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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.

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.

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.

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 ).

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.

Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were

issued in Fuentebella's name.

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.
order granting said motion,

By virtue of a court

on March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for

P6,000.00 to Rosendo Alvarez.

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.
issued to Siason,

13

12

Accordingly, TCT Nos. 30919 and 30920 were

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
18

and T-23166 issued to Rosendo Alvarez.

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 defendantsappellants 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 4defendant 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.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77029 August 30, 1990
BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO, all surnamed,
GEVERO,petitioners,
vs.
INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT
CORPORATION, respondents.
Carlito B. Somido for petitioners.
Benjamin N. Tabios for private respondent.
PARAS, J.:
This is a petition for review on certiorari of the March 20, 1988 decision

of the then Intermediate

Appellate Court (now Court of Appeals) in AC-GR CV No. 69264, entitled Del Monte Development
Corporation vs. Enrique Ababa, et al., etc. affirming the decision

of the then Court of First Instance

(now Regional Trial Court) of Misamis Oriental declaring the plaintiff corporation as the true and
absolute owner of that portion of Lot 476 of the Cagayan Cadastre, particularly Lot No. 2476-D of the
subdivision plan (LRC) Psd-80450, containing an area of Seven Thousand Eight Hundred Seventy Eight
(7,878) square meters more or less.
As found by the Appellate Court, the facts are as follows:
The parcel of land under litigation is Lot No. 2476 of the Subdivision Plan Psd-37365
containing an area of 20,119 square meters and situated at Gusa, Cagayan de Oro City.
Said lot was acquired by purchase from the late Luis Lancero on September 15, 1964 as
per Deed of Absolute Sale executed in favor of plaintiff and by virtue of which Transfer
Certificate of Title No. 4320 was issued to plaintiff (DELCOR for brevity). Luis Lancero, in
turn acquired the same parcel from Ricardo Gevero on February 5, 1952 per deed of sale
executed by Ricardo Gevero which was duly annotated as entry No. 1128 at the back of
Original Certificate of Title No. 7610 covering the mother lot identified as Lot No. 2476 in
the names of Teodorica Babangha 1/2 share and her children: Maria; Restituto, Elena,
Ricardo, Eustaquio and Ursula, all surnamed surnamed Gevero, 1/2 undivided share of
the whole area containing 48,122 square meters.
Teodorica Babangha died long before World War II and was survived by her six children
aforementioned. The heirs of Teodorica Babangha on October 17,1966 executed an
Extra-Judicial Settlement and Partition of the estate of Teodorica Babangha, consisting of
two lots, among them was lot 2476. By virtue of the extra-judicial settlement and
partition executed by the said heirs of Teodorica Babangha, Lot 2476-A to Lot 2476-I,
inclusive, under subdivision plan (LRC) Psd-80450 duly approved by the Land
Registration Commission, Lot 2476-D, among others, was adjudicated to Ricardo Gevero
who was then alive at the time of extra-judicial settlement and partition in 1966. Plaintiff
(private respondent herein) filed an action with the CFI (now RTC) of Misamis Oriental to
quiet title and/or annul the partition made by the heirs of Teodorica Babangha insofar as
the same prejudices the land which it acquired a portion of lot 2476.
Plaintiff now seeks to quiet title and/or annul the partition made by the heirs of Teodorica
Babangha insofar as the same prejudices the land which it acquired, a portion of Lot
2476. Plaintiff proved that before purchasing Lot 2476-A it first investigated and checked
the title of Luis Lancero and found the same to be intact in the office of the Register of
Deeds of Cagayan de Oro City. The same with the subdivision plan (Exh. "B"), the
corresponding technical description (Exh. "P") and the Deed of Sale executed by Ricardo
Gevero all of which were found to be unquestionable. By reason of all these, plaintiff
claims to have bought the land in good faith and for value, occupying the land since the
sale and taking over from Lancero's possession until May 1969, when the defendants
Abadas forcibly entered the property. (Rollo, p. 23)
After trial the court a quo on July 18, 1977 rendered judgment, the dispositive portion of which reads
as follows:
WHEREFORE, premises considered, judgment is hereby rendered declaring the plaintiff
corporation as the true and absolute owner of that portion of Lot No. 2476 of the

Cagayan Cadastre, particularly Lot No. 2476-D of the subdivision plan (LRC) Psd-80450,
containing an area of SEVEN THOUSAND EIGHT HUNDRED SEVENTY EIGHT (7,878)
square meters, more or less. The other portions of Lot No. 2476 are hereby adjudicated
as follows:
Lot No. 2476 B to the heirs of Elena Gevero;
Lot No. 2476 C to the heirs of Restituto Gevero;
Lot No. 2476 E to the defendant spouses Enrique C. Torres and Francisca Aquino;
Lot No. 2476 F to the defendant spouses Eduard Rumohr and Emilia Merida Rumohf ;
Lot Nos. 2476-H, 2476-I and 2476 G to defendant spouses Enrique Abada and Lilia
Alvarez Abada.
No adjudication can be made with respect to Lot No. 2476-A considering that the said lot
is the subject of a civil case between the Heirs of Maria Gevero on one hand and the
spouses Daniel Borkingkito and Ursula Gevero on the other hand, which case is now
pending appeal before the Court of Appeals. No pronouncement as to costs,
SO ORDERED. (Decision, Record on Appeal, p. 203; Rollo, pp. 21-22)
From said decision, defendant heirs of Ricardo Gevero (petitioners herein) appealed to the IAC (now
Court of Appeals) which subsequently, on March 20, 1986, affirmed the decision appealed from.
Petitioners, on March 31, 1986, filed a motion for reconsideration (Rollo, p. 28) but was denied on
April 21, 1986.
Hence, the present petition.
This petition is devoid of merit.
Basically, the issues to be resolved in the instant case are: 1) whether or not the deed of sale
executed by Ricardo Gevero to Luis Lancero is valid; 2) in the affirmative, whether or not the
1/2 share of interest of Teodorica Babangha in one of the litigated lots, lot no. 2476 under OCT
No. 7610 is included in the deed of sale; and 3) whether or not the private respondents' action
is barred by laches.
Petitioners maintain that the deed of sale is entirely invalid citing alleged flaws thereto, such as that:
1) the signature of Ricardo was forged without his knowledge of such fact; 2) Lancero had recognized
the fatal defect of the 1952 deed of sale when he signed the document in 1968 entitled "Settlement
to Avoid the Litigation"; 3) Ricardo's children remained in the property notwithstanding the sale to
Lancero; 4) the designated Lot No. is 2470 instead of the correct number being Lot No. 2476; 5) the
deed of sale included the share of Eustaquio Gevero without his authority; 6) T.C.T. No. 1183 of
Lancero segregated the area of 20,119 square meters from the bigger area (OCT No. 7616) without
the consent of the other co-owners; 7) Lancero caused the 1952 Subdivision survey without the
consent of the Geveros' to bring about the segregation of the 20,119 square meters lot from the
mother lot 2476 which brought about the issuance of his title T-1183 and to DELCOR's title T4320,
both of which were illegally issued; and 8) the area sold as per document is 20,649 square meters
whereas the segregated area covered by TCT No. T-1183 of Lancero turned out to be 20,119 square
meters (Petitioners Memorandum, pp. 62-78).
As to petitioners' claim that the signature of Ricardo in the 1952 deed of sale in favor of Lancero was
forged without Ricardo's knowledge of such fact (Rollo, p. 71) it will be observed that the deed of sale

in question was executed with all the legal formalities of a public document. The 1952 deed was duly
acknowledged by both parties before the notary public, yet petitioners did not bother to rebut the
legal presumption of the regularity of the notarized document (Dy v. Sacay, 165 SCRA 473 [1988]);
Nuguid v. C.A., G.R. No. 77423, March 13, 1989). In fact it has long been settled that a public
document executed and attested through the intervention of the notary public is evidence of the facts
in clear, unequivocal manner therein expressed. It has the presumption of regularity and to contradict
all these, evidence must be clear, convincing and more than merely preponderant (Rebuleda v. I.A.C.,
155 SCRA 520-521 [1987]). Forgery cannot be presumed, it must be proven (Siasat v. IAC, No. 67889,
October 10, 1985). Likewise, petitioners allegation of absence of consideration of the deed was not
substantiated. Under Art. 1354 of the Civil Code, consideration is presumed unless the contrary is
proven.
As to petitioners' contention that Lancero had recognized the fatal defect of the 1952 deed when he
signed the document in 1968 entitled "Settlement to Avoid Litigation" (Rollo, p. 71), it is a basic rule
of evidence that the right of a party cannot be prejudiced by an act, declaration, or omission of
another (Sec. 28. Rule 130, Rules of Court). This particular rule is embodied in the maxim "res inter
alios acta alteri nocere non debet." Under Section 31, Rule 130, Rules of Court "where one derives
title to property from another, the act, declaration, or omission of the latter, while holding the title, in
relation to the property is evidence against the former." It is however stressed that the admission of
the former owner of a property must have been made while he was the owner thereof in order that
such admission may be binding upon the present owner (City of Manila v. del Rosario, 5 Phil. 227
[1905]; Medel v. Avecilla, 15 Phil. 465 [1910]). Hence, Lanceros' declaration or acts of executing the
1968 document have no binding effect on DELCOR, the ownership of the land having passed to
DELCOR in 1964.
Petitioners' claim that they remained in the property, notwithstanding the alleged sale by Ricardo to
Lancero (Rollo, p. 71) involves a question of fact already raised and passed upon by both the trial and
appellate courts. Said the Court of Appeals:
Contrary to the allegations of the appellants, the trial court found that Luis Lancero had
taken possession of the land upon proper investigation by plaintiff the latter learned that
it was indeed Luis Lancero who was the owner and possessor of Lot 2476 D. . . .
(Decision, C.A., p. 6).
As a finding of fact, it is binding upon this Court (De Gola-Sison v. Manalo, 8 SCRA 595 [1963]; Gaduco
vs. C.A., 14 SCRA 282 [1965]; Ramos v. Pepsi-Cola, 19 SCRA 289 [1967]; Tan v. C.A., 20 SCRA 54
[1967]; Ramirez Tel. Co. v. Bank of America, 33 SCRA 737 [1970]; Lucero v. Loot, 25 SCRA 687 [1968];
Guerrero v. C.A., 142 SCRA 130 [1986]).
Suffice it to say that the other flaws claimed by the petitioners which allegedly invalidated the 1952
deed of sale have not been raised before the trial court nor before the appellate court. It is settled
jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in
the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules
of fair play, justice and due process. (Matienzo v. Servidad, 107 SCRA 276 [1981]; Dela Santa v. C.A.,
140 SCRA 44 [1985]; Dihiansan v. C.A., 157 SCRA 434 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987];

Dulos Realty and Development Corporation v. C.A., 157 SCRA [1988]; Kamos v. IAC, G.R. No. 78282,
July 5, 1989).
Petitioners aver that the 1/2 share of interest of Teodorica (mother of Ricardo) in Lot 2476 under OCT
No. 7610 was not included in the deed of sale as it was intended to limit solely to Ricardos'
proportionate share out of the undivided 1/2 of the area pertaining to the six (6) brothers and sisters
listed in the Title and that the Deed did not include the share of Ricardo, as inheritance from
Teodorica, because the Deed did not recite that she was deceased at the time it was executed (Rollo,
pp. 67-68).
The hereditary share in a decedents' estate is transmitted or vested immediately from the moment of
the death of the "causante" or predecessor in interest (Civil Code of the Philippines, Art. 777), and
there is no legal bar to a successor (with requisite contracting capacity) disposing of 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 (De Borja v. Vda. de Borja, 46 SCRA 577 [1972]).
Teodorica Babangha died long before World War II, hence, the rights to the succession were
transmitted from the moment of her death. It is therefore incorrect to state that it was only in 1966,
the date of extrajudicial partition, when Ricardo received his share in the lot as inheritance from his
mother Teodorica. Thus, when Ricardo sold his share over lot 2476 that share which he inherited from
Teodorica was also included unless expressly excluded in the deed of sale.
Petitioners contend that Ricardo's share from Teodorica was excluded in the sale considering that a
paragraph of the aforementioned deed refers merely to the shares of Ricardo and Eustaquio (Rollo, p.
67-68).
It is well settled that laws and contracts shall be so construed as to harmonize and give effect to the
different provisions thereof (Reparations Commission v. Northern Lines, Inc., 34 SCRA 203 [1970]), to
ascertain the meaning of the provisions of a contract, its entirety must be taken into account (Ruiz v.
Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation insisted upon by the petitioners,
by citing only one paragraph of the deed of sale, would not only create contradictions but also, render
meaningless and set at naught the entire provisions thereof.
Petitioners claim that DELCOR's action is barred by laches considering that the petitioners have
remained in the actual, open, uninterrupted and adverse possession thereof until at present (Rollo, p.
17).
An instrument notarized by a notary public as in the case at bar is a public instrument (Eacnio v.
Baens, 5 Phil. 742). The execution of a public instrument is equivalent to the delivery of the thing (Art.
1498, 1st Par., Civil Code) and is deemed legal delivery. Hence, its execution was considered a
sufficient delivery of the property (Buencamino v. Viceo, 13 Phil. 97; [1906]; Puato v. Mendoza, 64
Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil. Suburban Development
Corp. v. Auditor Gen., 63 SCRA 397 (1975]).
Besides, the property sold is a registered land. It is the act of registration that transfers the ownership
of the land sold. (GSIS v. C.A., G.R. No. 42278, January 20, 1989). If the property is a registered land,
the purchaser in good, faith has a right to rely on the certificate of title and is under no duty to go
behind it to look for flaws (Mallorca v. De Ocampo, No. L-26852, March 25, 1970; Unchuan v. C.A., 161
SCRA 710 [1988]; Nuguid v. CA-G.R. No. 77427, March 13, 1989).

Under the established principles of land registration law, the person dealing with registered land may
generally rely on the correctness of its certificate of title and the law will in no way oblige him to go
behind the certificate to determine the condition of the property (Tiongco v. de la Merced, L-2446, July
25, 1974; Lopez vs. CA., G.R. No. 49739, January 20, 1989; Davao Grains Inc. vs. IAC, 171 SCRA 612
[1989]). This notwithstanding, DELCOR did more than that. It did not only rely on the certificate of
title. The Court of Appeals found that it had first investigated and checked the title (T.C.T. No. T-1183)
in the name of Luis Lancero. It likewise inquired into the Subdivision Plan, the corresponding technical
description and the deed of sale executed by Ricardo Gevero in favor of Luis Lancero and found
everything in order. It even went to the premises and found Luis Lancero to be in possession of the
land to the exclusion of any other person. DELCOR had therefore acted in good faith in purchasing the
land in question.
Consequently, DELCOR's action is not barred by laches.
The main issues having been disposed of, discussion of the other issues appear unnecessary.
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 89783 February 19, 1992
MARIANO B. LOCSIN, JULIAN J. LOCSIN, JOSE B. LOCSIN, AUREA B. LOCSIN, MATILDE L.
CORDERO, SALVADOR B. LOCSIN and MANUEL V. DEL ROSARIO, petitioners,
vs.
THE HON. COURT OF APPEALS, JOSE JAUCIAN, FLORENTINO JAUCIAN, MERCEDES JAUCIAN
ARBOLEDA, HEIRS OF JOSEFINA J. BORJA, HEIRS OF EDUARDO JAUCIAN and HEIRS OF
VICENTE JAUCIAN, respondents.
Aytona Law Office and Siquia Law Offices for petitioners.
Mabella, Sangil & Associates for private respondents.
NARVASA, C.J.:
Reversal of the decision of the Court of Appeals in CA-G.R. No. CV-11186 affirming with modification
the judgment of the Regional Trial Court of Albay in favor of the plaintiffs in Civil Case No. 7152
entitled "Jose Jaucian, et al. v. Mariano B. Locsin, et al.," an action for recovery of real property with
damages is sought. in these proceedings initiated by petition for review on certiorari in accordance
with Rule 45 of the Rules of Court.
The petition was initially denied due course and dismissed by this Court. It was however reinstated
upon a second motion for reconsideration filed by the petitioners, and the respondents were required
to comment thereon. The petition was thereafter given due course and the parties were directed to

submit their memorandums. These, together with the evidence, having been carefully considered, the
Court now decides the case.
First, the facts as the Court sees them in light of the evidence on record:
The late Getulio Locsin had three children named Mariano, Julian and Magdalena, all surnamed Locsin.
He owned extensive residential and agricultural properties in the provinces of Albay and Sorsogon.
After his death, his estate was divided among his three (3) children as follows:
(a) the coconut lands of some 700 hectares in Bual, Pilar, Sorsogon, were adjudicated to his daughter,
Magdalena Locsin;
(b) 106 hectares of coconut lands were given to Julian Locsin, father of the petitioners Julian, Mariano,
Jose, Salvador, Matilde, and Aurea, all surnamed Locsin;
(c) more than forty (40) hectares of coconut lands in Bogtong, eighteen (18) hectares of riceland in
Daraga, and the residential lots in Daraga, Albay and in Legazpi City went to his son Mariano, which
Mariano brought into his marriage to Catalina Jaucian in 1908. Catalina, for her part, brought into the
marriage untitled properties which she had inherited from her parents, Balbino Jaucian and Simona
Anson. These were augmented by other properties acquired by the spouses in the course of their
union, 1 which however was not blessed with children.
Eventually, the properties of Mariano and Catalina were brought under the Torrens System. Those that
Mariano inherited from his father, Getulio Locsin, were surveyed cadastrally and registered in the
name of "Mariano Locsin, married to Catalina Jaucian.''

Mariano Locsin executed a Last Will and Testament instituting his wife, Catalina, as the sole and
universal heir of all his properties.

The will was drawn up by his wife's nephew and trusted legal

adviser, Attorney Salvador Lorayes. Attorney Lorayes disclosed that the spouses being childless, they
had agreed that their properties, after both of them shall have died should revert to their respective
sides of the family, i.e., Mariano's properties would go to his "Locsin relatives" (i.e., brothers and
sisters or nephews and nieces), and those of Catalina to her "Jaucian relatives."

Don Mariano Locsin died of cancer on September 14, 1948 after a lingering illness. In due time, his
will was probated in Special Proceedings No. 138, CFI of Albay without any opposition from both sides
of the family. As directed in his will, Doa Catalina was appointed executrix of his estate. Her lawyer in
the probate proceeding was Attorney Lorayes. In the inventory of her husband's estate

which she

submitted to the probate court for approval, Catalina declared that "all items mentioned from Nos. 1
to 33 are the private properties of the deceased and form part of his capital at the time of the
marriage with the surviving spouse, while items Nos. 34 to 42 are conjugal."

Among her own and Don Mariano's relatives, Doa Catalina was closest to her nephew, Attorney
Salvador Lorayes, her nieces, Elena Jaucian, Maria Lorayes-Cornelio and Maria Olbes-Velasco, and the
husbands of the last two: Hostilio Cornelio and Fernando Velasco. 8 Her trust in Hostilio Cornelio was
such that she made him custodian of all the titles of her properties; and before she disposed of any of
them, she unfailingly consulted her lawyer-nephew, Attorney Salvador Lorayes. It was Atty. Lorayes
who prepared the legal documents and, more often than not, the witnesses to the transactions were
her niece Elena Jaucian, Maria Lorayes-Cornelio, Maria Olbes-Velasco, or their husbands. Her niece,
Elena Jaucian, was her life-long companion in her house.

Don Mariano relied on Doa Catalina to carry out the terms of their compact, hence, nine (9) years
after his death, as if in obedience to his voice from the grave, and fully cognizant that she was also
advancing in years, Doa Catalina began transferring, by sale, donation or assignment, Don Mariano's
as well as her own, properties to their respective nephews and nieces. She made the following sales
and donation of properties which she had received from her husband's estate, to his Locsin nephews
and nieces:
EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE WITNESSES
23 Jan. 26, 1957 Deed of Absolute Sale in 962 P 481
favor of Mariano Locsin
1-JRL Apr. 7, 1966 Deed of Sale in favor of 430,203 P 20,000
Jose R. Locsin
1-JJL Mar. 22, 1967 Deed of Sale in favor of 5,000 P 1,000 Hostilio Cornello
Julian Locsin (Lot 2020) Helen M. Jaucian
1 Nov. 29, 1974 Deed of Donation in 26,509
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
2 Feb. 4, 1975 Deed of Donation in 34,045
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
3 Sept. 9, 1975 Deed of Donation in (Lot 2059)
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
4 July 15, 1974 Deed of Absolute Sale in 1,424 Hostilio Cornelio
favor of Aurea B. Locsin Fernando Velasco
5 July 15, 1974 Deed of Absolute Sale in 1,456 P 5,750 Hostilio Cornelio
favor of Aurea B. Locsin Elena Jaucian
6 July 15, 1974 Deed of Absolute Sale in 1,237 P 5,720 - ditto favor of Aurea B. Locsin
7 July 15, 1974 Deed of Absolute Sale in 1,404 P 4,050 - ditto favor of Aurea B. Locsin
15 Nov. 26, 1975 Deed of Sale in favor of 261 P 4,930 - ditto Aurea Locsin
16 Oct. 17, 1975 Deed of Sale in favor of 533 P 2,000 Delfina Anson
Aurea Locsin M. Acabado
17 Nov. 26, 1975 Deed of Sale in favor of 373 P 1,000 Leonor Satuito
Aurea Locsin Mariano B. Locsin
19 Sept. 1, 1975 Conditional Donation in 1,130 P 3,000 - ditto favor of Mariano Locsin

1-MVRJ Dec. 29, 1972 Deed of Reconveyance 1,5110.66 P 1,000 Delfina Anson
in favor of Manuel V. del (Lot 2155) Antonio Illegible
Rosario whose maternal
grandfather was Getulio
Locsin
2-MVRJ June 30, 1973 Deed of Reconveyance 319.34 P 500 Antonio Illegible
in favor of Manuel V. del (Lot 2155) Salvador Nical
Rosario but the rentals
from bigger portion of
Lot 2155 leased to Filoil
Refinery were assigned to
Maria Jaucian Lorayes
Cornelio
Of her own properties, Doa Catalina conveyed the following to her own nephews and nieces and
others:
EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE
2-JJL July 16, 1964 Deed of Sale in favor 5,000 P 1,000
Vicente Jaucian (lot 2020)
(6,825 sqm. when
resurveyed)
24 Feb. 12, 1973 Deed of Absolute Sale 100 P 1,000
in favor of Francisco M.
Maquiniana
26 July 15, 1973 Deed of Absolute Sale in 130 P 1,300
favor of Francisco
Maquiniana
27 May 3, 1973 Deed of Absolute Sale in 100 P 1,000
favor of Ireneo Mamia
28 May 3, 1973 Deed of Absolute Sale in 75 P 750
favor of Zenaida Buiza
29 May 3, 1973 Deed of Absolute Sale in 150 P 1,500
favor of Felisa Morjella
30 Apr. 3, 1973 Deed of Absolute Sale in 31 P 1,000
favor of Inocentes Motocinos
31 Feb. 12, 1973 Deed of Absolute Sale in 150 P 1,500
favor of Casimiro Mondevil
32 Mar. 1, 1973 Deed of Absolute Sale in 112 P 1,200
favor of Juan Saballa
25 Dec. 28, 1973 Deed of Absolute Sale in 250 P 2,500
of Rogelio Marticio
Doa Catalina died on July 6, 1977.

Four years before her death, she had made a will on October 22, 1973 affirming and ratifying the
transfers she had made during her lifetime in favor of her husband's, and her own, relatives. After the
reading of her will, all the relatives agreed that there was no need to submit it to the court for probate
because the properties devised to them under the will had already been conveyed to them by the
deceased when she was still alive, except some legacies which the executor of her will or estate,
Attorney Salvador Lorayes, proceeded to distribute.
In 1989, or six (6) years after Doa Catalina's demise, some of her Jaucian nephews and nieces who
had already received their legacies and hereditary shares from her estate, filed action in the Regional
Trial Court of Legaspi City (Branch VIII, Civil Case No. 7152) to recover the properties which she had
conveyed to the Locsins during her lifetime, alleging that the conveyances were inofficious, without
consideration, and intended solely to circumvent the laws on succession. Those who were closest to
Doa Catalina did not join the action.
After the trial, judgment was rendered on July 8, l985 in favor of the plaintiffs (Jaucian), and against
the Locsin defendants, the dispositive part of which reads:
WHEREFORE, this Court renders judgment for the plaintiffs and against the defendants:
(1) declaring the, plaintiffs, except the heirs of Josefina J. Borja and Eduardo Jaucian, who
withdrew, the rightful heirs and entitled to the entire estate, in equal portions, of
Catalina Jaucian Vda. de Locsin, being the nearest collateral heirs by right of
representation of Juan and Gregorio, both surnamed Jaucian, and full-blood brothers of
Catalina;
(2) declaring the deeds of sale, donations, reconveyance and exchange and all other
instruments conveying any part of the estate of Catalina J. Vda. de Locsin including, but
not limited to those in the inventory of known properties (Annex B of the complaint) as
null and void ab-initio;
(3) ordering the Register of Deeds of Albay and/or Legazpi City to cancel all certificates
of title and other transfers of the real properties, subject of this case, in the name of
defendants, and derivatives therefrom, and issue new ones to the plaintiffs;
(4) ordering the defendants, jointly and severally, to reconvey ownership and possession
of all such properties to the plaintiffs, together with all muniments of title properly
endorsed and delivered, and all the fruits and incomes received by the defendants from
the estate of Catalina, with legal interest from the filing of this action; and where
reconveyance and delivery cannot be effected for reasons that might have intervened
and prevent the same, defendants shall pay for the value of such properties, fruits and
incomes received by them, also with legal interest from the filing, of this case
(5) ordering each of the defendants to pay the plaintiffs the amount of P30,000.00 as
exemplary damages; and the further sum of P20,000.00 each as moral damages; and
(6) ordering the defendants to pay the plaintiffs attorney's fees and litigation expenses,
in the amount of P30,000.00 without prejudice to any contract between plaintiffs and
counsel.
Costs against the defendants. 9

The Locsins appealed to the Court of Appeals (CA-G.R. No. CV-11186) which rendered its now
appealed judgment on March 14, 1989, affirming the trial court's decision.
The petition has merit and should be granted.
The trial court and the Court of Appeals erred in declaring the private respondents, nephews and
nieces of Doa Catalina J. Vda. de Locsin, entitled to inherit the properties which she had already
disposed of more than ten (10) years before her death. For those properties did not form part of her
hereditary estate, i.e., "the property and transmissible rights and obligations existing at the time of
(the decedent's) death and those which have accrued thereto since the opening of the
succession."

10

The rights to a person's succession are transmitted from the moment of his death, and

do not vest in his heirs until such time. 11 Property which Doa Catalina had transferred or conveyed
to other persons during her lifetime no longer formed part of her estate at the time of her death to
which her heirs may lay claim. Had she died intestate, only the property that remained in her estate
at the time of her death devolved to her legal heirs; and even if those transfers were, one and all,
treated as donations, the right arising under certain circumstances to impugn and compel the
reduction or revocation of a decedent's gifts inter vivos does not inure to the respondents since
neither they nor the donees are compulsory (or forced) heirs.

12

There is thus no basis for assuming an intention on the part of Doa Catalina, in transferring the
properties she had received from her late husband to his nephews and nieces, an intent to circumvent
the law in violation of the private respondents' rights to her succession. Said respondents are not her
compulsory heirs, and it is not pretended that she had any such, hence there were no legitimes that
could conceivably be impaired by any transfer of her property during her lifetime. All that the
respondents had was an expectancy that in nowise restricted her freedom to dispose of even her
entire estate subject only to the limitation set forth in Art. 750, Civil Code which, even if it were
breached, the respondents may not invoke:
Art. 750. The donation may comprehend all the present property of the donor or part
thereof, provided he reserves, in full ownership or in usufruct, sufficient means for the
support of himself, and of all relatives who, at the time of the acceptance of the
donation, are by law entitled to be supported by the donor. Without such reservation, the
donation shall be reduced on petition of any person affected. (634a)
The lower court capitalized on the fact that Doa Catalina was already 90 years old when she died on
July 6, 1977. It insinuated that because of her advanced years she may have been imposed upon, or
unduly influenced and morally pressured by her husband's nephews and nieces (the petitioners) to
transfer to them the properties which she had inherited from Don Mariano's estate. The records do
not support that conjecture.
For as early as 1957, or twenty-eight (28) years before her death, Doa Catalina had already begun
transferring to her Locsin nephews and nieces the properties which she received from Don Mariano.
She sold a 962-sq.m. lot on January 26, 1957 to his nephew and namesake Mariano Locsin II.

13

On

April 7, 1966, or 19 years before she passed away, she also sold a 43 hectare land to another Locsin
nephew, Jose R. Locsin. 14 The next year, or on March 22, 1967, she sold a 5,000-sq.m. portion of Lot
2020 to Julian Locsin. 15

On March 27, 1967, Lot 2020

16

was partitioned by and among Doa Catalina, Julian Locsin, Vicente

Jaucian and Agapito Lorete. 17 At least Vicente Jaucian, among the other respondents in this case, is
estopped from assailing the genuineness and due execution of the sale of portions of Lot 2020 to
himself, Julian Locsin, and Agapito Lorete, and the partition agreement that he (Vicente) concluded
with the other co-owners of Lot 2020.
Among Doa, Catalina's last transactions before she died in 1977 were the sales of property which
she made in favor of Aurea Locsin and Mariano Locsin in 1975. 18
There is not the slightest suggestion in the record that Doa Catalina was mentally incompetent when
she made those dispositions. Indeed, how can any such suggestion be made in light of the fact that
even as she was transferring properties to the Locsins, she was also contemporaneously disposing of
her other properties in favor of the Jaucians? She sold to her nephew, Vicente Jaucian, on July 16,
1964 (21 years before her death) one-half (or 5,000 sq.m.) of Lot 2020. Three years later, or on March
22, 1967, she sold another 5000 sq.m. of the same lot to Julian Locsin. 19
From 1972 to 1973 she made several other transfers of her properties to her relatives and other
persons, namely: Francisco Maquiniana, Ireneo Mamia, Zenaida Buiza, Feliza Morjella, Inocentes
Motocinos, Casimiro Mondevil, Juan Saballa and Rogelio Marticio.

20

None of those transactions was

impugned by the private respondents.


In 1975, or two years before her death, Doa Catalina sold some lots not only to Don Mariano's niece,
Aurea Locsin, and his nephew, Mariano Locsin
II,

21

but also to her niece, Mercedes Jaucian Arboleda.

22

If she was competent to make that

conveyance to Mercedes, how can there be any doubt that she was equally competent to transfer her
other pieces of property to Aurea and Mariano II?
The trial court's belief that Don Mariano Locsin bequeathed his entire estate to his wife, from a
"consciousness of its real origin" which carries the implication that said estate consisted of properties
which his wife had inherited from her parents, flies in the teeth of Doa Catalina's admission in her
inventory of that estate, that "items 1 to 33 are the private properties of the deceased (Don Mariano)
and forms (sic) part of his capital at the time of the marriage with the surviving spouse, while items
34 to 42 are conjugal properties, acquired during the marriage." She would have known better than
anyone else whether the listing included any of her paraphernal property so it is safe to assume that
none was in fact included. The inventory was signed by her under oath, and was approved by the
probate court in Special Proceeding No. 138 of the Court of First Instance of Albay. It was prepared
with the assistance of her own nephew and counsel, Atty. Salvador Lorayes, who surely would not
have prepared a false inventory that would have been prejudicial to his aunt's interest and to his own,
since he stood to inherit from her eventually.
This Court finds no reason to disbelieve Attorney Lorayes' testimony that before Don Mariano died, he
and his wife (Doa Catalina), being childless, had agreed that their respective properties should
eventually revert to their respective lineal relatives. As the trusted legal adviser of the spouses and a
full-blood nephew of Doa Catalina, he would not have spun a tale out of thin air that would also
prejudice his own interest.
Little significance, it seems, has been attached to the fact that among Doa Catalina's nephews and
nieces, those closest to her: (a) her lawyer-nephew Attorney Salvador Lorayes; (b) her niece and

companion Elena Jaucian: (c) her nieces Maria Olbes-Velasco and Maria Lorayes-Cornelio and their
respective husbands, Fernando Velasco and Hostilio Cornelio, did not join the suit to annul and
undo the dispositions of property which she made in favor of the Locsins, although it would have been
to their advantage to do so. Their desistance persuasively demonstrates that Doa Catalina acted as
a completely free agent when she made the conveyances in favor of the petitioners. In fact,
considering their closeness to Doa Catalina it would have been well-nigh impossible for the
petitioners to employ "fraud, undue pressure, and subtle manipulations" on her to make her sell or
donate her properties to them. Doa Catalina's niece, Elena Jaucian, daughter of her brother, Eduardo
Jaucian, lived with her in her house. Her nephew-in-law, Hostilio Cornelio, was the custodian of the
titles of her properties. The sales and donations which she signed in favor of the petitioners were
prepared by her trusted legal adviser and nephew, Attorney Salvador Lorayes. The (1) deed of
donation dated November 19,
1974 23 in favor of Aurea Locsin, (2) another deed of donation dated February 4, 1975
Matilde Cordero, and (3) still another deed dated September 9, 1975

25

24

in favor of

in favor of Salvador Lorayes,

were all witnessed by Hostilio Cornelio (who is married to Doa Catalina's niece, Maria Lorayes) and
Fernando Velasco who is married to another niece, Maria Olbes. 26The sales which she made in favor
of Aurea Locsin on July 15, 1974

27

were witnessed by Hostilio Cornelio and Elena Jaucian. Given those

circumstances, said transactions could not have been anything but free and voluntary acts on her
part.
Apart from the foregoing considerations, the trial court and the Court of Appeals erred in not
dismissing this action for annulment and reconveyance on the ground of prescription. Commenced
decades after the transactions had been consummated, and six (6) years after Doa Catalina's death,
it prescribed four (4) years after the subject transactions were recorded in the Registry of
Property, 28 whether considered an action based on fraud, or one to redress an injury to the rights of
the plaintiffs. The private respondents may not feign ignorance of said transactions because the
registration of the deeds was constructive notice thereof to them and the whole world. 29
WHEREFORE, the petition for review is granted. The decision dated March 14, 1989 of the Court of
Appeals in CA-G.R. CV No. 11186 is REVERSED and SET ASIDE. The private respondents' complaint for
annulment of contracts and reconveyance of properties in Civil Case No. 7152 of the Regional Trial
Court, Branch VIII of Legazpi City, is DISMISSED, with costs against the private respondents, plaintiffs
therein.
SO ORDERED.
NATALIA CARPENA OPULENCIA, petitioner, vs. COURT OF APPEALS, ALADIN SIMUNDAC and
MIGUEL OLIVAN, respondents.
DECISION
PANGANIBAN, J.
Is a contract to sell a real property involved in testate proceedings valid and binding without the
approval of the probate court?
Statement of the Case

This is the main question raised in this petition for review before us, assailing the Decision [1] of the
Court

of

Appeals[2] in

CA-GR

CV

No.

41994

promulgated

on

February

6,

1996

and

its

Resolution[3] dated July 19, 1996. The challenged Decision disposed as follows:
WHEREFORE, premises considered, the order of the lower court dismissing the complaint is SET
ASIDE and judgment is hereby rendered declaring the CONTRACT TO SELL executed by appellee in
favor of appellants as valid and binding, subject to the result of the administration proceedings of the
testate Estate of Demetrio Carpena.
SO ORDERED. [4]
Petitioners Motion for Reconsideration was denied in the challenged Resolution. [5]
The Facts
The antecedent facts, as succinctly narrated by Respondent Court of Appeals are:
In a complaint for specific performance filed with the court a quo [herein private respondents] Aladin
Simundac and Miguel Oliven alleged that [herein petitioner] Natalia Carpena Opulencia executed in
their favor a CONTRACT TO SELL Lot 2125 of the Sta. Rosa Estate, consisting of 23,766 square
meters located in Sta. Rosa, Laguna at P150.00 per square meter; that plaintiffs paid a downpayment
ofP300,000.00 but defendant, despite demands, failed to comply with her obligations under the
contract. [Private respondents] therefore prayed that [petitioner] be ordered to perform her
contractual obligations and to further pay damages, attorneys fee and litigation expenses.
In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and receipt
of P300,000.00 as downpayment. However, she put forward the following affirmative defenses: that
the property subject of the contract formed part of the Estate of Demetrio Carpena (petitioners
father), in respect of which a petition for probate was filed with the Regional Trial Court, Branch 24,
Bian, Laguna; that at the time the contract was executed, the parties were aware of the pendency of
the probate proceeding; that the contract to sell was not approved by the probate court; that realizing
the nullity of the contract [petitioner] had offered to return the downpayment received from [private
respondents], but the latter refused to accept it; that [private respondents] further failed to provide
funds for the tenant who demanded P150,00.00 in payment of his tenancy rights on the land; that
[petitioner] had chosen to rescind the contract.
At the pre-trial conference the parties stipulated on [sic] the following facts:
1.

That on February 3, 1989, [private respondents] and [petitioner] entered into a contract to

sell involving a parcel of land situated in Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the
Sta. Rosa Estate.
2.

That the price or consideration of the said sell [sic] is P150.00 per square meters;

3.

That the amount of P300,000.00 had already been received by [petitioner];

4.

That the parties have knowledge that the property subject of the contract to sell is subject of

the probate proceedings;


5.

That [as] of this time, the probate Court has not yet issued an order either approving or

denying the said sale. (p. 3, appealed Order of September 15, 1992, pp. 109-112, record).
[Private respondents] submitted their evidence in support of the material allegations of the
complaint. In addition to testimonies of witnesses, [private respondents] presented the following
documentary evidences: (1) Contract to Sell (Exh A); (2) machine copy of the last will and testament

of Demetrio Carpena (defendants father) to show that the property sold by defendant was one of
those devised to her in said will (Exh B); (3) receipts signed by defendant for the downpayment in the
total amount of P300,000.00 (Exhs C, D & E); and (4) demand letters sent to defendant (Exhs F & G).
It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence. In
essence, defendant maintained that the contract to sell was null and void for want of approval by the
probate court. She further argued that the contract was subject to a suspensive condition, which was
the probate of the will of defendants father Demetrio Carpena. An Opposition was filed by [private
respondents]. It appears further that in an Order dated December 15, 1992 the court a quo granted
the demurrer to evidence and dismissed the complaint. It justified its action in dismissing the
complaint in the following manner:
It is noteworthy that when the contract to sell was consummated, no petition was filed in the Court
with notice to the heirs of the time and place of hearing, to show that the sale is necessary and
beneficial. A sale of properties of an estate as beneficial to the interested parties must comply with
the requisites provided by law, (Sec. 7, Rule 89, Rules of Court) which are mandatory, and without
them, the authority to sell, the sale itself, and the order approving it, would be null and void ab
initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L-6736, May 4, 1954;
Bonaga vs. Soler, 2 Phil. 755) Besides, it is axiomatic that where the estate of a deceased person is
already the subject of a testate or intestate proceeding, the administrator cannot enter into any
transaction involving it without prior approval of the probate Court. (Estate of Obave, vs. Reyes, 123
SCRA 767).
As held by the Supreme Court, a decedents representative (administrator) is not estopped from
questioning the validity of his own void deed purporting to convey land. (Bona vs. Soler, 2 Phil,
755). In the case at bar, the [petitioner,] realizing the illegality of the transaction[,] has interposed
the nullity of the contract as her defense, there being no approval from the probate Court, and, in
good faith offers to return the money she received from the [private respondents]. Certainly, the
administratrix is not estop[ped] from doing so and the action to declare the inexistence of contracts
do not prescribe. This is what precipitated the filing of [petitioners] demurrer to evidence. [6]
The trial courts order of dismissal was elevated to the Court of Appeals by private respondents
who alleged:
1.

The lower court erred in concluding that the contract to sell is null and void, there being no

approval of the probate court.


2.

The lower court erred in concluding that [petitioner] in good faith offers to return the money to

[private respondents].
3.

The lower court erred in concluding that [petitioner] is not under estoppel to question the

validity of the contract to sell.


4.

The lower court erred in not ruling on the consideration of the contract to sell which is

tantamount to plain unjust enrichment of [petitioner] at the expense of [private respondents]. [7]
Public Respondents Ruling
Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on
Demetrio Carpenas estate, the appellate court set aside the trial courts dismissal of the complaint
and correctly ruled as follows:

It is apparent from the appealed order that the lower court treated the contract to sell executed by
appellee as one made by the administratrix of the Estate of Demetrio Carpena for the benefit of the
estate. Hence, its main reason for voiding the contract in question was the absence of the probate
courts approval. Presumably, what the lower court had in mind was the sale of the estate or part
thereof made by the administrator for the benefit of the estate, as authorized under Rule 89 of the
Revised Rules of Court, which requires the approval of the probate court upon application therefor
with notice to the heirs, devisees and legatees.
However, as adverted to by appellants in their brief, the contract to sell in question is not covered by
Rule 89 of the Revised Rules of Court since it was made by appellee in her capacity as an heir, of a
property that was devised to her under the will sought to be probated. Thus, while the document
inadvertently stated that appellee executed the contract in her capacity as executrix and
administratrix of the estate, a cursory reading of the entire text of the contract would unerringly
show that what she undertook to sell to appellants was one of the other properties given to her by
her late father, and more importantly, it was not made for the benefit of the estate but for her own
needs. To illustrate this point, it is apropos to refer to the preambular or preliminary portion of the
document, which reads:
WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more particularly
described as follows:
xxx
x

xx
xxx

xxx
x

xx
xxx

xxx
x

xx
xxx

WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of the abovedescribed property, which property was only one among the other properties given to her by her late
father, to anyone who can wait for complete clearance of the court on the Last Will Testament of her
father.
WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said property at
ONE HUNDRED FIFTY PESOS (150.00) Philippine Currency, per square meter unto the BUYERS, and
with this offer, the latter has accepted to buy and/or purchase the same, less the area for the road
and other easements indicated at the back of Transfer Certificate of Title No. 2125 duly confirmed
after the survey to be conducted by the BUYERs Licensed Geodetic Engineer, and whatever area [is]
left. (Emphasis added).
To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot 2125 not
in her capacity as executrix of the will or administratrix of the estate of her father, but as an heir and
more importantly as owner of said lot which, along with other properties, was devised to her under
the will sought to be probated. That being so, the requisites stipulated in Rule 89 of the Revised Rules
of Court which refer to a sale made by the administrator for the benefit of the estate do not apply.
xxx
x

xx
xxx

It is noteworthy that in a Manifestation filed with this court by appellants, which is not controverted by
appellee, it is mentioned that the last will and testament of Demetrio Carpena was approved in a final
judgment rendered in Special Proceeding No. B-979 by the Regional Trial Court, Branch 24 Binan,
Laguna. But of course such approval does not terminate the proceeding[s] since the settlement of
the estate will ensue. Such proceedings will consist, among others, in the issuance by the court of a
notice to creditors (Rule 86), hearing of money claims and payment of taxes and estate debts (Rule
88) and distribution of the residue to the heirs or persons entitled thereto (Rule 90). In effect, the
final execution of the deed of sale itself upon appellants payment of the balance of the purchase
price will have to wait for the settlement or termination of the administration proceedings of the
Estate of Demetrio Carpena. Under the foregoing premises, what the trial court should have done
with the complaint was not to dismiss it but to simply put on hold further proceedings until such time
that the estate or its residue will be distributed in accordance with the approved will.
The rule is that when a demurrer to the evidence is granted by the trial court but reversed on appeal,
defendant loses the right to adduce his evidence. In such a case, the appellate court will decide the
controversy on the basis of plaintiffs evidence. In the case at bench, while we find the contract to
sell valid and binding between the parties, we cannot as yet order appellee to perform her obligations
under the contract because the result of the administration proceedings of the testate Estate of
Demetrio Carpena has to be awaited. Hence, we shall confine our adjudication to merely declaring
the validity of the questioned Contract to Sell.
Hence, this appeal.[8]
The Issue
Petitioner raises only one issue:
Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and
[p]rivate [r]espondent[s] without the requisite probate court approval is valid.
The Courts Ruling
The petition has no merit.
Contract to Sell Valid
In a nutshell, petitioner contends that where the estate of the deceased person is already the
subject of a testate or intestate proceeding, the administrator cannot enter into any transaction
involving it without prior approval of the Probate Court. [9] She maintains that the Contract to Sell is
void because it was not approved by the probate court, as required by Section 7, Rule 89 of the Rules
of Court:
SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The
court having jurisdiction of the estate of the deceased may authorize the executor or administrator to
sell, mortgage, or otherwise encumber real estate, in cases provided by these rules and when it
appears necessary or beneficial, under the following regulations:
xxx
Insisting that the above rule should apply to this case, petitioner argues that the stipulations in
the Contract to Sell require her to act in her capacity as an executrix or administratrix. She avers that
her obligation to eject tenants pertains to the administratrix or executrix, the estate being the
landlord of the said tenants.[10] Likewise demonstrating that she entered into the contract in her

capacity as executor is the stipulation that she must effect the conversion of subject land from
irrigated rice land to residential land and secure the necessary clearances from government
offices. Petitioner alleges that these obligations can be undertaken only by an executor or
administrator of an estate, and not by an heir. [11]
The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of the
Rules of Court is not applicable, because petitioner entered into the Contract to Sell in her capacity as
an heiress, not as an executrix or administratrix of the estate. In the contract, she represented
herself as the lawful owner and seller of the subject parcel of land. [12] She also explained the reason
for the sale to be difficulties in her living conditions and consequent need of cash. [13] These
representations clearly evince that she was not acting on behalf of the estate under probate when she
entered into the Contract to Sell. Accordingly, the jurisprudence cited by petitioner has no application
to the instant case.
We emphasize that hereditary rights are vested in the heir or heirs from the moment of the
decedents death.[14] Petitioner, therefore, became the owner of her hereditary share the moment her
father died. Thus, the lack of judicial approval does not invalidate the Contract to Sell, because the
petitioner has the substantive right to sell the whole or a part of her share in the estate of her late
father.[15] Thus, in Jakosalem vs. Rafols,[16] the Court resolved an identical issue under the old Civil
Code and held:
Article 440 of the Civil Code provides that the possession of hereditary property is deemed to be
transmitted to the heir without interruption from the instant of the death of the decedent, in case the
inheritance be accepted. And Manresa with reason states that upon the death of a person, each of
his heirs becomes the undivided owner of the whole estate left with respect to the part or portion
which might be adjudicated to him, a community of ownership being thus formed among the
coowners of the estate while it remains undivided. xxx And according to article 399 of the Civil Code,
every part owner may assign or mortgage his part in the common property, and the effect of such
assignment or mortgage shall be limited to the portion which may be allotted him in the partition
upon the dissolution of the community. Hence, where some of the heirs, without the concurrence of
the others, sold a property left by their deceased father, this Court, speaking thru its then Chief
Justice Cayetano Arellano, said that the sale was valid, but that the effect thereof was limited to the
share which may be allotted to the vendors upon the partition of the estate.
Administration of the Estate Not Prejudiced by the Contract to Sell
Petitioner further contends that [t]o sanction the sale at this stage would bring about a partial
distribution of the decedents estate pending the final termination of the testate proceedings. [17] This
becomes all the more significant in the light of the trial courts finding, as stated in its Order dated
August 20, 1997, that the legitime of one of the heirs has been impaired. [18]
Petitioners contention is not convincing. The Contract to Sell stipulates that petitioners offer to
sell is contingent on the complete clearance of the court on the Last Will Testament of her
father.[19] Consequently, although the Contract to Sell was perfected between the petitioner and
private respondents during the pendency of the probate proceedings, the consummation of the sale
or the transfer of ownership over the parcel of land to the private respondents is subject to the full
payment

of

the

purchase

price

and

to

the

termination

and

outcome

of

the

testate

proceedings. Therefore, there is no basis for petitioners apprehension that the Contract to Sell may
result in a premature partition and distribution of the properties of the estate. Indeed, it is settled
that the sale made by an heir of his share in an inheritance, subject to the pending administration, in
no wise stands in the way of such administration. [20]
Estoppel
Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sell
with private respondents, from whom she had already received P300,000 as initial payment of the
purchase price. Petitioner may not renege on her own acts and representations, to the prejudice of
the private respondents who have relied on them. [21] Jurisprudence teaches us that neither the law nor
the courts will extricate a party from an unwise or undesirable contract he or she entered into with all
the required formalities and with full awareness of its consequences. [22]
WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 126334

November 23, 2001

EMILIO EMNACE, petitioner,


vs.
COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM
TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA
TABANAO and VINCENT TABANAO, respondents.
YNARES-SANTIAGO, J.:
Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business
concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they decided to dissolve
their partnership and executed an agreement of partition and distribution of the partnership
properties among them, consequent to Jacinto Divinagracia's withdrawal from the
partnership.1 Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2)
parcels of land located at Sto. Nio and Talisay, Negros Occidental, and cash deposits in the local
branches of the Bank of the Philippine Islands and Prudential Bank.
Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in
1994, petitioner failed to submit to Tabanao's heirs any statement of assets and liabilities of the
partnership, and to render an accounting of the partnership's finances. Petitioner also reneged on his
promise to turn over to Tabanao's heirs the deceased's 1/3 share in the total assets of the partnership,
amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for payment
thereof.2
Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting,
payment of shares, division of assets and damages. 3 In their complaint, respondents prayed as
follows:
1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the
partnership at bar; and

2. After due notice and hearing defendant be ordered to pay/remit/deliver/surrender/yield to


the plaintiffs the following:
A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing
vessels, trucks, motor vehicles, and other forms and substance of treasures which belong
and/or should belong, had accrued and/or must accrue to the partnership;
B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages;
C. Attorney's fees equivalent to Thirty Percent (30%) of the entire share/amount/award
which the Honorable Court may resolve the plaintiffs as entitled to plus P1,000.00 for
every appearance in court.4
Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, lack of
jurisdiction over the nature of the action or suit, and lack of capacity of the estate of Tabanao to
sue.5 On August 30, 1994, the trial court denied the motion to dismiss. It held that venue was properly
laid because, while realties were involved, the action was directed against a particular person on the
basis of his personal liability; hence, the action is not only a personal action but also an action in
personam. As regards petitioner's argument of lack of jurisdiction over the action because the
prescribed docket fee was not paid considering the huge amount involved in the claim, the trial court
noted that a request for accounting was made in order that the exact value of the partnership may be
ascertained and, thus, the correct docket fee may be paid. Finally, the trial court held that the heirs of
Tabanao had aright to sue in their own names, in view of the provision of Article 777 of the Civil Code,
which states that the rights to the succession are transmitted from the moment of the death of the
decedent.6
The following day, respondents filed an amended complaint, 7 incorporating the additional prayer that
petitioner be ordered to "sell all (the partnership's) assets and thereafter
pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share in the proceeds thereof.
In due time, petitioner filed a manifestation and motion to dismiss, 8arguing that the trial court did not
acquire jurisdiction over the case due to the plaintiffs' failure to pay the proper docket fees. Further, in
a supplement to his motion to dismiss, 9 petitioner also raised prescription as an additional ground
warranting the outright dismissal of the complaint.
On June 15, 1995, the trial court issued an Order, 10 denying the motion to dismiss inasmuch as the
grounds raised therein were basically the same as the earlier motion to dismiss which has been
denied. Anent the issue of prescription, the trial court ruled that prescription begins to run only upon
the dissolution of the partnership when the final accounting is done. Hence, prescription has not set in
the absence of a final accounting. Moreover, an action based on a written contract prescribes in ten
years from the time the right of action accrues.
Petitioner filed a petition for certiorari before the Court of Appeals, 11 raising the following issues:
I.

Whether or not respondent Judge acted without jurisdiction or with grave abuse of

discretion in taking cognizance of a case despite the failure to pay the required docket fee;
II.

Whether or not respondent Judge acted without jurisdiction or with grave abuse of

discretion in insisting to try the case which involve (sic) a parcel of land situated outside of its
territorial jurisdiction;

III.

Whether or not respondent Judge acted without jurisdiction or with grave abuse of

discretion in allowing the estate of the deceased to appear as party plaintiff, when there is no
intestate case and filed by one who was never appointed by the court as administratrix of the
estates; and
IV.

Whether or not respondent Judge acted without jurisdiction or with grave abuse of

discretion in not dismissing the case on the ground of prescription.


On August 8, 1996, the Court of Appeals rendered the assailed decision, 12 dismissing the petition for
certiorari, upon a finding that no grave abuse of discretion amounting to lack or excess of jurisdiction
was committed by the trial court in issuing the questioned orders denying petitioner's motions to
dismiss.
Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by the
Court of Appeals, namely:
I.

Failure to pay the proper docket fee;

II.

Parcel of land subject of the case pending before the trial court is outside the said court's

territorial jurisdiction;
III.

Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and

IV.

Prescription of the plaintiff heirs' cause of action.

It can be readily seen that respondents' primary and ultimate objective in instituting the action below
was to recover the decedent's 1/3 share in the partnership' s assets. While they ask for an accounting
of the partnership' s assets and finances, what they are actually asking is for the trial court to compel
petitioner to pay and turn over their share, or the equivalent value thereof, from the proceeds of the
sale of the partnership assets. They also assert that until and unless a proper accounting is done, the
exact value of the partnership' s assets, as well as their corresponding share therein, cannot be
ascertained. Consequently, they feel justified in not having paid the commensurate docket fee as
required by the Rules of Court.1wphi1.nt
We do not agree. The trial court does not have to employ guesswork in ascertaining the estimated
value of the partnership's assets, for respondents themselves voluntarily pegged the worth thereof at
Thirty Million Pesos (P30,000,000.00). Hence, this case is one which is really not beyond pecuniary
estimation, but rather partakes of the nature of a simple collection case where the value of the
subject assets or amount demanded is pecuniarily determinable. 13 While it is true that the exact value
of the partnership's total assets cannot be shown with certainty at the time of filing, respondents can
and must ascertain, through informed and practical estimation, the amount they expect to collect
from the partnership, particularly from petitioner, in order to determine the proper amount of docket
and other fees.14 It is thus imperative for respondents to pay the corresponding docket fees in order
that the trial court may acquire jurisdiction over the action. 15
Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,16 where there
was clearly an effort to defraud the government in avoiding to pay the correct docket fees, we see no
attempt to cheat the courts on the part of respondents. In fact, the lower courts have noted their
expressed desire to remit to the court "any payable balance or lien on whatever award which the
Honorable Court may grant them in this case should there be any deficiency in the payment of the
docket fees to be computed by the Clerk of Court." 17 There is evident willingness to pay, and the fact

that the docket fee paid so far is inadequate is not an indication that they are trying to avoid paying
the required amount, but may simply be due to an inability to pay at the time of filing. This
consideration may have moved the trial court and the Court of Appeals to declare that the unpaid
docket fees shall be considered a lien on the judgment award.
Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the nonpayment of the proper legal fees and in allowing the same to become a lien on the monetary or
property judgment that may be rendered in favor of respondents. There is merit in petitioner's
assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states that:
The legal fees shall be a lien on the monetary or property judgment in favor of the pauperlitigant.
Respondents cannot invoke the above provision in their favor because it specifically applies to pauperlitigants. Nowhere in the records does it appear that respondents are litigating as paupers, and as
such are exempted from the payment of court fees. 18
The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of Court, which defines
the two kinds of claims as: (1) those which are immediately ascertainable; and (2) those which cannot
be immediately ascertained as to the exact amount. This second class of claims, where the exact
amount still has to be finally determined by the courts based on evidence presented, falls squarely
under the third paragraph of said Section 5(a), which provides:
In case the value of the property or estate or the sum claimed is less or more in accordance
with the appraisal of the court, the difference of fee shall be refunded or paid as the case may
be. (Underscoring ours)
In Pilipinas Shell Petroleum Corporation v. Court of Appeals, 19 this Court pronounced that the abovequoted provision "clearly contemplates an Initial payment of the filing fees corresponding to the
estimated amount of the claim subject to adjustment as to what later may be proved." 20 Moreover, we
reiterated therein the principle that the payment of filing fees cannot be made contingent or
dependent on the result of the case. Thus, an initial payment of the docket fees based on an
estimated amount must be paid simultaneous with the filing of the complaint. Otherwise, the court
would stand to lose the filing fees should the judgment later turn out to be adverse to any claim of the
respondent heirs.
The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court
expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary,
and to the government as well, the payment of docket fees cannot be made dependent on the
outcome of the case, except when the claimant is a pauper-litigant.
Applied to the instant case, respondents have a specific claim - 1/3 of the value of all the partnership
assets - but they did not allege a specific amount. They did, however, estimate the partnership's total
assets to be worth Thirty Million Pesos (P30,000,000.00), in a letter 21 addressed to petitioner.
Respondents cannot now say that they are unable to make an estimate, for the said letter and the
admissions therein form part of the records of this case. They cannot avoid paying the initial docket
fees by conveniently omitting the said amount in their amended complaint. This estimate can be
made the basis for the initial docket fees that respondents should pay. Even if it were later established
that the amount proved was less or more than the amount alleged or estimated, Rule 141, Section

5(a) of the Rules of Court specifically provides that the court may refund the 'excess or exact
additional fees should the initial payment be insufficient. It is clear that it is only the difference
between the amount finally awarded and the fees paid upon filing of this complaint that is subject to
adjustment and which may be subjected to alien.
In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion, 22 this Court held that
when the specific claim "has been left for the determination by the court, the additional filing fee
therefor shall constitute a lien on the judgment and it shall be the responsibility of the Clerk of Court
or his duly authorized deputy to enforce said lien and assess and collect the additional fee." Clearly,
the rules and jurisprudence contemplate the initial payment of filing and docket fees based on the
estimated claims of the plaintiff, and it is only when there is a deficiency that a lien may be
constituted on the judgment award until such additional fee is collected.
Based on the foregoing, the trial court erred in not dismissing the complaint outright despite their
failure to pay the proper docket fees. Nevertheless, as in other procedural rules, it may be liberally
construed in certain cases if only to secure a just and speedy disposition of an action. While the rule is
that the payment of the docket fee in the proper amount should be adhered to, there are certain
exceptions which must be strictly construed.23
In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine, allowing the
plaintiff to pay the proper docket fees within a reasonable time before the expiration of the applicable
prescriptive or reglementary period.24
In the recent case of National Steel Corp. v. Court of Appeals,25 this Court held that:
The court acquires jurisdiction over the action if the filing of the initiatory pleading is
accompanied by the payment of the requisite fees, or, if the fees are not paid at the time of the
filing of the pleading, as of the time of full payment of the fees within such reasonable time as
the court may grant, unless, of course, prescription has set in the meantime.
It does not follow, however, that the trial court should have dismissed the complaint for failure
of private respondent to pay the correct amount of docket fees. Although the payment of the
proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an
action to pay the same within a reasonable time before the expiration of the applicable
prescriptive or reglementary period. If the plaintiff fails to comply within this requirement, the
defendant should timely raise the issue of jurisdiction or else he would be considered in
estoppel. In the latter case, the balance between the appropriate docket fees and the amount
actually paid by the plaintiff will be considered a lien or any award he may obtain in his favor.
(Underscoring ours)
Accordingly, the trial court in the case at bar should determine the proper docket fee based on the
estimated amount that respondents seek to collect from petitioner, and direct them to pay the same
within a reasonable time, provided the applicable prescriptive or reglementary period has not yet
expired, Failure to comply therewith, and upon motion by petitioner, the immediate dismissal of the
complaint shall issue on jurisdictional grounds.
On the matter of improper venue, we find no error on the part of the trial court and the Court of
Appeals in holding that the case below is a personal action which, under the Rules, may be

commenced and tried where the defendant resides or may be found, or where the plaintiffs reside, at
the election of the latter.26
Petitioner, however, insists that venue was improperly laid since the action is a real action involving a
parcel of land that is located outside the territorial jurisdiction of the court a quo. This contention is
not well-taken. The records indubitably show that respondents are asking that the assets of the
partnership be accounted for, sold and distributed according to the agreement of the partners. The
fact that two of the assets of the partnership are parcels of land does not materially change the
nature of the action. It is an action in personam because it is an action against a person, namely,
petitioner, on the basis of his personal liability. It is not an action in rem where the action is against
the thing itself instead of against the person. 27 Furthermore, there is no showing that the parcels of
land involved in this case are being disputed. In fact, it is only incidental that part of the assets of the
partnership under liquidation happen to be parcels of land.
The time-tested case of Claridades v. Mercader, et al.,28 settled this issue thus:
The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond
in question, did not change the nature or character of the action, such sale being merely a
necessary incident of the liquidation of the partnership, which should precede and/or is part of
its process of dissolution.
The action filed by respondents not only seeks redress against petitioner. It also seeks the
enforcement of, and petitioner's compliance with, the contract that the partners executed to formalize
the partnership's dissolution, as well as to implement the liquidation and partition of the partnership's
assets. Clearly, it is a personal action that, in effect, claims a debt from petitioner and seeks the
performance of a personal duty on his part. 29 In fine, respondents' complaint seeking the liquidation
and partition of the assets of the partnership with damages is a personal action which may be filed in
the proper court where any of the parties reside. 30 Besides, venue has nothing to do with jurisdiction
for venue touches more upon the substance or merits of the case. 31 As it is, venue in this case was
properly laid and the trial court correctly ruled so.
On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal
capacity to sue since she was never appointed as administratrix or executrix of his estate. Petitioner's
objection in this regard is misplaced. The surviving spouse does not need to be appointed as executrix
or administratrix of the estate before she can file the action. She and her children are complainants in
their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao' s death,
his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the
succession are transmitted from the moment of death of the decedent.32
Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were
transmitted to respondents by operation of law, more particularly by succession, which 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.33 Moreover, respondents became owners of their respective
hereditary shares from the moment Vicente Tabanao died. 34
A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or
administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As successors
who stepped into the shoes of their decedent upon his death, they can commence any action

originally pertaining to the decedent.35 From the moment of his death, his rights as a partner and to
demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were
transmitted to respondents. They, therefore, had the capacity to sue and seek the court's intervention
to compel petitioner to fulfill his obligations.
Finally, petitioner contends that the trial court should have dismissed the complaint on the ground of
prescription, arguing that respondents' action prescribed four (4) years after it accrued in 1986. The
trial court and the Court of Appeals gave scant consideration to petitioner's hollow arguments, and
rightly so.
The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination.36 The partnership, although dissolved, continues to exist and its legal personality is
retained, at which time it completes the winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners. 37 For as long as the partnership exists, any
of the partners may demand an accounting of the partnership's business. Prescription of the said right
starts to run only upon the dissolution of the partnership when the final accounting is done. 38
Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the
partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to
run in the absence of a final accounting. Article 1842 of the Civil Code provides:
The right to an account of his interest shall accrue to any partner, or his legal representative as
against the winding up partners or the surviving partners or the person or partnership
continuing the business, at the date of dissolution, in the absence of any agreement to the
contrary.
Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the abovecited provision states that the right to demand an accounting accrues at the date of dissolution in the
absence of any agreement to the contrary. When a final accounting is made, it is only then that
prescription begins to run. In the case at bar, no final accounting has been made, and that is precisely
what respondents are seeking in their action before the trial court, since petitioner has failed or
refused to render an accounting of the partnership's business and assets. Hence, the said action is
not barred by prescription.
In fine, the trial court neither erred nor abused its discretion when it denied petitioner's motions to
dismiss. Likewise, the Court of Appeals did not commit reversible error in upholding the trial court's
orders. Precious time has been lost just to settle this preliminary issue, with petitioner resurrecting the
very same arguments from the trial court all the way up to the Supreme Court. The litigation of the
merits and substantial issues of this controversy is now long overdue and must proceed without
further delay.
WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and the
case isREMANDED to the Regional Trial Court of Cadiz City, Branch 60, which is ORDERED to
determine the proper docket fee based on the estimated amount that plaintiffs therein seek to collect,
and direct said plaintiffs to pay the same within a reasonable time, provided the applicable
prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ORDERED to
conduct the appropriate proceedings in Civil Case No. 416-C.
Costs against petitioner.1wphi1.nt

SO ORDERED.

JOHNNY S. RABADILLA,[1] petitioner, vs. COURT OF APPEALS AND MARIA


MARLENA[2] COSCOLUELLA Y BELLEZA VILLACARLOS, respondents.
DECISION
PURISIMA, J.:
This is a petition for review of the decision of the Court of Appeals, [3] dated December 23, 1993,
in CA-G.R. No. CV-35555, which set aside the decision of Branch 52 of the Regional Trial Court in
Bacolod City, and ordered the defendants-appellees (including herein petitioner), as heirs of Dr.
Jorge Rabadilla, to reconvey title over Lot No. 1392, together with its fruits and interests, to the
estate of Aleja Belleza.
The antecedent facts are as follows:
In a Codicil appended to the Last Will and Testament of testatrix Aleja Belleza, Dr. Jorge
Rabadilla, predecessor-in-interest of the herein petitioner, Johnny S. Rabadilla, was instituted as
a devisee of 511, 855 square meters of that parcel of land surveyed as Lot No. 1392 of the
Bacolod Cadastre. The said Codicil, which was duly probated and admitted in Special
Proceedings No. 4046 before the then Court of First Instance of Negros Occidental, contained
the following provisions:
"FIRST
I give, leave and bequeath the following property owned by me to Dr. Jorge Rabadilla
resident of 141 P. Villanueva, Pasay City:
(a) Lot No. 1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title No. RT4002 (10942), which is registered in my name according to the records of the Register of
Deeds of Negros Occidental.
(b) That should Jorge Rabadilla die ahead of me, the aforementioned property and the
rights which I shall set forth hereinbelow, shall be inherited and acknowledged by the
children and spouse of Jorge Rabadilla.
xxx
FOURTH
(a)....It is also my command, in this my addition (Codicil), that should I die and Jorge
Rabadilla shall have already received the ownership of the said Lot No. 1392 of the
Bacolod Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10942), and also
at the time that the lease of Balbinito G. Guanzon of the said lot shall expire, Jorge
Rabadilla shall have the obligation until he dies, every year to give to Maria Marlina
Coscolluela y Belleza, Seventy (75) (sic) piculs of Export sugar and Twenty Five (25)
piculs of Domestic sugar, until the said Maria Marlina Coscolluela y Belleza dies.
FIFTH
(a) Should Jorge Rabadilla die, his heir to whom he shall give Lot No. 1392 of the Bacolod
Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10492), shall have the
obligation to still give yearly, the sugar as specified in the Fourth paragraph of his

testament, to Maria Marlina Coscolluela y Belleza on the month of December of each


year.
SIXTH
I command, in this my addition (Codicil) that the Lot No. 1392, in the event that the one
to whom I have left and bequeathed, and his heir shall later sell, lease, mortgage this
said Lot, the buyer, lessee, mortgagee, shall have also the obligation to respect and
deliver yearly ONE HUNDRED (100) piculs of sugar to Maria Marlina Coscolluela y Belleza,
on each month of December, SEVENTY FIVE (75) piculs of Export and TWENTY FIVE (25)
piculs of Domestic, until Maria Marlina shall die, lastly should the buyer, lessee or the
mortgagee of this lot, not have respected my command in this my addition (Codicil),
Maria Marlina Coscolluela y Belleza, shall immediately seize this Lot No. 1392 from my
heir and the latter's heirs, and shall turn it over to my near desendants, (sic) and the
latter shall then have the obligation to give the ONE HUNDRED (100) piculs of sugar until
Maria Marlina shall die. I further command in this my addition (Codicil) that my heir and
his heirs of this Lot No. 1392, that they will obey and follow that should they decide to
sell, lease, mortgage, they cannot negotiate with others than my near descendants and
my sister."[4]
Pursuant to the same Codicil, Lot No. 1392 was transferred to the deceased, Dr. Jorge Rabadilla,
and Transfer Certificate of Title No. 44498 thereto issued in his name.
Dr. Jorge Rabadilla died in 1983 and was survived by his wife Rufina and children Johnny
(petitioner), Aurora, Ofelia and Zenaida, all surnamed Rabadilla.
On August 21, 1989, Maria Marlena Coscolluela y Belleza Villacarlos brought a complaint,
docketed as Civil Case No. 5588, before Branch 52 of the Regional Trial Court in Bacolod City,
against the above-mentioned heirs of Dr. Jorge Rabadilla, to enforce the provisions of subject
Codicil. The Complaint alleged that the defendant-heirs violated the conditions of the Codicil, in
that:
1. Lot No. 1392 was mortgaged to the Philippine National Bank and the Republic Planters
Bank in disregard of the testatrix's specific instruction to sell, lease, or mortgage only to
the near descendants and sister of the testatrix.
2. Defendant-heirs failed to comply with their obligation to deliver one hundred (100)
piculs of sugar (75 piculs export sugar and 25 piculs domestic sugar) to plaintiff Maria
Marlena Coscolluela y Belleza from sugar crop years 1985 up to the filing of the
complaint as mandated by the Codicil, despite repeated demands for compliance.
3. The banks failed to comply with the 6th paragraph of the Codicil which provided that
in case of the sale, lease, or mortgage of the property, the buyer, lessee, or mortgagee
shall likewise have the obligation to deliver 100 piculs of sugar per crop year to herein
private respondent.
The plaintiff then prayed that judgment be rendered ordering defendant-heirs to
reconvey/return-Lot No. 1392 to the surviving heirs of the late Aleja Belleza, the cancellation of
TCT No. 44498 in the name of the deceased, Dr. Jorge Rabadilla, and the issuance of a new
certificate of title in the names of the surviving heirs of the late Aleja Belleza.

On February 26, 1990, the defendant-heirs were declared in default but on March 28, 1990 the
Order of Default was lifted, with respect to defendant Johnny S. Rabadilla, who filed his Answer,
accordingly.
During the pre-trial, the parties admitted that:
On November 15, 1998, the plaintiff (private respondent) and a certain Alan Azurin, son-in-law
of the herein petitioner who was lessee of the property and acting as attorney-in-fact of
defendant-heirs, arrived at an amicable settlement and entered into a Memorandum of
Agreement on the obligation to deliver one hundred piculs of sugar, to the following effect:
"That for crop year 1988-89, the annuity mentioned in Entry No. 49074 of TCT No. 44489
will be delivered not later than January of 1989, more specifically, to wit:
75 piculs of 'A' sugar, and 25 piculs of 'B' sugar, or then existing in any of
our names, Mary Rose Rabadilla y Azurin or Alan Azurin, during December
of each sugar crop year, in Azucar Sugar Central; and, this is considered
compliance of the annuity as mentioned, and in the same manner will
compliance of the annuity be in the next succeeding crop years.
That the annuity above stated for crop year 1985-86, 1986-87, and 1987-88, will be
complied in cash equivalent of the number of piculs as mentioned therein and which is
as herein agreed upon, taking into consideration the composite price of sugar during
each sugar crop year, which is in the total amount of ONE HUNDRED FIVE THOUSAND
PESOS (P105,000.00).
That the above-mentioned amount will be paid or delivered on a staggered cash installment,
payable on or before the end of December of every sugar crop year, to wit:
For 1985-86, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or
before December of crop year 1988-89;
For 1986-87, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or
before December of crop year 1989-90;
For 1987-88, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or
before December of crop year 1990-91; and
For 1988-89, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or
before December of crop year 1991-92."[5]
However, there was no compliance with the aforesaid Memorandum of Agreement except for a
partial delivery of 50.80 piculs of sugar corresponding to sugar crop year 1988 -1989.
On July 22, 1991, the Regional Trial Court came out with a decision, dismissing the complaint
and disposing as follows:
"WHEREFORE, in the light of the aforegoing findings, the Court finds that the action is
prematurely filed as no cause of action against the defendants has as yet arose in favor
of plaintiff. While there maybe the non-performance of the command as mandated
exaction from them simply because they are the children of Jorge Rabadilla, the title
holder/owner of the lot in question, does not warrant the filing of the present complaint.
The remedy at bar must fall. Incidentally, being in the category as creditor of the left
estate, it is opined that plaintiff may initiate the intestate proceedings, if only to

establish the heirs of Jorge Rabadilla and in order to give full meaning and semblance to
her claim under the Codicil.
In the light of the aforegoing findings, the Complaint being prematurely filed is
DISMISSED without prejudice.
SO ORDERED."[6]
On appeal by plaintiff, the First Division of the Court of Appeals reversed the decision of the
trial court; ratiocinating and ordering thus:
"Therefore, the evidence on record having established plaintiff-appellant's right to
receive 100 piculs of sugar annually out of the produce of Lot No. 1392; defendantsappellee's obligation under Aleja Belleza's codicil, as heirs of the modal heir, Jorge
Rabadilla, to deliver such amount of sugar to plaintiff-appellant; defendants-appellee's
admitted non-compliance with said obligation since 1985; and, the punitive
consequences enjoined by both the codicil and the Civil Code, of seizure of Lot No. 1392
and its reversion to the estate of Aleja Belleza in case of such non-compliance, this Court
deems it proper to order the reconveyance of title over Lot No. 1392 from the estates of
Jorge Rabadilla to the estate of Aleja Belleza. However, plaintiff-appellant must institute
separate proceedings to re-open Aleja Belleza's estate, secure the appointment of an
administrator, and distribute Lot No. 1392 to Aleja Belleza's legal heirs in order to
enforce her right, reserved to her by the codicil, to receive her legacy of 100 piculs of
sugar per year out of the produce of Lot No. 1392 until she dies.
Accordingly, the decision appealed from is SET ASIDE and another one entered ordering
defendants-appellees, as heirs of Jorge Rabadilla, to reconvey title over Lot No. 1392,
together with its fruits and interests, to the estate of Aleja Belleza.
SO ORDERED."[7]
Dissatisfied with the aforesaid disposition by the Court of Appeals, petitioner found his way to
this Court via the present petition, contending that the Court of Appeals erred in ordering the
reversion of Lot 1392 to the estate of the testatrix Aleja Belleza on the basis of paragraph 6 of
the Codicil, and in ruling that the testamentary institution of Dr. Jorge Rabadilla is a modal
institution within the purview of Article 882 of the New Civil Code.
The petition is not impressed with merit.
Petitioner contends that the Court of Appeals erred in resolving the appeal in accordance with
Article 882 of the New Civil Code on modal institutions and in deviating from the sole issue
raised which is the absence or prematurity of the cause of action. Petitioner maintains that
Article 882 does not find application as there was no modal institution and the testatrix
intended a mere simple substitution - i.e. the instituted heir, Dr. Jorge Rabadilla, was to be
substituted by the testatrix's "near descendants" should the obligation to deliver the fruits to
herein private respondent be not complied with. And since the testatrix died single and without
issue, there can be no valid substitution and such testamentary provision cannot be given any
effect.
The petitioner theorizes further that there can be no valid substitution for the reason that the
substituted heirs are not definite, as the substituted heirs are merely referred to as "near

descendants" without a definite identity or reference as to who are the "near descendants" and
therefore, under Articles 843[8] and 845[9] of the New Civil Code, the substitution should be
deemed as not written.
The contentions of petitioner are untenable. Contrary to his supposition that the Court of
Appeals deviated from the issue posed before it, which was the propriety of the dismissal of the
complaint on the ground of prematurity of cause of action, there was no such deviation. The
Court of Appeals found that the private respondent had a cause of action against the petitioner.
The disquisition made on modal institution was, precisely, to stress that the private respondent
had a legally demandable right against the petitioner pursuant to subject Codicil; on which
issue the Court of Appeals ruled in accordance with law.
It is a general rule under the law on succession that successional rights are transmitted from
the moment of death of the decedent[10] and compulsory heirs are called to succeed by
operation of law. The legitimate children and descendants, in relation to their legitimate
parents, and the widow or widower, are compulsory heirs. [11] Thus, the petitioner, his mother
and sisters, as compulsory heirs of the instituted heir, Dr. Jorge Rabadilla, succeeded the latter
by operation of law, without need of further proceedings, and the successional rights were
transmitted to them from the moment of death of the decedent, Dr. Jorge Rabadilla.
Under Article 776 of the New Civil Code, inheritance includes all the property, rights and
obligations of a person, not extinguished by his death. Conformably, whatever rights Dr. Jorge
Rabadilla had by virtue of subject Codicil were transmitted to his forced heirs, at the time of his
death. And since obligations not extinguished by death also form part of the estate of the
decedent; corollarily, the obligations imposed by the Codicil on the deceased Dr. Jorge
Rabadilla, were likewise transmitted to his compulsory heirs upon his death.
In the said Codicil, testatrix Aleja Belleza devised Lot No. 1392 to Dr. Jorge Rabadilla, subject to
the condition that the usufruct thereof would be delivered to the herein private respondent
every year. Upon the death of Dr. Jorge Rabadilla, his compulsory heirs succeeded to his rights
and title over the said property, and they also assumed his (decedent's) obligation to deliver
the fruits of the lot involved to herein private respondent. Such obligation of the instituted heir
reciprocally corresponds to the right of private respondent over the usufruct, the fulfillment or
performance of which is now being demanded by the latter through the institution of the case
at bar. Therefore, private respondent has a cause of action against petitioner and the trial court
erred in dismissing the complaint below.
Petitioner also theorizes that Article 882 of the New Civil Code on modal institutions is not
applicable because what the testatrix intended was a substitution - Dr. Jorge Rabadilla was to
be substituted by the testatrix's near descendants should there be noncompliance with the
obligation to deliver the piculs of sugar to private respondent.
Again, the contention is without merit.
Substitution is the designation by the testator of a person or persons to take the place of the
heir or heirs first instituted. Under substitutions in general, the testator may either (1) provide
for the designation of another heir to whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be incapacitated to inherit, as in a

simple substitution,[12] or (2) leave his/her property to one person with the express charge that
it be transmitted subsequently to another or others, as in a fideicommissary substitution. [13] The
Codicil sued upon contemplates neither of the two.
In simple substitutions, the second heir takes the inheritance in default of the first heir by
reason of incapacity, predecease or renunciation. [14] In the case under consideration, the
provisions of subject Codicil do not provide that should Dr. Jorge Rabadilla default due to
predecease, incapacity or renunciation, the testatrix's near descendants would substitute him.
What the Codicil provides is that, should Dr. Jorge Rabadilla or his heirs not fulfill the conditions
imposed in the Codicil, the property referred to shall be seized and turned over to the
testatrix's near descendants.
Neither is there a fideicommissary substitution here and on this point, petitioner is correct. In a
fideicommissary substitution, the first heir is strictly mandated to preserve the property and
to transmit the same later to the second heir.[15] In the case under consideration, the
instituted heir is in fact allowed under the Codicil to alienate the property provided the
negotiation is with the near descendants or the sister of the testatrix. Thus, a very important
element of a fideicommissary substitution is lacking; the obligation clearly imposing upon the
first heir the preservation of the property and its transmission to the second heir. "Without this
obligation to preserve clearly imposed by the testator in his will, there is no fideicommissary
substitution."[16] Also, the near descendants' right to inherit from the testatrix is not definite.
The property will only pass to them should Dr. Jorge Rabadilla or his heirs not fulfill the
obligation to deliver part of the usufruct to private respondent.
Another important element of a fideicommissary substitution is also missing here. Under Article
863, the second heir or the fideicommissary to whom the property is transmitted must not be
beyond one degree from the first heir or the fiduciary. A fideicommissary substitution is
therefore, void if the first heir is not related by first degree to the second heir. [17] In the case
under scrutiny, the near descendants are not at all related to the instituted heir, Dr. Jorge
Rabadilla.
The Court of Appeals erred not in ruling that the institution of Dr. Jorge Rabadilla under subject
Codicil is in the nature of a modal institution and therefore, Article 882 of the New Civil Code is
the provision of law in point. Articles 882 and 883 of the New Civil Code provide:
Art. 882. The statement of the object of the institution or the application of the property
left by the testator, or the charge imposed on him, shall not be considered as a condition
unless it appears that such was his intention.
That which has been left in this manner may be claimed at once provided that the
instituted heir or his heirs give security for compliance with the wishes of the testator
and for the return of anything he or they may receive, together with its fruits and
interests, if he or they should disregard this obligation.
Art. 883. When without the fault of the heir, an institution referred to in the preceding
article cannot take effect in the exact manner stated by the testator, it shall be complied
with in a manner most analogous to and in conformity with his wishes.

The institution of an heir in the manner prescribed in Article 882 is what is known in the law of
succession as an institucion sub modo or a modal institution. In a modal institution, the testator
states (1) the object of the institution, (2) the purpose or application of the property left by the
testator, or (3) the charge imposed by the testator upon the heir. [18] A "mode" imposes an
obligation upon the heir or legatee but it does not affect the efficacy of his rights to the
succession.[19] On the other hand, in a conditional testamentary disposition, the condition must
happen or be fulfilled in order for the heir to be entitled to succeed the testator. The condition
suspends but does not obligate; and the mode obligates but does not suspend. [20] To some
extent, it is similar to a resolutory condition.[21]
From the provisions of the Codicil litigated upon, it can be gleaned unerringly that the testatrix
intended that subject property be inherited by Dr. Jorge Rabadilla. It is likewise clearly worded
that the testatrix imposed an obligation on the said instituted heir and his successors-ininterest to deliver one hundred piculs of sugar to the herein private respondent, Marlena
Coscolluela Belleza, during the lifetime of the latter. However, the testatrix did not make Dr.
Jorge Rabadilla's inheritance and the effectivity of his institution as a devisee, dependent on
the performance of the said obligation. It is clear, though, that should the obligation be not
complied with, the property shall be turned over to the testatrix's near descendants. The
manner of institution of Dr. Jorge Rabadilla under subject Codicil is evidently modal in nature
because it imposes a charge upon the instituted heir without, however, affecting the efficacy of
such institution.
Then too, since testamentary dispositions are generally acts of liberality, an obligation imposed
upon the heir should not be considered a condition unless it clearly appears from the Will itself
that such was the intention of the testator. In case of doubt, the institution should be
considered as modal and not conditional.[22]
Neither is there tenability in the other contention of petitioner that the private respondent has
only a right of usufruct but not the right to seize the property itself from the instituted heir
because the right to seize was expressly limited to violations by the buyer, lessee or
mortgagee.
In the interpretation of Wills, when an uncertainty arises on the face of the Will, as to the
application of any of its provisions, the testator's intention is to be ascertained from the words
of the Will, taking into consideration the circumstances under which it was made. [23] Such
construction as will sustain and uphold the Will in all its parts must be adopted. [24]
Subject Codicil provides that the instituted heir is under obligation to deliver One Hundred
(100) piculs of sugar yearly to Marlena Belleza Coscuella. Such obligation is imposed on the
instituted heir, Dr. Jorge Rabadilla, his heirs, and their buyer, lessee, or mortgagee should they
sell, lease, mortgage or otherwise negotiate the property involved. The Codicil further provides
that in the event that the obligation to deliver the sugar is not respected, Marlena Belleza
Coscuella shall seize the property and turn it over to the testatrix's near descendants. The nonperformance of the said obligation is thus with the sanction of seizure of the property and
reversion thereof to the testatrix's near descendants. Since the said obligation is clearly
imposed by the testatrix, not only on the instituted heir but also on his successors-in-interest,

the sanction imposed by the testatrix in case of non-fulfillment of said obligation should equally
apply to the instituted heir and his successors-in-interest.
Similarly unsustainable is petitioner's submission that by virtue of the amicable settlement, the
said obligation imposed by the Codicil has been assumed by the lessee, and whatever
obligation petitioner had become the obligation of the lessee; that petitioner is deemed to have
made a substantial and constructive compliance of his obligation through the consummated
settlement between the lessee and the private respondent, and having consummated a
settlement with the petitioner, the recourse of the private respondent is the fulfillment of the
obligation under the amicable settlement and not the seizure of subject property.
Suffice it to state that a Will is a personal, solemn, revocable and free act by which a person
disposes of his property, to take effect after his death. [25] Since the Will expresses the manner in
which a person intends how his properties be disposed, the wishes and desires of the testator
must be strictly followed. Thus, a Will cannot be the subject of a compromise agreement which
would thereby defeat the very purpose of making a Will.
WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals,
dated December 23, 1993, in CA-G.R. No. CV-35555 AFFIRMED. No pronouncement as to costs
SO ORDERED.
BELINDA TAREDO, for herself and in representation of her brothers and sisters, and
TEOFILA

CORPUZ

TANEDO,

representing

her

minor

daughter

VERNA

TANEDO, petitioners, vs. THE COURT OF APPEALS, SPOUSES RICARDO M. TAREDO


AND TERESITA BARERA TAREDO,respondents.
DECISION
PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real property, who has
preference in ownership? What is the probative value of the lower courts finding of good faith in
registration of such sales in the registry of property? These are the main questions raised in this
Petition for review on certiorari under Rule 45 of the Rules of Court to set aside and reverse the
Decision1 of the Court of Appeals2 in CA-G.R. CV NO. 24987 promulgated on September 26, 1991
affirming the decision of the Regional Trial Court, Branch 63, Third Judicial Region, Tarlac, Tarlac in Civil
Case No. 6328, and its Resolution denying reconsideration thereof, promulgated on May 27, 1992.
By the Courts Resolution on October 25, 1995, this case (along with several others) was
transferred from the First to the Third Division and after due deliberation, the Court assigned it to the
undersigned ponenle for the writing of this Decision.
The Facts
On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale in favor of his
eldest brother, Ricardo Taedo, and the latters wife, Teresita Barera, private respondents herein,
whereby he conveyed to the latter in consideration of P1,500.00, one hectare of whatever share I
shall have over Lot No. 191 of the cadastral survey of Gerona, Province of Tarlac and covered by Title
T-l3829 of the Register of Deeds of Tarlac, the said property being his future inheritance from his
parents (Exh. 1). Upon the death of his father Matias, Lazaro executed an Affidavit of Conformity

dated February 28, 1980 (Exh. 3) to re-affirm, respect. acknowledge and validate the sale I made in
1962. On January 13, 1981, Lazaro executed another notarized deed of sale in favor of private
respondents covering his undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191 x x
(Exh. 4). He acknowledged therein his receipt of P 10,000.00 as consideration therefor. In February
1981, Ricardo learned that Lazaro sold the same property to his children, petitioners herein, through a
deed of sale datedDecember 29, 1980 (Exh. E). On June 7, 1982, private respondents recorded the
Deed of Sale (Exh. 4) in their favor in the Registry of Deeds and the corresponding entry was made in
Transfer Certificate of Title No. 166451 (Exh. 5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the deeds of sale
executed by Lazaro in favor of private respondents covering the property inherited by Lazaro from his
father.
Petitioners

claimed

that

their

father,

Lazaro,

executed

an

Absolute

Deed

of

Sale

dated December 29, 1980 (Exit. E), conveying to his ten children his allotted portion under the
extrajudicial partition executed by the heirs of Matias, which deed included the land in litigation
(Lot 191).
Petitioners also presented in evidence: (1) a private writing purportedly prepared and signed by
Matias dated December 28, 1978, stating that it was his desire that whatever inheritance Lazaro
would receive from him should be given to his (Lazaros) children (Exh. A); (2) a typewritten document
dated March 10, 1979 signed by Lazaro in the presence of two witnesses, wherein he confirmed that
he would voluntarily abide by the wishes of his father, Matias, to give to his (Lazaros) children all the
property he would inherit from the latter (Exh. B); and (3) a letter dated January 1, 1980 of Lazaro to
his daughter, Carmela, stating that his share in the extrajudicial settlement of the estate of his father
was intended for his children, petitioners herein (Exh. C).
Private respondents, however presented in evidence a Deed of Revocation of a Deed of Sale
dated March 12, 1981 (Exh. 6), wherein Lazaro revoked the sale in favor of petitioners for the reason
that it was simulated or fictitious - without any consideration whatsoever.
Shortly after the case a quo was filed, Lazaro executed a sworn statement (Exh. G) which virtually
repudiated the contents of the Deed of Revocation of a Deed of Sale (Exh. 6) and the Deed of Sale
(Exh. 4) in favor of private respondents. However, Lazaro testified that he sold the property to
Ricardo, and that it was a lawyer who induced him to execute a deed of sale in favor of his children
after giving him five pesos (P5.00) to buy a drink (TSN September 18, 1985, pp. 204-205).
The trial court decided in favor of private respondents, holding that petitioners failed to adduce a
preponderance of evidence to support (their) claim. On appeal, the Court of Appeals affirmed the
decision of the trial court, ruling that the Deed of Sale dated January 13, 1981 (Exh. 9) was valid and
that its registration in good faith vested title in said respondents.
The Issues
Petitioners raised the following errors in the respondent Court, which they also now allege in the
instant Petition:
I. The trial court erred in concluding that the Contract of Sale of October 20, 1962 (Exhibit 7, Answer)
is merely voidable or annulable and not void ab initio pursuant to paragraph 2 of Article 1347 of the
New Civil Code involving as it does a future inheritance.

II. The trial court erred in holding that defendants-appellees acted in good faith in registering the
deed of sale of January 13, 1981 (Exhibit 9) with the Register of Deeds of Tarlac and therefore
ownership of the land in question passed on to defendants-appellees.
III. The trial court erred in ignoring and failing to consider the testimonial and documentary evidence
of plaintiffs-appellants which clearly established by preponderance of evidence that they are indeed
the legitimate and lawful owners of the property in question.
IV. The decision is contrary to law and the facts of the case and the conclusions drawn from the
established facts are illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of
Property) of a deed of sale covering the same property to the same buyers valid?
3. May this Court review the findings of the respondent Court (a) holding that the buyers
acted in good faith in registering the said subsequent deed of sale and (b) in failing to
consider petitioners evidence? Are the conclusions of the respondent Court illogical and
off-tangent?
The Courts Ruling
At the outset, let it be clear that the errors which are reviewable by this Court in this petition for
review on certiorari are only those allegedly committed by the respondent Court of Appeals and not
directly those of the trial court, which is not a party here. The assignment of errors in the petition
quoted above are therefore totally misplaced, and for that reason, the petition should be dismissed.
But in order to give the parties substantial justice we have decided to delve into the issues as above
re-stated. The errors attributed by petitioners to the latter (trial) court will be discussed only insofar
as they are relevant to the appellate courts assailed Decision and Resolution.
The sale made in 1962 involving future inheritance is not really at issue here. In context, the
assailed Decision conceded it may be legally correct that a contract of sale of anticipated future
inheritance is null and void.3
But to remove all doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil
Code, (n)o contract may be entered into upon a future inheritance except in cases expressly
authorized by law.
Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor
the creator of any obligation between the parties.
Hence, the affidavit of conformity dated February 28, 1980, insofar as it sought to validate or
ratify the 1962 sale, is also useless and, in the words of the respondent Court, suffers from the same
infirmity. Even private respondents in their memorandum 4 concede this.
However, the documents that are critical to the resolution of this case are: (a) the deed of sale of
January 13, 1981 in favor of private respondents covering Lazaros undivided inheritance of onetwelfth (1/12) share in Lot No. 191, which was subsequently registered on June 7, 1982; and (b) the
deed of sale dated December 29, 1980 in favor of petitioners covering the same property. These two
documents were executed after the death of Matias (and his spouse) and after a deed of extrajudicial
settlement of his (Matias) estate was executed, thus vesting in Lazaro actual title over said property.

In other words, these dispositions, though conflicting, were no longer infected with the infirmities of
the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only one-half hectare out of Lot
No. 191, citing as authority the trial courts decision. As earlier pointed out, what is on review in these
proceedings by this Court is the Court of Appeals decision - which correctly identified the subject
matter of the January 13, 1981 sale to be the entire undivided 1/12 share of Lazaro in Lot No. 191 and
which is the same property disposed of on December 29, 1980 in favor of petitioners.
Critical in determining which of these two deeds should be given effect is the registration of the
sale in favor of private respondents with the register of deeds on June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales,
as follows:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in
the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith.
The property in question is land, an immovable, and following the above-quoted law, ownership
shall belong to the buyer who in good faith registers it first in the registry of property. Thus, although
the deed of sale in favor of private respondents was later than the one in favor of petitioners,
ownership would vest in the former because of the undisputed fact of registration. On the other hand,
petitioners have not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that private respondents
never took possession thereof. As between two purchasers, the one who registered the sale in his
favor has a preferred right over the other who has not registered his title, even if the latter is in actual
possession of the immovable property. 5
As to third issue, while petitioners conceded the fact of registration, they nevertheless contended
that it was done in bad faith. On this issue, the respondent Court ruled:
Under the second assignment of error, plaintiffs-appellants contend that defendants-appellees acted
in bad faith when they registered the Deed of Sale in their favor as appellee Ricardo already knew of
the execution of the deed of sale in favor of the plaintiffs; appellants cite the testimony of plaintiff
Belinda Tafledo to the effect that defendant Ricardo Taedo called her up on January 4 or 5, 1981 to
tell her that he was already the owner of the land in question but the contract of sale between our
father and us were (sic) already consumated (pp. 9-10, tsn, January 6, 1984). This testimony is
obviously self-serving, and because it was a telephone conversation, the deed of sale
dated December 29, 1980 was not shown; Belinda merely told her uncle that there was already a
document showing that plaintiffs are the owners (p. 80). Ricardo Taedo controverted this and
testified that he learned for the first time of the deed of sale executed by Lazaro in favor of his
children about a month or sometime in February 1981 (p. 111, tsn, Nov. 28, 1984). x x x 6

The respondent Court, reviewing the trial courts findings, refused to overturn the latters assessment
of the testimonial evidence, as follows:
We are not prepared to set aside the finding of the lower court upholding Ricardo Tanedos
testimony, as it involves a matter of credibility of witnesses which the trial judge, who presided at the
hearing, was in a better position to resolve. (Court of Appeals Decision, p. 6.)
In this connection, we note the tenacious allegations made by petitioners, both in their basic
petition and in their memorandum, as follows:
1. The respondent Court allegedly ignored the claimed fact that respondent Ricardo by fraud
and deceit and with foreknowledge that the property in question had already been sold to
petitioners, made Lazaro execute the deed of January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2 of the purchase price of
P10,000.00 was paid at the time of the execution of the deed of sale, contrary to the
written acknowledgment, thus showing bad faith;
3. There is allegedly sufficient evidence showing that the deed of revocation of the sale in
favor of petitioners was tainted with fraud or deceit.
4. There is allegedly enough evidence to show that private respondents took undue
advantage over the weakness and unschooled and pitiful situation of Lazaro Tafledo . . .
and that respondent Ricardo Taedo exercised moral ascendancy over his younger brother
he being the eldest brother and who reached fourth year college of law and at one time a
former Vice-Governor of Tarlac, while his younger brother only attained first year high
school x x x ;
5. The respondent Court erred in not giving credence to petitioners evidence, especially
Lazaro Taedos Sinumpaang Salaysay dated July 27, 1982 stating that Ricardo Taedo
deceived the former in executing the deed of sale in favor of private respondents.
To be sure, there are indeed many conflicting documents and testimonies as well as arguments
over their probative value and significance. Suffice it to say, however, that all the above contentions
involve questions of fact, appreciation of evidence and credibility of witnesses, which are not proper in
this review. It is well-settled that the Supreme Court is not a trier of facts. In petitions for review under
Rule 45 of the Revised Rules of Court, only questions of law may be raised and passed upon. Absent
any whimsical or capricious exercise of judgment, and unless the lack of any basis for the conclusions
made by the lower courts be amply demonstrated, the Supreme Court will not disturb their findings.
At most, it appears that petitioners have shown that their evidence was not believed by both the trial
and the appellate courts, and that the said courts tended to give more credence to the evidence
presented by private respondents. But this in itself is not a reason for setting aside such findings. We
are far from convinced that both courts gravely abused their respective authorities and judicial
prerogatives.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goidrock Construction and
Development Corp.:7
The Court has consistently held that the factual findings of the trial court, as well as the Court of
Appeals, are final and conclusive and may not be reviewed on appeal. Among the exceptional
circumstances where a reassessment of facts found by the lower courts is allowed are when the

conclusion is a finding grounded entirely on speculation, surmises or conjectures; when the inference
made is manifestly absurd, mistaken or Impossible; when there is grave abuse of discretion in the
appreciation of facts; when the judgment is premised on a misapprehension of facts; when the
findings went beyond the issues of the case and the same are contrary to the admissions of both
appellant and appellee. After a careful study of the case at bench, we find none of the above grounds
present to justify the re-evaluation of the findings of fact made by the courts below.
In the same vein, the ruling in the recent case of South Sea Surety and Insurance Company, Inc.
vs. Hon. Court of Appeals, et al.[8] is equally applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is not the
function of this Court to assess and evaluate all over again the evidence, testimonial and
documentary, adduced by the parties, particularly where, such as here, the findings of both the trial
court and the appellate court on the matter coincide. (italics supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals
is AFFIRMED. No Costs.
SO ORDERED.
SPS. VIRGILIO F. SANTOS &
ESPERANZA

G.R. No. 169129

LATI SANTOS,

SPS.VICTORINO F. SANTOS, &

Present:

LAGRIMAS SANTOS, ERNESTO


F.

SANTOS,

and

TADEO

F.

SANTOS,

YNARES-SANTIAGO, J.,
Chairperson,

Petitioners,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,*
- versus -

CHICO-NAZARIO, and
NACHURA, JJ.

SPS.

JOSE

LUMBAO

and

PROSERFINA LUMBAO,

Promulgated:

Respondents.
March 28, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

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 on20 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 ofP30,000.00 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.
FINDING

THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT


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 anadmission 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.
Q.

No, sir.
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 coowner. Furthermore, the sale is subject to the results of the partition upon the termination of the coownership.[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 107square 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-ininterest 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-ininterest 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.
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.
DECISION
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 thumbmark5 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 SelfAdjudication 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 SelfAdjudication) 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 Resolution8 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."18The 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
powerthat 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
resolution35 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 Sell36 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"39likely 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 SelfAdjudication) 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.