 1924, Tomas Rodriguez executed his last will and testament, in the second clause of which he declared: I institute as the only and universal heirs to all my property, my cousin Vicente F. Lopez and his daughter Luz Lopez de Bueno. Prior to the time of the execution of this will the testator, Tomas Rodriguez, had been judicially declared incapable of taking care of himself and had been placed under the care of his cousin Vicente F. Lopez, as guardian. On January 7, 1924, or only four days after the will above-mentioned was made, Vicente F. Lopez died; and the testator, Tomas Rodriguez, died on February 25, 1924, thereafter. At the time the will was made Vicente F. Lopez had not presented his final accounts as guardian, and no such accounts had been presented by him at the time of his death. Margariat Lopez was a cousin and nearest relative of the decedent. The will referred to, and after having been contested, has been admitted to probate by judicial determination (Torres and Lopez de Bueno vs. Lopez, 48 Phil., 772). Our discussion of the legal problem presented should begin with article 753 of the Civil Code which in effect declares that, with certain exceptions in favor of near relatives, no testamentary provision shall be valid when made by a ward in favor of his guardian before the final accounts of the latter have been approved. This provision is of undoubted application to the situation before us; and the provision made in the will of Tomas Rodriguez in favor of Vicente F. Lopez was not any general incapacity on his part, but a special incapacity due to the accidental relation of guardian and ward existing between the parties. We now pass to article 982 of the Civil Code, defining the right of accretion. It is there declared, in effect, that accretion take place in a testamentary succession, first when the two or more persons are called to the same inheritance or the same portion thereof without special designation of shares; and secondly, when one of the persons so called dies before the testator or renounces the inheritance or is disqualifying to receive it. In the case before us we have a will calling Vicente F. Lopez and his daughter, Luz Lopez de Bueno, to the same inheritance without special designation of shares. In addition to this, one of the persons named as heir has predeceased the testator, this person being also disqualified to receive the estate even if he had been alive at the time of the testator's death. This article (982) is therefore also of exact application to the case in hand; and its effect is to give to the survivor, Luz Lopez de Bueno, not only the undivided half which she would have received in conjunction with her father if he had been alive and qualified to take, but also the half which pertained to him. There was no error whatever, therefore, in the order of the trial court declaring Luz Lopez de Bueno entitled to the whole estate. The argument in favor of the appellant supposes that there has supervened a partial intestacy with respect to the half of the estate which was intended for Vicente F. Lopez and that this half has descended to the appellant, Margarita Lopez, as next of kin and sole heir at law of the decedent. In this connection attention is directed to article 764 of the Civil Code wherein it is declared, among other things, that a will may be valid even though the person instituted as heir is disqualified to inherit. Our attention is next invited to article 912 wherein it is declared, among other things, that legal succession takes place if the heir dies before the testator and also when the heir instituted is disqualified to succeed. Upon these provisions an argument is planted conducting to the conclusion that the will of Tomas Rodriguez was valid, notwithstanding the fact that one of the individuals named as heirs in the will was disqualified to take, and that as a consequence Margarita Lopez s entitled to inherit the share of said disqualified heir. We are the opinion that this contention is untenable and that the appellee clearly has the better right. In playing the provisions of the Code it is the duty of the court to harmonize its provisions as far as possible, giving due effect to all; and in case of conflict between two provisions the more general is to be considered as being limited by the more specific. As between articles 912 and 983, it is obvious that the former is the more general of the two, dealing, as it does, with the general topic of intestate succession while the latter is more specific, defining the particular conditions under which accretion takes place. In case of conflict, therefore, the provisions of the former article must be considered limited by the latter. Indeed, in subsection 3 of article 912 the provision with respect to intestate succession is expressly subordinated to article 983 by the expression "and (if) there is no right of accretion." It is true that the same express qualification is not found in subsection 4 of article 912, yet it must be so understood, in view of the rule of interpretation above referred to, by which the more specific is held to control the general. Besides, this interpretation supplies the only possible means of harmonizing the two provisions. In addition to this, article 986 of the Civil Code affords independent proof that intestate succession to a vacant portion can only occur when accretion is impossible. The attorneys for the appellant direct attention to the fact that, under paragraph 4 of article 912, intestate succession occurs when the heir instituted is disqualified to succeed (incapaz de suceder), while, under the last provision in paragraph 2 of article 982, accretion occurs when one of the persons called to inherit under the will is disqualified to receive the inheritance (incapaz de recibirla). A distinction is then drawn between incapacity to succeed and incapacity to take, and it is contended that the disability of Vicente F. Lopez was such as to bring the case under article 912 rather than 982. We are of the opinion that the case cannot be made to turn upon so refined an interpretation of the language of the Code, and at any rate the disability to which Vicente F. Lopez was subject was not a general disability to succeed but an accidental incapacity to receive the legacy, a consideration which makes a case for accretion rather than for intestate succession. The opinions of the commentators, so far as they have expressed themselves on the subject, tend to the conclusion that the right of accretion with regard to portions of an inheritance left vacant by the death or disqualification of one of the heirs or his renunciation of the inheritance is governed by article 912, without being limited, to the extent supposed in appellant's brief, by provisions of the Code relative to intestate succession (Manresa, Comentarios al Codigo Civil Espaol, 4th ed., vol. VII, pp. 310, 311; id., 34; 13 Mucius Scaevola, pp. 372, 373, 285-287; 16 Mucius Scaevola, 186). Says Escriche: "It is to be understood that one of the coheirs or colegatees fails if nonexistent at the time of the making of the will, or he renounces the inheritance or legacy, if he dies before the testator, if the condition be not fulfilled, or if he becomes otherwise incapacitated. . . . (Diccionario de Legislacion y Jurisprudencia, vol. I, p. 225.)lawphil.net In conclusion it may be worth observing that there has always existed both in the civil and in the common law a certain legal intendment, amounting to a mild presumption, against partial intestacy. In Roman law, as is well known, partial testacy systems a presumption against it, a presumption which has its basis in the supposed intention of the testator. The judgment appealed from will be affirmed, and it is so ordered, with costs against the appellant. Avancea, C, J., Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur. G.R. No. 162784 June 22, 2007 NATIONAL HOUSING AUTHORITY, petitioner, vs. SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31, respondents. D E C I S I O N PUNO, C.J .: This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing Authority (NHA) against the Court of Appeals, the Regional Trial Court of San Pedro Laguna, Branch 31, and private respondent Segunda Almeida. On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera several portions of land which are part of the Tunasan Estate in San Pedro, Laguna. The award is evidenced by an Agreement to Sell No. 3787. 1 By virtue of Republic Act No. 3488, the LTA was succeeded by the Department of Agrarian Reform (DAR). On July 31, 1975, the DAR was succeeded by the NHA by virtue of Presidential Decree No. 757. 2 NHA as the successor agency of LTA is the petitioner in this case. The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado (the mother of private respondent) and Francisca Herrera. Beatriz Herrera- Mercado predeceased her mother and left heirs. Margarita Herrera passed away on October 27, 1971. 3
On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita Herrera executed a Deed of Self-Adjudication claiming that she is the only remaining relative, being the sole surviving daughter of the deceased. She also claimed to be the exclusive legal heir of the late Margarita Herrera. The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960, allegedly executed by Margarita Herrera. The pertinent portions of which are as follows: SINUMPAANG SALAYSAY SA SINO MAN KINAUUKULAN; Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo, kasalukuyang naninirahan at tumatanggap ng sulat sa Nayon ng San Vicente, San Pedro Laguna, sa ilalim ng panunumpa ay malaya at kusang loob kong isinasaysay at pinagtitibay itong mga sumusunod: 1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR), tumatayo sa Nayon ng San Vicente, San Pedro, Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771) METRONG PARISUKAT ang laki, humigit kumulang, at makikilala sa tawag na Lote 17, Bloke 55, at pag-aari ng Land Tenure Administration; 2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog sa Land Tenure Administration, at noong ika 30 ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT TO SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng Maynila, sa harap ng Notario Publico na si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959; 3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako ay nakatira at pinagsisilbihan nang aking anak na si Francisca Herrera, at ang tinitirikan o solar na nasasabi sa unahan ay binabayaran ng kaniyang sariling cuarta sa Land Tenure Administration; 4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na ng Dios ng aking buhay, ang lupang nasasabi sa unahan ay aking ipinagkakaloob sa nasabi kong anak na FRANCISCA HERRERA, Filipina, nasa katamtamang gulang, kasal kay Macario Berroya, kasalukuyang naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro Laguna, o sa kaniyang mga tagapagmana at; 5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay bawian na ng Dios ng aking buhay ay KILALANIN, IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking anak na si Francisca Herrera ang loteng nasasabi sa unahan. SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong kamay sa ibaba nito at sa kaliwang gilid ng unang dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng Octubre, 1960. 4
The said document was signed by two witnesses and notarized. The witnesses signed at the left-hand side of both pages of the document with the said document having 2 pages in total. Margarita Herrera placed her thumbmark 5 above her name in the second page and at the left-hand margin of the first page of the document. The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-Adjudication before the then Court of First Instance of Laguna, Branch 1 in Binan, Laguna (now, Regional Trial Court Branch 25). The case for annulment was docketed as Civil Case No. B-1263. 6
On December 29, 1980, a Decision in Civil Case No. B- 1263 (questioning the Deed of Self-Adjudication) was rendered and the deed was declared null and void. 7
During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca Herrera filed an application with the NHA to purchase the same lots submitting therewith a copy of the "Sinumpaang Salaysay" executed by her mother. Private respondent Almeida, as heir of Beatriz Herrera-Mercado, protested the application. In a Resolution 8 dated February 5, 1986, the NHA granted the application made by Francisca Herrera, holding that: From the evidence of the parties and the records of the lots in question, we gathered the following facts: the lots in question are portions of the lot awarded and sold to the late Margarita Herrera on July 28, 1959 by the defunct Land Tenure Administration; protestant is the daughter of the late Beatriz Herrera Mercado who was the sister of the protestee; protestee and Beatriz are children of the late Margarita Herrera; Beatriz was the transferee from Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots transferred to Beatriz, e.g. Lot 47, with an area of 148 square meters is in the name of the protestant; protestant occupied the lots in question with the permission of the protestee; protestee is a resident of the Tunasan Homesite since birth; protestee was born on the lots in question; protestee left the place only after marriage but resided in a lot situated in the same Tunasan Homesite; her (protestee) son Roberto Herrera has been occupying the lots in question; he has been there even before the death of the late Margarita Herrera; on October 7, 1960, Margarita Herrera executed a "Sinumpaang Salaysay" whereby she waived or transferred all her rights and interest over the lots in question in favor of the protestee; and protestee had paid the lots in question in full on March 8, 1966 with the defunct Land Tenure Administration. This Office finds that protestee has a better preferential right to purchase the lots in question. 9
Private respondent Almeida appealed to the Office of the President. 10 The NHA Resolution was affirmed by the Office of the President in a Decision dated January 23, 1987. 11
On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial settlement of her estate which they submitted to the NHA. Said transfer of rights was approved by the NHA. 12 The NHA executed several deeds of sale in favor of the heirs of Francisca Herrera and titles were issued in their favor. 13 Thereafter, the heirs of Francisca Herrera directed Segunda Mercado- Almeida to leave the premises that she was occupying. Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA, private respondent Segunda Mercado-Almeida sought the cancellation of the titles issued in favor of the heirs of Francisca. She filed a Complaint on February 8, 1988, for "Nullification of Government Lot's Award," with the Regional Trial Court of San Pedro, Laguna, Branch 31. In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed properties, and re-raised the fact that Francisca Herrera's declaration of self-adjudication has been adjudged as a nullity because the other heirs were disregarded. The defendant heirs of Francisca Herrera alleged that the complaint was barred by laches and that the decision of the Office of the President was already final and executory. 14 They also contended that the transfer of purchase of the subject lots is perfectly valid as the same was supported by a consideration and that Francisca Herrera paid for the property with the use of her own money. 15 Further, they argued that plaintiff's occupation of the property was by mere tolerance and that they had been paying taxes thereon. 16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of jurisdiction. 17
The Court of Appeals in a Decision dated June 26, 1989 reversed and held that the Regional Trial Court had jurisdiction to hear and decide the case involving "title and possession to real property within its jurisdiction." 18
The case was then remanded for further proceedings on the merits. A pre-trial was set after which trial ensued. On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of the NHA and the decision of the Office of the President awarding the subject lots in favor of Francisca Herrera. It declared the deeds of sale executed by NHA in favor of Herrera's heirs null and void. The Register of Deeds of Laguna, Calamba Branch was ordered to cancel the Transfer Certificate of Title issued. Attorney's fees were also awarded to private respondent. The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of rights but a disposition of property which shall take effect upon death. It then held that the said document must first be submitted to probate before it can transfer property. Both the NHA and the heirs of Francisca Herrera filed their respective motions for reconsideration which were both denied on July 21, 1998 for lack of merit. They both appealed to the Court of Appeals. The brief for the heirs of Francisca Herrera was denied admission by the appellate court in a Resolution dated June 14, 2002 for being a "carbon copy" of the brief submitted by the NHA and for being filed seventy-nine (79) days late. On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial Court, viz: There is no dispute that the right to repurchase the subject lots was awarded to Margarita Herrera in 1959. There is also no dispute that Margarita executed a "Sinumpaang Salaysay" on October 7, 1960. Defendant NHA claims that the "Sinumpaang Salaysay" is, in effect, a waiver or transfer of rights and interest over the subject lots in favor of Francisca Herrera. This Court is disposed to believe otherwise. After a perusal of the "Sinumpaang Salaysay" of Margarita Herrera, it can be ascertained from its wordings taken in their ordinary and grammatical sense that the document is a simple disposition of her estate to take effect after her death. Clearly the Court finds that the "Sinumpaang Salaysay" is a will of Margarita Herrera. Evidently, if the intention of Margarita Herrera was to merely assign her right over the lots to her daughter Francisca Herrera, she should have given her "Sinumpaang Salaysay" to the defendant NHA or to Francisca Herrera for submission to the defendant NHA after the full payment of the purchase price of the lots or even prior thereto but she did not. Hence it is apparent that she intended the "Sinumpaang Salaysay" to be her last will and not an assignment of rights as what the NHA in its resolution would want to make it appear. The intention of Margarita Herrera was shared no less by Francisca Herrera who after the former's demise executed on August 22, 1974 a Deed of Self-Adjudication claiming that she is her sole and legal heir. It was only when said deed was questioned in court by the surviving heirs of Margarita Herrera's other daughter, Beatriz Mercado, that Francisca Herrera filed an application to purchase the subject lots and presented the "Sinumpaang Salaysay" stating that it is a deed of assignment of rights. 19
The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots to the heirs of Francisca Herrera. It upheld the trial court ruling that the "Sinumpaang Salaysay" was not an assignment of rights but one that involved disposition of property which shall take effect upon death. The issue of whether it was a valid will must first be determined by probate. Petitioner NHA elevated the case to this Court. Petitioner NHA raised the following issues: A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE DECISION OF THE OFFICE OF THE PRESIDENT HAVE ATTAINED FINALITY, AND IF SO, WHETHER OR NOT THE PRINCIPLE OF ADMINISTRATIVE RES JUDICATA BARS THE COURT FROM FURTHER DETERMINING WHO BETWEEN THE PARTIES HAS PREFERENTIAL RIGHTS FOR AWARD OVER THE SUBJECT LOTS; B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE AWARD ON THE SUBJECT LOTS; AND C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE NHA IS ARBITRARY. We rule for the respondents. Res judicata is a concept applied in review of lower court decisions in accordance with the hierarchy of courts. But jurisprudence has also recognized the rule of administrative res judicata: "the rule which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial facts of public, executive or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers . . . It has been declared that whenever final adjudication of persons invested with power to decide on the property and rights of the citizen is examinable by the Supreme Court, upon a writ of error or a certiorari, such final adjudication may be pleaded as res judicata." 20 To be sure, early jurisprudence were already mindful that the doctrine of res judicata cannot be said to apply exclusively to decisions rendered by what are usually understood as courts without unreasonably circumscribing the scope thereof and that the more equitable attitude is to allow extension of the defense to decisions of bodies upon whom judicial powers have been conferred. In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals, 21 the Court held that the rule prescribing that "administrative orders cannot be enforced in the courts in the absence of an express statutory provision for that purpose" was relaxed in favor of quasi-judicial agencies. In fine, it should be remembered that quasi-judicial powers will always be subject to true judicial power that which is held by the courts. Quasi-judicial power is defined as that power of adjudication of an administrative agency for the "formulation of a final order." 22 This function applies to the actions, discretion and similar acts of public administrative officers or bodies who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature. 23
However, administrative agencies are not considered courts, in their strict sense. The doctrine of separation of powers reposes the three great powers into its three (3) branchesthe legislative, the executive, and the judiciary. Each department is co-equal and coordinate, and supreme in its own sphere. Accordingly, the executive department may not, by its own fiat, impose the judgment of one of its agencies, upon the judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." 24 Courts have an expanded role under the 1987 Constitution in the resolution of societal conflicts under the grave abuse clause of Article VIII which includes that duty to check whether the other branches of government committed an act that falls under the category of grave abuse of discretion amounting to lack or excess of jurisdiction. 25
Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980 26 where it is therein provided that the Intermediate Appellate Court (now, Court of Appeals) shall exercise the "exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards, of the Regional Trial Courts and Quasi-Judicial agencies, instrumentalities, boards or commissions, except those falling within the jurisdiction of the Supreme Court in accordance with the Constitution" 27 and contends that the Regional Trial Court has no jurisdiction to rule over awards made by the NHA. Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003, already ruled that the issue of the trial court's authority to hear and decide the instant case has already been settled in the decision of the Court of Appeals dated June 26, 1989 (which has become final and executory on August 20, 1989 as per entry of judgment dated October 10, 1989). 28 We find no reason to disturb this ruling. Courts are duty-bound to put an end to controversies. The system of judicial review should not be misused and abused to evade the operation of a final and executory judgment. 29 The appellate court's decision becomes the law of the case which must be adhered to by the parties by reason of policy. 30
Next, petitioner NHA contends that its resolution was grounded on meritorious grounds when it considered the application for the purchase of lots. Petitioner argues that it was the daughter Francisca Herrera who filed her application on the subject lot; that it considered the respective application and inquired whether she had all the qualifications and none of the disqualifications of a possible awardee. It is the position of the petitioner that private respondent possessed all the qualifications and none of the disqualifications for lot award and hence the award was not done arbitrarily. The petitioner further argues that assuming that the "Sinumpaang Salaysay" was a will, it could not bind the NHA. 31 That, "insofar as [the] NHA is concerned, it is an evidence that the subject lots were indeed transferred by Margarita Herrera, the original awardee, to Francisca Herrera was then applying to purchase the same before it." 32
We are not impressed. When the petitioner received the "Sinumpaang Salaysay," it should have noted that the effectivity of the said document commences at the time of death of the author of the instrument; in her words "sakaling ako'y bawian na ng Dios ng aking buhay" Hence, in such period, all the interests of the person should cease to be hers and shall be in the possession of her estate until they are transferred to her heirs by virtue of Article 774 of the Civil Code which provides that: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. 33
By considering the document, petitioner NHA should have noted that the original applicant has already passed away. Margarita Herrera passed away on October 27, 1971. 34 The NHA issued its resolution 35 on February 5, 1986. The NHA gave due course to the application made by Francisca Herrera without considering that the initial applicant's death would transfer all her property, rights and obligations to the estate including whatever interest she has or may have had over the disputed properties. To the extent of the interest that the original owner had over the property, the same should go to her estate. Margarita Herrera had an interest in the property and that interest should go to her estate upon her demise so as to be able to properly distribute them later to her heirsin accordance with a will or by operation of law. The death of Margarita Herrera does not extinguish her interest over the property. Margarita Herrera had an existing Contract to Sell 36 with NHA as the seller. Upon Margarita Herrera's demise, this Contract to Sell was neither nullified nor revoked. This Contract to Sell was an obligation on both partiesMargarita Herrera and NHA. Obligations are transmissible. 37 Margarita Herrera's obligation to pay became transmissible at the time of her death either by will or by operation of law. If we sustain the position of the NHA that this document is not a will, then the interests of the decedent should transfer by virtue of an operation of law and not by virtue of a resolution by the NHA. For as it stands, NHA cannot make another contract to sell to other parties of a property already initially paid for by the decedent. Such would be an act contrary to the law on succession and the law on sales and obligations. 38
When the original buyer died, the NHA should have considered the estate of the decedent as the next "person" 39 likely to stand in to fulfill the obligation to pay the rest of the purchase price. The opposition of other heirs to the repurchase by Francisca Herrera should have put the NHA on guard as to the award of the lots. Further, the Decision in the said Civil Case No. B-1263 (questioning the Deed of Self-Adjudication) which rendered the deed therein null and void 40 should have alerted the NHA that there are other heirs to the interests and properties of the decedent who may claim the property after a testate or intestate proceeding is concluded. The NHA therefore acted arbitrarily in the award of the lots. We need not delve into the validity of the will. The issue is for the probate court to determine. We affirm the Court of Appeals and the Regional Trial Court which noted that it has an element of testamentary disposition where (1) it devolved and transferred property; (2) the effect of which shall transpire upon the death of the instrument maker. 41
IN VIEW WHEREOF, the petition of the National Housing Authority is DENIED. The decision of the Court of Appeals in CA-G.R. No. 68370 dated August 28, 2003, affirming the decision of the Regional Trial Court of San Pedro, Laguna in Civil Case No. B-2780 dated March 9, 1998, is hereby AFFIRMED. No cost. SO ORDERED. Sandoval-Gutierrez, Corona, Azcuna, Garcia, JJ., concur. G.R. No. 82027 March 29, 1990 ROMARICO G. VITUG, petitioner, vs. THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA, respondents. Rufino B. Javier Law Office for petitioner. Quisumbing, Torres & Evangelista for private respondent.
SARMIENTO, J .: This case is a chapter in an earlier suit decided by this Court 1 involving the probate of the two wills of the late Dolores Luchangco Vitug, who died in New York, U. S.A., on November 10, 1980, naming private respondent Rowena Faustino-Corona executrix. In our said decision, we upheld the appointment of Nenita Alonte as co-special administrator of Mrs. Vitug's estate with her (Mrs. Vitug's) widower, petitioner Romarico G. Vitug, pending probate. On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the probate court to sell certain shares of stock and real properties belonging to the estate to cover allegedly his advances to the estate in the sum of P667,731.66, plus interests, which he claimed were personal funds. As found by the Court of Appeals, 2 the alleged advances consisted of P58,147.40 spent for the payment of estate tax, P518,834.27 as deficiency estate tax, and P90,749.99 as "increment thereto." 3 According to Mr. Vitug, he withdrew the sums of P518,834.27 and P90,749.99 from savings account No. 35342-038 of the Bank of America, Makati, Metro Manila. On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn from savings account No. 35342-038 were conjugal partnership properties and part of the estate, and hence, there was allegedly no ground for reimbursement. She also sought his ouster for failure to include the sums in question for inventory and for "concealment of funds belonging to the estate." 4
Vitug insists that the said funds are his exclusive property having acquired the same through a survivorship agreement executed with his late wife and the bank on June 19, 1970. The agreement provides: We hereby agree with each other and with the BANK OF AMERICAN NATIONAL TRUST AND SAVINGS ASSOCIATION (hereinafter referred to as the BANK), that all money now or hereafter deposited by us or any or either of us with the BANK in our joint savings current account shall be the property of all or both of us and shall be payable to and collectible or withdrawable by either or any of us during our lifetime, and after the death of either or any of us shall belong to and be the sole property of the survivor or survivors, and shall be payable to and collectible or withdrawable by such survivor or survivors. We further agree with each other and the BANK that the receipt or check of either, any or all of us during our lifetime, or the receipt or check of the survivor or survivors, for any payment or withdrawal made for our above-mentioned account shall be valid and sufficient release and discharge of the BANK for such payment or withdrawal. 5
The trial courts 6 upheld the validity of this agreement and granted "the motion to sell some of the estate of Dolores L. Vitug, the proceeds of which shall be used to pay the personal funds of Romarico Vitug in the total sum of P667,731.66 ... ." 7
On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein private respondent, held that the above-quoted survivorship agreement constitutes a conveyance mortis causa which "did not comply with the formalities of a valid will as prescribed by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere donation inter vivos, it is a prohibited donation under the provisions of Article 133 of the Civil Code. 9
The dispositive portion of the decision of the Court of Appeals states: WHEREFORE, the order of respondent Judge dated November 26, 1985 (Annex II, petition) is hereby set aside insofar as it granted private respondent's motion to sell certain properties of the estate of Dolores L. Vitug for reimbursement of his alleged advances to the estate, but the same order is sustained in all other respects. In addition, respondent Judge is directed to include provisionally the deposits in Savings Account No. 35342-038 with the Bank of America, Makati, in the inventory of actual properties possessed by the spouses at the time of the decedent's death. With costs against private respondent. 10
In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the strength of our decisions in Rivera v. People's Bank and Trust Co. 11 and Macam v. Gatmaitan 12 in which we sustained the validity of "survivorship agreements" and considering them as aleatory contracts. 13
The petition is meritorious. The conveyance in question is not, first of all, one of mortis causa, which should be embodied in a will. A will has been defined as "a personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights and declares or complies with duties to take effect after his death." 14 In other words, the bequest or device must pertain to the testator. 15 In this case, the monies subject of savings account No. 35342- 038 were in the nature of conjugal funds In the case relied on, Rivera v. People's Bank and Trust Co., 16 we rejected claims that a survivorship agreement purports to deliver one party's separate properties in favor of the other, but simply, their joint holdings: xxx xxx xxx ... Such conclusion is evidently predicated on the assumption that Stephenson was the exclusive owner of the funds-deposited in the bank, which assumption was in turn based on the facts (1) that the account was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased." But it not infrequently happens that a person deposits money in the bank in the name of another; and in the instant case it also appears that Ana Rivera served her master for about nineteen years without actually receiving her salary from him. The fact that subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and executed with the latter the survivorship agreement in question although there was no relation of kinship between them but only that of master and servant, nullifies the assumption that Stephenson was the exclusive owner of the bank account. In the absence, then, of clear proof to the contrary, we must give full faith and credit to the certificate of deposit which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera; that they were joint (and several) owners thereof; and that either of them could withdraw any part or the whole of said account during the lifetime of both, and the balance, if any, upon the death of either, belonged to the survivor. 17
xxx xxx xxx In Macam v. Gatmaitan, 18 it was held: xxx xxx xxx This Court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the Civil Code, one of the parties or both reciprocally bind themselves to give or do something as an equivalent for that which the other party is to give or do in case of the occurrence of an event which is uncertain or will happen at an indeterminate time. As already stated, Leonarda was the owner of the house and Juana of the Buick automobile and most of the furniture. By virtue of Exhibit C, Juana would become the owner of the house in case Leonarda died first, and Leonarda would become the owner of the automobile and the furniture if Juana were to die first. In this manner Leonarda and Juana reciprocally assigned their respective property to one another conditioned upon who might die first, the time of death determining the event upon which the acquisition of such right by the one or the other depended. This contract, as any other contract, is binding upon the parties thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon acquired the ownership of the house, in the same manner as Leonarda would have acquired the ownership of the automobile and of the furniture if Juana had died first. 19
xxx xxx xxx There is no showing that the funds exclusively belonged to one party, and hence it must be presumed to be conjugal, having been acquired during the existence of the marita. relations. 20
Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it was to take effect after the death of one party. Secondly, it is not a donation between the spouses because it involved no conveyance of a spouse's own properties to the other. It is also our opinion that the agreement involves no modification petition of the conjugal partnership, as held by the Court of Appeals, 21 by "mere stipulation" 22 and that it is no "cloak" 23 to circumvent the law on conjugal property relations. Certainly, the spouses are not prohibited by law to invest conjugal property, say, by way of a joint and several bank account, more commonly denominated in banking parlance as an "and/or" account. In the case at bar, when the spouses Vitug opened savings account No. 35342-038, they merely put what rightfully belonged to them in a money- making venture. They did not dispose of it in favor of the other, which would have arguably been sanctionable as a prohibited donation. And since the funds were conjugal, it can not be said that one spouse could have pressured the other in placing his or her deposits in the money pool. The validity of the contract seems debatable by reason of its "survivor-take-all" feature, but in reality, that contract imposed a mere obligation with a term, the term being death. Such agreements are permitted by the Civil Code. 24
Under Article 2010 of the Code: ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is uncertain, or which is to occur at an indeterminate time. Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the happening of an event which is (1) "uncertain," (2) "which is to occur at an indeterminate time." A survivorship agreement, the sale of a sweepstake ticket, a transaction stipulating on the value of currency, and insurance have been held to fall under the first category, while a contract for life annuity or pension under Article 2021, et sequentia, has been categorized under the second. 25 In either case, the element of risk is present. In the case at bar, the risk was the death of one party and survivorship of the other. However, as we have warned: xxx xxx xxx But although the survivorship agreement is per se not contrary to law its operation or effect may be violative of the law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled upon such grounds. No such vice has been imputed and established against the agreement involved in this case. 26
xxx xxx xxx There is no demonstration here that the survivorship agreement had been executed for such unlawful purposes, or, as held by the respondent court, in order to frustrate our laws on wills, donations, and conjugal partnership. The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired upon her death a vested right over the amounts under savings account No. 35342-038 of the Bank of America. Insofar as the respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the separate property of petitioner, it forms no more part of the estate of the deceased. WHEREFORE, the decision of the respondent appellate court, dated June 29, 1987, and its resolution, dated February 9, 1988, are SET ASIDE. No costs. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Regalado JJ., concur. SECOND DIVISION [G.R. No. 131641. February 23, 2000] NATIVIDAD P. NAZARENO, petitioner, vs. COURT OF APPEALS, HON. NAPOLEON V. DILAG, Presiding Judge, RTC-Cavite, Branch XV, ROMEO P. NAZARENO and ELIZA NAZARENO, respondents. D E C I S I O N BELLOSILLO, J .: A writ of execution must conform to the judgment to be executed; it may not vary the terms of the judgment it seeks to enforce. Nor may it go beyond the terms of the judgment sought to be executed. Where the execution is not in harmony with the judgment which gives it life, and in fact exceeds it, it has pro tanto no validity. To maintain otherwise would be to ignore the constitutional provision against depriving a person of his property without due process of law.1[1] Adjudication of ownership necessarily includes delivery of possession. Indeed, it would be defeating the ends of justice should we require that for the parties to obtain
possession of the property duly adjudged to be theirs from those who have no right to remain therein, they must submit to court litigations anew.2[2] An exception however exists where the actual possessor has shown a valid right over the property enforceable even against the owner thereof.3[3] On 15 March 1985 Natividad Nazareno filed a Complaint for Annulment of Sale and Damages against spouses Romeo and Eliza Nazareno. Natividad avers in her complaint that she is the sole and absolute owner of a parcel of land located in Naic, Cavite, covered by TCT No. 51798 of the Registry of Deeds of Cavite. Sometime in April 1981 Natividads brother, Romeo, and his wife Eliza convinced Natividad to lend them TCT No. 51798 to be used as collateral to a loan the proceeds of which would be used in the completion of the construction of the Naic Cinema on the subject property. Natividad agreed on the condition that title to her property would be returned within one (1) year from the completion of the construction of the cinema. Accordingly, Natividad executed a Deed of Absolute Sale in favor of spouses Romeo and Eliza over the lot covered by TCT No. 51798. The sale, however, was simulated because Natividad did not receive any consideration therefor. The cinema was completed in November 1981 but despite several demands by Natividad, spouses Romeo and Eliza failed and refused to return Natividads title to the property; instead, they had the property transferred in their name. Consequently, TCT No. T-118276 was issued in their name in lieu of TCT No. 51798. Spouses Romeo and Eliza denied that the property belonged to Natividad. On the contrary, they averred that it originally formed part of the estate of the late Maximino Nazareno, Jr., father of Romeo and Natividad. According to Romeo, the property was his share in their inheritance. As regards the deed of sale, he explained that it was only resorted to for the purpose of carrying out and implementing the transfer of the property forming part of the estate of Maximino Nazareno Jr., the distribution of which was entrusted to Natividad. The trial court found for the spouses Romeo and Eliza and ruled that although the Deed of Absolute Sale was simulated, the same could be treated as an adjudication and a conveyance to Romeo of his share in the estate of his father. But the Court of Appeals ruled otherwise. It found that during pre-trial, the parties stipulated that the Deed of Absolute Sale between Natividad and spouses Romeo and Eliza was simulated as there was in fact no money consideration. Consequently, the burden of proof was shifted to Romeo to prove that the transfer was in reality a conveyance of his share in the estate of his father. But during trial, Romeo failed to prove this so-called conveyance of his share. On the other hand, Natividad satisfactorily showed that the property was previously sold to her by their late father. Romeo failed to disprove this fact. Neither did he successfully cause the deed of sale executed by Maximino Nazareno Jr. in favor of
Natividad to be declared null and void. Resultingly, its authenticity and validity remained unrebutted. In short, the Court of Appeals did not sustain the trial court and set aside its Decision. The Deed of Absolute Sale executed by Natividad in favor of the spouses Romeo and Eliza as well as TCT No. 118276 was declared null and void. Hence, the Register of Deeds was ordered to restore TCT No. 51798 under the name of Natividad. The case was brought to us on a Petition for Review on Certiorari but we denied the petition after having ascertained that the appellate court committed no reversible error. Thus, the Court of Appeals decision became final and executory on 13 June 1996. On 7 November 1996 Natividad filed a Manifestation and Motion with the Regional Trial Court of Naic praying for the issuance of a writ of execution as well as a writ of possession. The spouses Romeo and Eliza filed an Opposition contending that in her Complaint Natividad never prayed that she be placed in possession of the subject premises. Neither did the Court of Appeals order that petitioner be placed in possession of the property. On 21 February 1997 the trial court granted the writ of execution prayed for but denied the issuance of a writ of possession as it was not included in the decision of the Court of Appeals. Natividads Motion for Reconsideration was denied. Hence, recourse was made to the Court of Appeals. On 9 September 1997 the Court of Appeals denied the petition thus - Execution not in harmony with the judgment has no validity. It must conform more particularly to that ordained or decreed in the dispositive portion of the decision, as the only portion of the decision that becomes the subject of execution. Therefore, to issue a writ of possession in favor of petitioner in this case where possession was never decreed in favor of petitioner, would be void x x x Moreover, it is a settled rule that a writ of possession is improper to eject another from possession unless sought in connection with (1) a land registration proceeding; (2) an extrajudicial foreclosure of real property; (3) in a judicial foreclosure of property provided that the mortgagor has possession and no third party has intervened; and (4) in execution sales. It is an undisputed fact that this case is for the annulment of a private sale made by petitioner to private respondent. This action is not a land registration case nor a foreclosure of mortgage whether judicially or extrajudicially nor was the subject property sold in execution. Petitioner sought for the issuance of a writ of possession in connection with a decision in a civil action for annulment of a private sale and damages.4[4] A Motion for Reconsideration was filed but the same was denied; hence, the instant petition.
Obviously, we have no choice but to deny the petition. Section 49 (c) of Rule 39 (now Sec. 47 (c) of Rule 39) of the Rules of Court provides: Sec. 49. Effect of judgments. - The effect of a judgment or final order rendered by a court or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be as follows: x x x x (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. From the aforestated, it is clear that a judgment is not confined to what appears on the face of the decision, but also to those necessarily included therein or necessary thereto.5[5] Thus although the dispositive portion of the decision of the Court of Appeals in CA-GR CV No. 12856 provides - WHEREFORE, judgment is hereby rendered REVERSING the Decision appealed from and another is hereby rendered as follows: 1. The "Deed of Absolute Sale of Registered Land" (Exhibit "B") and Transfer Certificate of Title No. 118276 (Exhibit "F") under the name of the appellees are hereby declared null and void; 2. The Register of Deeds is hereby ordered to restore Transfer Certificate of Title No. 51798 under the name of the appellant.6[6] it is clear that the same resulted from the adjudication of ownership over the disputed lot which is necessarily included in the discussion. Thus, as explained by the Court of Appeals - In sum, then, Lot 504-A-3 covered by Transfer Certificate of Title No. 51798 was owned by the appellant in her own right as vendee and not appellee's share in the estate of their deceased father. Consequently, appellee's claim that the appellant executed the "Deed of Absolute Sale" (Exhibit "B") for the purpose of conveying to the appellee the latter's share in the estate of their deceased father is utterly bereft of factual basis x x x Evidently, the decision of the Court of Appeals required no writ of possession as the writ of execution would suffice to place Natividad in possession of Lot 504-A-3. A case in point is Perez v. Evite7[7] wherein the lower
court declared Evite as owner of the disputed land. When the judgment became final and executory, Evite moved for the issuance of a writ of execution which the trial court granted. Perez moved to quash the writ arguing that the writ was at variance with the decision as the decision sought to be executed merely declared Evite owner of the property and did not order its delivery to him. Perez argued citing the cases of Jabon v. Alo8[8] and Talens v. Garcia9[9] which held that adjudication of ownership of the land did not include possession thereof. In resolving in favor of Evite this Court held - x x x Considering that herein plaintiff-appellants have no other claim to possession of the property apart from their claim of ownership which was rejected by the lower court and, consequently, has no right to remain thereon after such ownership was adjudged to defendant- appellees, the delivery of possession of the land should be considered included in the decision. Indeed, it would be defeating the ends of justice should we require that for herein appellees to obtain possession of the property duly adjudged to be theirs, from those who have no right to remain therein, they must submit to court litigations anew. In the instant case, spouses Romeo and Eliza could not use Jabon v. Alo and Talens v. Garcia to support their contention that the adjudication of ownership over the land does not necessarily include possession. As already decreed in Perez v. Evite - It may be observed that in both decisions (Jabon v. Alo and Talens v. Garcia), this Court underscored the possibility that the actual possessor has some rights which must be respected and defined. It is thus evident that the pronouncement was made having in mind cases wherein the actual possessor has a valid right over the property enforceable even against the owner thereof. As example, we gave the cases of tenants and lessees. However, it is our view that that above doctrine may not be invoked in instances where no such right may be appreciated in favor of the possessor. In the instant case there appears in the appealed order of June 30, 1959, the specific finding of the trial court that "the plaintiffs have not given any reason why they are retaining the possession of the property" x x x x This factual finding cannot be reviewed in this instance as the appeal has been taken to us directly on a question of law x x x x The same ruling would apply in the instant case. The Court of Appeals categorically declared that the claim of spouses Romeo and Eliza over the disputed lot has utterly no factual basis. Therefore, they have no reason to remain in possession of the property. But the same could not be said of the Naic Cinema. The matter of ownership and possession of the Naic Cinema was never put in issue. Consequently, petitioner cannot ask for a writ of possession to place her in physical occupancy of the Naic Cinema. Being declared owner of subject lot does not also mean that she is automatically
entitled to possession of all the improvements therein. Otherwise, the actual possessor would be deprived of his property without due process of law. Finally, petitioner cannot validly claim possession over the Naic Cinema since in her complaint and subsequent pleadings, she has admitted not being the owner thereof. On the contrary, she claims that the Naic Cinema belongs to the estate of her father. On the other hand, respondent spouses have asserted dominion over the Naic Cinema. Plainly, petitioner cannot wrest possession of the moviehouse from respondent spouses through a mere writ of possession as she herself even disclaims being the owner thereof. Ownership over the Naic Cinema must be threshed out in a proper proceeding. A mere prayer for the issuance of a writ of possession will not suffice. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals denying the issuance of a writ of possession is AFFIRMED. Costs against petitioner. SO ORDERED. Mendoza, Quisumbing, and De Leon, Jr., JJ., concur. Buena, J., on leave. Heirs of Spouses REMEDIOS R. SANDEJAS and ELIODORO P. SANDEJAS SR. -- ROBERTO R. SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA SANDEJAS MORELAND, BENJAMIN R. SANDEJAS, REMEDIOS R. SANDEJAS; and heirs of SIXTO S. SANDEJAS II, RAMON R. SANDEJAS, TERESITA R. SANDEJAS, and ELIODORO R. SANDEJAS JR., all represented by ROBERTO R. SANDEJAS, petitioners, vs. ALEX A. LINA, respondent. D E C I S I O N PANGANIBAN, J.: A contract of sale is not invalidated by the fact that it is subject to probate court approval. The transaction remains binding on the seller-heir, but not on the other heirs who have not given their consent to it. In settling the estate of the deceased, a probate court has jurisdiction over matters incidental and collateral to the exercise of its recognized powers. Such matters include selling, mortgaging or otherwise encumbering realty belonging to the estate. Rule 89, Section 8 of the Rules of Court, deals with the conveyance of real property contracted by the decedent while still alive. In contrast with Sections 2 and 4 of the same Rule, the said provision does not limit to the executor or administrator the right to file the application for authority to sell, mortgage or otherwise encumber realty under administration. The standing to pursue such course of action before the probate court inures to any person who stands to be benefited or injured by the judgment or to be entitled to the avails of the suit. The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to reverse and set aside the Decisionxxv[1] dated April 16, 1999 and the Resolutionxxvi[2] dated January 12, 2000, both promulgated by the Court of Appeals in CA-GR CV No. 49491. The dispositive portion of the assailed Decision reads as follows:xxvii[3] WHEREFORE, for all the foregoing, [w]e hereby MODIFY the [O]rder of the lower court dated January 13, 1995, approving the Receipt of Earnest Money With Promise to Buy and Sell dated June 7, 1982, only to the three-fifth (3/5) portion of the disputed lots covering the share of [A]dministrator Eliodoro Sandejas, Sr. [in] the property. The intervenor is hereby directed to pay appellant the balance of the purchase price of the three- fifth (3/5) portion of the property within thirty (30) days from receipt of this [O]rder and x x x the administrator [is directed] to execute the necessary and proper deeds of conveyance in favor of appellee within thirty (30) days thereafter. The assailed Resolution denied reconsideration of the foregoing disposition. The Facts
The facts of the case, as narrated by the Court of Appeals (CA), are as follows:xxviii[4] On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition (Record, SP. Proc. No. R-83-15601, pp. 8-10) in the lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife, REMEDIOS R. SANDEJAS, who died on April 17, 1955. On July 1, 1981, Letters of Administration [were issued by the lower court appointing Eliodoro Sandejas, Sr. as administrator of the estate of the late Remedios Sandejas (Record, SP. Proc. No. R-83-15601, p. 16). Likewise on the same date, Eliodoro Sandejas, Sr. took his oath as administrator (Record, SP. Proc. No. R-83- 15601, p. 17). x x x. On November 19, 1981, the 4th floor of Manila City Hall was burned and among the records burned were the records of Branch XI of the Court of First Instance of Manila. As a result, [A]dministrator Eliodoro Sandejas, Sr. filed a [M]otion for [R]econstitution of the records of the case on February 9, 1983 (Record, SP. Proc. No. R- 83-15601, pp. 1-5). On February 16, 1983, the lower court in its [O]rder granted the said motion (Record, SP. Proc. No. R-83-15601, pp. 28-29). On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by [M]ovant Alex A. Lina alleging among others that on June 7, 1982, movant and [A]dministrator Eliodoro P. Sandejas, in his capacity as seller, bound and obligated himself, his heirs, administrators, and assigns, to sell forever and absolutely and in their entirety the following parcels of land which formed part of the estate of the late Remedios R. Sandejas, to wit: 1. A parcel of land (Lot No. 22 Block No. 45 of the subdivision plan Psd-21121, being a portion of Block 45 described on plan Psd-19508, G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, province of Rizal, containing an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13465; 2. A parcel of land (Lot No. 21 Block No. 45 of the subdivision plan Psd-21141, being a portion of Block 45 described on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal, containing an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13464; 3. A parcel of land (Lot No. 5 Block No. 45 of the subdivision plan Psd-21141, being a portion of Block 45 described on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal, containing an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with TCT No. 13468; 4. A parcel of land (Lot No. 6, Block No. 45 of the subdivision plan Psd-21141, being a portion of Block 45 described on plan Psd-19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal, containing an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with TCT No. 13468; The [R]eceipt of the [E]arnest [M]oney with [P]romise to [S]ell and to [B]uy is hereunder quoted, to wit: Received today from MR. ALEX A. LINA the sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS, Philippine Currency, per Metropolitan Bank & Trust Company Chec[k] No. 319913 dated today for P100,000.00, x x x as additional earnest money for the following: x x x x x x x x x all registered with the Registry of Deeds of the [P]rovince of Rizal (Makati Branch Office) in the name of SELLER ELIODORO SANDEJAS, Filipino Citizen, of legal age, married to Remedios Reyes de Sandejas; and which undersigned, as SELLER, binds and obligates himself, his heirs, administrators and assigns, to sell forever and absolutely in their entirety (all of the four (4) parcels of land above described, which are contiguous to each other as to form one big lot) to said Mr. Alex A. Lina, who has agreed to buy all of them, also binding on his heirs, administrators and assigns, for the consideration of ONE MILLION (P1,000,000.00) PESOS, Philippine Currency, upon such reasonable terms of payment as may be agreed upon by them. The parties have, however, agreed on the following terms and conditions: 1. The P100,000.00 herein received is in addition to the P70,000.00 earnest money already received by SELLER from BUYER, all of which shall form part of, and shall be deducted from, the purchase price of P1,000,000.00, once the deed of absolute [sale] shall be executed; 2. As a consideration separate and distinct from the price, undersigned SELLER also acknowledges receipt from Mr. Alex A. Lina of the sum of ONE THOUSAND (P1,000.00) PESOS, Philippine Currency, per Metropolitan Bank & Trust Company Check No. 319912 dated today and payable to SELLER for P1,000.00; 3. Considering that Mrs. Remedios Reyes de Sandejas is already deceased and as there is a pending intestate proceedings for the settlement of her estate (Spec. Proc. No. 138393, Manila CFI, Branch XI), wherein SELLER was appointed as administrator of said Estate, and as SELLER, in his capacity as administrator of said Estate, has informed BUYER that he (SELLER) already filed a [M]otion with the Court for authority to sell the above parcels of land to herein BUYER, but which has been delayed due to the burning of the records of said Spec. Pro. No. 138398, which records are presently under reconstitution, the parties shall have at least ninety (90) days from receipt of the Order authorizing SELLER, in his capacity as administrator, to sell all THE ABOVE DESCRIBED PARCELS OF LAND TO HEREIN BUYER (but extendible for another period of ninety (90) days upon the request of either of the parties upon the other), within which to execute the deed of absolute sale covering all above parcels of land; 4. In the event the deed of absolute sale shall not proceed or not be executed for causes either due to SELLERS fault, or for causes of which the BUYER is innocent, SELLER binds himself to personally return to Mr. Alex A. Lina the entire ONE HUNDRED SEVENTY THOUSAND ([P]170,000.00) PESOS in earnest money received from said Mr. Lina by SELLER, plus fourteen (14%) percentum interest per annum, all of which shall be considered as liens of said parcels of land, or at least on the share therein of herein SELLER; 5. Whether indicated or not, all of above terms and conditions shall be binding on the heirs, administrators, and assigns of both the SELLER (undersigned MR. ELIODORO P. SANDEJAS, SR.) and BUYER (MR. ALEX A. LINA). (Record, SP. Proc. No. R-83-15601, pp. 52-54) On July 17, 1984, the lower court issued an [O]rder granting the intervention of Alex A. Lina (Record, SP. Proc. No. R-83-15601, p. 167). On January 7, 1985, the counsel for [A]dministrator Eliodoro P. Sandejas filed a [M]anifestation alleging among others that the administrator, Mr. Eliodoro P. Sandejas, died sometime in November 1984 in Canada and said counsel is still waiting for official word on the fact of the death of the administrator. He also alleged, among others that the matter of the claim of Intervenor Alex A. Lina becomes a money claim to be filed in the estate of the late Mr. Eliodoro P. Sandejas (Record, SP. Proc. No. R-83-15601, p. 220). On February 15, 1985, the lower court issued an [O]rder directing, among others, that the counsel for the four (4) heirs and other heirs of Teresita R. Sandejas to move for the appointment of [a] new administrator within fifteen (15) days from receipt of this [O]rder (Record, SP. Proc. No. R-83-15601, p. 227). In the same manner, on November 4, 1985, the lower court again issued an order, the content of which reads: On October 2, 1985, all the heirs, Sixto, Roberto, Antonio, Benjamin all surnamed Sandejas were ordered to move for the appointment of [a] new administrator. On October 16, 1985, the same heirs were given a period of fifteen (15) days from said date within which to move for the appointment of the new administrator. Compliance was set for October 30, 1985, no appearance for the aforenamed heirs. The aforenamed heirs are hereby ordered to show cause within fifteen (15) days from receipt of this Order why this Petition for Settlement of Estate should not be dismissed for lack of interest and failure to comply with a lawful order of this Court. SO ORDERED. (Record, SP. Proc. No. R-83-15601, p. 273) On November 22, 1985, Alex A. Lina as petitioner filed with the Regional Trial Court of Manila an Omnibus Pleading for (1) petition for letters of administration [and] (2) to consolidate instant case with SP. Proc. No. R-83- 15601 RTC-Branch XI-Manila, docketed therein as SP. Proc. No. 85-33707 entitled IN RE: INTESTATE ESTATE OF ELIODORO P. SANDEJAS, SR., ALEX A. LINA PETITIONER, [for letters of administration] (Record, SP. Proc. No. 85-33707, pp. 1-7). On November 29, 1985, Branch XXXVI of the Regional Trial Court of Manila issued an [O]rder consolidating SP. Proc. No. 85-33707, with SP. Proc. No. R-83-15601 (Record, SP. Proc. No.85-33707, p. 13). Likewise, on December 13, 1985, the Regional Trial Court of Manila, Branch XI, issued an [O]rder stating that this Court has no objection to the consolidation of Special Proceedings No. 85-331707, now pending before Branch XXXVI of this Court, with the present proceedings now pending before this Branch (Record, SP. Proc. No. R-83-15601, p. 279). On January 15, 1986, Intervenor Alex A. Lina filed [a] Motion for his appointment as a new administrator of the Intestate Estate of Remedios R. Sandejas on the following reasons: 5.01. FIRST, as of this date, [i]ntervenor has not received any motion on the part of the heirs Sixto, Antonio, Roberto and Benjamin, all surnamed Sandejas, for the appointment of a new [a]dministrator in place of their father, Mr. Eliodoro P. Sandejas, Sr.; 5.02. SECOND, since Sp. Proc. 85-33707, wherein the [p]etitioner is herein Intervenor Alex A. Lina and the instant Sp. PROC. R-83-15601, in effect are already consolidated, then the appointment of Mr. Alex Lina as [a]dministrator of the Intestate Estate of Remedios R. Sandejas in instant Sp. Proc. R-83-15601, would be beneficial to the heirs and also to the Intervenor; 5.03. THIRD, of course, Mr. Alex A. Lina would be willing to give way at anytime to any [a]dministrator who may be proposed by the heirs of the deceased Remedios R. Sandejas, so long as such [a]dministrator is qualified. (Record, SP. Proc. No. R-83-15601, pp. 281-283) On May 15, 1986, the lower court issued an order granting the [M]otion of Alex A. Lina as the new [a]dministrator of the Intestate Estate of Remedios R. Sandejas in this proceedings. (Record, SP. Proc. No. R-83-15601, pp. 288-290) On August 28, 1986, heirs Sixto, Roberto, Antonio and Benjamin, all surnamed Sandejas, and heirs [sic] filed a [M]otion for [R]econsideration and the appointment of another administrator Mr. Sixto Sandejas, in lieu of [I]ntervenor Alex A. Lina stating among others that it [was] only lately that Mr. Sixto Sandejas, a son and heir, expressed his willingness to act as a new administrator of the intestate estate of his mother, Remedios R. Sandejas (Record, SP. Proc. No. 85-33707, pp. 29-31). On October 2, 1986, Intervenor Alex A. Lina filed his [M]anifestation and [C]ounter [M]otion alleging that he ha[d] no objection to the appointment of Sixto Sandejas as [a]dministrator of the [i]ntestate [e]state of his mother Remedios R. Sandejas (Sp. Proc. No. 85-15601), provided that Sixto Sandejas be also appointed as administrator of the [i]ntestate [e]state of his father, Eliodoro P. Sandejas, Sr. (Spec. Proc. No. 85-33707), which two (2) cases have been consolidated (Record, SP. Proc. No. 85-33707, pp. 34-36). On March 30, 1987, the lower court granted the said [M]otion and substituted Alex Lina with Sixto Sandejas as petitioner in the said [P]etitions (Record, SP. Proc. No. 85-33707, p.52). After the payment of the administrators bond (Record, SP. Proc. No. 83-15601, pp. 348-349) and approval thereof by the court (Record, SP. Proc. No. 83- 15601, p. 361), Administrator Sixto Sandejas on January 16, 1989 took his oath as administrator of the estate of the deceased Remedios R. Sandejas and Eliodoro P. Sandejas (Record, SP. Proc. No. 83-15601, p. 367) and was likewise issued Letters of Administration on the same day (Record, SP. Proc. No. 83-15601, p. 366). On November 29, 1993, Intervenor filed [an] Omnibus Motion (a) to approve the deed of conditional sale executed between Plaintiff-in-Intervention Alex A. Lina and Elidioro [sic] Sandejas, Sr. on June 7, 1982; (b) to compel the heirs of Remedios Sandejas and Eliodoro Sandejas, Sr. thru their administrator, to execute a deed of absolute sale in favor of [I]ntervenor Alex A. Lina pursuant to said conditional deed of sale (Record, SP. Proc. No. 83-15601, pp. 554-561) to which the administrator filed a [M]otion to [D]ismiss and/or [O]pposition to said omnibus motion on December 13, 1993 (Record, SP. Proc. No. 83-15601, pp. 591-603). On January 13, 1995, the lower court rendered the questioned order granting intervenors [M]otion for the [A]pproval of the Receipt of Earnest Money with promise to buy between Plaintiff-in-Intervention Alex A. Lina and Eliodoro Sandejas, Sr. dated June 7, 1982 (Record, SP. Proc. No. 83-15601, pp. 652-654). x x x. The Order of the intestate courtxxix[5] disposed as follows: WHEREFORE, [i]ntervenors motion for the approval of the Receipt Of Earnest Money With Promise To Sell And To Buy dated June 7, 1982, is granted. The [i]ntervenor is directed to pay the balance of the purchase price amounting to P729,000.00 within thirty (30) days from receipt of this Order and the Administrator is directed to execute within thirty (30) days thereafter the necessary and proper deeds of conveyancing.xxx[6] Ruling of the Court of Appeals
Overturning the RTC ruling, the CA held that the contract between Eliodoro Sandejas Sr. and respondent was merely a contract to sell, not a perfected contract of sale. It ruled that the ownership of the four lots was to remain in the intestate estate of Remedios Sandejas until the approval of the sale was obtained from the settlement court. That approval was a positive suspensive condition, the nonfulfillment of which was not tantamount to a breach. It was simply an event that prevented the obligation from maturing or becoming effective. If the condition did not happen, the obligation would not arise or come into existence. The CA held that Section 1, Rule 89xxxi[7] of the Rules of Court was inapplicable, because the lack of written notice to the other heirs showed the lack of consent of those heirs other than Eliodoro Sandejas Sr. For this reason, bad faith was imputed to him, for no one is allowed to enjoy a claim arising from ones own wrongdoing. Thus, Eliodoro Sr. was bound, as a matter of justice and good faith, to comply with his contractual commitments as an owner and heir. When he entered into the agreement with respondent, he bound his conjugal and successional shares in the property. Hence, this Petition.xxxii[8] Issues
In their Memorandum, petitioners submit the following issues for our resolution: a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated to convey title to the property referred to in the subject document which was found to be in the nature of a contract to sell where the suspensive condition set forth therein [i.e.] court approval, was not complied with; b) Whether or not Eliodoro P. Sandejas Sr. was guilty of bad faith despite the conclusion of the Court of Appeals that the respondent [bore] the burden of proving that a motion for authority to sell ha[d] been filed in court; c) Whether or not the undivided shares of Eliodoro P. Sandejas Sr. in the subject property is three-fifth (3/5) and the administrator of the latter should execute deeds of conveyance therefor within thirty days from receipt of the balance of the purchase price from the respondent; and d) Whether or not the respondents petition-in- intervention was converted to a money claim and whether the [trial court] acting as a probate court could approve the sale and compel the petitioners to execute [a] deed of conveyance even for the share alone of Eliodoro P. Sandejas Sr.xxxiii[9] In brief, the Petition poses the main issue of whether the CA erred in modifying the trial courts Decision and in obligating petitioners to sell 3/5 of the disputed properties to respondent, even if the suspensive condition had not been fulfilled. It also raises the following collateral issues: (1) the settlement courts jurisdiction; (2) respondent-intervenors standing to file an application for the approval of the sale of realty in the settlement case, (3) the decedents bad faith, and (4) the computation of the decedents share in the realty under administration. This Courts Ruling
The Petition is partially meritorious. Main Issue:
Obligation With a Suspensive Condition
Petitioners argue that the CA erred in ordering the conveyance of the disputed 3/5 of the parcels of land, despite the nonfulfillment of the suspensive condition -- court approval of the sale -- as contained in the Receipt of Earnest Money with Promise to Sell and to Buy (also referred to as the Receipt). Instead, they assert that because this condition had not been satisfied, their obligation to deliver the disputed parcels of land was converted into a money claim. We disagree. Petitioners admit that the agreement between the deceased Eliodoro Sandejas Sr. and respondent was a contract to sell. Not exactly. In a contract to sell, the payment of the purchase price is a positive suspensive condition. The vendors obligation to convey the title does not become effective in case of failure to pay.xxxiv[10] On the other hand, the agreement between Eliodoro Sr. and respondent is subject to a suspensive condition -- the procurement of a court approval, not full payment. There was no reservation of ownership in the agreement. In accordance with paragraph 1 of the Receipt, petitioners were supposed to deed the disputed lots over to respondent. This they could do upon the courts approval, even before full payment. Hence, their contract was a conditional sale, rather than a contract to sell as determined by the CA. When a contract is subject to a suspensive condition, its birth or effectivity can take place only if and when the condition happens or is fulfilled.xxxv[11] Thus, the intestate courts grant of the Motion for Approval of the sale filed by respondent resulted in petitioners obligation to execute the Deed of Sale of the disputed lots in his favor. The condition having been satisfied, the contract was perfected. Henceforth, the parties were bound to fulfill what they had expressly agreed upon. Court approval is required in any disposition of the decedents estate per Rule 89 of the Rules of Court. Reference to judicial approval, however, cannot adversely affect the substantive rights of heirs to dispose of their own pro indiviso shares in the co- heirship or co-ownership.xxxvi[12] In other words, they can sell their rights, interests or participation in the property under administration. A stipulation requiring court approval does not affect the validity and the effectivity of the sale as regards the selling heirs. It merely implies that the property may be taken out of custodia legis, but only with the courts permission.xxxvii[13] It would seem that the suspensive condition in the present conditional sale was imposed only for this reason. Thus, we are not persuaded by petitioners argument that the obligation was converted into a mere monetary claim. Paragraph 4 of the Receipt, which petitioners rely on, refers to a situation wherein the sale has not materialized. In such a case, the seller is bound to return to the buyer the earnest money paid plus interest at fourteen percent per annum. But the sale was approved by the intestate court; hence, the proviso does not apply. Because petitioners did not consent to the sale of their ideal shares in the disputed lots, the CA correctly limited the scope of the Receipt to the pro-indiviso share of Eliodoro Sr. Thus, it correctly modified the intestate courts ruling by excluding their shares from the ambit of the transaction. First Collateral Issue:
Jurisdiction of Settlement Court
Petitioners also fault the CA Decision by arguing, inter alia, (a) jurisdiction over ordinary civil action seeking not merely to enforce a sale but to compel performance of a contract falls upon a civil court, not upon an intestate court; and (b) that Section 8 of Rule 89 allows the executor or administrator, and no one else, to file an application for approval of a sale of the property under administration. Citing Gil v. Cancioxxxviii[14] and Acebedo v. Abesamis,xxxix[15] petitioners contend that the CA erred in clothing the settlement court with the jurisdiction to approve the sale and to compel petitioners to execute the Deed of Sale. They allege factual differences between these cases and the instant case, as follows: in Gil, the sale of the realty in administration was a clear and an unequivocal agreement for the support of the widow and the adopted child of the decedent; and in Acebedo, a clear sale had been made, and all the heirs consented to the disposition of their shares in the realty in administration. We are not persuaded. We hold that Section 8 of Rule 89 allows this action to proceed. The factual differences alleged by petitioners have no bearing on the intestate courts jurisdiction over the approval of the subject conditional sale. Probate jurisdiction covers all matters relating to the settlement of estates (Rules 74 & 86-91) and the probate of wills (Rules 75-77) of deceased persons, including the appointment and the removal of administrators and executors (Rules 78-85). It also extends to matters incidental and collateral to the exercise of a probate courts recognized powers such as selling, mortgaging or otherwise encumbering realty belonging to the estate. Indeed, the rules on this point are intended to settle the estate in a speedy manner, so that the benefits that may flow from such settlement may be immediately enjoyed by the heirs and the beneficiaries.xl[16] In the present case, the Motion for Approval was meant to settle the decedents obligation to respondent; hence, that obligation clearly falls under the jurisdiction of the settlement court. To require respondent to file a separate action -- on whether petitioners should convey the title to Eliodoro Sr.s share of the disputed realty -- will unnecessarily prolong the settlement of the intestate estates of the deceased spouses. The suspensive condition did not reduce the conditional sale between Eliodoro Sr. and respondent to one that was not a definite, clear and absolute document of sale, as contended by petitioners. Upon the occurrence of the condition, the conditional sale became a reciprocally demandable obligation that is binding upon the parties.xli[17] That Acebedo also involved a conditional sale of real propertyxlii[18] proves that the existence of the suspensive condition did not remove that property from the jurisdiction of the intestate court. Second Collateral Issue: Intervenors Standing
Petitioners contend that under said Rule 89, only the executor or administrator is authorized to apply for the approval of a sale of realty under administration. Hence, the settlement court allegedly erred in entertaining and granting respondents Motion for Approval. We read no such limitation. Section 8, Rule 89 of the Rules of Court, provides: SEC. 8. When court may authorize conveyance of realty which deceased contracted to convey. Notice. Effect of deed.Where the deceased was in his lifetime under contract, binding in law, to deed real property, or an interest therein, the court having jurisdiction of the estate may, on application for that purpose, authorize the executor or administrator to convey such property according to such contract, or with such modifications as are agreed upon by the parties and approved by the court; and if the contract is to convey real property to the executor or administrator, the clerk of the court shall execute the deed. x x x. This provision should be differentiated from Sections 2 and 4 of the same Rule, specifically requiring only the executor or administrator to file the application for authority to sell, mortgage or otherwise encumber real estate for the purpose of paying debts, expenses and legacies (Section 2);xliii[19] or for authority to sell real or personal estate beneficial to the heirs, devisees or legatees and other interested persons, although such authority is not necessary to pay debts, legacies or expenses of administration (Section 4).xliv[20] Section 8 mentions only an application to authorize the conveyance of realty under a contract that the deceased entered into while still alive. While this Rule does not specify who should file the application, it stands to reason that the proper party must be one who is to be benefited or injured by the judgment, or one who is to be entitled to the avails of the suit.xlv[21] Third Collateral Issue: Bad Faith
Petitioners assert that Eliodoro Sr. was not in bad faith, because (a) he informed respondent of the need to secure court approval prior to the sale of the lots, and (2) he did not promise that he could obtain the approval. We agree. Eliodoro Sr. did not misrepresent these lots to respondent as his own properties to which he alone had a title in fee simple. The fact that he failed to obtain the approval of the conditional sale did not automatically imply bad faith on his part. The CA held him in bad faith only for the purpose of binding him to the conditional sale. This was unnecessary because his being bound to it is, as already shown, beyond cavil. Fourth Collateral Issue: Computation of Eliodoros Share
Petitioners aver that the CAs computation of Eliodoro Sr.s share in the disputed parcels of land was erroneous because, as the conjugal partner of Remedios, he owned one half of these lots plus a further one tenth of the remaining half, in his capacity as a one of her legal heirs. Hence, Eliodoros share should be 11/20 of the entire property. Respondent poses no objection to this computation.xlvi[22] On the other hand, the CA held that, at the very least, the conditional sale should cover the one half (1/2) pro indiviso conjugal share of Eliodoro plus his one tenth (1/10) hereditary share as one of the ten legal heirs of the decedent, or a total of three fifths (3/5) of the lots in administration.xlvii[23] Petitioners computation is correct. The CA computed Eliodoros share as an heir based on one tenth of the entire disputed property. It should be based only on the remaining half, after deducting the conjugal share.xlviii[24] The proper determination of the seller-heirs shares requires further explanation. Succession laws and jurisprudence require that when a marriage is dissolved by the death of the husband or the wife, the decedents entire estate under the concept of conjugal properties of gains -- must be divided equally, with one half going to the surviving spouse and the other half to the heirs of the deceased.xlix[25] After the settlement of the debts and obligations, the remaining half of the estate is then distributed to the legal heirs, legatees and devices. We assume, however, that this preliminary determination of the decedents estate has already been taken into account by the parties, since the only issue raised in this case is whether Eliodoros share is 11/20 or 3/5 of the disputed lots. WHEREFORE, the Petition is hereby PARTIALLY GRANTED. The appealed Decision and Resolution are AFFIRMED with the MODIFICATION that respondent is entitled to only a pro-indiviso share equivalent to 11/20 of the disputed lots. SO ORDERED. Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur. EN BANC
[G.R. No. L-24434. January 17, 1968.]
HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIAS REGANON, JOSEFA REGANON, VIOLETA REGANON and FLORA REGANON, Plaintiffs-Appellees, v. RUFINO IMPERIAL, Defendant-Appellant.
Torcuato L. Galon for Plaintiffs-Appellees.
V. Lacaya, for Defendant-Appellant.
SYLLABUS
1. ATTACHMENT; PROPERTY IN CUSTODIA LEGIS; NEW RULES OF COURT, EFFECT. Under the old Rules it was held that property under custodial legis cannot be attached. The New Rules, however, specifically provides for the procedure to be followed in case the property to be attached is in custodia legis. The clear import of this new provisions is that property under custodia legis is now attachable, subject to the mode set forth in said rule. (Rule 57, Section 7)
2. ID.; ID.; EFFECT OF DEATH UPON GUARDIANSHIP OF DECEASED WARD. The death of the ward necessarily terminates the guardianship and thereupon all powers and duties of the guardian cease, except the duty which remains to make a proper accounting and settlement in the probate court. Upon the death of the ward, Eulogio Imperial on September 13, 1962, the rights to his succession from the moment of his death were transmitted to his heirs.
3. SUCCESSION; AUTOMATIC TRANSMISSION OF RIGHTS TO HEIRS, UPON MOMENT OF DEATH. The rights to the succession of a person are transmitted from the moment of death and, where, as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir immediately succeeds, by force of law to the dominion, ownership and possession of the properties of his predecessor, and consequently stands legally in shoes of the latter.
4. JUDGMENT; EXECUTION OF JUDGMENT; INTERESTS OF AN HEIR, IN ESTATE OF DECEASED PERSON, SUBJECT TO ATTACHMENT FOR PURPOSES OF EXECUTION. The interest of an heir, in the estate of a deceased person may be attached for purpose of execution even if the estate is in the process of settlement before the courts. This is a settled matter in this jurisdiction.
5. SUCCESSION; EXTRAJUDICIAL PARTITION; EFFECT. The Deed of Extrajudicial Partition executed by the heirs on May 25, 1964, provided all the requisites of its validity were fulfilled settled the entire estate of the decedent and the heirs were at full liberty to withdraw the residuary estate from the Philippine National Bank Dipolog Branch, and divide it among themselves.
6. ID.; EXEMPTION FROM EXECUTION OF MONTHLY USVA ALLOWANCES, A RIGHT PERSONALISSIMA, NOT TRANSMISSIBLE TO HEIRS OF THE DECEASED VETERAN. Any pension, annuity or gratuity granted by the Government in recognition of past services rendered is primordially aimed at tiding its beneficiaries during their old age and/or disability. This right is personalissima, purely personal, because founded on necessity. Where the recipient dies, however, the motivating necessity underlying the grant ceases to exist. With more reason in this case where the law (Rep. Act 360) providing for exemption from execution is intended to benefit US veterans residing here and is merely a manifestation of comity.
7. CIVIL LAW; PARTITION, EXTRAJUDICIAL; EFFECT THEREOF. Where the heirs have divided the estate among themselves through a Deed of Extra-Judicial Partition, as in this case, the end result is that the property is no longer that of the estate but of the individual heirs. Thus, one of the heirs cannot thereafter secure the appointment of an administrator to take charge of and administer the estate or a part thereof, which no longer pertains to the estate but to the individual heirs, whether it remains undivided or not.
D E C I S I O N
BENGZON, J.P., J .:
This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964, respectively, of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).
The facts of the case are admitted by both parties.
On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership and possession of about one- hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952, situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7,9954 hectares), with damages, against Rufino Imperial.
Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, 1963 filed a motion to declare the former in default. The trial court granted the motion in its order dated April 10, 1963.
On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court acting as Commissioner.
The court a quo on May 6, 1963, rendered a decision declaring the plaintiffs lawful owners of the land in question and entitled to its peaceful possession and enjoyment; ordering defendant immediately to vacate the portion occupied by him and to restore the peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs to amount of P1,929.20 and the costs.
On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This was granted by the trial court in its order of December 9, 1963.
The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriffs return of proceedings reporting the garnishment and sale of a carabao and goat belonging to defendant for P153.00, and the attachment and sale of defendants parcel of land covered by Tax Declaration No. 4694, situated in Sicet, Polanco, Zamboanga del Norte, for P500.00 both sales having been made to the only bidder, plaintiffs counsel Atty. Vic T. Lacaya.
On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del Norte in Sp. Proc. No. R-145.
On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a Deed of Extrajudicial Partition of the residuary estate, wherein was apportioned P1,471.97 as defendant Rufino Imperials share.
Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for issuance of an alias writ of execution and of an order directing the manager, or the representative, of the Philippine National Bank Dipolog Branch, to hold the share of defendant and deliver the same to the provincial sheriff of the province to be applied to the satisfaction of the balance of the money judgment. This was granted by the trial court (Branch II) in its order dated June 9, 1964.
On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy addressed to defendant, giving notice of the garnishment of the rights, interests, shares and participation that defendant may have over the residuary estate of the late Eulogio Imperial, consisting of the money deposited in the Philippine National Bank Dipolog Branch.
Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964 filed a motion for reconsideration of the order dated June 9, 1964, and to quash the alias writ of execution issued pursuant to it, to which plaintiffs filed their opposition on July 6, 1964. On July 14, 1964, the trial court denied defendants aforesaid motion.
Defendants second motion for reconsideration likewise having been denied by the trial court in its order of August 11, 1964, defendant appealed to Us, raising the following issues:chanrob1es virtual 1aw library
(1) Upon the death of a ward, is the money accumulated in his guardianship proceedings and deposited in a bank, still considered in custodia legis and therefore not subject to attachment?
(2) Is the residuary estate of a U.S. veteran, which consists in the aggregate accumulated sum from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, exempt from execution?
Defendant-appellant argues that the property of an incompetent under guardianship is in custodia legis and therefore can not be attached.
It is true that in a former case 1 it was held that property under custodia legis can not be attached. But this was under the old Rules of Court. The new Rules of Court 2 now specifically provides for the procedure to be followed in case what is attached is in custodia legis. 3 The clear import of this new provision is that property under custodia legis is now attachable, subject to the mode set forth in said rule.
Besides, the ward having died, the guardianship proceedings no longer subsist:jgc:chanrobles.com.ph
"The death of the ward necessarily terminates the guardianship, and thereupon all powers and duties of the guardian cease, except the duty, which remains, to make a proper accounting and settlement in the probate court." 4
As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I of the Court of First Instance of Zamboanga del Norte in which it was pending, in its order of February 8, 1964, where it stated
"In the meantime, the guardian Philippine National Bank is hereby directed to deposit the residuary estate of said ward with its bank agency in Dipolog, this province, in the name of the estate of the deceased ward Eulogio Imperial, preparatory to the eventual distribution of the same to the heirs when the latter shall be known, and upon proof of deposit of said residuary estate, the guardian Philippine National Bank shall forthwith be relieved from any responsibility as such, and this proceedings shall be considered closed and terminated." 5
And the condition has long been fulfilled, because on March 13, 1964 the Philippine National Bank Manila deposited the residuary estate of the ward with the Philippine National Bank-Dipolog Branch, evidenced by a receipt attached to the records in Sp. Proc. No. R- 145. 6
When Eulogio Imperial died on September 13, 1962, the rights to his succession from the moment of his death were transmitted to his heirs, one of whom is his son and heir, Defendant-Appellant herein. 7 This automatic transmission can not but proceed with greater ease and certainty than in this case where the parties agree that the residuary estate is not burdened with any debt. For,
"The rights to the succession of a person are transmitted from the moment of death, and where, as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir immediately succeeds, by force of law, to the dominion, ownership, and possession of the properties of his predecessor, and consequently stands legally in the shoes of the latter." 8
That the interest of an heir in the estate of a deceased person may be attached for purposes of execution, even if the estate is in the process of settlement before the courts, is already a settled matter in this jurisdiction. 9 It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on May 25, 1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the entire estate of the decedent provided all the requisites for its validity are fulfilled 10 even without the approval of the court. Therefore, the estate for all practical purposes has been settled. The heirs are at full liberty to withdraw the residuary estate from the Philippine National Bank- Dipolog Branch and divide it among themselves. The only reason they have not done so is because of the alleged illegal withdrawal from said estate of the amount of P1,080.00 by one Gloria Gomez by authority of Branch I of the Court of first Instance of Zamboanga del Norte, which incident is now on appeal before the Court of Appeals. This appeal, however, does not detract any from the fact that the guardianship proceedings is closed and terminated and the residuary estate no longer under custodia legis.
Finally, it is defendant-appellants position that the residuary estate of Eulogio Imperial, a former U.S. veteran, having been set aside from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, is exempt from execution.
Any pension, annuity. or gratuity granted by a Government to its officers or employees in recognition of past services rendered, is primordially aimed at tiding them over during their old age and/or disability. This is therefore a right personalissima, purely personal because founded on necessity. It requires no argument to show that where the recipient dies, the necessity motivating or underlying its grant necessarily ceases to be. Even more so in this case where the law 11 providing for the exemption is calculated to benefit U.S. veterans residing here, and is therefore merely a manifestation of comity.
Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have already executed a Deed of Extrajudicial Partition the end result of which is that the property is no longer the property of the estate but of the individual heirs. And it is settled that:jgc:chanrobles.com.ph
"When the heirs by mutual agreement have divided the estate among themselves, one of the heirs can not thereafter secure the appointment of an administrator to take charge of and administer the estate or a part thereof. The property is no longer the property of the estate, but of the individual heirs, whether it remains undivided or not." 12
WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-appellant. So ordered.
Concepcion, C.J., J.B.L., Reyes, Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Angeles and Fernando, JJ., concur.
PhilippineLaw.info Jurisprudence 1967 June PhilippineLaw.info Jurisprudence SCRA Vol. 20 G.R. No. L-25952, Salvador v. Enriquez, 20 SCRA 603 Republic of the Philippines SUPREME COURT Manila EN BANC June 30, 1967 G.R. No. L-25952 MARGARITA SALVADOR, in her own behalf and as Attorney-in-fact of CANDIDA SALVADOR, ET AL., petitioners, vs. THE HON. JUDGE ANDRES STA. MARIA, DOMINADOR CARDENAS, REMEDIOS CABRERA, ALBERTO M. K. JAMIR and SIMEON ENRIQUEZ, respondents. Arturo Joaquin for petitioners. Pelaez, Jalandoni and Jamir and S. V. Enriquez, for respondent Simeon Enriquez. C. E. Medina and J. M. Locsin for respondent Philippine National Bank. Bala and Enriquez for the other respondents. BENGZON, J.P., J .: Seven parcels of titled land and two parcels of untitled land, situated in Bigaa, Bulacan, were owned by Celestino Salvador. In 1941, he executed a deed of sale over them in favor of the spouses Alfonso Salvador and Anatolia Halili. Alleging that the sale was void for lack of consideration, he filed on May 12,1955, against said vendees, a suit for reconveyance of said parcels of land (CFI of Bulacan, Br. I, Civil Case No. 1082). On April 27, 1956, Celestino Salvador died, testate. As his alleged heirs, twenty-one persons [[1]] were on May 18, 1956 substituted as plaintiffs in the action for reconveyance. And meanwhile, special proceedings for the probate of his will and for letters testamentary was instituted (CFI of Bulacan, Br. II, Sp. Proceedings No. 940). In said proceedings, Dominador Cardenas was appointed on June 11, 1956 special administrator of Celestino Salvador's testate estate. On September 4, 1956 the administrator filed in Sp. Proceedings No. 940 an inventory of properties of the estate, covering the same parcels of land subject matter of the reconveyance action. On September 7, 1956, Celestino Salvador's will was admitted to probate and Dominador Cardenas was appointed executor of said will. Actual issuance of letters testamentary to him was made on October 27, 1956. Twenty-three (23) persons were instituted heirs in the will. Of these, nine (9) were not among the twenty-one (21) alleged relatives substituted in the reconveyance case; and of the twenty-one (21) substituted alleged heirs seven (7) were not instituted in the will. 2 In the suit for reconveyance, on November 26, 1956, the Court (CFI of Bulacan, Br. I) rendered judgment, ordering the defendants therein (the spouses Alfonso and Anatolia), to reconvey the parcels of land to the estate of Celestino Salvador. Appeal therefrom to the Court of Appeals was interposed by said defendants. On August 12, 1961, the Court of Appeals affirmed the reconveyance judgment, with the correction that reconveyance be in favor of the twenty-one (21) heirs substituted as plaintiffs therein. About three years later, pursuant to an order of the CFI of Bulacan, Br. II, in the testacy proceedings, dated April 21, 1964, one of the parcels of land involved, Lot 6, was sold so that with its proceeds debtors who filed claims may be paid. The Philippine National Bank bought it at P41,184.00. Said amount was then deposited in the same bank by the administrator, subject to Court order. On December 18, 1964, defendants in the suit for reconveyance executed a deed of reconveyance over the subject parcels of land, in favor of Celestino Salvador's estate. Revoking the same as lot in accordance with the final judgment therein, the CFI of Bulacan, Br. I, on September 24, 1965, ordered a new deed of reconveyance to be executed, in favor of the twenty-one persons substituted as plaintiffs in that action. Accordingly, on September 30, 1965, a new deed of reconveyance was made, in favor of said twenty-one (21) persons as heirs of Celestino. Following this, on November 22, 1965, said Br. I, ordered the corresponding title certificate (TCT No. 54639) in the administrator's name, cancelled; new title certificate to be issued in the names of the same twenty- one (21) persons. Said order was carried out, and TCT No. 63734 was issued in the names of the twenty-one persons. 3 On December 7, 1965, Br. I (reconveyance court) ordered the Philippine National Bank to release the P41,184.00 proceeds of the sale of Lot 6, to the twenty- one (21) plaintiffs in the reconveyance case. Apparently, although the passbook was given by the administrator to said twenty-one persons, no release was made, as the Philippine National Bank awaited Br. II's order. Br. II, on March 1, 1966, approved the following claims against the estate: Taxes Nat'l. gov't P5,328.23 Atty's fees Atty. Enriquez 8,000.00 Atty's fees Atty. Jamir 12,000.00 Loan R. Cabrera 13,544.35 T O T A L . . . . . . . .
38,872.58 ========= On March 30, 1966, said Br. II (probate court), ordered return of the passbook to the administrator; and release to the administrator by the PNB of the P41,184.00, or so much thereof is needed to pay the afore-stated debts of the estate. After failing to get reconsideration of said order, the twenty-one (21) substituted heirs, on April 25, 1966, filed with Us the present special civil action for certiorari with preliminary injunction to assail the order to pay the debts of the estate with the P41,184.00 proceeds of the sale of Lot 6; and to question Br. II's (probate court) power to dispose of the parcels of land involved in the reconveyance suit in Br. I. Raised are these issues: (1) Are the parcels of land and the proceeds of the sale of one of them, properties of the estate or not? (2) Does final judgment in the reconveyance suit in favor of the twenty-one so-called heirs who substituted Celestino Salvador, bar the disposition of the reconveyed properties by the settlement court? It is a settled point of law that the right of heirs to specific, distributive shares of inheritance does not become finally determinable until all the debts of the estate are paid. Until then, in the face of said claims, their rights cannot be enforced, are inchoate, and subject to the existence of a residue after payment of the debts (Castellvi de Raquiza v. Castellvi, L-17630, October 31, 1963; Jimoga-on v. Belmonte, 84 Phil. 545; Sec. 1, Rule 90, Rules of Court). Petitioners do not question the existence of the debts abovementioned. They only contend that the properties involved having been ordered by final judgment reconveyed to them, not to the estate the same are not properties of the estate but their own, and thus, not liable for debts of the estate. Said contention is self-refuting. Petitioners rely for their rights on their alleged character as heirs of Celestino; as such, they were substituted in the reconveyance case; the reconveyance to them was reconveyance to them as heirs of Celestino Salvador. It follows that the properties they claim are, even by their own reasoning, part of Celestino's estate. The right thereto as allegedly his heirs would arise only if said parcels of land are part of the estate of Celestino, not otherwise. Their having received the same, therefore, in the reconveyance action, was perforce in trust for the estate, subject to its obligations. They cannot distribute said properties among themselves as substituted heirs without the debts of the estate being first satisfied. At any rate, the proceeds of Lot 6 alone (P41,184.00) appears more than sufficient to pay the debt (P38,872.58); and there will remain the other parcels of land not sold. As to the question of who will receive how much as heirs, the same is properly determinable by the settlement court, after payment of the debts (Pimentel v. Palanca, 5 Phil. 436; Maningat v. Castillo, 75 Phil. 532; Jimoga-on v. Belmonte, supra). Wherefore, the petition for certiorari is denied, without costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar Sanchez and Castro JJ., concur. G.R. No. L-25049, Ramirez, Ramirez and Eguaras v. Baltazar et al., 24 SCRA 918 Republic of the Philippines SUPREME COURT Manila EN BANC August 30, 1968 G.R. No. L-25049 FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE EGUARAS, plaintiffs-appellants, vs. ARTEMIO BALTAZAR, ET AL., defendants-appellees. Eduardo M. Peralta for plaintiffs-appellants. Tomas P. Anonuevo for defendants-appellees Artemio Baltazar and Susana Flores. Tirso Caballero for defendant-appellee Artemio Diawan. ANGELES, J .: On appeal from an order dismissing the complaint, on motion to dismiss, in Civil Case No. SC-319 of the Court of First Instance of Laguna. It appears that on 6 January 1959, Victoriana Eguaras single, made and executed a real estate mortgage over a parcel of land, owned by her in fee simple, as security for a loan of P2,170.00 in favor of the spouses Artemio Baltazar and Susana Flores. Upon the demise of the mortgagor, the mortgagees, as creditors of the deceased, on 16 September 1960 filed a petition for the intestate proceedings of her estate, in the Court of First Instance of Laguna, docketed as Civil Case No. SC-99 wherein said mortgages, as petitioners, alleged that Filemon Ramirez and Monica Ramirez are the heirs of the deceased. Filemon Ramirez was appointed administrator of the estate; however, having failed to qualify, on 16 January 1961, the court appointed Artemio Diawan, then a deputy clerk of court, administrator of the estate who, in due time, qualified for the office. On 19 April 1961, the mortgagees, Artemio Baltazar and Susana Flores, filed a complaint for foreclosure of the aforesaid mortgage, against Artemio Diawan, in his capacity as administrator of the estate, docketed as Civil Case No. SC-292 of the Court of First Instance of Laguna. The defendant-administrator was duly served with summons but he failed to answer, whereupon, on petition of the plaintiffs said defendant was declared in default. The case was referred to a commissioner to receive the evidence for the plaintiffs, and defendant- administrator, as deputy clerk of court, acted as such hearing commissioner. On 16 August 1961, decision was rendered decreeing the foreclosure of the mortgaged property and the sale thereof, if, within ninety days from finality of the decision, the obligation was not fully paid. The judgment not having been satisfied, a writ of execution was issued for the sale of the mortgaged property, and after compliance with the requirements of the law regarding the sending, posting and publication of the notice of sale, the Sheriff sold the property at public auction to the highest bidder, who happened to be the plaintiffs themselves, for the sum of P2,888.50 covering the amount of the judgment, plus the expenses of the sale and the Sheriff's fees. On petition of the plaintiffs, the sale was confirmed by the court on 26 January 1962. On 6 February 1962, Filemon Ramirez, Monica Ramirez and Jose Eguaras, the first two being the heirs named in the petition for intestate proceedings, filed a complaint designated "For the Annulment of all Proceedings in said Civil Case No. SC-292 for the Foreclosure of the Mortgage", against the spouses Artemio Baltazar and Susana Flores, and Artemio Diawan, in his capacity as administrator of the estate of Victoriana Eguaras, deceased, and Silverio Talabis, in his capacity as deputy provincial sheriff of Laguna, docketed as Civil Case No. SC-319 of the Court of First Instance of Laguna. The facts hereinabove narrated are, succinctly, contained in the complaint in said Civil Case No. SC- 319, with the additional averments that the defendant Diawan, the deputy clerk of court appointed as administrator of the intestate estate of the deceased, acted in collusion with the other defendants Artemio Baltazar and Susana Flores, deliberately and in fraud of the plaintiffs: (a) in allowing the reglementary period within which to file an answer to lapse without notifying and/or informing the said plaintiffs of the complaint for foreclosure, as a result of which he was declared in default to the prejudice of the estate which he represents; (b) that had the plaintiffs (Monica and Filemon) been notified of the pendency of the case, the defendant administrator could have interposed a counterclaim because payment in the sum of P1,548.52 had been made and received by the mortgagees on account of the debt; (c) in presiding as hearing officer in the ex parte hearing in Civil Case No. 292, to receive evidence for plaintiffs therein, notwithstanding the fact that there was another deputy clerk of court available who could have acted in his stead, as a result of which an anomalous situation was created whereby he was a defendant and at the same time a commissioner receiving evidence against himself as administrator; (d) in allowing judgment to become final without notifying the plaintiffs; (e) in deliberately, allowing the 90-day period within which to make payment to expire without notifying the heirs, as a result of which the said heirs were not afforded an opportunity to make payments ordered by the Court in its decision; and (f) in refusing to help the heirs seek postponement of the auction sale. It is also alleged that it was only when the property foreclosed was published for sale at public auction that the heirs came to know about the foreclosure proceedings. The defendants spouses, Artemio Baltazar and Susana Flores, filed a motion to dismiss the complaint on the ground that the plaintiffs have no legal capacity to sue; defendant Diawan likewise moved to dismiss on two grounds: that plaintiffs have no legal capacity to sue and that the complaint states no cause of action. Despite vigorous opposition interposed by the plaintiffs against the aforesaid motions to dismiss, the court, on 13 March 1962, dismissed the complaint with costs against the plaintiffs, reasoning thus: that "upon consideration of the evidence, said defendant could not have offered any evidence to avoid the foreclosure of the mortgage which the Court found to be in order. Under the circumstances and with the apparent disinterestedness of Filemon and Rolando to qualify as administrator when appointed, there could not have been any connivance and/or collusion between plaintiffs in this case and Artemio Diawan as administrator"; and that plaintiffs have no legal capacity to sue since their status as legal heirs of the deceased has yet to be determined precisely in Special Proceeding No. SC-99, and until such status is so fixed by the Court, they have no cause of action against defendants. In that order of 13 March 1962, the court also denied plaintiffs' petition for the issuance of a writ of preliminary injunction to enjoin defendants from entering and taking physical possession of the land in question on the ground "that possession thereof was effected and delivered by the Provincial Sheriff to Artemio Baltazar and Susana Flores on February, 1962." Reconsideration of the aforesaid order having been denied, the plaintiffs took the present appeal where they assigned the following errors: (1) in holding that plaintiffs-appellants have no legal capacity to sue until their status as legal heirs of the deceased is determined in Special Proceeding No. SC-99; (2) in ruling that there was no collusion or connivance among the defendants- appellees, despite the fact that the issue in the motion to dismiss is purely legal, not factual; and (3) in denying the petition for a writ of preliminary injunction. At the outset, let it be remembered that the defendants- appellees, in availing themselves of the defense that the plaintiffs-appellants had not been declared to be the heirs of the deceased Victoriana Eguaras, have overlooked the fact that the (defendants-appellees) themselves in their petition for intestate proceedings (Case SC-99) have alleged that Filemon Ramirez and Monica Ramirez, two of herein plaintiffs-appellants, are the heirs of the deceased. Insofar as defendants- appellees are concerned, it is our opinion that they are estopped from questioning the heirship of these two named persons to the estate of the deceased. There is no question that the rights to succession are automatically transmitted to the heirs from the moment of the death of the decedent. [[1]] While, as a rule, the formal declaration or recognition to such successional rights needs judicial confirmation, this Court has, under special circumstances, protected these rights from encroachments made or attempted before the judicial declaration. [[2]] In Pascual vs. Pascual, [[3]] it was ruled that although heirs have no legal standing in court upon the commencement of testate or intestate proceedings, this rule admits of an exception as "when the administrator fails or refuses to act in which event the heirs may act in his place." A similar situation obtains in the case at bar. The administrator is being charged to have been in collusion and connivance with the mortgagees of a property of the deceased, allowing its foreclosure without notifying the heirs, to the prejudice of the latter. Since the ground for the present action to annul the aforesaid foreclosure proceedings is the fraud resulting from such insidious machinations and collusion in which the administrator has allegedly participated, it would be farfetched to expect the said administrator himself to file the action in behalf of the estate. And who else but the heirs, who have an interest to assert and to protect, would bring the action? Inevitably, this case should fall under the exception, rather than the general rule that pending proceedings for the settlement of the estate, the heirs have no right to commence an action arising out of the rights belonging to the deceased. On the second point raised, We fully agree with the plaintiffs-appellants that the lower court had gone too far in practically adjudicating the case on the merits when it made the observation that "there could not have been any connivance and/or collusion between plaintiffs in this case and Artemio Diawan as administrator." A thorough scrutiny of the allegations in the motions to dismiss filed by defendants-appellees does not indicate that that question was ever put at issue therein. On the other hand, the controversy on the existence or inexistence of collusion between the parties as a result of which judgment was rendered against the estate is the very core of the complaint that was dismissed. Undoubtedly, the cause of action is based on Section 30, Rule 132 of the Rules of Court. We are not, however, in accord with the third assigned error the denial of the motion for the issuance of preliminary injunction for it puts at issue the factual finding made by the lower court that the defendants had already been placed in possession of the property. At this stage of the proceeding, and considering the nature of the case before Us, such a question is, at this time, beyond the competence of the Court. PREMISES CONSIDERED, the order appealed from is hereby set aside insofar as it dismissed the complaint in Civil Case No. SC-319, and the records be remanded to the lower court for further proceedings. Costs against defendants-appellees. The Clerk of Court is directed to furnish a copy of this decision to the Department of Justice for its information. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Fernando, JJ., concur. THIRD DIVISION
JOSELITO MUSNI PUNO (as heir of the late Carlos Puno), Petitioner,
G.R. No. 177066
Present:
- versus -
PUNO ENTERPRISES, INC., represented by JESUSA PUNO, Respondent.
YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ.
Upon the death of a stockholder, the heirs do not automatically become stockholders of the corporation; neither are they mandatorily entitled to the rights and privileges of a stockholder. This, we declare in this petition for review on certiorari of the Court of Appeals (CA) Decision10[1] dated October 11, 2006 and Resolution dated March 6, 2007 in CA-G.R. CV No. 86137.
The facts of the case follow:
Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno Enterprises, Inc. On March 14, 2003, petitioner Joselito Musni Puno, claiming to be an heir of Carlos L. Puno, initiated a complaint for specific performance against respondent. Petitioner averred that he is the son of the deceased with the latters common-law wife, Amelia Puno. As surviving heir, he claimed entitlement to the rights and privileges of his late father as stockholder of respondent. The complaint thus prayed that respondent allow petitioner to inspect its corporate book, render an accounting of all the transactions it entered into from 1962, and give petitioner all the profits, earnings, dividends, or income pertaining to the shares of Carlos L. Puno.11[2]
Respondent filed a motion to dismiss on the ground that petitioner did not have the legal personality to sue because his birth certificate names him as Joselito Musni Muno. Apropos, there was yet a need for a judicial declaration that Joselito Musni Puno and Joselito Musni Muno were one and the same.
The court ordered that the proceedings be held in abeyance, ratiocinating that petitioners certificate of live birth was no proof of his paternity and relation to Carlos L. Puno.
Petitioner submitted the corrected birth certificate with the name Joselito M. Puno, certified by the Civil Registrar of the City of Manila, and the Certificate of Finality thereof. To hasten the disposition of the case, the court conditionally admitted the corrected birth certificate as genuine and authentic and ordered respondent to file its answer within fifteen days from the order and set the case for pretrial.12[3]
On October 11, 2005, the court rendered a Decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering Jesusa Puno and/or Felicidad Fermin to allow the plaintiff to inspect the corporate books and records of the company from 1962 up to the present including the financial statements of the corporation.
The costs of copying shall be shouldered by the plaintiff. Any expenses to be incurred by the defendant to be able to comply with this order shall be the subject of a bill of costs.
SO ORDERED.13[4]
On appeal, the CA ordered the dismissal of the complaint in its Decision dated October 11, 2006. According to the CA, petitioner was not able to establish the paternity of and his filiation to Carlos L. Puno since his birth certificate was prepared without the intervention of and the participatory acknowledgment of paternity by Carlos L. Puno. Accordingly, the CA said that petitioner had no right to demand that he be allowed to examine respondents books. Moreover, petitioner was not a stockholder of the corporation but was merely claiming rights as an heir of Carlos L. Puno, an incorporator of the corporation. His action for specific performance therefore appeared to be premature; the proper action to be taken was to prove the paternity of and his filiation to Carlos L. Puno in a petition for the settlement of the estate of the latter.14[5]
Petitioners motion for reconsideration was denied by the CA in its Resolution15[6] dated March 6, 2007.
In this petition, petitioner raises the following issues:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE JOSELITO PUNO IS ENTITLED TO THE RELIEFS DEMANDED HE BEING THE HEIR OF THE LATE CARLOS PUNO, ONE OF THE INCORPORATORS [OF] RESPONDENT CORPORATION.
II. HONORABLE COURT OF APPEALS ERRED IN RULING THAT FILIATION OF JOSELITO PUNO, THE PETITIONER[,] IS NOT DULY PROVEN OR ESTABLISHED.
III. THE HONORABLE COURT ERRED IN NOT RULING THAT JOSELITO MUNO AND JOSELITO PUNO REFERS TO THE ONE AND THE SAME PERSON.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT RESPONDENT MERELY DISPUTES IS THE SURNAME OF THE PETITIONER WHICH WAS MISSPELLED AND THE FACTUAL ALLEGATION E.G. RIGHTS OF PETITIONER AS HEIR OF CARLOS PUNO ARE DEEMED ADMITTED HYPOTHETICALLY IN THE RESPONDENT[S] MOTION TO DISMISS.
V. THE HONORABLE COURT OF APPEALS THEREFORE ERRED I[N] DECREEING THAT PETITIONER IS NOT ENTITLED TO INSPECT THE CORPORATE BOOKS OF DEFENDANT CORPORATION.16[7]
The petition is without merit. Petitioner failed to establish the right to inspect respondent corporations books and receive dividends on the stocks owned by Carlos L. Puno.
Petitioner anchors his claim on his being an heir of the deceased stockholder. However, we agree with the appellate court that petitioner was not able to prove satisfactorily his filiation to the deceased stockholder; thus, the former cannot claim to be an heir of the latter.
Incessantly, we have declared that factual findings of the CA supported by substantial evidence, are conclusive and binding.17[8] In an appeal via certiorari, the Court may not review the factual findings of the CA. It is not the Courts function under Rule 45 of the Rules of Court to review, examine, and evaluate or weigh the probative value of the evidence presented.18[9]
A certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of the certificate. The local civil registrar has no authority to record the paternity of an illegitimate child on the information of a third person.19[10] As correctly observed by the CA, only petitioners mother supplied the data in the birth certificate and signed the same. There was no evidence that Carlos L. Puno acknowledged petitioner as his son.
As for the baptismal certificate, we have already decreed that it can only serve as evidence of the administration of the sacrament on the date specified but not of the veracity of the entries with respect to the childs paternity.20[11]
In any case, Sections 74 and 75 of the Corporation Code enumerate the persons who are entitled to the inspection of corporate books, thus
Sec. 74. Books to be kept; stock transfer agent. x x x.
The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.
x x x x
Sec. 75. Right to financial statements. Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its most recent financial statement, which shall include a balance sheet as of the end of the last taxable year and a profit or loss of statement for said taxable year, showing in reasonable detail its assets and liabilities and the result of its operations.21[12]
The stockholders right of inspection of the corporations books and records is based upon his ownership of shares in the corporation and the necessity for self- protection. After all, a shareholder has the right to be
intelligently informed about corporate affairs.22[13] Such right rests upon the stockholders underlying ownership of the corporations assets and property.23[14]
Similarly, only stockholders of record are entitled to receive dividends declared by the corporation, a right inherent in the ownership of the shares.24[15]
Upon the death of a shareholder, the heirs do not automatically become stockholders of the corporation and acquire the rights and privileges of the deceased as shareholder of the corporation. The stocks must be distributed first to the heirs in estate proceedings, and the transfer of the stocks must be recorded in the books of the corporation. Section 63 of the Corporation Code provides that no transfer shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation.25[16] During such interim period, the heirs stand as the equitable owners of the stocks, the executor or administrator duly appointed by the court being vested with the legal title to the stock.26[17] Until a settlement and division of the estate is effected, the stocks of the decedent are held by the administrator or executor.27[18] Consequently, during such time, it is the administrator or executor who is entitled to exercise the rights of the deceased as stockholder.
Thus, even if petitioner presents sufficient evidence in this case to establish that he is the son of Carlos L. Puno, he would still not be allowed to inspect respondents books and be entitled to receive dividends from respondent, absent any showing in its transfer book that some of the shares owned by Carlos L. Puno were transferred to him. This would only be possible if petitioner has been recognized as an heir and has participated in the settlement of the estate of the deceased.
Corollary to this is the doctrine that a determination of whether a person, claiming proprietary rights over the estate of a deceased person, is an heir of the deceased must be ventilated in a special proceeding instituted precisely for the purpose of settling the estate of the latter. The status of an illegitimate child who claims to be an heir to a decedents estate cannot be adjudicated in an ordinary civil action, as in a case for the recovery of property.28[19] The doctrine applies to the instant case, which is one for specific performance to direct respondent corporation to allow petitioner to exercise rights that pertain only to the deceased and his representatives.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated October 11, 2006 and Resolution dated March 6, 2007 are AFFIRMED.
SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 165744 August 11, 2008 OSCAR C. REYES, petitioner, vs.
HON. REGIONAL TRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE CORPORATION, and RODRIGO C. REYES, respondents. D E C I S I O N BRION, J .: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals (CA) 1 promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002 2 in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes (Oscar) Motion to Declare Complaint as Nuisance or Harassment Suit. BACKGROUND FACTS Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in 1993. Although Pedros estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with Anastacias estate, which included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively. 3
On May 9, 2000, Zenith and Rodrigo filed a complaint 4
with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is "a derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and assets of ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] and to determine the shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares." 5 [Emphasis supplied.] In his Answer with Counterclaim, 6 Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes. He asserted, as a defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. He thus questioned the SECs jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes. When Republic Act (R.A.) No. 8799 7 took effect, the SECs exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a special commercial court. 8 The records of Rodrigos SEC case were thus turned over to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553. On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit. 9 He claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of the nature of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court. The RTC, in its Order dated November 29, 2002 (RTC Order), denied the motion in part and declared: A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties brothers and sisters. The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate. Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court. 10
Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus 11 and prayed that the RTC Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings. The appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It likewise denied Oscars motion for reconsideration in a Resolution dated October 21, 2004. Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of Court. ASSIGNMENT OF ERRORS Petitioner Oscar presents the following points as conclusions the CA should have made: 1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and 2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court. Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigos complaint before the RTC. THE COURTS RULING We find the petition meritorious. The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigos complaint. To resolve it, we rely on the judicial principle that "jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein." 12
JURISDICTION OF SPECIAL COMMERCIAL COURTS P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction: SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission. b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; and c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations. The allegations set forth in Rodrigos complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTCs special court jurisdiction. Our focus in examining the allegations of the complaint shall therefore be on these two provisions. Fraudulent Devices and Schemes The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiffs cause of action and must specify the relief sought. 13 Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity. 14
These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the stockholders. In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following: 3. This is a complaintto determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes. 3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses Pedro and Anastacia Reyes. x x x x 4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral. x x x x 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein. x x x x 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. x x x x 10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein, to their damage and prejudice. x x x x 11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children. [Emphasis supplied.] Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to which the allegations of fraud refer, do not sufficiently state an effective cause of action. 15 The late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud or mistake. 16
Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations. While the complaint contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial courts jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as "illegal and fraudulent" were not explained nor elaborated on. Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial courts jurisdiction. To fall within this jurisdiction, there must be sufficient nexus showing that the corporations nature, structure, or powers were used to facilitate the fraudulent device or scheme. Contrary to this concept, the complaint presented a reverse situation. No corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and eventually, the corporations President. This is the essence of the complaint read as a whole and is particularly demonstrated under the following allegations: 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein. x x x x 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.] In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading. 17 It is essential, therefore, for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the courts special commercial jurisdiction. We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of amending or withdrawing the complaint, but he consistently refused. The courts function in resolving issues of jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these allegations, to the determination of whether they are of such nature and subject that they fall within the terms of the law defining the courts jurisdiction. Regretfully, we cannot read into the complaint any specifically alleged corporate fraud that will call for the exercise of the courts special commercial jurisdiction. Thus, we cannot affirm the RTCs assumption of jurisdiction over Rodrigos complaint on the basis of Section 5(a) of P.D. No. 902-A. 18
Intra-Corporate Controversy A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. 19 The types of relationships embraced under Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC, 20
were as follows: a) between the corporation, partnership, or association and the public; b) between the corporation, partnership, or association and its stockholders, partners, members, or officers; c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners, or associates themselves. [Emphasis supplied.] The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of the subject matter of the dispute. This came to be known as the relationship test. However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., 21 the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra- corporate relationship that gives rise to an intra- corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute. Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. 22 The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties correlative rights and obligations under the Corporation Code and the internal and intra- corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists. The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy. 23 This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals: 24
To determine whether a case involves an intra- corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy. The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates; between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns their individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. Given these standards, we now tackle the question posed for our determination under the specific circumstances of this case: Application of the Relationship Test Is there an intra-corporate relationship between the parties that would characterize the case as an intra- corporate dispute? We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his own right with respect to the 4,250 shares registered in his name, and as one of the heirs of Anastacia Reyes with respect to the 136,598 shares registered in her name. What is material in resolving the issues of this case under the allegations of the complaint is Rodrigos interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigos personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties interest therein as her heirs. Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacias death, her children acquired legal title to her estate (which title includes her shareholdings in Zenith), and they are, prior to the estates partition, deemed co- owners thereof. 25 This status as co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation. Section 63 provides: Section 63. Certificate of stock and transfer of shares. The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by- laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred. [Emphasis supplied.] No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. Simply stated, the transfer of title by means of succession, though effective and valid between the parties involved (i.e., between the decedents estate and her heirs), does not bind the corporation and third parties. The transfer must be registered in the books of the corporation to make the transferee-heir a stockholder entitled to recognition as such both by the corporation and by third parties. 26
We note, in relation with the above statement, that in Abejo v. Dela Cruz 27 and TCL Sales Corporation v. Court of Appeals 28 we did not require the registration of the transfer before considering the transferee a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between the parties and bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between these cases and the present one. In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the corporation; after the transferee had established prima facie ownership over the shares of stocks in question, registration became a mere formality in confirming their status as stockholders. In the present case, each of Anastacias heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate and subject to the outcome of a settlement proceeding; the right of the heirs to specific, distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are paid. In short, the heirs are only entitled to what remains after payment of the decedents debts; 29 whether there will be residue remains to be seen. Justice Jurado aptly puts it as follows: No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the debts are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, liquidation is necessary in order to determine whether or not the decedent has left any liquid assets which may be transmitted to his heirs. 30
[Emphasis supplied.] Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedents estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares. Without the settlement of Anastacias estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra- corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court. In sum, we find that insofar as the subject shares of stock (i.e., Anastacias shares) are concerned Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intra-corporate relationship exists that would serve as basis to bring this case within the special commercial courts jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigos complaint, therefore, fails the relationship test. Application of the Nature of Controversy Test The body rather than the title of the complaint determines the nature of an action. 31 Our examination of the complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as a "complaint for accounting of all corporate funds and assets." Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the complaint. The "derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar]" does not constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties brothers and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 10.1 of the complaint that: 10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein to their damage and prejudice. We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other than to determine the extent of Anastacias shareholdings for purposes of distribution. Another significant indicator that points us to the real nature of the complaint are Rodrigos repeated claims of illegal and fraudulent transfers of Anastacias shares by Oscar to the prejudice of the other heirs of the decedent; he cited these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacias shares to the heirs. These claims tell us unequivocally that the present controversy arose from the parties relationship as heirs of Anastacia and not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir (for the impairment of his successional rights) and not by the corporation nor by Rodrigo as a shareholder on record. More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal acquisition by Oscar is the distribution of Anastacias shareholdings without a prior settlement of her estate an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision Section 2 of Rule 90 of the Revised Rules of Court that contemplates properties of the decedent held by one of the heirs declares: Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.] Worth noting are this Courts statements in the case of Natcher v. Court of Appeals: 32
Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited jurisdiction. x x x x It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. [Emphasis supplied.] That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacias shareholdings will be undertaken by a probate court and not by a special commercial court is completely consistent with the probate courts limited jurisdiction. It has the power to enforce an accounting as a necessary means to its authority to determine the properties included in the inventory of the estate to be administered, divided up, and distributed. Beyond this, the determination of title or ownership over the subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or advancement. We had occasion to recognize the courts authority to act on questions of title or ownership in a collation or advancement situation in Coca v. Pangilinan 33 where we ruled: It should be clarified that whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional question. In essence, it is a procedural question involving a mode of practice "which may be waived." As a general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding. That question should be ventilated in a separate action. That general rule has qualifications or exceptions justified by expediency and convenience. Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final determination in a separate action. Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of ownership. [Citations omitted. Emphasis supplied.] In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigos complaint also fails the nature of the controversy test. DERIVATIVE SUIT Rodrigos bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These requisites are: a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material; b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or refused to heed his plea; and c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular stockholder bringing the suit. 34
Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit. First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee- heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder on record to proceed against Oscar. Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied. 35 Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion of remedies within the corporate setting: 8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal means of resolving the dispute with the end view of amicably settling the case, but the dispute between them ensued. Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscars acts. If indeed he illegally and fraudulently transferred Anastacias shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a shareholder on record. 36
In summary, whether as an individual or as a derivative suit, the RTC sitting as special commercial court has no jurisdiction to hear Rodrigos complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigos proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint. WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction. SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 169129 March 28, 2007 SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.VICTORINO F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F. SANTOS, and TADEO F. SANTOS, Petitioners, vs. SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents. D E C I S I O N CHICO-NAZARIO, J .: Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to annul and set aside the Decision 1
and Resolution 2 of the Court of Appeals in CA-G.R. CV No. 60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v. Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June 2005 and 29 July 2005, respectively, which granted the appeal filed by herein respondents Spouses Jose Lumbao and Proserfina Lumbao (Spouses Lumbao) and ordered herein petitioners Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents Spouses Lumbao the subject property and to pay the latter attorneys fees and litigation expenses, thus, reversing the Decision 3 of the Regional Trial Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao for lack of merit. Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed Santos, are the legitimate and surviving heirs of the late Rita Catoc Santos (Rita), who died on 20 October 1985. The other petitioners Esperanza Lati and Lagrimas Santos are the daughters-in-law of Rita. Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the alleged owners of the 107- square meter lot (subject property), which they purportedly bought from Rita during her lifetime. The facts of the present case are as follows: On two separate occasions during her lifetime, Rita sold to respondents Spouses Lumbao the subject property which is a part of her share in the estate of her deceased mother, Maria Catoc (Maria), who died intestate on 19 September 1978. On the first occasion, Rita sold 100 square meters of her inchoate share in her mothers estate through a document denominated as "Bilihan ng Lupa," dated 17 August 1979. 4 Respondents Spouses Lumbao claimed the execution of the aforesaid document was witnessed by petitioners Virgilio and Tadeo, as shown by their signatures affixed therein. On the second occasion, an additional seven square meters was added to the land as evidenced by a document also denominated as "Bilihan ng Lupa," dated 9 January 1981. 5
After acquiring the subject property, respondents Spouses Lumbao took actual possession thereof and erected thereon a house which they have been occupying as exclusive owners up to the present. As the exclusive owners of the subject property, respondents Spouses Lumbao made several verbal demands upon Rita, during her lifetime, and thereafter upon herein petitioners, for them to execute the necessary documents to effect the issuance of a separate title in favor of respondents Spouses Lumbao insofar as the subject property is concerned. Respondents Spouses Lumbao alleged that prior to her death, Rita informed respondent Proserfina Lumbao she could not deliver the title to the subject property because the entire property inherited by her and her co-heirs from Maria had not yet been partitioned. On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently and in conspiracy with one another, executed a Deed of Extrajudicial Settlement, 6 adjudicating and partitioning among themselves and the other heirs, the estate left by Maria, which included the subject property already sold to respondents Spouses Lumbao and now covered by TCT No. 81729 7 of the Registry of Deeds of Pasig City. On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal demand letter 8 to petitioners but despite receipt of such demand letter, petitioners still failed and refused to reconvey the subject property to the respondents Spouses Lumbao. Consequently, the latter filed a Complaint for Reconveyance with Damages 9 before the RTC of Pasig City. Petitioners filed their Answer denying the allegations that the subject property had been sold to the respondents Spouses Lumbao. They likewise denied that the Deed of Extrajudicial Settlement had been fraudulently executed because the same was duly published as required by law. On the contrary, they prayed for the dismissal of the Complaint for lack of cause of action because respondents Spouses Lumbao failed to comply with the Revised Katarungang Pambarangay Law under Republic Act No. 7160, otherwise known as the Local Government Code of 1991, which repealed Presidential Decree No. 1508 10
requiring first resort to barangay conciliation. Respondents Spouses Lumbao, with leave of court, amended their Complaint because they discovered that on 16 February 1990, without their knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of Julieta S. Esplana for the sum of P30,000.00. The said Deed of Real Estate Mortgage was annotated at the back of TCT No. PT-81729 on 26 April 1991. Also, in answer to the allegation of the petitioners that they failed to comply with the mandate of the Revised Katarungang Pambarangay Law, respondents Spouses Lumbao said that the Complaint was filed directly in court in order that prescription or the Statute of Limitations may not set in. During the trial, respondents Spouses Lumbao presented Proserfina Lumbao and Carolina Morales as their witnesses, while the petitioners presented only the testimony of petitioner Virgilio. The trial court rendered a Decision on 17 June 1998, the dispositive portion of which reads as follows: Premises considered, the instant complaint is hereby denied for lack of merit. Considering that [petitioners] have incurred expenses in order to protect their interest, [respondents spouses Lumbao] are hereby directed to pay [petitioners], to wit: 1) the amount of P30,000.00 as attorneys fees and litigation expenses, and 2) costs of the suit. 11
Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8 June 2005, the appellate court rendered a Decision, thus: WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Decision dated June 17, 1998 of the Regional Trial Court of Pasig City, Branch 69 in Civil Case No. 62175 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered ordering [petitioners] to reconvey 107 square meters of the subject [property] covered by TCT No. PT-81729 of the Registry of Deeds of Pasig City, Metro Manila, and to pay to [respondents spouses Lumbao] the sum of P30,000.00 for attorneys fees and litigation expenses. No pronouncement as to costs. 12
Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid Decision but it was denied in the Resolution of the appellate court dated 29 July 2005 for lack of merit. Hence, this Petition. The grounds relied upon by the petitioners are the following: I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN REVERSING THE DECISION OF THE TRIAL COURT, THEREBY CREATING A VARIANCE ON THE FINDINGS OF FACTS OF TWO COURTS. II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN ORDERING THE PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY] TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN NOT RULING THAT THEY ARE GUILTY OF LACHES, HENCE THEY CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM. III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING THE "DEED OF EXTRAJUDICIAL SETTLEMENT" DATED [2 MAY 1986]. IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY WITH THE SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981] THAT WERE SUPPOSEDLY EXECUTED BY THE LATE RITA CATOC. V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] ACTION FOR RECONVEYANCE WITH DAMAGES CANNOT BE SUPPORTED WITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN NG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981]. VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] COMPLAINT FOR RECONVEYANCE IS DISMISSABLE (SIC) FOR NON COMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS AMENDED BY Republic Act No. 7160. VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD LIABLE FOR PETITIONERS CLAIM FOR DAMAGES AND ATTORNEY[]S FEES. Petitioners ask this Court to scrutinize the evidence presented in this case, because they claim that the factual findings of the trial court and the appellate court are conflicting. They allege that the findings of fact by the trial court revealed that petitioners Virgilio and Tadeo did not witness the execution of the documents known as "Bilihan ng Lupa"; hence, this finding runs counter to the conclusion made by the appellate court. And even assuming that they were witnesses to the aforesaid documents, still, respondents Spouses Lumbao were not entitled to the reconveyance of the subject property because they were guilty of laches for their failure to assert their rights for an unreasonable length of time. Since respondents Spouses Lumbao had slept on their rights for a period of more than 12 years reckoned from the date of execution of the second "Bilihan ng Lupa," it would be unjust and unfair to the petitioners if the respondents will be allowed to recover the subject property. Petitioners allege they are in good faith in executing the Deed of Extrajudicial Settlement because even respondents Spouses Lumbaos witness, Carolina Morales, testified that neither petitioner Virgilio nor petitioner Tadeo was present during the execution of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981. Petitioners affirm that the Deed of Extrajudicial Settlement was published in a newspaper of general circulation to give notice to all creditors of the estate subject of partition to contest the same within the period prescribed by law. Since no claimant appeared to interpose a claim within the period allowed by law, a title to the subject property was then issued in favor of the petitioners; hence, they are considered as holders in good faith and therefore cannot be barred from entering into any subsequent transactions involving the subject property. Petitioners also contend that they are not bound by the documents denominated as "Bilihan ng Lupa" because the same were null and void for the following reasons: 1) for being falsified documents because one of those documents made it appear that petitioners Virgilio and Tadeo were witnesses to its execution and that they appeared personally before the notary public, when in truth and in fact they did not; 2) the identities of the properties in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in relation to the subject property in litigation were not established by the evidence presented by the respondents Spouses Lumbao; 3) the right of the respondents Spouses Lumbao to lay their claim over the subject property had already been barred through estoppel by laches; and 4) the respondents Spouses Lumbaos claim over the subject property had already prescribed. Finally, petitioners claim that the Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao was dismissible because they failed to comply with the mandate of Presidential Decree No. 1508, as amended by Republic Act No. 7160, particularly Section 412 of Republic Act No. 7160. Given the foregoing, the issues presented by the petitioners may be restated as follows: I. Whether or not the Complaint for Reconveyance with Damages filed by respondents spouses Lumbao is dismissible for their failure to comply with the mandate of the Revised Katarungang Pambarangay Law under R.A. No. 7160. II. Whether or not the documents known as "Bilihan ng Lupa" are valid and enforceable, thus, they can be the bases of the respondents spouses Lumbaos action for reconveyance with damages. III. Whether or not herein petitioners are legally bound to comply with the "Bilihan ng Lupa" dated 17 August 1979 and 9 January 1981 and consequently, reconvey the subject property to herein respondents spouses Lumbao. It is well-settled that in the exercise of the Supreme Courts power of review, the court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of fact of the Court of Appeals are conclusive and binding on the Court. 13 But, the rule is not without exceptions. There are several recognized exceptions 14 in which factual issues may be resolved by this Court. One of these exceptions is when the findings of the appellate court are contrary to those of the trial court. This exception is present in the case at bar. Going to the first issue presented in this case, it is the argument of the petitioners that the Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao should be dismissed for failure to comply with the barangay conciliation proceedings as mandated by the Revised Katarungang Pambarangay Law under Republic Act No. 7160. This argument cannot be sustained. Section 408 of the aforesaid law and Administrative Circular No. 14-93 15 provide that all disputes between parties actually residing in the same city or municipality are subject to barangay conciliation. A prior recourse thereto is a pre-condition before filing a complaint in court or any government offices. Non-compliance with the said condition precedent could affect the sufficiency of the plaintiffs cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity; but the same would not prevent a court of competent jurisdiction from exercising its power of adjudication over the case before it, where the defendants failed to object to such exercise of jurisdiction. 16
While it is true that the present case should first be referred to the Barangay Lupon for conciliation because the parties involved herein actually reside in the same city (Pasig City) and the dispute between them involves a real property, hence, the said dispute should have been brought in the city in which the real property, subject matter of the controversy, is located, which happens to be the same city where the contending parties reside. In the event that respondents Spouses Lumbao failed to comply with the said condition precedent, their Complaint for Reconveyance with Damages can be dismissed. In this case, however, respondents Spouses Lumbaos non-compliance with the aforesaid condition precedent cannot be considered fatal. Although petitioners alleged in their answer that the Complaint for Reconveyance with Damages filed by respondents spouses Lumbao should be dismissed for their failure to comply with the condition precedent, which in effect, made the complaint prematurely instituted and the trial court acquired no jurisdiction to hear the case, yet, they did not file a Motion to Dismiss the said complaint. Emphasis must be given to the fact that the petitioners could have prevented the trial court from exercising jurisdiction over the case had they filed a Motion to Dismiss. However, instead of doing so, they invoked the very same jurisdiction by filing an answer seeking an affirmative relief from it. Worse, petitioners actively participated in the trial of the case by presenting their own witness and by cross-examining the witnesses presented by the respondents Spouses Lumbao. It is elementary that the active participation of a party in a case pending against him before a court is tantamount to recognition of that courts jurisdiction and a willingness to abide by the resolution of the case which will bar said party from later on impugning the courts jurisdiction. 17 It is also well-settled that the non-referral of a case for barangay conciliation when so required under the law is not jurisdictional in nature and may therefore be deemed waived if not raised seasonably in a motion to dismiss. 18 Hence, herein petitioners can no longer raise the defense of non-compliance with the barangay conciliation proceedings to seek the dismissal of the complaint filed by the respondents Spouses Lumbao, because they already waived the said defense when they failed to file a Motion to Dismiss. As regards the second issue, petitioners maintain that the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 are null and void for being falsified documents as it is made to appear that petitioners Virgilio and Tadeo were present in the execution of the said documents and that the identities of the properties in those documents in relation to the subject property has not been established by the evidence of the respondents Spouses Lumbao. Petitioners also claim that the enforceability of those documents is barred by prescription of action and laches. It is the petitioners incessant barking that the "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 were falsified because it was made to appear that petitioners Virgilio and Tadeo were present in the executions thereof, and their allegation that even respondents Spouses Lumbaos witness Carolina Morales proved that said petitioners were not present during the execution of the aforementioned documents. This is specious. Upon examination of the aforesaid documents, this Court finds that in the "Bilihan ng Lupa," dated 17 August 1979, the signatures of petitioners Virgilio and Tadeo appeared thereon. Moreover, in petitioners Answer and Amended Answer to the Complaint for Reconveyance with Damages, both petitioners Virgilio and Tadeo made an admission that indeed they acted as witnesses in the execution of the "Bilihan ng Lupa," dated 17 August 1979. 19 However, in order to avoid their obligations in the said "Bilihan ng Lupa," petitioner Virgilio, in his cross-examination, denied having knowledge of the sale transaction and claimed that he could not remember the same as well as his appearance before the notary public due to the length of time that had passed. Noticeably, petitioner Virgilio did not categorically deny having signed the "Bilihan ng Lupa," dated 17 August 1979 and in support thereof, his testimony in the cross-examination propounded by the counsel of the respondents Spouses Lumbao is quoted hereunder: ATTY. CHIU: Q. Now, you said, Mr. WitnessVirgilio Santos, that you dont know about this document which was marked as Exhibit "A" for the [respondents spouses Lumbao]? ATTY. BUGARING: The question is misleading, your Honor. Counsel premised the question that he does not have any knowledge but not that he does not know. ATTY. CHIU: Q. Being you are one of the witnesses of this document? [I]s it not? WITNESS: A. No, sir. Q. I am showing to you this document, there is a signature at the left hand margin of this document Virgilio Santos, will you please go over the same and tell the court whose signature is this? A. I dont remember, sir, because of the length of time that had passed. Q. But that is your signature? A. I dont have eyeglasses My signature is different. Q. You never appeared before this notary public Apolinario Mangahas? A. I dont remember. 20
As a general rule, facts alleged in a partys pleading are deemed admissions of that party and are binding upon him, but this is not an absolute and inflexible rule. An answer is a mere statement of fact which the party filing it expects to prove, but it is not evidence. 21 And in spite of the presence of judicial admissions in a partys pleading, the trial court is still given leeway to consider other evidence presented. 22 However, in the case at bar, as the Court of Appeals mentioned in its Decision, "[herein petitioners] had not adduced any other evidence to override the admission made in their [A]nswer that [petitioners Virgilio and Tadeo] actually signed the [Bilihan ng Lupa dated 17 August 1979] except that they were just misled as to the purpose of the document, x x x." 23 Virgilios answers were unsure and quibbled. Hence, the general rule that the admissions made by a party in a pleading are binding and conclusive upon him applies in this case. On the testimony of respondents Spouses Lumbaos witness Carolina Morales, this Court adopts the findings made by the appellate court. Thus - [T]he trial court gave singular focus on her reply to a question during cross-examination if the [petitioners Virgilio and Tadeo] were not with her and the vendor [Rita] during the transaction. It must be pointed out that earlier in the direct examination of said witness, she confirmed that [respondents spouses Lumbao] actually bought the lot from [Rita] ("nagkabilihan"). Said witness positively identified and confirmed the two (2) documents evidencing the sale in favor of [respondents spouse Lumbao]. Thus, her subsequent statement that the [petitioners Virgilio and Tadeo] were not with them during the transaction does not automatically imply that [petitioners Virgilio and Tadeo] did not at any time sign as witnesses as to the deed of sale attesting to their mothers voluntary act of selling a portion of her share in her deceased mothers property. The rule is that testimony of a witness must be considered and calibrated in its entirety and not by truncated portions thereof or isolated passages therein. 24
Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 were duly notarized before a notary public. It is well-settled that a document acknowledged before a notary public is a public document 25 that enjoys the presumption of regularity. It is a prima facie evidence of the truth of the facts stated therein and a conclusive presumption of its existence and due execution. 26 To overcome this presumption, there must be presented evidence that is clear and convincing. Absent such evidence, the presumption must be upheld. 27 In addition, one who denies the due execution of a deed where ones signature appears has the burden of proving that contrary to the recital in the jurat, one never appeared before the notary public and acknowledged the deed to be a voluntary act. Nonetheless, in the present case petitioners denials without clear and convincing evidence to support their claim of fraud and falsity were not sufficient to overthrow the above-mentioned presumption; hence, the authenticity, due execution and the truth of the facts stated in the aforesaid "Bilihan ng Lupa" are upheld. The defense of petitioners that the identities of the properties described in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in relation to the subject property were not established by respondents Spouses Lumbaos evidence is likewise not acceptable. It is noteworthy that at the time of the execution of the documents denominated as "Bilihan ng Lupa," the entire property owned by Maria, the mother of Rita, was not yet divided among her and her co-heirs and so the description of the entire estate is the only description that can be placed in the "Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981" because the exact metes and bounds of the subject property sold to respondents Spouses Lumbao could not be possibly determined at that time. Nevertheless, that does not make the contract of sale between Rita and respondents Spouses Lumbao invalid because both the law and jurisprudence have categorically held that even while an estate remains undivided, co-owners have each full ownership of their respective aliquots or undivided shares and may therefore alienate, assign or mortgage them. 28 The co-owner, however, has no right to sell or alienate a specific or determinate part of the thing owned in common, because such right over the thing is represented by an aliquot or ideal portion without any physical division. In any case, the mere fact that the deed purports to transfer a concrete portion does not per se render the sale void. The sale is valid, but only with respect to the aliquot share of the selling co-owner. Furthermore, the sale is subject to the results of the partition upon the termination of the co- ownership. 29
In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986 by virtue of a Deed of Extrajudicial Settlement, the 107- square meter lot sold by the mother of the petitioners to respondents Spouses Lumbao should be deducted from the total lot, inherited by them in representation of their deceased mother, which in this case measures 467 square meters. The 107-square meter lot already sold to respondents Spouses Lumbao can no longer be inherited by the petitioners because the same was no longer part of their inheritance as it was already sold during the lifetime of their mother. Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa" documents was described as "a portion of a parcel of land covered in Tax Declarations No. A-018-01674," while the subject matter of the Deed of Extrajudicial Settlement was the property described in Transfer Certificate of Title (TCT) No. 3216 of the Registry of Deeds of the Province of Rizal in the name of Maria is of no moment because in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981, it is clear that there was only one estate left by Maria upon her death. And this fact was not refuted by the petitioners. Besides, the property described in Tax Declaration No. A-018-01674 and the property mentioned in TCT No. 3216 are both located in Barrio Rosario, Municipality of Pasig, Province of Rizal, and almost have the same boundaries. It is, thus, safe to state that the property mentioned in Tax Declaration No. A-018-01674 and in TCT No. 3216 are one and the same. The defense of prescription of action and laches is likewise unjustifiable. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been wrongfully or erroneously registered in another persons name to its rightful or legal owner, or to the one with a better right. It is, indeed, true that the right to seek reconveyance of registered property is not absolute because it is subject to extinctive prescription. However, when the plaintiff is in possession of the land to be reconveyed, prescription cannot set in. Such an exception is based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the expense of another. 30
In the case at bar, the right of the respondents Spouses Lumbao to seek reconveyance does not prescribe because the latter have been and are still in actual possession and occupation as owners of the property sought to be reconveyed, which fact has not been refuted nor denied by the petitioners. Furthermore, respondents Spouses Lumbao cannot be held guilty of laches because from the very start that they bought the 107-square meter lot from the mother of the petitioners, they have constantly asked for the transfer of the certificate of title into their names but Rita, during her lifetime, and the petitioners, after the death of Rita, failed to do so on the flimsy excuse that the lot had not been partitioned yet. Inexplicably, after the partition of the entire estate of Maria, petitioners still included the 107-square meter lot in their inheritance which they divided among themselves despite their knowledge of the contracts of sale between their mother and the respondents Spouses Lumbao. Under the above premises, this Court holds that the "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 are valid and enforceable and can be made the basis of the respondents Spouses Lumbaos action for reconveyance. The failure of respondents Spouses Lumbao to have the said documents registered does not affect its validity and enforceability. It must be remembered that registration is not a requirement for validity of the contract as between the parties, for the effect of registration serves chiefly to bind third persons. The principal purpose of registration is merely to notify other persons not parties to a contract that a transaction involving the property had been entered into. Where the party has knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him. 31 Hence, the "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981, being valid and enforceable, herein petitioners are bound to comply with their provisions. In short, such documents are absolutely valid between and among the parties thereto. Finally, the general rule that heirs are bound by contracts entered into by their predecessors-in-interest applies in the present case. Article 1311 32 of the NCC is the basis of this rule. It is clear from the said provision that whatever rights and obligations the decedent have over the property were transmitted to the heirs by way of succession, a mode of acquiring the property, rights and obligations of the decedent to the extent of the value of the inheritance of the heirs. 33 Thus, the heirs cannot escape the legal consequence of a transaction entered into by their predecessor-in-interest because they have inherited the property subject to the liability affecting their common ancestor. Being heirs, there is privity of interest between them and their deceased mother. They only succeed to what rights their mother had and what is valid and binding against her is also valid and binding as against them. The death of a party does not excuse nonperformance of a contract which involves a property right and the rights and obligations thereunder pass to the personal representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property interest in the subject matter of the contract. 34
In the end, despite the death of the petitioners mother, they are still bound to comply with the provisions of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981. Consequently, they must reconvey to herein respondents Spouses Lumbao the 107-square meter lot which they bought from Rita, petitioners mother. And as correctly ruled by the appellate court, petitioners must pay respondents Spouses Lumbao attorneys fees and litigation expenses for having been compelled to litigate and incur expenses to protect their interest. 35 On this matter, we do not find reasons to reverse the said findings. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 8 June 2005 and 29 July 2005, respectively, are hereby AFFIRMED. Herein petitioners are ordered to reconvey to respondents Spouses Lumbao the subject property and to pay the latter attorneys fees and litigation expenses. Costs against petitioners. SO ORDERED.