EN BANC

[G.R. No. L-8437. November 28, 1956.]

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

DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court
of First Instance of Rizal, presided by Judge Hermogenes
Caluag, dismissing its claim against the Estate of K. H.
Hemady (Special Proceeding No. Q-293) for failure to state a
cause of action.
The Luzon Surety Co. had filed a claim against the Estate
based on twenty different indemnity agreements, or counter
bonds, each subscribed by a distinct principal and by the
deceased K. H. Hemady, a surety solidary guarantor) in all of
them, in consideration of the Luzon Surety Co.s of having
guaranteed, the various principals in favor of different
creditors. The twenty counterbonds, or indemnity
agreements, all contained the following
stipulations:chanroblesvirtuallawlibrary
Premiums. As consideration for this suretyship, the
undersigned jointly and severally, agree to pay the
COMPANY the sum of ________________ (P______) pesos,
Philippines Currency, in advance as premium there of for
every __________ months or fractions thereof, this ________
or any renewal or substitution thereof is in effect.
Indemnity. The undersigned, jointly and severally, agree at
all times to indemnify the COMPANY and keep it indemnified
and hold and save it harmless from and against any and all
damages, losses, costs, stamps, taxes, penalties, charges,
and expenses of whatsoever kind and nature which the
COMPANY shall or may, at any time sustain or incur in
consequence of having become surety upon this bond or any
extension, renewal, substitution or alteration thereof made at
the instance of the undersigned or any of them or any order
executed on behalf of the undersigned or any of them; chan
roblesvirtualawlibraryand to pay, reimburse and make good to
the COMPANY, its successors and assigns, all sums and
amount of money which it or its representatives shall pay or
cause to be paid, or become liable to pay, on account of the
undersigned or any of them, of whatsoever kind and nature,
including 15% of the amount involved in the litigation or other
matters growing out of or connected therewith for counsel or
attorneys fees, but in no case less than P25. It is hereby
further agreed that in case of extension or renewal of this
________ we equally bind ourselves for the payment thereof
under the same terms and conditions as above mentioned
without the necessity of executing another indemnity
agreement for the purpose and that we hereby equally waive
our right to be notified of any renewal or extension of this
________ which may be granted under this indemnity
agreement.
Interest on amount paid by the Company. Any and all
sums of money so paid by the company shall bear interest at
the rate of 12% per annum which interest, if not paid, will be
accummulated and added to the capital quarterly order to
earn the same interests as the capital and the total sum
thereof, the capital and interest, shall be paid to the
COMPANY as soon as the COMPANY shall have become
liable therefore, whether it shall have paid out such sums of
money or any part thereof or not.
xxx

xxx

xxx

Waiver. It is hereby agreed upon by and between the

undersigned that any question which may arise between
them by reason of this document and which has to be
submitted for decision to Courts of Justice shall be brought
before the Court of competent jurisdiction in the City of
Manila, waiving for this purpose any other venue. Our right to
be notified of the acceptance and approval of this indemnity
agreement is hereby likewise waived.
xxx

xxx

xxx

Our Liability Hereunder. It shall not be necessary for the

COMPANY to bring suit against the principal upon his default,
or to exhaust the property of the principal, but the liability
hereunder of the undersigned indemnitor shall be jointly and
severally, a primary one, the same as that of the principal,
and shall be exigible immediately upon the occurrence of
such default. (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent
claim, of the value of the twenty bonds it had executed in
consideration of the counterbonds, and further asked for
judgment for the unpaid premiums and documentary stamps
affixed to the bonds, with 12 per cent interest thereon.
Before answer was filed, and upon motion of the
administratrix of Hemadys estate, the lower court, by order of
September 23, 1953, dismissed the claims of Luzon Surety
Co., on two grounds:chanroblesvirtuallawlibrary (1) that the
premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of
the undertaking of the guarantor (Hemady), since they were
not liabilities incurred after the execution of the counterbonds;
chan roblesvirtualawlibraryand (2) that whatever losses may
occur after Hemadys death, are not chargeable to his estate,
because upon his death he ceased to be guarantor.
Taking up the latter point first, since it is the one more far
reaching in effects, the reasoning of the court below ran as
follows:
The administratrix further contends that upon the death of
Hemady, his liability as a guarantor terminated, and therefore,
in the absence of a showing that a loss or damage was
suffered, the claim cannot be considered contingent. This
Court believes that there is merit in this contention and finds
support in Article 2046 of the new Civil Code. It should be
noted that a new requirement has been added for a person to
qualify as a guarantor, that is:chanroblesvirtuallawlibrary
integrity. As correctly pointed out by the Administratrix,
integrity is something purely personal and is not
transmissible. Upon the death of Hemady, his integrity was
not transmitted to his estate or successors. Whatever loss
therefore, may occur after Hemadys death, are not
chargeable to his estate because upon his death he ceased
to be a guarantor.
Another clear and strong indication that the surety company
has exclusively relied on the personality, character, honesty
and integrity of the now deceased K. H. Hemady, was the fact
that in the printed form of the indemnity agreement there is a
paragraph entitled Security by way of first mortgage, which
was expressly waived and renounced by the security
company. The security company has not demanded from K.
H. Hemady to comply with this requirement of giving security
by way of first mortgage. In the supporting papers of the
claim presented by Luzon Surety Company, no real property
was mentioned in the list of properties mortgaged which
appears at the back of the indemnity agreement. (Rec. App.,
pp. 407-408).
We find this reasoning untenable. Under the present Civil
Code (Article 1311), as well as under the Civil Code of 1889
(Article 1257), the rule is that
Contracts take effect only as between the parties, their
assigns and heirs, except in the case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law.
While in our successional system the responsibility of the
heirs for the debts of their decedent cannot exceed the value
of the inheritance they receive from him, the principle remains
intact that these heirs succeed not only to the rights of the
deceased but also to his obligations. Articles 774 and 776 of
the New Civil Code (and Articles 659 and 661 of the
preceding one) expressly so provide, thereby confirming
Article 1311 already quoted.
ART. 774. Succession is a mode of acquisition by virtue of
which the property, rights and obligations to the extent of the
value of the inheritance, of a person are transmitted through
his death to another or others either by his will or by
operation of law.
ART. 776. The inheritance includes all the property, rights

and obligations of a person which are not extinguished by his

death.
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
ruled:chanroblesvirtuallawlibrary
Under the Civil Code the heirs, by virtue of the rights of
succession are subrogated to all the rights and obligations of
the deceased (Article 661) and cannot be regarded as third
parties with respect to a contract to which the deceased was
a party, touching the estate of the deceased (Barrios vs.
Dolor, 2 Phil. 44).
xxx

xxx

xxx

The principle on which these decisions rest is not affected by

the provisions of the new Code of Civil Procedure, and, in
accordance with that principle, the heirs of a deceased
person cannot be held to be third persons in relation to any
contracts touching the real estate of their decedent which
comes in to their hands by right of inheritance; chan
roblesvirtualawlibrarythey take such property subject to all the
obligations resting thereon in the hands of him from whom
they derive their rights.
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874
and de Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision in our Rules of
Court that money debts of a deceased must be liquidated and
paid from his estate before the residue is distributed among
said heirs (Rule 89). The reason is that whatever payment is
thus made from the estate is ultimately a payment by the
heirs and distributees, since the amount of the paid claim in
fact diminishes or reduces the shares that the heirs would
have been entitled to receive.
Under our law, therefore, the general rule is that a partys
contractual rights and obligations are transmissible to the
successors. The rule is a consequence of the progressive
depersonalization of patrimonial rights and duties that, as
observed by Victorio Polacco, has characterized the history of
these institutions. From the Roman concept of a relation from
person to person, the obligation has evolved into a relation
from patrimony to patrimony, with the persons occupying only
a representative position, barring those rare cases where the
obligation is strictly personal, i.e., is contracted intuitu
personae, in consideration of its performance by a specific
person and by no other. The transition is marked by the
disappearance of the imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the
obligation of the surety or guarantor does not warrant the
conclusion that his peculiar individual qualities are
contemplated as a principal inducement for the contract.
What did the creditor Luzon Surety Co. expect of K. H.
Hemady when it accepted the latter as surety in the
counterbonds? Nothing but the reimbursement of the moneys
that the Luzon Surety Co. might have to disburse on account
of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting
from an obligation to give; chan roblesvirtualawlibraryand to
the Luzon Surety Co., it was indifferent that the
reimbursement should be made by Hemady himself or by
some one else in his behalf, so long as the money was paid
to it.
The second exception of Article 1311, p. 1, is
intransmissibility by stipulation of the parties. Being
exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must be
expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the
agreements sued upon nowhere indicate that they are nontransferable.
(b) Intransmisibilidad por pacto. Lo general es la
transmisibilidad de darechos y obligaciones; chan
roblesvirtualawlibraryle excepcion, la intransmisibilidad.
Mientras nada se diga en contrario impera el principio de la
transmision, como elemento natural a toda relacion juridica,
salvo las personalisimas. Asi, para la no transmision, es
menester el pacto expreso, porque si no, lo convenido entre
partes trasciende a sus herederos.

Siendo estos los continuadores de la personalidad del

causante, sobre ellos recaen los efectos de los vinculos
juridicos creados por sus antecesores, y para evitarlo, si asi
se quiere, es indespensable convension terminante en tal
sentido.
Por su esencia, el derecho y la obligacion tienden a ir ms
all de las personas que les dieron vida, y a ejercer presion
sobre los sucesores de esa persona; chan
roblesvirtualawlibrarycuando no se quiera esto, se impone
una estipulacion limitativa expresamente de la
transmisibilidad o de cuyos tirminos claramente se deduzca
la concresion del concreto a las mismas personas que lo
otorgon. (Scaevola, Codigo Civil, Tomo XX, p. 541-542)
(Emphasis supplied.)
Because under the law (Article 1311), a person who enters
into a contract is deemed to have contracted for himself and
his heirs and assigns, it is unnecessary for him to expressly
stipulate to that effect; chan roblesvirtualawlibraryhence, his
failure to do so is no sign that he intended his bargain to
terminate upon his death. Similarly, that the Luzon Surety
Co., did not require bondsman Hemady to execute a
mortgage indicates nothing more than the companys faith
and confidence in the financial stability of the surety, but not
that his obligation was strictly personal.
The third exception to the transmissibility of obligations under
Article 1311 exists when they are not transmissible by
operation of law. The provision makes reference to those
cases where the law expresses that the rights or obligations
are extinguished by death, as is the case in legal support
(Article 300), parental authority (Article 327), usufruct (Article
603), contracts for a piece of work (Article 1726), partnership
(Article 1830 and agency (Article 1919). By contract, the
articles of the Civil Code that regulate guaranty or suretyship
(Articles 2047 to 2084) contain no provision that the guaranty
is extinguished upon the death of the guarantor or the surety.
The lower court sought to infer such a limitation from Art.
2056, to the effect that one who is obliged to furnish a
guarantor must present a person who possesses integrity,
capacity to bind himself, and sufficient property to answer for
the obligation which he guarantees. It will be noted, however,
that the law requires these qualities to be present only at the
time of the perfection of the contract of guaranty. It is selfevident that once the contract has become perfected and
binding, the supervening incapacity of the guarantor would
not operate to exonerate him of the eventual liability he has
contracted; chan roblesvirtualawlibraryand if that be true of
his capacity to bind himself, it should also be true of his
integrity, which is a quality mentioned in the article alongside
the capacity.
The foregoing concept is confirmed by the next Article 2057,
that runs as follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be convicted in first
instance of a crime involving dishonesty or should become
insolvent, the creditor may demand another who has all the
qualifications required in the preceding article. The case is
excepted where the creditor has required and stipulated that
a specified person should be guarantor.
From this article it should be immediately apparent that the
supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound)
does not terminate the contract but merely entitles the
creditor to demand a replacement of the guarantor. But the
step
remains
optional
in
the
creditor:chanroblesvirtuallawlibrary it is his right, not his duty;
chan roblesvirtualawlibraryhe may waive it if he chooses, and
hold the guarantor to his bargain. Hence Article 2057 of the
present Civil Code is incompatible with the trial courts stand
that the requirement of integrity in the guarantor or surety
makes the latters undertaking strictly personal, so linked to
his individuality that the guaranty automatically terminates
upon his death.
The contracts of suretyship entered into by K. H. Hemady in
favor of Luzon Surety Co. not being rendered intransmissible
due to the nature of the undertaking, nor by the stipulations of
the contracts themselves, nor by provision of law, his
eventual liability thereunder necessarily passed upon his
death to his heirs. The contracts, therefore, give rise to

contingent claims provable against his estate under section 5,

Rule 87 (2 Moran, 1952 ed., p. 437; chan
roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil. 810,
814).
The most common example of the contingent claim is that
which arises when a person is bound as surety or guarantor
for a principal who is insolvent or dead. Under the ordinary
contract of suretyship the surety has no claim whatever
against his principal until he himself pays something by way
of satisfaction upon the obligation which is secured. When he
does this, there instantly arises in favor of the surety the right
to compel the principal to exonerate the surety. But until the
surety has contributed something to the payment of the debt,
or has performed the secured obligation in whole or in part,
he has no right of action against anybody no claim that
could be reduced to judgment. (May vs. Vann, 15 Pla., 553;
chan roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519;
chan roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.],
521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; chan
roblesvirtualawlibraryErnst vs. Nou, 63 Wis., 134.)
For Defendant administratrix it is averred that the above
doctrine refers to a case where the surety files claims against
the estate of the principal debtor; chan
roblesvirtualawlibraryand it is urged that the rule does not
apply to the case before us, where the late Hemady was a
surety, not a principal debtor. The argument evinces a
superficial view of the relations between parties. If under the
Gaskell ruling, the Luzon Surety Co., as guarantor, could file
a contingent claim against the estate of the principal debtors
if the latter should die, there is absolutely no reason why it
could not file such a claim against the estate of Hemady,
since Hemady is a solidary co-debtor of his principals. What
the Luzon Surety Co. may claim from the estate of a principal
debtor it may equally claim from the estate of Hemady, since,
in view of the existing solidarity, the latter does not even enjoy
the benefit of exhaustion of the assets of the principal debtor.
The foregoing ruling is of course without prejudice to the
remedies of the administratrix against the principal debtors
under Articles 2071 and 2067 of the New Civil Code.
Our conclusion is that the solidary guarantors liability is not
extinguished by his death, and that in such event, the Luzon
Surety Co., had the right to file against the estate a
contingent claim for reimbursement. It becomes unnecessary
now to discuss the estates liability for premiums and stamp
taxes, because irrespective of the solution to this question,
the Luzon Suretys claim did state a cause of action, and its
dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the
records are ordered remanded to the court of origin, with
instructions to proceed in accordance with law. Costs against
the Administratrix- Appellee. SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC
G.R. No. L-4963

January 29, 1953

MARIA USON, plaintiff-appellee, vs.MARIA DEL ROSARIO,

CONCEPCION NEBREDA, CONRADO NEBREDA,
DOMINADOR NEBREDA, AND FAUSTINO NEBREDA, Jr.,
defendants-appellants.
Priscilo Evangelista for appellee.Brigido G. Estrada for
appellant.
BAUTISTA ANGELO, J.:
This is an action for recovery of the ownership and
possession of five (5) parcels of land situated in the
Municipality of Labrador, Province of Pangasinan, filed by
Maria Uson against Maria del Rosario and her four children
named Concepcion, Conrado, Dominador, and Faustino,
surnamed Nebreda, who are all of minor age, before the

Court of First Instance of Pangasinan.

Maria Uson was the lawful wife of Faustino Nebreda who
upon his death in 1945 left the lands involved in this litigation.
Faustino Nebreda left no other heir except his widow Maria
Uson. However, plaintiff claims that when Faustino Nebreda
died in 1945, his common-law wife Maria del Rosario took
possession illegally of said lands thus depriving her of their
possession and enjoyment.
Defendants in their answer set up as special defense that on
February 21, 1931, Maria Uson and her husband, the late
Faustino Nebreda, executed a public document whereby they
agreed to separate as husband and wife and, in
consideration of their separation, Maria Uson was given a
parcel of land by way of alimony and in return she renounced
her right to inherit any other property that may be left by her
husband upon his death (Exhibit 1).
After trial, at which both parties presented their respective
evidence, the court rendered decision ordering the
defendants to restore to the plaintiff the ownership and
possession of the lands in dispute without special
pronouncement as to costs. Defendants interposed the
present appeal.
There is no dispute that Maria Uson, plaintiff-appellee, is the
lawful wife of Faustino Nebreda, former owner of the five
parcels of lands litigated in the present case. There is
likewise no dispute that Maria del Rosario, one of the
defendants-appellants, was merely a common-law wife of the
late Faustino Nebreda with whom she had four illegitimate
children, her now co-defendants. It likewise appears that
Faustino Nebreda died in 1945 much prior to the effectivity of
the new Civil Code. With this background, it is evident that
when Faustino Nebreda died in 1945 the five parcels of land
he was seized of at the time passed from the moment of his
death to his only heir, his widow Maria Uson (Article 657, old
Civil Code).As this Court aptly said, "The property belongs to
the heirs at the moment of the death of the ancestor as
completely as if the ancestor had executed and delivered to
them a deed for the same before his death" (Ilustre vs. Alaras
Frondosa, 17 Phil., 321). From that moment, therefore, the
rights of inheritance of Maria Uson over the lands in question
became vested.
The claim of the defendants that Maria Uson had relinquished
her right over the lands in question because she expressly
renounced to inherit any future property that her husband
may acquire and leave upon his death in the deed of
separation they had entered into on February 21, 1931,
cannot be entertained for the simple reason that future
inheritance cannot be the subject of a contract nor can it be
renounced (1 Manresa, 123, sixth edition; Tolentino on Civil
Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co.,
41 Phil., 531).
But defendants contend that, while it is true that the four
minor defendants are illegitimate children of the late Faustino
Nebreda and under the old Civil Code are not entitled to any
successional rights, however, under the new Civil Code which
became in force in June, 1950, they are given the status and
rights of natural children and are entitled to the successional
rights which the law accords to the latter (article 2264 and
article 287, new Civil Code), and because these successional
rights were declared for the first time in the new code, they
shall be given retroactive effect even though the event which
gave rise to them may have occurred under the prior
legislation (Article 2253, new Civil Code).
There is no merit in this claim. Article 2253 above referred to
provides indeed that rights which are declared for the first
time shall have retroactive effect even though the event which
gave rise to them may have occurred under the former
legislation, but this is so only when the new rights do not
prejudice any vested or acquired right of the same origin.
Thus, said article provides that "if a right should be declared
for the first time in this Code, it shall be effective at once,
even though the act or event which gives rise thereto may
have been done or may have occurred under the prior
legislation, provided said new right does not prejudice or

impair any vested or acquired right, of the same origin." As

already stated in the early part of this decision, the right of
ownership of Maria Uson over the lands in question became
vested in 1945 upon the death of her late husband and this is
so because of the imperative provision of the law which
commands that the rights to succession are transmitted from
the moment of death (Article 657, old Civil Code). The new
right recognized by the new Civil Code in favor of the
illegitimate children of the deceased cannot, therefore, be
asserted to the impairment of the vested right of Maria Uson
over the lands in dispute.
As regards the claim that Maria Uson, while her deceased
husband was lying in state, in a gesture of pity or
compassion, agreed to assign the lands in question to the
minor children for the reason that they were acquired while
the deceased was living with their mother and Maria Uson
wanted to assuage somewhat the wrong she has done to
them, this much can be said; apart from the fact that this
claim is disputed, we are of the opinion that said assignment,
if any, partakes of the nature of a donation of real property,
inasmuch as it involves no material consideration, and in
order that it may be valid it shall be made in a public
document and must be accepted either in the same
document or in a separate one (Article 633, old Civil Code).
Inasmuch as this essential formality has not been followed, it
results that the alleged assignment or donation has no valid
effect.
WHEREFORE, the decision appealed from is affirmed,
without costs.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION
G.R. No. L-41715 June 18, 1976
ROSALIO BONILLA (a minor) SALVACION BONILLA (a
minor) and PONCIANO BONILLA (their father) who
represents the minors, petitioners, vs.LEON BARCENA,
MAXIMA ARIAS BALLENA, ESPERANZA BARCENA,
MANUEL BARCENA, AGUSTINA NERI, widow of JULIAN
TAMAYO and HON. LEOPOLDO GIRONELLA of the Court
of First Instance of Abra, respondents.
Federico Paredes for petitioners.
Demetrio V. Pre for private respondents.

MARTIN, J:
This is a petition for review 1 of the Order of the Court of First
Instance of Abra in Civil Case No. 856, entitled Fortunata
Barcena vs. Leon Barcena, et al., denying the motions for
reconsideration of its order dismissing the complaint in the
aforementioned case.
On March 31, 1975 Fortunata Barcena, mother of minors
Rosalio Bonilla and Salvacion Bonilla and wife of Ponciano
Bonilla, instituted a civil action in the Court of First Instance of
Abra, to quiet title over certain parcels of land located in Abra.
On May 9, 1975, defendants filed a written motion to dismiss
the complaint, but before the hearing of the motion to
dismiss, the counsel for the plaintiff moved to amend the
complaint in order to include certain allegations therein. The
motion to amend the complaint was granted and on July 17,
1975, plaintiffs filed their amended complaint.
On August 4, 1975, the defendants filed another motion to
dismiss the complaint on the ground that Fortunata Barcena
is dead and, therefore, has no legal capacity to sue. Said

motion to dismiss was heard on August 14, 1975. In said

hearing, counsel for the plaintiff confirmed the death of
Fortunata Barcena, and asked for substitution by her minor
children and her husband, the petitioners herein; but the court
after the hearing immediately dismissed the case on the
ground that a dead person cannot be a real party in interest
and has no legal personality to sue.
On August 19, 1975, counsel for the plaintiff received a copy
of the order dismissing the complaint and on August 23,
1975, he moved to set aside the order of the dismissal
pursuant to Sections 16 and 17 of Rule 3 of the Rules of
Court. 2
On August 28, 1975, the court denied the motion for
reconsideration filed by counsel for the plaintiff for lack of
merit. On September 1, 1975, counsel for deceased plaintiff
filed a written manifestation praying that the minors Rosalio
Bonilla and Salvacion Bonilla be allowed to substitute their
deceased mother, but the court denied the counsel's prayer
for lack of merit. From the order, counsel for the deceased
plaintiff filed a second motion for reconsideration of the order
dismissing the complaint claiming that the same is in violation
of Sections 16 and 17 of Rule 3 of the Rules of Court but the
same was denied.
Hence, this petition for review.
The Court reverses the respondent Court and sets aside its
order dismissing the complaint in Civil Case No. 856 and its
orders denying the motion for reconsideration of said order of
dismissal. While it is true that a person who is dead cannot
sue in court, yet he can be substituted by his heirs in
pursuing the case up to its completion. The records of this
case show that the death of Fortunata Barcena took place on
July 9, 1975 while the complaint was filed on March 31, 1975.
This means that when the complaint was filed on March 31,
1975, Fortunata Barcena was still alive, and therefore, the
court had acquired jurisdiction over her person. If thereafter
she died, the Rules of Court prescribes the procedure
whereby a party who died during the pendency of the
proceeding can be substituted. Under Section 16, Rule 3 of
the Rules of Court "whenever a party to a pending case
dies ... it shall be the duty of his attorney to inform the court
promptly of such death ... and to give the name and
residence of his executor, administrator, guardian or other
legal representatives." This duty was complied with by the
counsel for the deceased plaintiff when he manifested before
the respondent Court that Fortunata Barcena died on July 9,
1975 and asked for the proper substitution of parties in the
case. The respondent Court, however, instead of allowing the
substitution, dismissed the complaint on the ground that a
dead person has no legal personality to sue. This is a grave
error. Article 777 of the Civil Code provides "that the rights to
the succession are transmitted from the moment of the death
of the decedent." From the moment of the death of the
decedent, the heirs become the absolute owners of his
property, subject to the rights and obligations of the decedent,
and they cannot be deprived of their rights thereto except by
the methods provided for by law. 3 The moment of death is
the determining factor when the heirs acquire a definite right
to the inheritance whether such right be pure or contingent. 4
The right of the heirs to the property of the deceased vests in
them even before judicial declaration of their being heirs in
the testate or intestate proceedings. 5 When Fortunata
Barcena, therefore, died her claim or right to the parcels of
land in litigation in Civil Case No. 856, was not extinguished
by her death but was transmitted to her heirs upon her death.
Her heirs have thus acquired interest in the properties in
litigation and became parties in interest in the case. There is,
therefore, no reason for the respondent Court not to allow
their substitution as parties in interest for the deceased
plaintiff.
Under Section 17, Rule 3 of the Rules of Court "after a party
dies and the claim is not thereby extinguished, the court shall
order, upon proper notice, the legal representative of the
deceased to appear and be substituted for the deceased,
within such time as may be granted ... ." The question as to
whether an action survives or not depends on the nature of
the action and the damage sued for. 6 In the causes of action

which survive the wrong complained affects primarily and

principally property and property rights, the injuries to the
person being merely incidental, while in the causes of action
which do not survive the injury complained of is to the person,
the property and rights of property affected being incidental. 7
Following the foregoing criterion the claim of the deceased
plaintiff which is an action to quiet title over the parcels of
land in litigation affects primarily and principally property and
property rights and therefore is one that survives even after
her death. It is, therefore, the duty of the respondent Court to
order the legal representative of the deceased plaintiff to
appear and to be substituted for her. But what the respondent
Court did, upon being informed by the counsel for the
deceased plaintiff that the latter was dead, was to dismiss the
complaint. This should not have been done for under the
same Section 17, Rule 3 of the Rules of Court, it is even the
duty of the court, if the legal representative fails to appear, to
order the opposing party to procure the appointment of a
legal representative of the deceased. In the instant case the
respondent Court did not have to bother ordering the
opposing party to procure the appointment of a legal
representative of the deceased because her counsel has not
only asked that the minor children be substituted for her but
also suggested that their uncle be appointed as guardian ad
litem for them because their father is busy in Manila earning a
living for the family. But the respondent Court refused the
request for substitution on the ground that the children were
still minors and cannot sue in court. This is another grave
error because the respondent Court ought to have known that
under the same Section 17, Rule 3 of the Rules of Court, the
court is directed to appoint a guardian ad litem for the minor
heirs. Precisely in the instant case, the counsel for the
deceased plaintiff has suggested to the respondent Court that
the uncle of the minors be appointed to act as guardian ad
litem for them. Unquestionably, the respondent Court has
gravely abused its discretion in not complying with the clear
provision of the Rules of Court in dismissing the complaint of
the plaintiff in Civil Case No. 856 and refusing the substitution
of parties in the case.
IN VIEW OF THE FOREGOING, the order of the respondent
Court dismissing the complaint in Civil Case No. 856 of the
Court of First Instance of Abra and the motions for
reconsideration of the order of dismissal of said complaint are
set aside and the respondent Court is hereby directed to
allow the substitution of the minor children, who are the
petitioners therein for the deceased plaintiff and to appoint a
qualified person as guardian ad litem for them. Without
pronouncement as to costs.
SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-28040 August 18, 1972

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE
BORJA, administrator-appellee; JOSE DE BORJA, as
administrator, CAYETANO DE BORJA, MATILDE DE
BORJA and CRISANTO DE BORJA (deceased) as
Children of Josefa Tangco, appellees, vs.TASIANA VDA.
DE DE BORJA, Special Administratrix of the Testate
Estate of Francisco de Borja, appellant. .
G.R. No L-28568 August 18, 1972
TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA,
TASIANA O. VDA. DE DE BORJA, special Administratrix
appellee, vs.JOSE DE BORJA, oppositor-appellant.
G.R. No. L-28611 August 18, 1972

TASIANA 0. VDA. DE BORJA, as Administratrix of the

Testate Estate of the late Francisco de Borja, plaintiffappellee, vs.JOSE DE BORJA, as Administrator of the
Testate Estate of the late Josefa Tangco, defendantappellant.
L-28040
Pelaez, Jalandoni & Jamir for administrator-appellee.
Quiogue & Quiogue for appellee Matilde de Borja.
Andres Matias for appellee Cayetano de Borja.
Sevilla & Aquino for appellant.
L-28568
Sevilla & Aquino for special administratrix-appellee.
Pelaez, Jalandoni & Jamir for oppositor-appellant.
L-28611
Sevilla & Aquino for plaintiff-appellee.
Pelaez, Jalandoni & Jamir and David Gueverra for
defendant-appellant.

REYES, J.B.L., J.:p

Of these cases, the first, numbered L-28040 is an appeal by
Tasiana Ongsingco Vda. de de Borja, special administratrix of
the testate estate of Francisco de Borja, 1from the approval of
a compromise agreement by the Court of First Instance of
Rizal, Branch I, in its Special Proceeding No. R-7866,
entitled, "Testate Estate of Josefa Tangco, Jose de Borja,
Administrator".
Case No. L-28568 is an appeal by administrator Jose Borja
from the disapproval of the same compromise agreement by
the Court of First Instance of Nueva Ecija, Branch II, in its
Special Proceeding No. 832, entitled, "Testate Estate of
Francisco de Borja, Tasiana O. Vda. de de Borja, Special
Administratrix".
And Case No. L-28611 is an appeal by administrator Jose de
Borja from the decision of the Court of First Instance of Rizal,
Branch X, in its Civil Case No. 7452, declaring the Hacienda
Jalajala Poblacion, which is the main object of the aforesaid
compromise agreement, as the separate and exclusive
property of the late Francisco de Borja and not a conjugal
asset of the community with his first wife, Josefa Tangco, and
that said hacienda pertains exclusively to his testate estate,
which is under administrator in Special Proceeding No. 832 of
the Court of First Instance of Nueva Ecija, Branch II.
It is uncontested that Francisco de Borja, upon the death of
his wife Josefa Tangco on 6 October 1940, filed a petition for
the probate of her will which was docketed as Special
Proceeding No. R-7866 of the Court of First Instance of Rizal,
Branch I. The will was probated on 2 April 1941. In 1946,
Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was
appointed co-administrator. When Francisco died, on 14 April
1954, Jose became the sole administrator of the testate
estate of his mother, Josefa Tangco. While a widower
Francisco de Borja allegedly took unto himself a second wife,
Tasiana Ongsingco. Upon Francisco's death, Tasiana
instituted testate proceedings in the Court of First Instance of
Nueva Ecija, where, in 1955, she was appointed special
administratrix. The validity of Tasiana's marriage to Francisco
was questioned in said proceeding.
The relationship between the children of the first marriage

and Tasiana Ongsingco has been plagued with several court

suits and counter-suits; including the three cases at bar,
some eighteen (18) cases remain pending determination in
the courts. The testate estate of Josefa Tangco alone has
been unsettled for more than a quarter of a century. In order
to put an end to all these litigations, a compromise agreement
was entered into on 12 October 1963, 2by and between "[T]he
heir and son of Francisco de Borja by his first marriage,
namely, Jose de Borja personally and as administrator of the
Testate Estate of Josefa Tangco," and "[T]he heir and
surviving spouse of Francisco de Borja by his second
marriage, Tasiana Ongsingco Vda. de Borja, assisted by her
lawyer, Atty. Luis Panaguiton Jr." The terms and conditions of
the compromise agreement are as follows:
AGREEMENT
THIS AGREEMENT made and entered into by and between
The heir and son of Francisco de Borja by his first marriage,
namely, Jose de Borja personally and as administrator of the
Testate Estate of Josefa Tangco,
AND
The heir and surviving spouse of Francisco de Borja by his
second marriage, Tasiana Ongsingco Vda. de Borja, assisted
by her lawyer, Atty. Luis Panaguiton Jr.
WITNESSETH
THAT it is the mutual desire of all the parties herein terminate
and settle, with finality, the various court litigations,
controversies, claims, counterclaims, etc., between them in
connection with the administration, settlement, partition,
adjudication and distribution of the assets as well as liabilities
of the estates of Francisco de Borja and Josefa Tangco, first
spouse of Francisco de Borja.
THAT with this end in view, the parties herein have agreed
voluntarily and without any reservations to enter into and
execute this agreement under the following terms and
conditions:
1. That the parties agree to sell the Poblacion portion of the
Jalajala properties situated in Jalajala, Rizal, presently under
administration in the Testate Estate of Josefa Tangco (Sp.
Proc. No. 7866, Rizal), more specifically described as follows:
Linda al Norte con el Rio Puwang que la separa de la
jurisdiccion del Municipio de Pililla de la Provincia de Rizal, y
con el pico del Monte Zambrano; al Oeste con Laguna de
Bay; por el Sur con los herederos de Marcelo de Borja; y por
el Este con los terrenos de la Familia Maronilla
with a segregated area of approximately 1,313 hectares at
the amount of P0.30 per square meter.
2. That Jose de Borja agrees and obligates himself to pay
Tasiana Ongsingco Vda. de de Borja the total amount of
Eight Hundred Thousand Pesos (P800,000) Philippine
Currency, in cash, which represent P200,000 as his share in
the payment and P600,000 as pro-rata shares of the heirs
Crisanto, Cayetano and Matilde, all surnamed de Borja and
this shall be considered as full and complete payment and
settlement of her hereditary share in the estate of the late
Francisco de Borja as well as the estate of Josefa Tangco,
Sp. Proc. No. 832-Nueva Ecija and Sp. Proc. No. 7866-Rizal,
respectively, and to any properties bequeathed or devised in
her favor by the late Francisco de Borja by Last Will and
Testament or by Donation Inter Vivos or Mortis Causa or
purportedly conveyed to her for consideration or otherwise.
The funds for this payment shall be taken from and shall
depend upon the receipt of full payment of the proceeds of
the sale of Jalajala, "Poblacion."
3. That Tasiana Ongsingco Vda. de de Borja hereby assumes
payment of that particular obligation incurred by the late

Francisco de Borja in favor of the Rehabilitation Finance

Corporation, now Development Bank of the Philippines,
amounting to approximately P30,000.00 and also assumes
payment of her 1/5 share of the Estate and Inheritance taxes
on the Estate of the late Francisco de Borja or the sum of
P3,500.00, more or less, which shall be deducted by the
buyer of Jalajala, "Poblacion" from the payment to be made
to Tasiana Ongsingco Vda. de Borja under paragraph 2 of
this Agreement and paid directly to the Development Bank of
the Philippines and the heirs-children of Francisco de Borja.
4. Thereafter, the buyer of Jalajala "Poblacion" is hereby
authorized to pay directly to Tasiana Ongsingco Vda. de de
Borja the balance of the payment due her under paragraph 2
of this Agreement (approximately P766,500.00) and issue in
the name of Tasiana Ongsingco Vda. de de Borja,
corresponding certified checks/treasury warrants, who, in
turn, will issue the corresponding receipt to Jose de Borja.
5. In consideration of above payment to Tasiana Ongsingco
Vda. de de Borja, Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco, and
Tasiana Ongsingco Vda. de de Borja, for themselves and for
their heirs, successors, executors, administrators, and
assigns, hereby forever mutually renounce, withdraw, waive,
remise, release and discharge any and all manner of action
or actions, cause or causes of action, suits, debts, sum or
sums of money, accounts, damages, claims and demands
whatsoever, in law or in equity, which they ever had, or now
have or may have against each other, more specifically Sp.
Proceedings Nos. 7866 and 1955, CFI-Rizal, and Sp. Proc.
No. 832-Nueva Ecija, Civil Case No. 3033, CFI Nueva Ecija
and Civil Case No. 7452-CFI, Rizal, as well as the case filed
against Manuel Quijal for perjury with the Provincial Fiscal of
Rizal, the intention being to completely, absolutely and finally
release each other, their heirs, successors, and assigns, from
any and all liability, arising wholly or partially, directly or
indirectly, from the administration, settlement, and distribution
of the assets as well as liabilities of the estates of Francisco
de Borja and Josefa Tangco, first spouse of Francisco de
Borja, and lastly, Tasiana Ongsingco Vda. de de Borja
expressly and specifically renounce absolutely her rights as
heir over any hereditary share in the estate of Francisco de
Borja.
6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of
the payment under paragraph 4 hereof, shall deliver to the
heir Jose de Borja all the papers, titles and documents
belonging to Francisco de Borja which are in her possession
and said heir Jose de Borja shall issue in turn the
corresponding receive thereof.
7. That this agreement shall take effect only upon the
fulfillment of the sale of the properties mentioned under
paragraph 1 of this agreement and upon receipt of the total
and full payment of the proceeds of the sale of the Jalajala
property "Poblacion", otherwise, the non-fulfillment of the said
sale will render this instrument NULL AND VOID AND
WITHOUT EFFECT THEREAFTER.
IN WITNESS WHEREOF, the parties hereto have her unto
set their hands in the City of Manila, Philippines, the 12th of
October, 1963.
On 16 May 1966, Jose de Borja submitted for Court approval
the agreement of 12 October 1963 to the Court of First
Instance of Rizal, in Special Proceeding No. R-7866; and
again, on 8 August 1966, to the Court of First Instance of
Nueva Ecija, in Special Proceeding No. 832. Tasiana
Ongsingco Vda. de de Borja opposed in both instances. The
Rizal court approved the compromise agreement, but the
Nueva Ecija court declared it void and unenforceable. Special
administratrix Tasiana Ongsingco Vda. de de Borja appealed
the Rizal Court's order of approval (now Supreme Court G.R.
case No. L-28040), while administrator Jose de Borja
appealed the order of disapproval (G.R. case No. L-28568)
by the Court of First Instance of Nueva Ecija.
The genuineness and due execution of the compromised
agreement of 12 October 1963 is not disputed, but its validity
is, nevertheless, attacked by Tasiana Ongsingco on the

ground that: (1) the heirs cannot enter into such kind of
agreement without first probating the will of Francisco de
Borja; (2) that the same involves a compromise on the validity
of the marriage between Francisco de Borja and Tasiana
Ongsingco; and (3) that even if it were valid, it has ceased to
have force and effect.
In assailing the validity of the agreement of 12 October 1963,
Tasiana Ongsingco and the Probate Court of Nueva Ecija rely
on this Court's decision in Guevara vs. Guevara. 74 Phil. 479,
wherein the Court's majority held the view that the
presentation of a will for probate is mandatory and that the
settlement and distribution of an estate on the basis of
intestacy when the decedent left a will, is against the law and
public policy. It is likewise pointed out by appellant Tasiana
Ongsingco that Section 1 of Rule 74 of the Revised Rules
explicitly conditions the validity of an extrajudicial settlement
of a decedent's estate by agreement between heirs, upon the
facts that "(if) the decedent left no will and no debts, and the
heirs are all of age, or the minors are represented by their
judicial and legal representatives ..." The will of Francisco de
Borja having been submitted to the Nueva Ecija Court and
still pending probate when the 1963 agreement was made,
those circumstances, it is argued, bar the validity of the
agreement.
Upon the other hand, in claiming the validity of the
compromise agreement, Jose de Borja stresses that at the
time it was entered into, on 12 October 1963, the governing
provision was Section 1, Rule 74 of the original Rules of
Court of 1940, which allowed the extrajudicial settlement of
the estate of a deceased person regardless of whether he left
a will or not. He also relies on the dissenting opinion of
Justice Moran, in Guevara vs. Guevara, 74 Phil. 479, wherein
was expressed the view that if the parties have already
divided the estate in accordance with a decedent's will, the
probate of the will is a useless ceremony; and if they have
divided the estate in a different manner, the probate of the will
is worse than useless.
The doctrine of Guevara vs. Guevara, ante, is not applicable
to the case at bar. This is apparent from an examination of
the terms of the agreement between Jose de Borja and
Tasiana Ongsingco. Paragraph 2 of said agreement
specifically stipulates that the sum of P800,000 payable to
Tasiana Ongsingco

the law favors, for obvious reasons, if only because it serves

to avoid a multiplicity of suits.
It is likewise worthy of note in this connection that as the
surviving spouse of Francisco de Borja, Tasiana Ongsingco
was his compulsory heir under article 995 et seq. of the
present Civil Code. Wherefore, barring unworthiness or valid
disinheritance, her successional interest existed independent
of Francisco de Borja's last will and testament and would
exist even if such will were not probated at all. Thus, the
prerequisite of a previous probate of the will, as established
in the Guevara and analogous cases, can not apply to the
case of Tasiana Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered into by
and between "Jose de Borja personally and as administrator
of the Testate Estate of Josefa Tangco" on the one hand, and
on the other, "the heir and surviving spouse of Francisco de
Borja by his second marriage, Tasiana Ongsingco Vda. de de
Borja", it is clear that the transaction was binding on both in
their individual capacities, upon the perfection of the contract,
even without previous authority of the Court to enter into the
same. The only difference between an extrajudicial
compromise and one that is submitted and approved by the
Court, is that the latter can be enforced by execution
proceedings. Art. 2037 of the Civil Code is explicit on the
point:
8. Art. 2037. A compromise has upon the parties the effect
and authority of res judicata; but there shall be no execution
except in compliance with a judicial compromise.
It is argued by Tasiana Ongsingco that while the agreement
Annex A expressed no definite period for its performance, the
same was intended to have a resolutory period of 60 days for
its effectiveness. In support of such contention, it is averred
that such a limit was expressly stipulated in an agreement in
similar terms entered into by said Ongsingco with the
brothers and sister of Jose de Borja, to wit, Crisanto, Matilde
and Cayetano, all surnamed de Borja, except that the
consideration was fixed at P600,000 (Opposition, Annex/Rec.
of Appeal, L-28040, pp. 39- 46) and which contained the
following clause:

shall be considered as full complete payment

settlement of her hereditary share in the estate of the late
Francisco de Borja as well as the estate of Josefa Tangco, ...
and to any properties bequeathed or devised in her favor by
the late Francisco de Borja by Last Will and Testament or by
Donation Inter Vivos or Mortis Causa or purportedly conveyed
to her for consideration or otherwise.

III. That this agreement shall take effect only upon the
consummation of the sale of the property mentioned herein
and upon receipt of the total and full payment of the proceeds
of the sale by the herein owner heirs-children of Francisco de
Borja, namely, Crisanto, Cayetano and Matilde, all surnamed
de Borja; Provided that if no sale of the said property
mentioned herein is consummated, or the non-receipt of the
purchase price thereof by the said owners within the period of
sixty (60) days from the date hereof, this agreement will
become null and void and of no further effect.

This provision evidences beyond doubt that the ruling in the

Guevara case is not applicable to the cases at bar. There was
here no attempt to settle or distribute the estate of Francisco
de Borja among the heirs thereto before the probate of his
will. The clear object of the contract was merely the
conveyance by Tasiana Ongsingco of any and all her
individual share and interest, actual or eventual in the estate
of Francisco de Borja and Josefa Tangco. There is no
stipulation as to any other claimant, creditor or legatee. And
as a hereditary share in a decedent's estate is transmitted or
vested immediately from the moment of the death of such
causante or predecessor in interest (Civil Code of the
Philippines, Art. 777) 3there is no legal bar to a successor
(with requisite contracting capacity) disposing of her or his
hereditary share immediately after such death, even if the
actual extent of such share is not determined until the
subsequent liquidation of the estate. 4Of course, the effect of
such alienation is to be deemed limited to what is ultimately
adjudicated to the vendor heir. However, the aleatory
character of the contract does not affect the validity of the
transaction; neither does the coetaneous agreement that the
numerous litigations between the parties (the approving order
of the Rizal Court enumerates fourteen of them, Rec. App.
pp. 79-82) are to be considered settled and should be
dismissed, although such stipulation, as noted by the Rizal
Court, gives the contract the character of a compromise that

Ongsingco's argument loses validity when it is considered

that Jose de Borja was not a party to this particular contract
(Annex 1), and that the same appears not to have been
finalized, since it bears no date, the day being left blank "this
day of October 1963"; and while signed by the parties, it
was not notarized, although plainly intended to be so done,
since it carries a proposed notarial ratification clause.
Furthermore, the compromise contract with Jose de Borja
(Annex A), provides in its par. 2 heretofore transcribed that of
the total consideration of P800, 000 to be paid to Ongsingco,
P600,000 represent the "prorata share of the heirs Crisanto,
Cayetano and Matilde all surnamed de Borja" which
corresponds to the consideration of P600,000 recited in
Annex 1, and that circumstance is proof that the duly
notarized contract entered into wit Jose de Borja under date
12 October 1963 (Annex A), was designed to absorb and
supersede the separate unformalize agreement with the other
three Borja heirs. Hence, the 60 days resolutory term in the
contract with the latter (Annex 1) not being repeated in Annex
A, can not apply to the formal compromise with Jose de
Borja. It is moreover manifest that the stipulation that the sale
of the Hacienda de Jalajala was to be made within sixty days
from the date of the agreement with Jose de Borja's co-heirs
(Annex 1) was plainly omitted in Annex A as improper and
ineffective, since the Hacienda de Jalajala (Poblacion) that
was to be sold to raise the P800,000 to be paid to Ongsingco

for her share formed part of the estate of Francisco de Borja

and could not be sold until authorized by the Probate Court.
The Court of First Instance of Rizal so understood it, and in
approving the compromise it fixed a term of 120 days
counted from the finality of the order now under appeal, for
the carrying out by the parties for the terms of the contract.
This brings us to the plea that the Court of First Instance of
Rizal had no jurisdiction to approve the compromise with
Jose de Borja (Annex A) because Tasiana Ongsingco was not
an heir in the estate of Josefa Tangco pending settlement in
the Rizal Court, but she was an heir of Francisco de Borja,
whose estate was the object of Special Proceeding No. 832
of the Court of First Instance of Nueva Ecija. This
circumstance is irrelevant, since what was sold by Tasiana
Ongsingco was only her eventual share in the estate of her
late husband, not the estate itself; and as already shown, that
eventual share she owned from the time of Francisco's death
and the Court of Nueva Ecija could not bar her selling it. As
owner of her undivided hereditary share, Tasiana could
dispose of it in favor of whomsoever she chose. Such
alienation is expressly recognized and provided for by article
1088 of the present Civil Code:
Art. 1088. Should any of the heirs sell his hereditary rights to
a stranger before the partition, any or all of the co-heirs may
be subrogated to the rights of the purchaser by reimbursing
him for the price of the sale, provided they do so within the
period of one month from the time they were notified in
writing of the sale of the vendor.
If a sale of a hereditary right can be made to a stranger, then
a fortiori sale thereof to a coheir could not be forbidden.
Tasiana Ongsingco further argues that her contract with Jose
de Borja (Annex "A") is void because it amounts to a
compromise as to her status and marriage with the late
Francisco de Borja. The point is without merit, for the very
opening paragraph of the agreement with Jose de Borja
(Annex "A") describes her as "the heir and surviving spouse
of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", which is in itself definite
admission of her civil status. There is nothing in the text of the
agreement that would show that this recognition of
Ongsingco's status as the surviving spouse of Francisco de
Borja was only made in consideration of the cession of her
hereditary rights.
It is finally charged by appellant Ongsingco, as well as by the
Court of First Instance of Nueva Ecija in its order of 21
September 1964, in Special Proceedings No. 832 (Amended
Record on Appeal in L-28568, page 157), that the
compromise agreement of 13 October 1963 (Annex "A") had
been abandoned, as shown by the fact that, after its
execution, the Court of First Instance of Nueva Ecija, in its
order of 21 September 1964, had declared that "no amicable
settlement had been arrived at by the parties", and that Jose
de Borja himself, in a motion of 17 June 1964, had stated that
the proposed amicable settlement "had failed to materialize".
It is difficult to believe, however, that the amicable settlement
referred to in the order and motion above-mentioned was the
compromise agreement of 13 October 1963, which already
had been formally signed and executed by the parties and
duly notarized. What the record discloses is that some time
after its formalization, Ongsingco had unilaterally attempted
to back out from the compromise agreement, pleading
various reasons restated in the opposition to the Court's
approval of Annex "A" (Record on Appeal, L-20840, page 23):
that the same was invalid because of the lapse of the
allegedly intended resolutory period of 60 days and because
the contract was not preceded by the probate of Francisco de
Borja's will, as required by this Court's Guevarra vs. Guevara
ruling; that Annex "A" involved a compromise affecting
Ongsingco's status as wife and widow of Francisco de Borja,
etc., all of which objections have been already discussed. It
was natural that in view of the widow's attitude, Jose de Borja
should attempt to reach a new settlement or novatory
agreement before seeking judicial sanction and enforcement
of Annex "A", since the latter step might ultimately entail a
longer delay in attaining final remedy. That the attempt to

reach another settlement failed is apparent from the letter of

Ongsingco's counsel to Jose de Borja quoted in pages 35-36
of the brief for appellant Ongsingco in G.R. No. 28040; and it
is more than probable that the order of 21 September 1964
and the motion of 17 June 1964 referred to the failure of the
parties' quest for a more satisfactory compromise. But the
inability to reach a novatory accord can not invalidate the
original compromise (Annex "A") and justifies the act of Jose
de Borja in finally seeking a court order for its approval and
enforcement from the Court of First Instance of Rizal, which,
as heretofore described, decreed that the agreement be
ultimately performed within 120 days from the finality of the
order, now under appeal.
We conclude that in so doing, the Rizal court acted in
accordance with law, and, therefore, its order should be
upheld, while the contrary resolution of the Court of First
Instance of Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that the time
elapsed in the appeal has affected her unfavorably, in that
while the purchasing power of the agreed price of P800,000
has diminished, the value of the Jalajala property has
increased. But the fact is that her delay in receiving the
payment of the agreed price for her hereditary interest was
primarily due to her attempts to nullify the agreement (Annex
"A") she had formally entered into with the advice of her
counsel, Attorney Panaguiton. And as to the devaluation de
facto of our currency, what We said in Dizon Rivera vs. Dizon,
L-24561, 30 June 1970, 33 SCRA 554, that "estates would
never be settled if there were to be a revaluation with every
subsequent fluctuation in the values of currency and
properties of the estate", is particularly opposite in the
present case.
Coming now to Case G.R. No. L-28611, the issue is whether
the Hacienda de Jalajala (Poblacion), concededly acquired
by Francisco de Borja during his marriage to his first wife,
Josefa Tangco, is the husband's private property (as
contended by his second spouse, Tasiana Ongsingco), or
whether it forms part of the conjugal (ganancial) partnership
with Josefa Tangco. The Court of First Instance of Rizal
(Judge Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in favor of
its conjugal character established by Article 160 of the Civil
Code.
We are of the opinion that this question as between Tasiana
Ongsingco and Jose de Borja has become moot and
academic, in view of the conclusion reached by this Court in
the two preceding cases (G.R. No. L-28568), upholding as
valid the cession of Tasiana Ongsingco's eventual share in
the estate of her late husband, Francisco de Borja, for the
sum of P800,000 with the accompanying reciprocal quitclaims between the parties. But as the question may affect
the rights of possible creditors and legatees, its resolution is
still imperative.
It is undisputed that the Hacienda Jalajala, of around 4,363
hectares, had been originally acquired jointly by Francisco de
Borja, Bernardo de Borja and Marcelo de Borja and their title
thereto was duly registered in their names as co-owners in
Land Registration Case No. 528 of the province of Rizal,
G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil. 465).
Subsequently, in 1931, the Hacienda was partitioned among
the co-owners: the Punta section went to Marcelo de Borja;
the Bagombong section to Bernardo de Borja, and the part in
Jalajala proper (Poblacion) corresponded to Francisco de
Borja (V. De Borja vs. De Borja 101 Phil. 911, 932).
The lot allotted to Francisco was described as
Una Parcela de terreno en Poblacion, Jalajala: N. Puang
River; E. Hermogena Romero; S. Heirs of Marcelo de Borja
O. Laguna de Bay; containing an area of 13,488,870 sq. m.
more or less, assessed at P297,410. (Record on Appeal,
pages 7 and 105)
On 20 November 1962, Tasiana O. Vda. de Borja, as
Administratrix of the Testate Estate of Francisco de Borja,

instituted a complaint in the Court of First Instance of Rizal

(Civil Case No. 7452) against Jose de Borja, in his capacity
as Administrator of Josefa Tangco (Francisco de Borja's first
wife), seeking to have the Hacienda above described
declared exclusive private property of Francisco, while in his
answer defendant (now appellant) Jose de Borja claimed that
it was conjugal property of his parents (Francisco de Borja
and Josefa Tangco), conformably to the presumption
established by Article 160 of the Philippine Civil Code
(reproducing Article 1407 of the Civil Code of 1889), to the
effect that:
Art. 160. All property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife.
Defendant Jose de Borja further counterclaimed for
damages, compensatory, moral and exemplary, as well as for
attorney's fees.

the Hacienda. The witness further testified that

Marcelo de Borja said that that money was entrusted to him
by Francisco de Borja when he was still a bachelor and which
he derived from his business transactions. (Hearing, 2
February 1965, t.s.n., pages 13-15) (Emphasis supplied)
The Court below, reasoning that not only Francisco's sworn
statement overweighed the admissions in the inventories
relied upon by defendant-appellant Jose de Borja since
probate courts can not finally determine questions of
ownership of inventoried property, but that the testimony of
Gregorio de Borja showed that Francisco de Borja acquired
his share of the original Hacienda with his private funds, for
which reason that share can not be regarded as conjugal
partnership property, but as exclusive property of the buyer,
pursuant to Article 1396(4) of Civil Code of 1889 and Article
148(4) of the Civil Code of the Philippines.
The following shall be the exclusive property of each spouse:

After trial, the Court of First Instance of Rizal, per Judge

Herminio Mariano, held that the plaintiff had adduced
sufficient evidence to rebut the presumption, and declared the
Hacienda de Jalajala (Poblacion) to be the exclusive private
property of the late Francisco de Borja, and his Administratrix,
Tasiana Ongsingco Vda. de Borja, to be entitled to its
possession. Defendant Jose de Borja then appealed to this
Court.
The evidence reveals, and the appealed order admits, that
the character of the Hacienda in question as owned by the
conjugal partnership De Borja-Tangco was solemnly admitted
by the late Francisco de Borja no less than two times: first, in
the Reamended Inventory that, as executor of the estate of
his deceased wife Josefa Tangco, he filed in the Special
Proceedings No. 7866 of the Court of First Instance of Rizal
on 23 July 1953 (Exhibit "2"); and again, in the Reamended
Accounting of the same date, also filed in the proceedings
aforesaid (Exhibit "7"). Similarly, the plaintiff Tasiana O. Vda.
de Borja, herself, as oppositor in the Estate of Josefa Tangco,
submitted therein an inventory dated 7 September 1954
(Exhibit "3") listing the Jalajala property among the "Conjugal
Properties of the Spouses Francisco de Borja and Josefa
Tangco". And once more, Tasiana Ongsingco, as
administratrix of the Estate of Francisco de Borja, in Special
Proceedings No. 832 of the Court of First Instance of Nueva
Ecija, submitted therein in December, 1955, an inventory
wherein she listed the Jalajala Hacienda under the heading
"Conjugal Property of the Deceased Spouses Francisco de
Borja and Josefa Tangco, which are in the possession of the
Administrator of the Testate Estate of the Deceased Josefa
Tangco in Special Proceedings No. 7866 of the Court of First
Instance of Rizal" (Exhibit "4").
Notwithstanding the four statements aforesaid, and the fact
that they are plain admissions against interest made by both
Francisco de Borja and the Administratrix of his estate, in the
course of judicial proceedings in the Rizal and Nueva Ecija
Courts, supporting the legal presumption in favor of the
conjugal community, the Court below declared that the
Hacienda de Jalajala (Poblacion) was not conjugal property,
but the private exclusive property of the late Francisco de
Borja. It did so on the strength of the following evidences: (a)
the sworn statement by Francis de Borja on 6 August 1951
(Exhibit "F") that
He tomado possession del pedazo de terreno ya delimitado
(equivalente a 1/4 parte, 337 hectareas) adjunto a mi terreno
personal y exclusivo (Poblacion de Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of Bernardo
de Borja, that the entire Hacienda had been bought at a
foreclosure sale for P40,100.00, of which amount P25,100
was contributed by Bernardo de Borja and P15,000. by
Marcelo de Borja; that upon receipt of a subsequent demand
from the provincial treasurer for realty taxes the sum of
P17,000, Marcelo told his brother Bernardo that Francisco
(son of Marcelo) wanted also to be a co-owner, and upon
Bernardo's assent to the proposal, Marcelo issue a check for
P17,000.00 to pay the back taxes and said that the amount
would represent Francisco's contribution in the purchase of

xxx xxx xxx

(4) That which is purchased with exclusive money of the wife
or of the husband.
We find the conclusions of the lower court to be untenable. In
the first place, witness Gregorio de Borja's testimony as to
the source of the money paid by Francisco for his share was
plain hearsay, hence inadmissible and of no probative value,
since he was merely repeating what Marcelo de Borja had
told him (Gregorio). There is no way of ascertaining the truth
of the statement, since both Marcelo and Francisco de Borja
were already dead when Gregorio testified. In addition, the
statement itself is improbable, since there was no need or
occasion for Marcelo de Borja to explain to Gregorio how and
when Francisco de Borja had earned the P17,000.00
entrusted to Marcelo. A ring of artificiality is clearly discernible
in this portion of Gregorio's testimony.
As to Francisco de Borja's affidavit, Exhibit "F", the quoted
portion thereof (ante, page 14) does not clearly demonstrate
that the "mi terreno personal y exclusivo (Poblacion de
Jalajala, Rizal) " refers precisely to the Hacienda in question.
The inventories (Exhibits 3 and 4) disclose that there were
two real properties in Jalajala owned by Francisco de Borja,
one of 72.038 sq. m., assessed at P44,600, and a much
bigger one of 1,357.260.70 sq. m., which is evidently the
Hacienda de Jalajala (Poblacion). To which of these lands did
the affidavit of Francisco de Borja (Exhibit "F") refer to? In
addition, Francisco's characterization of the land as "mi
terreno personal y exclusivo" is plainly self-serving, and not
admissible in the absence of cross examination.
It may be true that the inventories relied upon by defendantappellant (Exhibits "2", "3", "4" and "7") are not conclusive on
the conjugal character of the property in question; but as
already noted, they are clear admissions against the
pecuniary interest of the declarants, Francisco de Borja and
his executor-widow, Tasiana Ongsingco, and as such of much
greater probative weight than the self-serving statement of
Francisco (Exhibit "F"). Plainly, the legal presumption in favor
of the conjugal character of the Hacienda de Jalajala
(Poblacion) now in dispute has not been rebutted but actually
confirmed by proof. Hence, the appealed order should be
reversed and the Hacienda de Jalajala (Poblacion) declared
property of the conjugal partnership of Francisco de Borja
and Josefa Tangco.
No error having been assigned against the ruling of the lower
court that claims for damages should be ventilated in the
corresponding special proceedings for the settlement of the
estates of the deceased, the same requires no pro
announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed order of the
Court of First Instance of Rizal in Case No. L-28040 is hereby
affirmed; while those involved in Cases Nos. L-28568 and L28611 are reversed and set aside. Costs against the

appellant Tasiana Ongsingco Vda. de Borja in all three (3)

cases.

Republic of the PhilippinesSUPREME COURTManila

EN BANC
G.R. No. L-15499

February 28, 1962

ANGELA M. BUTTE, plaintiff-appellant, vs.MANUEL UY and

SONS, INC., defendant-appellee.
Delgado, Flores and Macapagal for plaintiff-appellant.Pelaez
and Jalandoni for defendant-appellee.
REYES, J.B.L., J.:
Appeal from a decision of the Court of First instance of
Manila dismissing the action for legal redemption filed by
plaintiff-appellant.
It appears that Jose V. Ramirez, during his lifetime, was a coowner of a house and lot located at Sta. Cruz, Manila, as
shown by Transfer Certificate of Title No. 52789, issued in the
name of the following co-owners: Marie Garnier Vda. de
Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6;
Rita de Ramirez, 1/6; and Jose Ma. Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died. Subsequently,
Special Proceeding No. 15026 was instituted to settle his
estate, that included the one-sixth (1/6) undivided share in
the aforementioned property. And although his last will and
testament, wherein he bequeathed his estate to his children
and grandchildren and one-third (1/3) of the free portion to
Mrs. Angela M. Butte, hereinafter referred to as plaintiffappellant, has been admitted to probate, the estate
proceedings are still pending up to the present on account of
the claims of creditors which exceed the assets of the
deceased. The Bank of the Philippine Islands was appointed
judicial administrator.
Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda.
de Ramirez, one of the co-owners of the late Jose V. Ramirez
in the Sta. Cruz property, sold her undivided 1/6 share to
Manuel Uy & Sons, Inc. defendant-appellant herein, for the
sum of P500,000.00. After the execution by her attorney-infact, Mrs. Elsa R. Chambers, of an affidavit to the effect that
formal notices of the sale had been sent to all possible
redemptioners, the deed of sale was duly registered and
Transfer Certificate of Title No. 52789 was cancelled in lieu of
which a new one was issued in the name of the vendee and
the other-co-owners.
On the same day (December 9, 1958), Manuel Uy & Sons,
Inc. sent a letter to the Bank of the Philippine Islands as
judicial administrator of the estate of the late Jose V. Ramirez
informing it of the above-mentioned sale. This letter, together
with that of the bank, was forwarded by the latter to Mrs.
Butte c/o her counsel Delgado, Flores & Macapagal, Escolta,
Manila, and having received the same on December 10,
1958, said law office delivered them to plaintiff-appellant's
son, Mr. Miguel Papa, who in turn personally handed the
letters to his mother, Mrs. Butte, on December 11 and 12,
1958. Aside from this letter of defendant-appellant, the
vendor, thru her attorney-in-fact Mrs. Chambers, wrote said
bank on December 11, 1958 confirming vendee's letter
regarding the sale of her 1/6 share in the Sta. Cruz property
for the sum of P500,000.00. Said letter was received by the
bank on December 15, 1958 and having endorsed it to Mrs.
Butte's counsel, the latter received the same on December
16, 1958. Appellant received the letter on December 19,
1958.

On January 15, 1959, Mrs. Angela M. Butte, thru Atty.

Resplandor Sobretodo, sent a letter and a Philippine National
Bank cashier's check in the amount of P500,000.00 to
Manuel Uy & Sons, Inc. offering to redeem the 1/6 share sold
by Mrs. Marie Garnier Vda. de Ramirez. This tender having
been refused, plaintiff on the same day consigned the amount
in court and filed the corresponding action for legal
redemption. Without prejudice to the determination by the
court of the reasonable and fair market value of the property
sold which she alleged to be grossly excessive, plaintiff
prayed for conveyance of the property, and for actual, moral
and exemplary damages.
After the filing by defendant of its answer containing a
counterclaim, and plaintiff's reply thereto, trial was held, after
which the court rendered decision on May 13, 1959,
dismissing plaintiff's complaint on the grounds that she has
no right to redeem the property and that, if ever she had any,
she exercised the same beyond the statutory 30-day period
for legal redemptions provided by the Civil Code. The
counterclaim of defendant for damages was likewise
dismissed for not being sufficiently established. Both parties
appealed directly to this Court.
Based on the foregoing facts, the main issues posed in this
appeal are: (1) whether or not plaintiff-appellant, having been
bequeathed 1/3 of the free portion of the estate of Jose V.
Ramirez, can exercise the right of legal redemption over the
1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez
despite the presence of the judicial administrator and pending
the final distribution of her share in the testate proceedings;
and (2) whether or not she exercised the right of legal
redemption within the period prescribed by law.
The applicable law involved in the present case is contained
in Articles 1620, p. 1, and 1623 of the Civil Code of the
Philippines, which read as follows:
ART. 1620. A co-owner of a thing may exercise the right of
redemption in case the shares of all the other-co-owners or of
any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay
only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share
they may respectively have in the thing owned in common.
(1522a)
ART. 1623. The right of legal predemption or redemption shall
not be exercised except within thirty days from the notice in
writing by the respective vendor, or by the vendor, as the
case may be. The deed of sale shall not be accorded in the
Registry of Property, unless accompanied by an affidavit of
the vendor that he has given written notice thereof at all
possible redemptioners.
The right of redemption of co-owners excludes that of
adjoining owners. (1524a)
That the appellant Angela M. Butte is entitled to exercise the
right of legal redemption is clear. As testamentary heir of the
estate of J.V. Ramirez, she and her co-heirs acquired an
interest in the undivided one-sixth (1/6) share owned by her
predecessor (causante) in the Santa Cruz property, from the
moment of the death of the aforesaid co-owner, J.V. Ramirez.
By law, the rights to the succession of a deceased persons
are transmitted to his heirs from the moment of his death, and
the right of succession includes all property rights and
obligations that survive the decedent.
ART. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his
death. (659)
ART. 777. The rights to the succession are transmitted from
the moment of the death of the decedent. (657a)
ART. 947. The legatee or devisee acquires a right to the pure

and simple legacies or devisees from the death of the

testator, and transmits it to his heirs. (881a)
The principle of transmission as of the time of the
predecessor's death is basic in our Civil Code, and is
supported by other related articles. Thus, the capacity of the
heir is determined as of the time the decedent died (Art.
1034); the legitime is to be computed as of the same
moment(Art. 908), and so is the in officiousness of the
donation inter vivos (Art. 771). Similarly, the legacies of credit
and remission are valid only in the amount due and
outstanding at the death of the testator (Art. 935),and the
fruits accruing after that instant are deemed to pertain to the
legatee (Art. 948).
As a consequence of this fundamental rule of succession, the
heirs of Jose V. Ramirez acquired his undivided share in the
Sta. Cruz property from the moment of his death, and from
that instant, they became co-owners in the aforesaid property,
together with the original surviving co-owners of their
decedent (causante). A co-owner of an undivided share is
necessarily a co-owner of the whole. Wherefore, any one of
the Ramirez heirs, as such co-owner, became entitled to
exercise the right of legal redemption (retracto de
comuneros) as soon as another co-owner (Maria Garnier
Vda. de Ramirez) had sold her undivided share to a stranger,
Manuel Uy & Sons, Inc. This right of redemption vested
exclusively in consideration of the redemptioner's share
which the law nowhere takes into account.
The situation is in no wise altered by the existence of a
judicial administrator of the estate of Jose V. Ramirez while
under the Rules of Court the administrator has the right to the
possession of the real and personal estate of the deceased,
so far as needed for the payment of the decedent's debts and
the expenses of administration (sec. 3, Rule 85), and the
administrator may bring or defend actions for the recovery or
protection of the property or rights of the deceased (sec. 2,
Rule 88), such rights of possession and administration do not
include the right of legal redemption of the undivided share
sold to Uy & Company by Mrs. Garnier Ramirez. The reason
is obvious: this right of legal redemption only came into
existence when the sale to Uy & Sons, Inc. was perfected,
eight (8) years after the death of Jose V. Ramirez, and
formed no part of his estate. The redemption right vested in
the heirs originally, in their individual capacity, they did not
derivatively acquire it from their decedent, for when Jose V.
Ramirez died, none of the other co-owners of the Sta. Cruz
property had as yet sold his undivided share to a stranger.
Hence, there was nothing to redeem and no right of
redemption; and if the late Ramirez had no such right at his
death, he could not transmit it to his own heirs. Much less
could Ramirez acquire such right of redemption eight years
after his death, when the sale to Uy & Sons, Inc. was made;
because death extinguishes civil personality, and, therefore,
all further juridical capacity to acquire or transmit rights and
obligations of any kind (Civil Code of the Phil., Art. 42).
It is argued that the actual share of appellant Mrs. Butte in the
estate of Jose V. Ramirez has not been specifically
determined as yet, that it is still contingent; and that the
liquidation of estate of Jose V. Ramirez may require the
alienation of the decedent's undivided portion in the Sta. Cruz
property, in which event Mrs. Butte would have no interest in
said undivided portion. Even if it were true, the fact would
remain that so long as that undivided share remains in the
estate, the heirs of Jose V. Ramirez own it, as the deceased
did own it before his demise, so that his heirs are now as
much co-owners of the Sta. Cruz property as Jose V.
Ramirez was himself a co-owner thereof during his lifetime.
As co-owners of the property, the heirs of Jose V. Ramirez, or
any one of them, became personally vested with right of legal
redemption as soon as Mrs. Garnier sold her own pro-indiviso
interest to Uy & Sons. Even if subsequently, the undivided
share of Ramirez (and of his heirs) should eventually be sold
to satisfy the creditors of the estate, it would not destroy their
ownership of it before the sale, but would only convey or
transfer it as in turn sold (of it actually is sold) to pay his
creditors. Hence, the right of any of the Ramirez heirs to
redeem the Garnier share will not be retroactively affected. All
that the law requires is that the legal redemptioner should be
a co-owner at the time the undivided share of another co-

owner is sold to a stranger. Whether or not the redemptioner

will continue being a co-owner after exercising the legal
redemptioner is irrelevant for the purposes of law.
Nor it can be argued that if the original share of Ramirez is
sold by the administrator, his heirs would stand in law as
never having acquired that share. This would only be true if
the inheritance is repudiated or the heir's quality as such is
voided. But where the heirship is undisputed, the purchaser
of hereditary property is not deemed to have acquired the title
directly from the deceased Ramirez, because a dead man
can not convey title, nor from the administrator who owns no
part of the estate; the purchaser can only derive his title from
the Ramirez heirs, represented by the administrator, as their
trustee or legal representative.
The right of appellant Angela M. Butte to make the
redemption being established, the next point of inquiry is
whether she had made or tendered the redemption price
within the 30 days from notices as prescribed by law. This
period, be it noted, is peremptory, because the policy of the
law is not to leave the purchaser's title in uncertainty beyond
the established 30-day period. In considering whether or not
the offer to redeem was timely, we think that the notice given
by the vendee (buyer) should not be taken into account. The
text of Article 1623 clearly and expressly prescribes that the
thirty days for making the redemption are to be counted from
notice in writing by the vendor. Under the old law (Civ. Code
of 1889, Art. 1524), it was immaterial who gave the notice; so
long as the redeeming co-owner learned of the alienation in
favor of the stranger, the redemption period began to run. It is
thus apparent that the Philippine legislature in Article 1623
deliberately selected a particular method of giving notice, and
that method must be deemed exclusive (39 Am. Jur., 237;
Payne vs. State, 12 S.W. [2d] 528). As ruled in Wampler vs.
Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275)
Why these provisions were inserted in the statute we are not
informed, but we may assume until the contrary is shown,
that a state of facts in respect thereto existed, which
warranted the legislature in so legislating.
The reasons for requiring that the notice should be given by
the seller, and not by the buyer, are easily divined. The seller
of an undivided interest is in the best position to know who
are his co-owners that under the law must be notified of the
sale. Also, the notice by the seller removes all doubts as to
the fact of the sale, its perfection; and its validity, the notice
being a reaffirmation thereof, so that the party need not
entertain doubt that the seller may still contest the alienation.
This assurance would not exist if the notice should be given
by the buyer.
The notice which became operative is that given by Mrs.
Chambers, in her capacity as attorney-in-fact of the vendor
Marie Garnier Vda. de Ramirez. Under date of December 11,
1958, she wrote the Administrator Bank of the Philippine
Islands that her principal's one-sixth (1/6) share in the Sta.
Cruz property had been sold to Manuel Uy & Sons, Inc. for
P500,000.00. The Bank received this notice on December 15,
1958, and on the same day endorsed it to Mrs. Butte, care of
Delgado, Flores and Macapagal (her attorneys), who
received the same on December 16, 1958. Mrs. Butte
tendered redemption and upon the vendee's refusal, judicially
consigned the price of P500,000.00 on January 15, 1959.
The latter date was the last one of the thirty days allowed by
the Code for the redemption, counted by excluding December
16, 1958 and including January 15, 1959, pursuant to Article
13 of the Civil Code. Therefore, the redemption was made in
due time.
The date of receipt of the vendor's notice by the Administrator
Bank (December 15) can not be counted as determining the
start of thirty days; for the Administrator of the estate was not
a proper redemptioner, since, as previously shown, the right
to redeem the share of Marie Garnier did not form part of the
estate of Jose V. Ramirez.
We find no jurisdiction for appellant's claim that the
P500,000,00. paid by Uy & Sons, Inc. for the Garnier share is
grossly excessive. Gross excess cannot be predicated on

mere individual estimates of market price by a single realtor.

The redemption and consignation having been properly
made, the Uy counterclaim for damages and attorney's fees
predicated on the assumption that plaintiff's action was
clearly unfounded, becomes untenable.
PREMISES CONSIDERED, the judgment appealed from is
hereby reversed and set aside, and another one entered:
(a) Declaring the consignation of P500,000,00 made by
appellant Angela M. Butte duly and properly made;
(b) Declaring that said appellant properly exercised in due
time the legal redemption of the one-sixth (1/6) undivided
portion of the land covered by Certificate of Title No. 59363 of
the Office of the Register of Deeds of the City of Manila, sold
on December 9, 1958 by Marie Garnier Vda. de Ramirez to
appellant Manuel Uy & Sons, Inc.
(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the
consigned price and to convey to Angela M. Butte the
undivided portion above referred to, within 30 days from the
time our decision becomes final, and subsequently to account
for the rentals and fruits of the redeemed share from and
after January 15, 1958, until its conveyance; and.
(d) Ordering the return of the records to the court of origin for
further proceedings conformable to this opinion.
Without finding as to costs.

Republic of the PhilippinesSUPREME COURTManila

EN BANC
G.R. No. L-15088

January 31, 1961

TORIBIA FONTANILLA PACIO, SANTIAGO PACIO,

ESPERANZA PACIO, and ROSARIO PACIO, plaintiffsappellants, vs.MANUELA PACIO BILLON, BRIGIDA PACIO,
and DOMINGA PACIO, defendants-appellees.
Alfredo F. Tadiar for plaintiffs-appellants.Camilo Z. Nisce for
defendants-appellees.
BENGZON, J.:
In 1901, Flaviano Pacio married Severa Jucutan. Herein
defendants were their children. Severa died in 1930; and
thereafter Flavio married the plaintiff Toribia Fontanilla, who
bore him the other four plaintiffs.
The dispute between the parties in the La Union court of first
instance, concerned two parcels of land which defendants
allegedly retained without any right thereto. The litigants later
agreed to a partition of the first parcel, and the court so
decreed.
As to the second parcel, a hearing was held, and it was
awarded to the defendants, on the ground that it had been
donated propter nuptias to Severa, in 1901, by Flaviano
Pacio, who was then admittedly the owner.
According to the stipulation of facts:
. . . a donation propter nuptias was made in a private
instrument by Flaviano Pacio in favor of his first wife Severa
Jucutan, before their marriage on June 4, 1901 . .;
3. That the land continued to be declared in the name of
Flaviano Pacio notwithstanding this donation propter nuptias
until 1956 when the same was changed in the name of the
defendants Brigida, Manuela and Dominga, all surnamed
Pacio;

4. That land taxes were paid in the name of Flaviano Pacio as

shown by tax receipts for the years 1931, 1933, 1934, 1935,
1940, 1942, 1943, 1944, 1945, 1946, 1947, 1948, 1949,
1955, and 1956;
5. That Flaviano Pacio died on November 2, 1951;
xxx

xxx

xxx

8. That defendants lived with their father and the second wife,
Toribia Fontanilla, from the date of their marriage in 1933,
except Manuela who left on the date of her marriage in 1941,
and returned in 1946, and Dominga who left in 1943 and
Brigida is presently living with the other defendants;
9. That while the plaintiffs and the defendants lived together
during the said period, they equally shared all the harvests
reaped from the land in the litigation;
10. That the land taxes were paid on both parcels (a) and (b)
in the names of the defendants starting with the year 1957
when the tax declarations were changed into their names on
December 20, 1956; . . .,"
The plaintiffs-appellants contend that the donation was void,
because it was not made in a public instrument. They are
right. Art. 633 of the Spanish Civil Code states that "In order
that a donation of real property be valid it must be made by
public instrument in which the property donated must be
specifically described and the amount of the encumbrances
to be assumed by the donee expressed . . .." .
And this Court has held that a donation propter nuptias of real
property written on a private instrument is not valid even
between the parties.1
The trial judge said "a donation propter nuptias in order to be
valid between the donor and the donee, need not be
embodied in a public instrument as such formality is only
necessary for registration purposes in the Office of the
Register of Deeds" so as to bind third persons. He was
obviously applying the new principles in the Philippine Civil
Code effective in the year 1950. 2 But in 1901 when the gift
was made, the law was contained in the Spanish Civil Code,
according to which, even between the parties, the donation
must be in a public instrument.
Realizing the force of plaintiffs' point, defendants emphasize
that the deed of donation constituted a title on which to base
acquisitive prescription, inasmuch as Severa possessed the
land from 1901 to March 1930 when she died. The stipulation
of facts says nothing about such possession. True, there was
a witness, Monica Pacio, who testified; but she stated that
both husband and wife held possession of the land, and the
stipulation says that from 1933 the parties shared the
harvests equally. At any rate, it is obvious that normally,
prescription by adverse possession can not exist between
husband and wife. See Article 1109 Civil Code of the
Philippines.
Espique v. Espique3 on which the appellees rely is not
controlling because the prescription there mentioned did not
refer to possession by the wife as against her husband.
It follows that Flaviano Pacio continued to be the owner of the
land as the donation had no effect and there was no
prescription. Upon his death, the land became the joint
property of his children by the first and second marriage.
Subject of course to the rights of his surviving spouse, the
plaintiff Toribia Fontanilla.
Reversing the decision in so far as this parcel is concerned,
we hereby order the return of the expediente to the court
below for further proceedings on partition in accordance with
these views.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION
G.R. No. 75884 September 24, 1987
JULITA GO ONG, FOR HERSELF AND AS JUDICIAL
GUARDIAN OF STEVEN GO ONG, petitioners, vs.THE
HON. COURT OF APPEALS, ALLIED BANKING
CORPORATION and the CITY SHERIFF OF QUEZON CITY,
respondents.

WHEREFORE, with the modification that the extrajudicial

foreclosure proceedings instituted by defendant against
plaintiff shall be held in abeyance to await the final result of
Civil Case No. 107089 of the Court of First Instance of
Manila, 6th Judicial District Branch XXXII, entitled "IN THE
MATTER OF THE INTESTATE ESTATE OF THE LATE
ALFREDO ONG BIO: JULITA GO ONG, ADMINISTRATRIX".
In pursuance with which the restraining order of the lower
court in this case restraining the sale of the properties levied
upon is hereby ordered to continue in full force and effect
coterminous with the final result of Civil Case No. 107089, the
decision appealed from is hereby affirmed. Costs against
plaintiff-appellant.
SO ORDERED.

PARAS, J.:
This is a petition for review on certiorari of the March 21,
1986 Decision * of the Court of Appeals in AC-G.R. CV No.
02635, "Julita Ong etc. vs. Allied Banking Corp. et al."
affirming, with modification, the January 5, 1984 Decision of
the Regional Trial Court of Quezon City in Civil Case No. Q35230.
The uncontroverted facts of this case, as found by the Court
of Appeals, are as follows:
...: Two (2) parcels of land in Quezon City Identified as Lot
No. 12, Block 407, Psd 37326 with an area of 1960.6 sq. m.
and Lot No. 1, Psd 15021, with an area of 3,660.8 sq. m. are
covered by Transfer Certificate of Title No. 188705 in the
name of "Alfredo Ong Bio Hong married to Julita Go Ong
"(Exh. D). Alfredo Ong Bio Hong died on January 18, 1975
and Julita Go Ong was appointed administratrix of her
husband's estate in Civil Case No. 107089. The letters of
administration was registered on TCT No. 188705 on October
23, 1979. Thereafter, Julita Go Ong sold Lot No. 12 to Lim
Che Boon, and TCT No. 188705 was partially cancelled and
TCT No. 262852 was issued in favor of Lim Che Boon
covering Lot No. 12 (Exh. D-4). On June 8, 1981 Julita Go
Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1)
mortgaged Lot No. 1 to the Allied Banking Corporation to
secure a loan of P900,000.00 obtained by JK Exports, Inc.
The mortgage was registered on TCT No. 188705 on the
same date with the following notation: "... mortgagee's
consent necessary in case of subsequent alienation or
encumbrance of the property other conditions set forth in
Doc. No. 340, Page No. 69, Book No. XIX, of the Not. Public
of Felixberto Abad". On the loan there was due the sum of
P828,000.00 and Allied Banking Corporation tried to collect it
from Julita Go Ong, (Exh. E). Hence, the complaint alleging
nullity of the contract for lack of judicial approval which the
bank had allegedly promised to secure from the court. In
response thereto, the bank averred that it was plaintiff Julita
Go Ong who promised to secure the court's approval, adding
that Julita Go Ong informed the defendant that she was
processed the sum of P300,000.00 by the JK Exports, Inc.
which will also take charge of the interest of the loan.
Concluding, the trial court ruled:
Absent (of) any evidence that the property in question is the
capital of the deceased husband brought into the marriage,
said property should be presumed as acquired during the
marriage and, therefore, conjugal property,
After the dissolution of the marriage with the death of
plaintiff's husband, the plaintiff acquired, by law, her conjugal
share, together with the hereditary rights thereon. (Margate
vs. Rabacal, L-14302, April 30, 1963). Consequently, the
mortgage constituted on said property, upon express
authority of plaintiff, notwithstanding the lack of judicial
approval, is valid, with respect to her conjugal share thereon,
together with her hereditary rights.
On appeal by petitioner, respondent Court of Appeals
affirmed, with modification, the appealed decision (Record,
pp. 19-22). The dispositive portion of the appellate court's
decision reads:

On April 8, 1986, petitioner moved for the reconsideration of

the said decision (Ibid., pp. 24-29), but in a Resolution dated
September 11, 1986, respondent court denied the motion for
lack of merit (Ibid., p. 23). Hence, the instant petition (Ibid.,
pp. 6-17).
The Second Division of this Court, in a Resolution dated
November 19, 1986 (Rollo, p. 30), without giving due course
to the petition, resolved to require private respondent to
comment thereon and it did on February 19, 1987 (Ibid., pp.
37-42). Thereafter, in a Resolution dated April 6, 1987, the
petition was given due course and the parties were required
to file their respective memoranda (Ibid., p. 43).
Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp.
45-56), while private respondent filed its Memorandum on
May 20, 1987 (Ibid., pp. 62-68).
The sole issue in this case is
WHETHER OR NOT THE MORTGAGE CONSTITUTED
OVER THE PARCEL OF LAND UNDER PETITIONER'S
ADMINISTRATION IS NULL AND VOID FOR WANT OF
JUDICIAL APPROVAL.
The instant petition is devoid of merit.
The well-settled rule that the findings of fact of the trial court
are entitled to great respect, carries even more weight when
affirmed by the Court of Appeals as in the case at bar.
In brief, the lower court found: (1) that the property under the
administration of petitioner the wife of the deceased, is a
community property and not the separate property of the
latter; (2) that the mortgage was constituted in the wife's
personal capacity and not in her capacity as administratrix;
and (3) that the mortgage affects the wife's share in the
community property and her inheritance in the estate of her
husband.
Petitioner, asserting that the mortgage is void for want of
judicial approval, quoted Section 7 of Rule 89 of the Rules of
Court and cited several cases wherein this Court ruled that
the regulations provided in the said section are mandatory.
While petitioner's assertion may have merit insofar as the rest
of the estate of her husband is concerned the same is not
true as regards her conjugal share and her hereditary rights
in the estate. The records show that petitioner willingly and
voluntarily mortgaged the property in question because she
was processed by JK Exports, Inc. the sum of P300,000.00
from the proceeds of the loan; and that at the time she
executed the real estate mortgage, there was no court order
authorizing the mortgage, so she took it upon herself, to
secure an order.
Thus, in confirming the findings of the lower court, as
supported by law and the evidence, the Court of Appeals
aptly ruled that Section 7 of Rule 89 of the Rules of Court is
not applicable, since the mortgage was constituted in her
personal capacity and not in her capacity as administratrix of
the estate of her husband.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs.

Lladas (21 SCRA 1483) and Fernandez, et al. vs. Maravilla
(10 SCRA 589), further argues that in the settlement
proceedings of the estate of the deceased spouse, the entire
conjugal partnership property of the marriage is under
administration. While such may be in a sense true, that fact
alone is not sufficient to invalidate the whole mortgage,
willingly and voluntarily entered into by the petitioner. An
opposite view would result in an injustice. Under similar
circumstances, this Court applied the provisions of Article 493
of the Civil Code, where the heirs as co-owners shall each
have the full ownership of his part and the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even effect of the alienation or mortgage,
with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the
termination of the co-ownership (Philippine National Bank vs.
Court of Appeals, 98 SCRA 207 [1980]).
Consequently, in the case at bar, the trial court and the Court
of Appeals cannot be faulted in ruling that the questioned
mortgage constituted on the property under administration, by
authority of the petitioner, is valid, notwithstanding the lack of
judicial approval, with respect to her conjugal share and to
her hereditary rights. The fact that what had been mortgaged
was in custodia legis is immaterial, insofar as her conjugal
share and hereditary share in the property is concerned for
after all, she was the ABSOLUTE OWNER thereof. This
ownership by hers is not disputed, nor is there any claim that
the rights of the government (with reference to taxes) nor the
rights of any heir or anybody else have been prejudiced for
impaired. As stated by Associate Justice (later Chief Justice)
Manuel Moran in Jakosalem vs. Rafols, et al., 73 Phil. 618

and/or co-ownership formed between her and the other

heirs/co-owners (See Art. 493, Civil Code, supra.). Sec. 7,
Art. 89 of the Civil Code applies in a case where judicial
approval has to be sought in connection with, for instance,
the sale or mortgage of property under administration for the
payment, say of a conjugal debt, and even here, the conjugal
and hereditary shares of the wife are excluded from the
requisite judicial approval for the reason already adverted to
hereinabove, provided of course no prejudice is caused
others, including the government.
Moreover, petitioner is already estopped from questioning the
mortgage. An estoppel may arise from the making of a
promise even though without consideration, if it was intended
that the promise should be relied upon and in fact it was
relied upon, and if a refusal to enforce it would be virtually to
sanction the perpetration of fraud or would result in other
injustice (Gonzalo Sy Trading vs. Central Bank, 70 SCRA
570).
PREMISES CONSIDERED, the instant petition is hereby
DENIED and the assailed decision of the Court of Appeals is
hereby AFFIRMED.
SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

The land in question, described in the appealed decision,

originally belonged to Juan Melgar. The latter died and the
judicial administration of his estate was commenced in 1915
and came to a close on December 2, 1924, only. During the
pendency of the said administration, that is, on July 5, 1917,
Susana Melgar, daughter of the deceased Juan Melgar, sold
the land with the right of repurchase to Pedro Cui, subject to
the stipulation that during the period for the repurchase she
would continue in possession of the land as lessee of the
purchase. On December 12, 1920, the partition of the estate
left by the deceased Juan Melgar was made, and the land in
question was adjudicated to Susana Melgar. In 1921, she
conveyed, in payment of professional fees, one-half of the
land in favor of the defendant-appellee Nicolas Rafols, who
entered upon the portion thus conveyed and has been in
possession thereof up to the present. On July 23, 1921,
Pedro Cui brought an action to recover said half of the land
from Nicolas Rafols and the other half from the other
defendants, and while that case was pending, or about
August 4, 1925, Pedro Cui donated the whole land in
question to Generosa Teves, the herein plaintiff-appellant,
after trial, the lower court rendered a decision absolving
Nicolas Rafols as to the one-half of the land conveyed to him
by Susana Melgar, and declaring the plaintiff owner of the
other half by express acknowledgment of the other
defendants. The plaintiff appealed from that part of the
judgment which is favorable to Nicolas Rafols.
The lower court absolved Nicolas Rafols upon the theory that
Susana Melgar could not have sold anything to Pedro Cui
because the land was then in custodia legis, that is, under
judicial administration. This is error. That the land could not
ordinary be levied upon while in custodia legis, does not
mean that one of the heirs may not sell the right, interest or
participation which he has or might have in the lands under
administration. The ordinary execution of property in custodia
legis is prohibited in order to avoid interference with the
possession by the court. But the sale made by an heir of his
share in an inheritance, subject to the result of the pending
administration, in no wise stands in the way of such
administration.
The reference to judicial approval in Sec. 7, Rule 89 of the
Rules of Court cannot adversely affect the substantive rights
of private respondent to dispose of her Ideal [not inchoate, for
the conjugal partnership ended with her husband's death, and
her hereditary rights accrued from the moment of the death of
the decedent (Art. 777, Civil Code) share in the co-heirship

G.R. No. L-24434

January 17, 1968

HEIRS OF PEDRO REGANON, JOVENCIA REGANON,

MENCIA REGANON, JOSEFA REGANON, VIOLETA
REGANON, and FLORA REGANON, plaintiffs-appellees, vs.
RUFINO IMPERIAL, defendant-appellant.
Torcuato L. Galon for plaintiffs-appellees. V. Lacaya for
defendant-appellant.
BENGZON, J.P., J.:
This is an appeal from the orders dated June 9, 1964, July
14, 1964 and August 11, 1964, respectively, of the Court of
First Instance of Zamboanga del Norte (Dipolog, Branch II).
The facts of the case are admitted by both parties.
On February 22, 1963, the heirs of Pedro Reganon filed a
complaint for recovery of ownership and possession of about
one-hectare portion of a parcel of land (Lot No. 1 or Lot No.
4952, situated at Miasi, Polanco, Zamboanga del Norte,
covered by O.T.C. No. 1447, with an area of 7.9954
hectares), with damages, against Rufino Imperial.
Defendant not having filed an answer within the reglementary
period, the plaintiffs on April 8, 1963 filed a motion to declare
the former in default. The trial court granted the motion in its
order dated April 10, 1963.
On April 23, 1963, the plaintiffs presented their evidence ex
parte before the Clerk of Court acting as Commissioner. The
court a quo on May 6, 1963, rendered a decision declaring
the plaintiffs lawful owners of the land in question and entitled
to its peaceful possession and enjoyment; ordering defendant
immediately to vacate the portion occupied by him and to
restore the peaceful possession thereof to plaintiffs; and
sentencing defendant to pay plaintiffs the amount of
P1,929.20 and the costs.
On November 29, 1963, the plaintiffs filed a motion for
issuance of a writ of execution. This was granted by the trial
court in its order of December 9, 1963.

The Deputy Provincial Sheriff submitted on February 8, 1964

a sheriff's return of proceedings reporting the garnishment
and sale of a carabao and goat belonging to defendant for
P153.00, and the attachment and sale of defendant's parcel
of land covered by Tax Declaration No. 4694, situated in
Sicet, Polanco, Zamboanga del Norte, for P500.00 both
sales having been made to the only bidder, plaintiffs' counsel
Atty. Vic T. Lacaya.
On March 13, 1964, the Philippine National Bank deposited in
the Philippine National Bank-Dipolog Branch the residuary
estate of its former ward, Eulogio Imperial, in the sum of
P10,303.80, pursuant to an order of Branch I of the Court of
First Instance of Zamboanga del Norte in Sp. Proc. No. R145.
On May 25, 1964, the heirs of said Eulogio Imperial, one of
whom is defendant, executed a Deed of Extrajudicial Partition
of the residuary estate, wherein was apportioned P1,471.97
as defendant Rufino Imperial's share.
Informed of this development, the plaintiffs filed on June 5,
1964 an ex parte motion for issuance of an alias writ of
execution and of an order directing the manager, or the
representative, of the Philippine National Bank-Dipolog
Branch, to hold the share of defendant and deliver the same
to the provincial sheriff of the province to be applied to the
satisfaction of the balance of the money judgment. This was
granted by the trial court (Branch II) in its order dated June 9,
1964.
On June 17, 1964, the Deputy Provincial Sheriff issued a
sheriffs notification for levy addressed to defendant, giving
notice of the garnishment of the rights, interests, shares and
participation that defendant may have over the residuary
estate of the late Eulogio Imperial, consisting of the money
deposited in the Philippine National Bank-Dipolog Branch.
Defendant, through counsel, appearing for the first time
before the trial court, on June 24, 1964 filed a motion for
reconsideration of the order dated June 9, 1964, and to
quash the alias writ of execution issued pursuant to it, to
which plaintiffs filed their opposition on July 6, 1964. On July
14, 1964, the trial court denied defendant's aforesaid motion.
Defendant's second motion for reconsideration likewise
having denied by the trial court in its order of August 11,
1964, defendant appealed to Us, raising the following issues:
(1) Upon the death of a ward, is the money accumulated in
his guardianship proceedings and deposited in a bank, still
considered in custodia legis and therefore cannot be
attached?
(2) Is the residuary estate of a U.S. veteran, which consists in
the aggregate accumulated sum from the monthly allowances
given him by the United States Veterans Administration
(USVA) during his lifetime, exempt from execution?
Defendant-appellant argues that the property of an
incompetent under guardianship is in custodia legis and
therefore can not be attached.
It is true that in a former case 1 it was held that property under
custodia legis can not be attached. But this was under the old
Rules of Court. The new Rules of Court 2 now specifically
provides for the procedure to be followed in case what is
attached is in custodia legis. 3 The clear import of this new
provision is that property under custodia legis is now
attachable, subject to the mode set forth in said rule.
Besides, the ward having died, the guardianship proceedings
no longer subsist:
The death of the ward necessarily terminates the
guardianship, and thereupon all powers and duties of the
guardian cease, except the duty, which remains, to make a
proper accounting and settlement in the probate court. 4

As a matter of fact, the guardianship proceedings was

ordered conditionally closed by Branch I of the Court of First
Instance of Zamboanga del Norte in which it was pending, in
its order of February 8, 1964, where it stated
In the meantime, the guardian Philippine National Bank is
hereby directed to deposit the residuary estate of said ward
with its bank agency in Dipolog, this province, in the name of
the estate of the deceased ward Eulogio Imperial,
preparatory to the eventual distribution of the same to the
heirs when the latter shall be known, and upon proof of
deposit of said residuary estate, the guardian Philippine
National Bank shall forthwith be relieved from any
responsibility as such, and this proceeding shall be
considered closed and terminated. 5
And the condition has long been fulfilled, because on March
13, 1964 the Philippine National Bank-Manila deposited the
residuary estate of the ward with the Philippine National
Bank-Dipolog Branch, evidenced by a receipt attached to the
records in Sp. Proc. No. R-145. 6
When Eulogio Imperial died on September 13, 1962, the
rights to his succession from the moment of his death
were transmitted to his heirs, one of whom is his son and
heir, defendant-appellant herein. 7 This automatic
transmission can not but proceed with greater ease and
certainty than in this case where the parties agree that the
residuary estate is not burdened with any debt. For,
The rights to the succession of a person are transmitted from
the moment of death, and where, as in this case, the heir is of
legal age and the estate is not burdened with any debts, said
heir immediately succeeds, by force of law, to the dominion,
ownership, and possession of the properties of his
predecessor and consequently stands legally in the shoes of
the latter. 8
That the interest of an heir in the estate of a deceased person
may be attached for purposes of execution, even if the estate
is in the process of settlement before the courts, is already a
settled matter in this jurisdiction. 9
It is admitted that the heirs of Eulogio Imperial, including
herein defendant-appellant, have on May 25, 1964 executed
a Deed of Extrajudicial Partition. This instrument suffices to
settle the entire estate of the decedent provided all the
requisites for its validity are fulfilled 10 even without the
approval of the court. Therefore, the estate for all practical
purposes have been settled. The heirs are at full liberty to
withdraw the residuary estate from the Philippine National
Bank-Dipolog Branch and divide it among themselves. The
only reason they have not done so is because of the alleged
illegal withdrawal from said estate of the amount of P1,080.00
by one Gloria Gomez by authority of Branch I of the Court of
First Instance of Zamboanga del Norte, which incident is now
on appeal before the Court of Appeals. This appeal, however,
does not detract any from the fact that the guardianship
proceedings is closed and terminated and the residuary
estate no longer under custodia legis.
Finally, it is defendant-appellant's position that the residuary
estate of Eulogio Imperial, a former U.S. veteran, having
been set aside from the monthly allowances given him by the
United States Veterans Administration (USVA) during his
lifetime, is exempt from execution.
Any pension, annuity, or gratuity granted by a Government to
its officers or employees in recognition of past services
rendered, is primordially aimed at tiding them over during
their old age and/or disability. This is therefore a right
personalissima, purely personal because founded on
necessity. It requires no argument to show that where the
recipient dies, the necessity motivating or underlying its grant
necessarily ceases to be. Even more so in this case where
the law 11 providing for the exemption is calculated to benefit
U.S. veterans residing here, and is therefore merely a
manifestation of comity.
Besides, as earlier stated, the heirs of Eulogio Imperial, one

of whom is appellant, have already executed a Deed of

Extrajudicial Partition the end result of which is that the
property is no longer the property of the estate but of the
individual heirs. And it is settled that:

On August 12, 1961, the Court of Appeals affirmed the

reconveyance judgment, with the correction
that
reconveyance be in favor of the twenty-one (21) heirs
substituted as plaintiffs therein.

When the heirs by mutual agreement have divided the estate

among themselves, one of the heirs can not therefore secure
the appointment of an administrator to take charge of and
administer the estate or a part thereof. The property is no
longer the property of the estate, but of the individual heirs,
whether it remains undivided or not. 12

About three years later, pursuant to an order of the CFI of

Bulacan, Br. II, in the testacy proceedings, dated April 21,
1964, one of the parcels of land involved, Lot 6, was sold so
that with its proceeds debtors who filed claims may be paid.
The Philippine National Bank bought it at P41,184.00. Said
amount was then deposited in the same bank by the
administrator, subject to Court order.

WHEREFORE, the orders appealed from are hereby

affirmed, with costs against defendant-appellant. So ordered.

Republic of the PhilippinesSUPREME COURTManila

EN BANC
G.R. No. L-25952

June 30, 1967

MARGARITA SALVADOR, in her own behalf and as

Attorney-in-fact of CANDIDA SALVADOR, ET AL.,
petitioners, vs.THE HON. JUDGE ANDRES STA. MARIA,
DOMINADOR CARDENAS, REMEDIOS CABRERA,
ALBERTO M. K. JAMIR and SIMEON ENRIQUEZ,
respondents.
Arturo Joaquin for petitioners.Pelaez, Jalandoni and Jamir
and S. V. Enriquez, for respondent Simeon Enriquez.C. E.
Medina and J. M. Locsin for respondent Philippine National
Bank.Bala and Enriquez for the other respondents.

On December 18, 1964, defendants in the suit for

reconveyance executed a deed of reconveyance over the
subject parcels of land, in favor of Celestino Salvador's
estate. Revoking the same as lot in accordance with the final
judgment therein, the CFI of Bulacan, Br. I, on September 24,
1965, ordered a new deed of reconveyance to be executed,
in favor of the twenty-one persons substituted as plaintiffs in
that action. Accordingly, on September 30, 1965, a new deed
of reconveyance was made, in favor of said twenty-one (21)
persons as heirs of Celestino.
Following this, on November 22, 1965, said Br. I, ordered the
corresponding title certificate (TCT No. 54639) in the
administrator's name, cancelled; new title certificate to be
issued in the names of the same twenty-one (21) persons.
Said order was carried out, and TCT No. 63734 was issued in
the names of the twenty-one persons. 3
On December 7, 1965, Br. I (reconveyance court) ordered the
Philippine National Bank to release the P41,184.00 proceeds
of the sale of Lot 6, to the twenty-one (21) plaintiffs in the
reconveyance case. Apparently, although the passbook was
given by the administrator to said twenty-one persons, no
release was made, as the Philippine National Bank awaited
Br. II's order.

BENGZON, J.P., J.:

Seven parcels of titled land and two parcels of untitled land,
situated in Bigaa, Bulacan, were owned by Celestino
Salvador. In 1941, he executed a deed of sale over them in
favor of the spouses Alfonso Salvador and Anatolia Halili.
Alleging that the sale was void for lack of consideration, he
filed on May 12,1955, against said vendees, a suit for
reconveyance of said parcels of land (CFI of Bulacan, Br. I,
Civil Case No. 1082).
On April 27, 1956, Celestino Salvador died, testate. As his
alleged heirs, twenty-one persons1 were on May 18, 1956
substituted as plaintiffs in the action for reconveyance. And
meanwhile, special proceedings for the probate of his will and
for letters testamentary was instituted (CFI of Bulacan, Br. II,
Sp. Proceedings No. 940). In said proceedings, Dominador
Cardenas was appointed on June 11, 1956 special
administrator
of
Celestino
Salvador's
testate
estate.1wph1.t

Br. II, on March 1, 1966, approved the following claims

against the estate:
Taxes

Nat'l. gov't

Atty's fees

Atty. Enriquez

Atty's fees

Atty. Jamir

12,000.00

Loan

R. Cabrera

13,544.35

TO TAL. . . . . . . .

P5,328.23
8,000.00

38,872.58
=========

On March 30, 1966, said Br. II (probate court), ordered return

of the passbook to the administrator; and release to the
administrator by the PNB of the P41,184.00, or so much
thereof is needed to pay the afore-stated debts of the estate.

On September 4, 1956 the administrator filed in Sp.

Proceedings No. 940 an inventory of properties of the estate,
covering the same parcels of land subject matter of the
reconveyance action. On September 7, 1956, Celestino
Salvador's will was admitted to probate and Dominador
Cardenas was appointed executor of said will. Actual
issuance of letters testamentary to him was made on October
27, 1956.

After failing to get reconsideration of said order, the twentyone (21) substituted heirs, on April 25, 1966, filed with Us the
present special civil action for certiorari with preliminary
injunction to assail the order to pay the debts of the estate
with the P41,184.00 proceeds of the sale of Lot 6; and to
question Br. II's (probate court) power to dispose of the
parcels of land involved in the reconveyance suit in Br. I.

Twenty-three (23) persons were instituted heirs in the will. Of

these, nine (9) were not among the twenty-one (21) alleged
relatives substituted in the reconveyance case; and of the
twenty-one (21) substituted alleged heirs seven (7) were not
instituted in the will. 2

Raised are these issues: (1) Are the parcels of land and the
proceeds of the sale of one of them, properties of the estate
or not? (2) Does final judgment in the reconveyance suit in
favor of the twenty-one so-called heirs who substituted
Celestino Salvador, bar the disposition of the reconveyed
properties by the settlement court?

In the suit for reconveyance, on November 26, 1956, the

Court (CFI of Bulacan, Br. I) rendered judgment, ordering the
defendants therein (the spouses Alfonso and Anatolia), to
reconvey the parcels of land to the estate of Celestino
Salvador. Appeal therefrom to the Court of Appeals was
interposed by said defendants.1wph1.t

It is a settled point of law that the right of heirs to specific,

distributive shares of inheritance does not become finally
determinable until all the debts of the estate are paid. Until
then, in the face of said claims, their rights cannot be
enforced, are inchoate, and subject to the existence of a

residue after payment of the debts (Castellvi de Raquiza v.

Castellvi, L-17630, October 31, 1963; Jimoga-on v. Belmonte,
84 Phil. 545; Sec. 1, Rule 90, Rules of Court).
Petitioners do not question the existence of the debts
abovementioned. They only contend that the properties
involved having been ordered by final judgment reconveyed
to them, not to the estate the same are not properties of the
estate but their own, and thus, not liable for debts of the
estate.

Susana Flores, filed a complaint for foreclosure of the

aforesaid mortgage, against Artemio Diawan, in his capacity
as administrator of the estate, docketed as Civil Case No.
SC-292 of the Court of First Instance of Laguna. The
defendant-administrator was duly served with summons but
he failed to answer, whereupon, on petition of the plaintiffs
said defendant was declared in default. The case was
referred to a commissioner to receive the evidence for the
plaintiffs, and defendant-administrator, as deputy clerk of
court, acted as such hearing commissioner. 1wph1.t

Said contention is self-refuting. Petitioners rely for their rights

on their alleged character as heirs of Celestino; as such, they
were substituted in the reconveyance case; the
reconveyance to them was reconveyance to them as heirs of
Celestino Salvador. It follows that the properties they claim
are, even by their own reasoning, part of Celestino's estate.
The right thereto as allegedly his heirs would arise only if said
parcels of land are part of the estate of Celestino, not
otherwise. Their having received the same, therefore, in the
reconveyance action, was perforce in trust for the estate,
subject to its obligations. They cannot distribute said
properties among themselves as substituted heirs without the
debts of the estate being first satisfied.

On 16 August 1961, decision was rendered decreeing the

foreclosure of the mortgaged property and the sale thereof, if,
within ninety days from finality of the decision, the obligation
was not fully paid. The judgment not having been satisfied, a
writ of execution was issued for the sale of the mortgaged
property, and after compliance with the requirements of the
law regarding the sending, posting and publication of the
notice of sale, the Sheriff sold the property at public auction to
the highest bidder, who happened to be the plaintiffs
themselves, for the sum of P2,888.50 covering the amount of
the judgment, plus the expenses of the sale and the Sheriff's
fees. On petition of the plaintiffs, the sale was confirmed by
the court on 26 January 1962.

At any rate, the proceeds of Lot 6 alone (P41,184.00)

appears more than sufficient to pay the debt (P38,872.58);
and there will remain the other parcels of land not sold. As to
the question of who will receive how much as heirs, the same
is properly determinable by the settlement court, after
payment of the debts (Pimentel v. Palanca, 5 Phil. 436;
Maningat v. Castillo, 75 Phil. 532; Jimoga-on v. Belmonte,
supra).

On 6 February 1962, Filemon Ramirez, Monica Ramirez and

Jose Eguaras, the first two being the heirs named in the
petition for intestate proceedings, filed a complaint
designated "For the Annulment of all Proceedings in said Civil
Case No. SC-292 for the Foreclosure of the Mortgage",
against the spouses Artemio Baltazar and Susana Flores,
and Artemio Diawan, in his capacity as administrator of the
estate of Victoriana Eguaras, deceased, and Silverio Talabis,
in his capacity as deputy provincial sheriff of Laguna,
docketed as Civil Case No. SC-319 of the Court of First
Instance of Laguna.

Wherefore, the petition for certiorari is denied, without costs.

So ordered.
Republic of the PhilippinesSUPREME COURTManila
EN BANC
G.R. No. L-25049

August 30, 1968

FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE

EGUARAS, plaintiffs-appellants, vs.ARTEMIO BALTAZAR,
ET AL., defendants-appellees.
Eduardo M. Peralta for plaintiffs-appellants. Tomas P.
Anonuevo for defendants-appellees Artemio Baltazar and
Susana Flores. Tirso Caballero for defendant-appellee
Artemio Diawan.
ANGELES, J.:
On appeal from an order dismissing the complaint, on motion
to dismiss, in Civil Case No. SC-319 of the Court of First
Instance of Laguna.
It appears that on 6 January 1959, Victoriana Eguaras single,
made and executed a real estate mortgage over a parcel of
land, owned by her in fee simple, as security for a loan of
P2,170.00 in favor of the spouses Artemio Baltazar and
Susana Flores.
Upon the demise of the mortgagor, the mortgagees, as
creditors of the deceased, on 16 September 1960 filed a
petition for the intestate proceedings of her estate, in the
Court of First Instance of Laguna, docketed as Civil Case No.
SC-99 wherein said mortgages, as petitioners, alleged that
Filemon Ramirez and Monica Ramirez are the heirs of the
deceased. Filemon Ramirez was appointed administrator of
the estate; however, having failed to qualify, on 16 January
1961, the court appointed Artemio Diawan, then a deputy
clerk of court, administrator of the estate who, in due time,
qualified for the office.
On 19 April 1961, the mortgagees, Artemio Baltazar and

The facts hereinabove narrated are, succinctly, contained in

the complaint in said Civil Case No. SC-319, with the
additional averments that the defendant Diawan, the deputy
clerk of court appointed as administrator of the intestate
estate of the deceased, acted in collusion with the other
defendants Artemio Baltazar and Susana Flores, deliberately
and in fraud of the plaintiffs: (a) in allowing the reglementary
period within which to file an answer to lapse without notifying
and/or informing the said plaintiffs of the complaint for
foreclosure, as a result of which he was declared in default to
the prejudice of the estate which he represents; (b) that had
the plaintiffs (Monica and Filemon) been notified of the
pendency of the case, the defendant administrator could
have interposed a counterclaim because payment in the sum
of P1,548.52 had been made and received by the
mortgagees on account of the debt; (c) in presiding as
hearing officer in the ex parte hearing in Civil Case No. 292,
to receive evidence for plaintiffs therein, notwithstanding the
fact that there was another deputy clerk of court available
who could have acted in his stead, as a result of which an
anomalous situation was created whereby he was a
defendant and at the same time a commissioner receiving
evidence against himself as administrator; (d) in allowing
judgment to become final without notifying the plaintiffs; (e) in
deliberately, allowing the 90-day period within which to make
payment to expire without notifying the heirs, as a result of
which the said heirs were not afforded an opportunity to make
payments ordered by the Court in its decision; and (f) in
refusing to help the heirs seek postponement of the auction
sale. It is also alleged that it was only when the property
foreclosed was published for sale at public auction that the
heirs came to know about the foreclosure proceedings.
The defendants spouses, Artemio Baltazar and Susana
Flores, filed a motion to dismiss the complaint on the ground
that the plaintiffs have no legal capacity to sue; defendant
Diawan likewise moved to dismiss on two grounds: that
plaintiffs have no legal capacity to sue and that the complaint
states no cause of action. 1wph1.t
Despite vigorous opposition interposed by the plaintiffs
against the aforesaid motions to dismiss, the court, on 13
March 1962, dismissed the complaint with costs against the
plaintiffs, reasoning thus: that "upon consideration of the

evidence, said defendant could not have offered any

evidence to avoid the foreclosure of the mortgage which the
Court found to be in order. Under the circumstances and with
the apparent disinterestedness of Filemon and Rolando to
qualify as administrator when appointed, there could not have
been any connivance and/or collusion between plaintiffs in
this case and Artemio Diawan as administrator"; and that
plaintiffs have no legal capacity to sue since their status as
legal heirs of the deceased has yet to be determined
precisely in Special Proceeding No. SC-99, and until such
status is so fixed by the Court, they have no cause of action
against defendants.
In that order of 13 March 1962, the court also denied
plaintiffs' petition for the issuance of a writ of preliminary
injunction to enjoin defendants from entering and taking
physical possession of the land in question on the ground
"that possession thereof was effected and delivered by the
Provincial Sheriff to Artemio Baltazar and Susana Flores on
February, 1962."
Reconsideration of the aforesaid order having been denied,
the plaintiffs took the present appeal where they assigned the
following errors: (1) in holding that plaintiffs-appellants have
no legal capacity to sue until their status as legal heirs of the
deceased is determined in Special Proceeding No. SC-99; (2)
in ruling that there was no collusion or connivance among the
defendants-appellees, despite the fact that the issue in the
motion to dismiss is purely legal, not factual; and (3) in
denying the petition for a writ of preliminary injunction.
At the outset, let it be remembered that the defendantsappellees, in availing themselves of the defense that the
plaintiffs-appellants had not been declared to be the heirs of
the deceased Victoriana Eguaras, have overlooked the fact
that the (defendants-appellees) themselves in their petition
for intestate proceedings (Case SC-99) have alleged that
Filemon Ramirez and Monica Ramirez, two of herein
plaintiffs-appellants, are the heirs of the deceased. Insofar as
defendants-appellees are concerned, it is our opinion that
they are estopped from questioning the heirship of these two
named persons to the estate of the deceased.
There is no question that the rights to succession are
automatically transmitted to the heirs from the moment of the
death of the decedent.1 While, as a rule, the formal
declaration or recognition to such successional rights needs
judicial confirmation, this Court has, under special
circumstances, protected these rights from encroachments
made or attempted before the judicial declaration.2 In Pascual
vs. Pascual,3 it was ruled that although heirs have no legal
standing in court upon the commencement of testate or
intestate proceedings, this rule admits of an exception as
"when the administrator fails or refuses to act in which event

the heirs may act in his place."

A similar situation obtains in the case at bar. The
administrator is being charged to have been in collusion and
connivance with the mortgagees of a property of the
deceased, allowing its foreclosure without notifying the heirs,
to the prejudice of the latter. Since the ground for the present
action to annul the aforesaid foreclosure proceedings is the
fraud resulting from such insidious machinations and
collusion in which the administrator has allegedly
participated, it would be farfetched to expect the said
administrator himself to file the action in behalf of the estate.
And who else but the heirs, who have an interest to assert
and to protect, would bring the action? Inevitably, this case
should fall under the exception, rather than the general rule
that pending proceedings for the settlement of the estate, the
heirs have no right to commence an action arising out of the
rights belonging to the deceased.
On the second point raised, We fully agree with the plaintiffsappellants that the lower court had gone too far in practically
adjudicating the case on the merits when it made the
observation that "there could not have been any connivance
and/or collusion between plaintiffs in this case and Artemio
Diawan as administrator." A thorough scrutiny of the
allegations in the motions to dismiss filed by defendantsappellees does not indicate that that question was ever put at
issue therein. On the other hand, the controversy on the
existence or inexistence of collusion between the parties as a
result of which judgment was rendered against the estate
is the very core of the complaint that was dismissed.
Undoubtedly, the cause of action is based on Section 30,
Rule 132 of the Rules of Court.
We are not, however, in accord with the third assigned error
the denial of the motion for the issuance of preliminary
injunction for it puts at issue the factual finding made by
the lower court that the defendants had already been placed
in possession of the property. At this stage of the proceeding,
and considering the nature of the case before Us, such a
question is, at this time, beyond the competence of the Court.
PREMISES CONSIDERED, the order appealed from is
hereby set aside insofar as it dismissed the complaint in Civil
Case No. SC-319, and the records be remanded to the lower
court for further proceedings. Costs against defendantsappellees. The Clerk of Court is directed to furnish a copy of
this decision to the Department of Justice for its information.
1wph1.t