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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 non-
transferable.
(b) Intransmisibilidad por pacto. Lo general es la transmisibilidad de
darechos y obligaciones; chan roblesvirtualawlibraryle excepcion, la
intransmisibilidad. Mientras nada se diga en contrario impera el principio de la
transmision, como elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester el pacto expreso,
porque si no, lo convenido entre partes trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del causante, sobre ellos
recaen los efectos de los vinculos juridicos creados por sus antecesores, y para
evitarlo, si asi se quiere, es indespensable convension terminante en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir ms all de las personas
que les dieron vida, y a ejercer presion sobre los sucesores de esa persona;
chan roblesvirtualawlibrarycuando no se quiera esto, se impone una estipulacion
limitativa expresamente de la transmisibilidad o de cuyos tirminos claramente se
deduzca la concresion del concreto a las mismas personas que lo otorgon.
(Scaevola, Codigo Civil, Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a contract is
deemed to have contracted for himself and his heirs and assigns, it is
unnecessary for him to expressly stipulate to that effect; chan
roblesvirtualawlibraryhence, his failure to do so is no sign that he intended his
bargain to terminate upon his death. Similarly, that the Luzon Surety Co., did not
require bondsman Hemady to execute a mortgage indicates nothing more than
the companys faith and confidence in the financial stability of the surety, but not
that his obligation was strictly personal.
The third exception to the transmissibility of obligations under Article 1311 exists
when they are not transmissible by operation of law. The provision makes
reference to those cases where the law expresses that the rights or obligations
are extinguished by death, as is the case in legal support (Article 300), parental
authority (Article 327), usufruct (Article 603), contracts for a piece of work (Article
1726), partnership (Article 1830 and agency (Article 1919). By contract, the
articles of the Civil Code that regulate guaranty or suretyship (Articles 2047 to
2084) contain no provision that the guaranty is extinguished upon the death of
the guarantor or the surety.
The lower court sought to infer such a limitation from Art. 2056, to the effect that
one who is obliged to furnish a guarantor must present a person who possesses
integrity, capacity to bind himself, and sufficient property to answer for the
obligation which he guarantees. It will be noted, however, that the law requires
these qualities to be present only at the time of the perfection of the contract of
guaranty. It is self-evident that once the contract has become perfected and
binding, the supervening incapacity of the guarantor would not operate to
exonerate him of the eventual liability he has contracted; chan
roblesvirtualawlibraryand if that be true of his capacity to bind himself, it should
also be true of his integrity, which is a quality mentioned in the article alongside
the capacity.
The foregoing concept is confirmed by the next Article 2057, that runs as
follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be convicted in first instance of a crime
involving dishonesty or should become insolvent, the creditor may demand
another who has all the qualifications required in the preceding article. The case
is excepted where the creditor has required and stipulated that a specified
person should be guarantor.
From this article it should be immediately apparent that the supervening
dishonesty of the guarantor (that is to say, the disappearance of his integrity after
he has become bound) does not terminate the contract but merely entitles the
creditor to demand a replacement of the guarantor. But the step remains optional
in the creditor:chanroblesvirtuallawlibrary it is his right, not his duty; chan
roblesvirtualawlibraryhe may waive it if he chooses, and hold the guarantor to his
bargain. Hence Article 2057 of the present Civil Code is incompatible with the
trial courts stand that the requirement of integrity in the guarantor or surety
makes the latters undertaking strictly personal, so linked to his individuality that
the guaranty automatically terminates upon his death.
The contracts of suretyship entered into by K. H. Hemady in favor of Luzon
Surety Co. not being rendered intransmissible due to the nature of the
undertaking, nor by the stipulations of the contracts themselves, nor by provision
of law, his eventual liability thereunder necessarily passed upon his death to his
heirs. The contracts, therefore, give rise to contingent claims provable against his
estate under section 5, Rule 87 (2 Moran, 1952 ed., p. 437; chan
roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).
The most common example of the 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 Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-4963 January 29, 1953

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


NEBREDA, CONRADO NEBREDA, DOMINADOR NEBREDA, AND
FAUSTINO NEBREDA, Jr., defendants-appellants.

Priscilo Evangelista for appellee. Brigido G. Estrada for appellant.

BAUTISTA ANGELO, J.:

This is an action for recovery of the ownership and possession of five (5) parcels
of land situated in the Municipality of Labrador, Province of Pangasinan, filed by
Maria Uson against Maria del Rosario and her four children named Concepcion,
Conrado, Dominador, and Faustino, surnamed Nebreda, who are all of minor
age, before the Court of First Instance of Pangasinan.

Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945
left the lands involved in this litigation. Faustino Nebreda left no other heir except
his widow Maria Uson. However, plaintiff claims that when Faustino Nebreda
died in 1945, his common-law wife Maria del Rosario took possession illegally of
said lands thus depriving her of their possession and enjoyment.
Defendants in their answer set up as special defense that on February 21, 1931,
Maria Uson and her husband, the late Faustino Nebreda, executed a public
document whereby they agreed to separate as husband and wife and, in
consideration of their separation, Maria Uson was given a parcel of land by way
of alimony and in return she renounced her right to inherit any other property that
may be left by her husband upon his death (Exhibit 1).

After trial, at which both parties presented their respective evidence, the court
rendered decision ordering the defendants to restore to the plaintiff the
ownership and possession of the lands in dispute without special pronouncement
as to costs. Defendants interposed the present appeal.

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of


Faustino Nebreda, former owner of the five parcels of lands litigated in the
present case. There is likewise no dispute that Maria del Rosario, one of the
defendants-appellants, was merely a common-law wife of the late Faustino
Nebreda with whom she had four illegitimate children, her now co-defendants. It
likewise appears that Faustino Nebreda died in 1945 much prior to the effectivity
of the new Civil Code. With this background, it is evident that when Faustino
Nebreda died in 1945 the five parcels of land he was seized of at the time
passed from the moment of his death to his only heir, his widow Maria Uson
(Article 657, old Civil Code).As this Court aptly said, "The property belongs to the
heirs at the moment of the death of the ancestor as completely as if the ancestor
had executed and delivered to them a deed for the same before his death"
(Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the
rights of inheritance of Maria Uson over the lands in question became vested.

The claim of the defendants that Maria Uson had relinquished her right over the
lands in question because she expressly renounced to inherit any future property
that her husband may acquire and leave upon his death in the deed of separation
they had entered into on February 21, 1931, cannot be entertained for the simple
reason that future inheritance cannot be the subject of a contract nor can it be
renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p. 12; Osorio
vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).

But defendants contend that, while it is true that the four minor defendants are
illegitimate children of the late Faustino Nebreda and under the old Civil Code
are not entitled to any successional rights, however, under the new Civil Code
which became in force in June, 1950, they are given the status and rights of
natural children and are entitled to the successional rights which the law accords
to the latter (article 2264 and article 287, new Civil Code), and because these
successional rights were declared for the first time in the new code, they shall be
given retroactive effect even though the event which gave rise to them may have
occurred under the prior legislation (Article 2253, new Civil Code).

There is no merit in this claim. Article 2253 above referred to provides indeed
that rights which are declared for the first time shall have retroactive effect even
though the event which gave rise to them may have occurred under the former
legislation, but this is so only when the new rights do not prejudice any vested or
acquired right of the same origin. Thus, said article provides that "if a right should
be declared for the first time in this Code, it shall be effective at once, even
though the act or event which gives rise thereto may have been done or may
have occurred under the prior legislation, provided said new right does not
prejudice or impair any vested or acquired right, of the same origin." As already
stated in the early part of this decision, the right of ownership of Maria Uson over
the lands in question became vested in 1945 upon the death of her late husband
and this is so because of the imperative provision of the law which commands
that the rights to succession are transmitted from the moment of death (Article
657, old Civil Code). The new right recognized by the new Civil Code in favor of
the illegitimate children of the deceased cannot, therefore, be asserted to the
impairment of the vested right of Maria Uson over the lands in dispute.

As regards the claim that Maria Uson, while her deceased husband was lying in
state, in a gesture of pity or compassion, agreed to assign the lands in question
to the minor children for the reason that they were acquired while the deceased
was living with their mother and Maria Uson wanted to assuage somewhat the
wrong she has done to them, this much can be said; apart from the fact that this
claim is disputed, we are of the opinion that said assignment, if any, partakes of
the nature of a donation of real property, inasmuch as it involves no material
consideration, and in order that it may be valid it shall be made in a public
document and must be accepted either in the same document or in a separate
one (Article 633, old Civil Code). Inasmuch as this essential formality has not
been followed, it results that the alleged assignment or donation has no valid
effect.

WHEREFORE, the decision appealed from is affirmed, without costs.

Republic of the Philippines SUPREME COURT Manila

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 Philippines SUPREME COURT Manila

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

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-


appellee; JOSE DE BORJA, as administrator, CAYETANO DE BORJA,
MATILDE DE BORJA and CRISANTO DE BORJA (deceased) as Children of
Josefa Tangco, appellees, vs. TASIANA VDA. DE DE BORJA, Special
Administratrix of the Testate Estate of Francisco de Borja, appellant. .

G.R. No L-28568 August 18, 1972

TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O.


VDA. DE DE BORJA, special Administratrix appellee, vs. JOSE DE BORJA,
oppositor-appellant.

G.R. No. L-28611 August 18, 1972

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


late Francisco de Borja, plaintiff-appellee, vs. JOSE DE BORJA, as
Administrator of the Testate Estate of the late Josefa Tangco, defendant-
appellant.

L-28040

Pelaez, Jalandoni & Jamir for administrator-appellee.

Quiogue & Quiogue for appellee Matilde de Borja.

Andres Matias for appellee Cayetano de Borja.

Sevilla & Aquino for appellant.

L-28568

Sevilla & Aquino for special administratrix-appellee.

Pelaez, Jalandoni & Jamir for oppositor-appellant.

L-28611

Sevilla & Aquino for plaintiff-appellee.

Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.

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


Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco
Vda. de de Borja, special administratrix of the testate estate of Francisco de
Borja, 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

shall be considered as full complete payment settlement of her hereditary


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

This provision evidences beyond doubt that the ruling in the Guevara case is not
applicable to the cases at bar. There was here no attempt to settle or distribute
the estate of Francisco de Borja among the heirs thereto before the probate of
his will. The clear object of the contract was merely the conveyance by Tasiana
Ongsingco of any and all her individual share and interest, actual or eventual in
the estate of Francisco de Borja and Josefa Tangco. There is no stipulation as to
any other claimant, creditor or legatee. And as a hereditary share in a decedent's
estate is transmitted or vested immediately from the moment of the death of such
causante or predecessor in interest (Civil Code of the Philippines, Art. 777) 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 the law
favors, for obvious reasons, if only because it serves to avoid a multiplicity of
suits.

It is likewise worthy of note in this connection that as the surviving spouse of


Francisco de Borja, Tasiana Ongsingco was his compulsory heir under article
995 et seq. of the present Civil Code. Wherefore, barring unworthiness or valid
disinheritance, her successional interest existed independent of Francisco de
Borja's last will and testament and would exist even if such will were not probated
at all. Thus, the prerequisite of a previous probate of the will, as established in
the Guevara and analogous cases, can not apply to the case of Tasiana
Ongsingco Vda. de de Borja.

Since the compromise contract Annex A was entered into by and between "Jose
de Borja personally and as administrator of the Testate Estate of Josefa Tangco"
on the one hand, and on the other, "the heir and surviving spouse of Francisco
de Borja by his second marriage, Tasiana Ongsingco Vda. de de Borja", it is
clear that the transaction was binding on both in their individual capacities, upon
the perfection of the contract, even without previous authority of the Court to
enter into the same. The only difference between an extrajudicial compromise
and one that is submitted and approved by the Court, is that the latter can be
enforced by execution proceedings. Art. 2037 of the Civil Code is explicit on the
point:

8. Art. 2037. A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise.

It is argued by Tasiana Ongsingco that while the agreement Annex A expressed


no definite period for its performance, the same was intended to have a
resolutory period of 60 days for its effectiveness. In support of such contention, it
is averred that such a limit was expressly stipulated in an agreement in similar
terms entered into by said Ongsingco with the brothers and sister of Jose de
Borja, to wit, Crisanto, Matilde and Cayetano, all surnamed de Borja, except that
the consideration was fixed at P600,000 (Opposition, Annex/Rec. of Appeal, L-
28040, pp. 39- 46) and which contained the following clause:

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

Ongsingco's argument loses validity when it is considered that Jose de Borja was
not a party to this particular contract (Annex 1), and that the same appears not to
have been finalized, since it bears no date, the day being left blank "this day of
October 1963"; and while signed by the parties, it was not notarized, although
plainly intended to be so done, since it carries a proposed notarial ratification
clause. Furthermore, the compromise contract with Jose de Borja (Annex A),
provides in its par. 2 heretofore transcribed that of the total consideration of
P800, 000 to be paid to Ongsingco, P600,000 represent the "prorata share of the
heirs Crisanto, Cayetano and Matilde all surnamed de Borja" which corresponds
to the consideration of P600,000 recited in Annex 1, and that circumstance is
proof that the duly notarized contract entered into wit Jose de Borja under date
12 October 1963 (Annex A), was designed to absorb and supersede the
separate unformalize agreement with the other three Borja heirs. Hence, the 60
days resolutory term in the contract with the latter (Annex 1) not being repeated
in Annex A, can not apply to the formal compromise with Jose de Borja. It is
moreover manifest that the stipulation that the sale of the Hacienda de Jalajala
was to be made within sixty days from the date of the agreement with Jose de
Borja's co-heirs (Annex 1) was plainly omitted in Annex A as improper and
ineffective, since the Hacienda de Jalajala (Poblacion) that was to be sold to
raise the P800,000 to be paid to Ongsingco for her share formed part of the
estate of Francisco de Borja and could not be sold until authorized by the
Probate Court. The Court of First Instance of Rizal so understood it, and in
approving the compromise it fixed a term of 120 days counted from the finality of
the order now under appeal, for the carrying out by the parties for the terms of
the contract.

This brings us to the plea that the Court of First Instance of Rizal had no
jurisdiction to approve the compromise with Jose de Borja (Annex A) because
Tasiana Ongsingco was not an heir in the estate of Josefa Tangco pending
settlement in the Rizal Court, but she was an heir of Francisco de Borja, whose
estate was the object of Special Proceeding No. 832 of the Court of First
Instance of Nueva Ecija. This circumstance is irrelevant, since what was sold by
Tasiana Ongsingco was only her eventual share in the estate of her late
husband, not the estate itself; and as already shown, that eventual share she
owned from the time of Francisco's death and the Court of Nueva Ecija could not
bar her selling it. As owner of her undivided hereditary share, Tasiana could
dispose of it in favor of whomsoever she chose. Such alienation is expressly
recognized and provided for by article 1088 of the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before
the partition, any or all of the co-heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the sale, provided they do so within
the period of one month from the time they were notified in writing of the sale of
the vendor.

If a sale of a hereditary right can be made to a stranger, then a fortiori sale


thereof to a coheir could not be forbidden.

Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex
"A") is void because it amounts to a compromise as to her status and marriage
with the late Francisco de Borja. The point is without merit, for the very opening
paragraph of the agreement with Jose de Borja (Annex "A") describes her as "the
heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", which is in itself definite admission of her civil
status. There is nothing in the text of the agreement that would show that this
recognition of Ongsingco's status as the surviving spouse of Francisco de Borja
was only made in consideration of the cession of her hereditary rights.

It is finally charged by appellant Ongsingco, as well as by the Court of First


Instance of Nueva Ecija in its order of 21 September 1964, in Special
Proceedings No. 832 (Amended Record on Appeal in L-28568, page 157), that
the compromise agreement of 13 October 1963 (Annex "A") had been
abandoned, as shown by the fact that, after its execution, the Court of First
Instance of Nueva Ecija, in its order of 21 September 1964, had declared that "no
amicable settlement had been arrived at by the parties", and that Jose de Borja
himself, in a motion of 17 June 1964, had stated that the proposed amicable
settlement "had failed to materialize".

It is difficult to believe, however, that the amicable settlement referred to in the


order and motion above-mentioned was the compromise agreement of 13
October 1963, which already had been formally signed and executed by the
parties and duly notarized. What the record discloses is that some time after its
formalization, Ongsingco had unilaterally attempted to back out from the
compromise agreement, pleading various reasons restated in the opposition to
the Court's approval of Annex "A" (Record on Appeal, L-20840, page 23): that
the same was invalid because of the lapse of the allegedly intended resolutory
period of 60 days and because the contract was not preceded by the probate of
Francisco de Borja's will, as required by this Court's Guevarra vs. Guevara ruling;
that Annex "A" involved a compromise affecting Ongsingco's status as wife and
widow of Francisco de Borja, etc., all of which objections have been already
discussed. It was natural that in view of the widow's attitude, Jose de Borja
should attempt to reach a new settlement or novatory agreement before seeking
judicial sanction and enforcement of Annex "A", since the latter step might
ultimately entail a longer delay in attaining final remedy. That the attempt to
reach another settlement failed is apparent from the letter of Ongsingco's counsel
to Jose de Borja quoted in pages 35-36 of the brief for appellant Ongsingco in
G.R. No. 28040; and it is more than probable that the order of 21 September
1964 and the motion of 17 June 1964 referred to the failure of the parties' quest
for a more satisfactory compromise. But the inability to reach a novatory accord
can not invalidate the original compromise (Annex "A") and justifies the act of
Jose de Borja in finally seeking a court order for its approval and enforcement
from the Court of First Instance of Rizal, which, as heretofore described, decreed
that the agreement be ultimately performed within 120 days from the finality of
the order, now under appeal.

We conclude that in so doing, the Rizal court acted in accordance with law, and,
therefore, its order should be upheld, while the contrary resolution of the Court of
First Instance of Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal
has affected her unfavorably, in that while the purchasing power of the agreed
price of P800,000 has diminished, the value of the Jalajala property has
increased. But the fact is that her delay in receiving the payment of the agreed
price for her hereditary interest was primarily due to her attempts to nullify the
agreement (Annex "A") she had formally entered into with the advice of her
counsel, Attorney Panaguiton. And as to the devaluation de facto of our currency,
what We said in Dizon Rivera vs. Dizon, L-24561, 30 June 1970, 33 SCRA 554,
that "estates would never be settled if there were to be a revaluation with every
subsequent fluctuation in the values of currency and properties of the estate", is
particularly opposite in the present case.

Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de
Jalajala (Poblacion), concededly acquired by Francisco de Borja during his
marriage to his first wife, Josefa Tangco, is the husband's private property (as
contended by his second spouse, Tasiana Ongsingco), or whether it forms part
of the conjugal (ganancial) partnership with Josefa Tangco. The Court of First
Instance of Rizal (Judge Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in favor of its conjugal
character established by Article 160 of the Civil Code.

We are of the opinion that this question as between Tasiana Ongsingco and Jose
de Borja has become moot and academic, in view of the conclusion reached by
this Court in the two preceding cases (G.R. No. L-28568), upholding as valid the
cession of Tasiana Ongsingco's eventual share in the estate of her late husband,
Francisco de Borja, for the sum of P800,000 with the accompanying reciprocal
quit-claims between the parties. But as the question may affect the rights of
possible creditors and legatees, its resolution is still imperative.

It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been
originally acquired jointly by Francisco de Borja, Bernardo de Borja and Marcelo
de Borja and their title thereto was duly registered in their names as co-owners in
Land Registration Case No. 528 of the province of Rizal, G.L.R.O. Rec. No.
26403 (De Barjo vs. Jugo, 54 Phil. 465). Subsequently, in 1931, the Hacienda
was partitioned among the co-owners: the Punta section went to Marcelo de
Borja; the Bagombong section to Bernardo de Borja, and the part in Jalajala
proper (Poblacion) corresponded to Francisco de Borja (V. De Borja vs. De Borja
101 Phil. 911, 932).

The lot allotted to Francisco was described as

Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena


Romero; S. Heirs of Marcelo de Borja O. Laguna de Bay; containing an area of
13,488,870 sq. m. more or less, assessed at P297,410. (Record on Appeal,
pages 7 and 105)
On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the
Testate Estate of Francisco de Borja, instituted a complaint in the Court of First
Instance of Rizal (Civil Case No. 7452) against Jose de Borja, in his capacity as
Administrator of Josefa Tangco (Francisco de Borja's first wife), seeking to have
the Hacienda above described declared exclusive private property of Francisco,
while in his answer defendant (now appellant) Jose de Borja claimed that it was
conjugal property of his parents (Francisco de Borja and Josefa Tangco),
conformably to the presumption established by Article 160 of the Philippine Civil
Code (reproducing Article 1407 of the Civil Code of 1889), to the effect that:

Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to
the wife.

Defendant Jose de Borja further counterclaimed for damages, compensatory,


moral and exemplary, as well as for attorney's fees.

After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held
that the plaintiff had adduced sufficient evidence to rebut the presumption, and
declared the Hacienda de Jalajala (Poblacion) to be the exclusive private
property of the late Francisco de Borja, and his Administratrix, Tasiana
Ongsingco Vda. de Borja, to be entitled to its possession. Defendant Jose de
Borja then appealed to this Court.

The evidence reveals, and the appealed order admits, that the character of the
Hacienda in question as owned by the conjugal partnership De Borja-Tangco
was solemnly admitted by the late Francisco de Borja no less than two times:
first, in the Reamended Inventory that, as executor of the estate of his deceased
wife Josefa Tangco, he filed in the Special Proceedings No. 7866 of the Court of
First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the
Reamended Accounting of the same date, also filed in the proceedings aforesaid
(Exhibit "7"). Similarly, the plaintiff Tasiana O. Vda. de Borja, herself, as
oppositor in the Estate of Josefa Tangco, submitted therein an inventory dated 7
September 1954 (Exhibit "3") listing the Jalajala property among the "Conjugal
Properties of the Spouses Francisco de Borja and Josefa Tangco". And once
more, Tasiana Ongsingco, as administratrix of the Estate of Francisco de Borja,
in Special Proceedings No. 832 of the Court of First Instance of Nueva Ecija,
submitted therein in December, 1955, an inventory wherein she listed the
Jalajala Hacienda under the heading "Conjugal Property of the Deceased
Spouses Francisco de Borja and Josefa Tangco, which are in the possession of
the Administrator of the Testate Estate of the Deceased Josefa Tangco in
Special Proceedings No. 7866 of the Court of First Instance of Rizal" (Exhibit
"4").

Notwithstanding the four statements aforesaid, and the fact that they are plain
admissions against interest made by both Francisco de Borja and the
Administratrix of his estate, in the course of judicial proceedings in the Rizal and
Nueva Ecija Courts, supporting the legal presumption in favor of the conjugal
community, the Court below declared that the Hacienda de Jalajala (Poblacion)
was not conjugal property, but the private exclusive property of the late Francisco
de Borja. It did so on the strength of the following evidences: (a) the sworn
statement by Francis de Borja on 6 August 1951 (Exhibit "F") that

He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4


parte, 337 hectareas) adjunto a mi terreno personal y exclusivo (Poblacion de
Jalajala, Rizal).

and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the
entire Hacienda had been bought at a foreclosure sale for P40,100.00, of which
amount P25,100 was contributed by Bernardo de Borja and P15,000. by Marcelo
de Borja; that upon receipt of a subsequent demand from the provincial treasurer
for realty taxes the sum of P17,000, Marcelo told his brother Bernardo that
Francisco (son of Marcelo) wanted also to be a co-owner, and upon Bernardo's
assent to the proposal, Marcelo issue a check for P17,000.00 to pay the back
taxes and said that the amount would represent Francisco's contribution in the
purchase of the Hacienda. The witness further testified that

Marcelo de Borja said that that money was entrusted to him by Francisco de
Borja when he was still a bachelor and which he derived from his business
transactions. (Hearing, 2 February 1965, t.s.n., pages 13-15) (Emphasis
supplied)

The Court below, reasoning that not only Francisco's sworn statement
overweighed the admissions in the inventories relied upon by defendant-
appellant Jose de Borja since probate courts can not finally determine questions
of ownership of inventoried property, but that the testimony of Gregorio de Borja
showed that Francisco de Borja acquired his share of the original Hacienda with
his private funds, for which reason that share can not be regarded as conjugal
partnership property, but as exclusive property of the buyer, pursuant to Article
1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of the
Philippines.

The following shall be the exclusive property of each spouse:

xxx xxx xxx

(4) That which is purchased with exclusive money of the wife or of the husband.

We find the conclusions of the lower court to be untenable. In the first place,
witness Gregorio de Borja's testimony as to the source of the money paid by
Francisco for his share was plain hearsay, hence inadmissible and of no
probative value, since he was merely repeating what Marcelo de Borja had told
him (Gregorio). There is no way of ascertaining the truth of the statement, since
both Marcelo and Francisco de Borja were already dead when Gregorio testified.
In addition, the statement itself is improbable, since there was no need or
occasion for Marcelo de Borja to explain to Gregorio how and when Francisco de
Borja had earned the P17,000.00 entrusted to Marcelo. A ring of artificiality is
clearly discernible in this portion of Gregorio's testimony.

As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante,
page 14) does not clearly demonstrate that the "mi terreno personal y exclusivo
(Poblacion de Jalajala, Rizal) " refers precisely to the Hacienda in question. The
inventories (Exhibits 3 and 4) disclose that there were two real properties in
Jalajala owned by Francisco de Borja, one of 72.038 sq. m., assessed at
P44,600, and a much bigger one of 1,357.260.70 sq. m., which is evidently the
Hacienda de Jalajala (Poblacion). To which of these lands did the affidavit of
Francisco de Borja (Exhibit "F") refer to? In addition, Francisco's characterization
of the land as "mi terreno personal y exclusivo" is plainly self-serving, and not
admissible in the absence of cross examination.

It may be true that the inventories relied upon by defendant-appellant (Exhibits


"2", "3", "4" and "7") are not conclusive on the conjugal character of the property
in question; but as already noted, they are clear admissions against the
pecuniary interest of the declarants, Francisco de Borja and his executor-widow,
Tasiana Ongsingco, and as such of much greater probative weight than the self-
serving statement of Francisco (Exhibit "F"). Plainly, the legal presumption in
favor of the conjugal character of the Hacienda de Jalajala (Poblacion) now in
dispute has not been rebutted but actually confirmed by proof. Hence, the
appealed order should be reversed and the Hacienda de Jalajala (Poblacion)
declared property of the conjugal partnership of Francisco de Borja and Josefa
Tangco.

No error having been assigned against the ruling of the lower court that claims
for damages should be ventilated in the corresponding special proceedings for
the settlement of the estates of the deceased, the same requires no pro
announcement from this Court.

IN VIEW OF THE FOREGOING, the appealed order of the Court of First


Instance of Rizal in Case No. L-28040 is hereby affirmed; while those involved in
Cases Nos. L-28568 and L-28611 are reversed and set aside. Costs against the
appellant Tasiana Ongsingco Vda. de Borja in all three (3) cases.
Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-15499 February 28, 1962

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


defendant-appellee.

Delgado, Flores and Macapagal for plaintiff-appellant. Pelaez and Jalandoni for
defendant-appellee.

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

Appeal from a decision of the Court of First instance of Manila dismissing the
action for legal redemption filed by plaintiff-appellant.

It appears that Jose V. Ramirez, during his lifetime, was a co-owner of a house
and lot located at Sta. Cruz, Manila, as shown by Transfer Certificate of Title No.
52789, issued in the name of the following co-owners: Marie Garnier Vda. de
Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6; Rita de Ramirez, 1/6;
and Jose Ma. Ramirez, 1/6.

On October 20, 1951, Jose V. Ramirez died. Subsequently, Special Proceeding


No. 15026 was instituted to settle his estate, that included the one-sixth (1/6)
undivided share in the aforementioned property. And although his last will and
testament, wherein he bequeathed his estate to his children and grandchildren
and one-third (1/3) of the free portion to Mrs. Angela M. Butte, hereinafter
referred to as plaintiff-appellant, has been admitted to probate, the estate
proceedings are still pending up to the present on account of the claims of
creditors which exceed the assets of the deceased. The Bank of the Philippine
Islands was appointed judicial administrator.

Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de Ramirez, one of


the co-owners of the late Jose V. Ramirez in the Sta. Cruz property, sold her
undivided 1/6 share to Manuel Uy & Sons, Inc. defendant-appellant herein, for
the sum of P500,000.00. After the execution by her attorney-in-fact, Mrs. Elsa R.
Chambers, of an affidavit to the effect that formal notices of the sale had been
sent to all possible redemptioners, the deed of sale was duly registered and
Transfer Certificate of Title No. 52789 was cancelled in lieu of which a new one
was issued in the name of the vendee and the other-co-owners.

On the same day (December 9, 1958), Manuel Uy & Sons, Inc. sent a letter to
the Bank of the Philippine Islands as judicial administrator of the estate of the late
Jose V. Ramirez informing it of the above-mentioned sale. This letter, together
with that of the bank, was forwarded by the latter to Mrs. Butte c/o her counsel
Delgado, Flores & Macapagal, Escolta, Manila, and having received the same on
December 10, 1958, said law office delivered them to plaintiff-appellant's son, Mr.
Miguel Papa, who in turn personally handed the letters to his mother, Mrs. Butte,
on December 11 and 12, 1958. Aside from this letter of defendant-appellant, the
vendor, thru her attorney-in-fact Mrs. Chambers, wrote said bank on December
11, 1958 confirming vendee's letter regarding the sale of her 1/6 share in the Sta.
Cruz property for the sum of P500,000.00. Said letter was received by the bank
on December 15, 1958 and having endorsed it to Mrs. Butte's counsel, the latter
received the same on December 16, 1958. Appellant received the letter on
December 19, 1958.

On January 15, 1959, Mrs. Angela M. Butte, thru Atty. Resplandor Sobretodo,
sent a letter and a Philippine National Bank cashier's check in the amount of
P500,000.00 to Manuel Uy & Sons, Inc. offering to redeem the 1/6 share sold by
Mrs. Marie Garnier Vda. de Ramirez. This tender having been refused, plaintiff
on the same day consigned the amount in court and filed the corresponding
action for legal redemption. Without prejudice to the determination by the court of
the reasonable and fair market value of the property sold which she alleged to be
grossly excessive, plaintiff prayed for conveyance of the property, and for actual,
moral and exemplary damages.

After the filing by defendant of its answer containing a counterclaim, and


plaintiff's reply thereto, trial was held, after which the court rendered decision on
May 13, 1959, dismissing plaintiff's complaint on the grounds that she has no
right to redeem the property and that, if ever she had any, she exercised the
same beyond the statutory 30-day period for legal redemptions provided by the
Civil Code. The counterclaim of defendant for damages was likewise dismissed
for not being sufficiently established. Both parties appealed directly to this Court.

Based on the foregoing facts, the main issues posed in this appeal are: (1)
whether or not plaintiff-appellant, having been bequeathed 1/3 of the free portion
of the estate of Jose V. Ramirez, can exercise the right of legal redemption over
the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez despite the presence
of the judicial administrator and pending the final distribution of her share in the
testate proceedings; and (2) whether or not she exercised the right of legal
redemption within the period prescribed by law.

The applicable law involved in the present case is contained in Articles 1620, p.
1, and 1623 of the Civil Code of the Philippines, which read as follows:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case
the shares of all the other-co-owners or of any of them, are sold to a third person.
If the price of the alienation is grossly excessive, the redemptioner shall pay only
a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they
may only do so in proportion to the share they may respectively have in the thing
owned in common. (1522a)

ART. 1623. The right of legal predemption or redemption shall not be exercised
except within thirty days from the notice in writing by the respective vendor, or by
the vendor, as the case may be. The deed of sale shall not be accorded in the
Registry of Property, unless accompanied by an affidavit of the vendor that he
has given written notice thereof at all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners. (1524a)

That the appellant Angela M. Butte is entitled to exercise the right of legal
redemption is clear. As testamentary heir of the estate of J.V. Ramirez, she and
her co-heirs acquired an interest in the undivided one-sixth (1/6) share owned by
her predecessor (causante) in the Santa Cruz property, from the moment of the
death of the aforesaid co-owner, J.V. Ramirez. By law, the rights to the
succession of a deceased persons are transmitted to his heirs from the moment
of his death, and the right of succession includes all property rights and
obligations that survive the decedent.

ART. 776. The inheritance includes all the property, rights and obligations of a
person which are not extinguished by his death. (659)

ART. 777. The rights to the succession are transmitted from the moment of the
death of the decedent. (657a)

ART. 947. The legatee or devisee acquires a right to the pure and simple
legacies or devisees from the death of the testator, and transmits it to his heirs.
(881a)

The principle of transmission as of the time of the predecessor's death is basic in


our Civil Code, and is supported by other related articles. Thus, the capacity of
the heir is determined as of the time the decedent died (Art. 1034); the legitime is
to be computed as of the same moment(Art. 908), and so is the in officiousness
of the donation inter vivos (Art. 771). Similarly, the legacies of credit and
remission are valid only in the amount due and outstanding at the death of the
testator (Art. 935),and the fruits accruing after that instant are deemed to pertain
to the legatee (Art. 948).

As a consequence of this fundamental rule of succession, the heirs of Jose V.


Ramirez acquired his undivided share in the Sta. Cruz property from the moment
of his death, and from that instant, they became co-owners in the aforesaid
property, together with the original surviving co-owners of their decedent
(causante). A co-owner of an undivided share is necessarily a co-owner of the
whole. Wherefore, any one of the Ramirez heirs, as such co-owner, became
entitled to exercise the right of legal redemption (retracto de comuneros) as soon
as another co-owner (Maria Garnier Vda. de Ramirez) had sold her undivided
share to a stranger, Manuel Uy & Sons, Inc. This right of redemption vested
exclusively in consideration of the redemptioner's share which the law nowhere
takes into account.

The situation is in no wise altered by the existence of a judicial administrator of


the estate of Jose V. Ramirez while under the Rules of Court the administrator
has the right to the possession of the real and personal estate of the deceased,
so far as needed for the payment of the decedent's debts and the expenses of
administration (sec. 3, Rule 85), and the administrator may bring or defend
actions for the recovery or protection of the property or rights of the deceased
(sec. 2, Rule 88), such rights of possession and administration do not include the
right of legal redemption of the undivided share sold to Uy & Company by Mrs.
Garnier Ramirez. The reason is obvious: this right of legal redemption only came
into existence when the sale to Uy & Sons, Inc. was perfected, eight (8) years
after the death of Jose V. Ramirez, and formed no part of his estate. The
redemption right vested in the heirs originally, in their individual capacity, they did
not derivatively acquire it from their decedent, for when Jose V. Ramirez died,
none of the other co-owners of the Sta. Cruz property had as yet sold his
undivided share to a stranger. Hence, there was nothing to redeem and no right
of redemption; and if the late Ramirez had no such right at his death, he could
not transmit it to his own heirs. Much less could Ramirez acquire such right of
redemption eight years after his death, when the sale to Uy & Sons, Inc. was
made; because death extinguishes civil personality, and, therefore, all further
juridical capacity to acquire or transmit rights and obligations of any kind (Civil
Code of the Phil., Art. 42).

It is argued that the actual share of appellant Mrs. Butte in the estate of Jose V.
Ramirez has not been specifically determined as yet, that it is still contingent; and
that the liquidation of estate of Jose V. Ramirez may require the alienation of the
decedent's undivided portion in the Sta. Cruz property, in which event Mrs. Butte
would have no interest in said undivided portion. Even if it were true, the fact
would remain that so long as that undivided share remains in the estate, the heirs
of Jose V. Ramirez own it, as the deceased did own it before his demise, so that
his heirs are now as much co-owners of the Sta. Cruz property as Jose V.
Ramirez was himself a co-owner thereof during his lifetime. As co-owners of the
property, the heirs of Jose V. Ramirez, or any one of them, became personally
vested with right of legal redemption as soon as Mrs. Garnier sold her own pro-
indiviso interest to Uy & Sons. Even if subsequently, the undivided share of
Ramirez (and of his heirs) should eventually be sold to satisfy the creditors of the
estate, it would not destroy their ownership of it before the sale, but would only
convey or transfer it as in turn sold (of it actually is sold) to pay his creditors.
Hence, the right of any of the Ramirez heirs to redeem the Garnier share will not
be retroactively affected. All that the law requires is that the legal redemptioner
should be a co-owner at the time the undivided share of another co-owner is sold
to a stranger. Whether or not the redemptioner will continue being a co-owner
after exercising the legal redemptioner is irrelevant for the purposes of law.

Nor it can be argued that if the original share of Ramirez is sold by the
administrator, his heirs would stand in law as never having acquired that share.
This would only be true if the inheritance is repudiated or the heir's quality as
such is voided. But where the heirship is undisputed, the purchaser of hereditary
property is not deemed to have acquired the title directly from the deceased
Ramirez, because a dead man can not convey title, nor from the administrator
who owns no part of the estate; the purchaser can only derive his title from the
Ramirez heirs, represented by the administrator, as their trustee or legal
representative.

The right of appellant Angela M. Butte to make the redemption being established,
the next point of inquiry is whether she had made or tendered the redemption
price within the 30 days from notices as prescribed by law. This period, be it
noted, is peremptory, because the policy of the law is not to leave the
purchaser's title in uncertainty beyond the established 30-day period. In
considering whether or not the offer to redeem was timely, we think that the
notice given by the vendee (buyer) should not be taken into account. The text of
Article 1623 clearly and expressly prescribes that the thirty days for making the
redemption are to be counted from notice in writing by the vendor. Under the old
law (Civ. Code of 1889, Art. 1524), it was immaterial who gave the notice; so
long as the redeeming co-owner learned of the alienation in favor of the stranger,
the redemption period began to run. It is thus apparent that the Philippine
legislature in Article 1623 deliberately selected a particular method of giving
notice, and that method must be deemed exclusive (39 Am. Jur., 237; Payne vs.
State, 12 S.W. [2d] 528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in
75 Law Ed. [U.S.] 275)

Why these provisions were inserted in the statute we are not informed, but we
may assume until the contrary is shown, that a state of facts in respect thereto
existed, which warranted the legislature in so legislating.

The reasons for requiring that the notice should be given by the seller, and not by
the buyer, are easily divined. The seller of an undivided interest is in the best
position to know who are his co-owners that under the law must be notified of the
sale. Also, the notice by the seller removes all doubts as to the fact of the sale,
its perfection; and its validity, the notice being a reaffirmation thereof, so that the
party need not entertain doubt that the seller may still contest the alienation. This
assurance would not exist if the notice should be given by the buyer.

The notice which became operative is that given by Mrs. Chambers, in her
capacity as attorney-in-fact of the vendor Marie Garnier Vda. de Ramirez. Under
date of December 11, 1958, she wrote the Administrator Bank of the Philippine
Islands that her principal's one-sixth (1/6) share in the Sta. Cruz property had
been sold to Manuel Uy & Sons, Inc. for P500,000.00. The Bank received this
notice on December 15, 1958, and on the same day endorsed it to Mrs. Butte,
care of Delgado, Flores and Macapagal (her attorneys), who received the same
on December 16, 1958. Mrs. Butte tendered redemption and upon the vendee's
refusal, judicially consigned the price of P500,000.00 on January 15, 1959. The
latter date was the last one of the thirty days allowed by the Code for the
redemption, counted by excluding December 16, 1958 and including January 15,
1959, pursuant to Article 13 of the Civil Code. Therefore, the redemption was
made in due time.

The date of receipt of the vendor's notice by the Administrator Bank (December
15) can not be counted as determining the start of thirty days; for the
Administrator of the estate was not a proper redemptioner, since, as previously
shown, the right to redeem the share of Marie Garnier did not form part of the
estate of Jose V. Ramirez.

We find no jurisdiction for appellant's claim that the P500,000,00. paid by Uy &
Sons, Inc. for the Garnier share is grossly excessive. Gross excess cannot be
predicated on mere individual estimates of market price by a single realtor.

The redemption and consignation having been properly made, the Uy


counterclaim for damages and attorney's fees predicated on the assumption that
plaintiff's action was clearly unfounded, becomes untenable.

PREMISES CONSIDERED, the judgment appealed from is hereby reversed and


set aside, and another one entered:

(a) Declaring the consignation of P500,000,00 made by appellant Angela M.


Butte duly and properly made;

(b) Declaring that said appellant properly exercised in due time the legal
redemption of the one-sixth (1/6) undivided portion of the land covered by
Certificate of Title No. 59363 of the Office of the Register of Deeds of the City of
Manila, sold on December 9, 1958 by Marie Garnier Vda. de Ramirez to
appellant Manuel Uy & Sons, Inc.

(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned price and
to convey to Angela M. Butte the undivided portion above referred to, within 30
days from the time our decision becomes final, and subsequently to account for
the rentals and fruits of the redeemed share from and after January 15, 1958,
until its conveyance; and.

(d) Ordering the return of the records to the court of origin for further proceedings
conformable to this opinion.

Without finding as to costs.


Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-15088 January 31, 1961

TORIBIA FONTANILLA PACIO, SANTIAGO PACIO, ESPERANZA PACIO,


and ROSARIO PACIO, plaintiffs-appellants, 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 Philippines SUPREME COURT Manila

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.

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. Q-35230.

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:

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.

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

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 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 Philippines SUPREME COURT Manila

EN BANC

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. R-145.

On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant,
executed a Deed of Extrajudicial Partition of the residuary estate, wherein was
apportioned P1,471.97 as defendant Rufino 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:

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

WHEREFORE, the orders appealed from are hereby affirmed, with costs against
defendant-appellant. So ordered.
Republic of the Philippines SUPREME COURT Manila

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.

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

On September 4, 1956 the administrator filed in Sp. Proceedings No. 940 an


inventory of properties of the estate, covering the same parcels of land subject
matter of the reconveyance action. On September 7, 1956, Celestino Salvador's
will was admitted to probate and Dominador Cardenas was appointed executor
of said will. Actual issuance of letters testamentary to him was made on October
27, 1956.

Twenty-three (23) persons were instituted heirs in the will. Of these, nine (9)
were not among the twenty-one (21) alleged relatives substituted in the
reconveyance case; and of the twenty-one (21) substituted alleged heirs seven
(7) were not instituted in the will. 2

In the suit for reconveyance, on November 26, 1956, the Court (CFI of Bulacan,
Br. I) rendered judgment, ordering the defendants therein (the spouses Alfonso
and Anatolia), to reconvey the parcels of land to the estate of Celestino Salvador.
Appeal therefrom to the Court of Appeals was interposed by said
defendants.1wph1.t

On August 12, 1961, the Court of Appeals affirmed the reconveyance judgment,
with the correction that reconveyance be in favor of the twenty-one (21) heirs
substituted as plaintiffs therein.

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

On December 18, 1964, defendants in the suit for reconveyance executed a


deed of reconveyance over the subject parcels of land, in favor of Celestino
Salvador's estate. Revoking the same as lot in accordance with the final
judgment therein, the CFI of Bulacan, Br. I, on September 24, 1965, ordered a
new deed of reconveyance to be executed, in favor of the twenty-one persons
substituted as plaintiffs in that action. Accordingly, on September 30, 1965, a
new deed of reconveyance was made, in favor of said twenty-one (21) persons
as heirs of Celestino.

Following this, on November 22, 1965, said Br. I, ordered the corresponding title
certificate (TCT No. 54639) in the administrator's name, cancelled; new title
certificate to be issued in the names of the same twenty-one (21) persons. Said
order was carried out, and TCT No. 63734 was issued in the names of the
twenty-one persons. 3

On December 7, 1965, Br. I (reconveyance court) ordered the Philippine National


Bank to release the P41,184.00 proceeds of the sale of Lot 6, to the twenty-one
(21) plaintiffs in the reconveyance case. Apparently, although the passbook was
given by the administrator to said twenty-one persons, no release was made, as
the Philippine National Bank awaited Br. II's order.

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

Taxes Nat'l. gov't P5,328.23


Atty's
Atty. Enriquez 8,000.00
fees
Atty's
Atty. Jamir 12,000.00
fees
Loan R. Cabrera 13,544.35

TOTAL........ 38,872.58
=========
On March 30, 1966, said Br. II (probate court), ordered return of the passbook to
the administrator; and release to the administrator by the PNB of the P41,184.00,
or so much thereof is needed to pay the afore-stated debts of the estate.

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

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

It is a settled point of law that the right of heirs to specific, distributive shares of
inheritance does not become finally determinable until all the debts of the estate
are paid. Until then, in the face of said claims, their rights cannot be enforced, are
inchoate, and subject to the existence of a residue after payment of the debts
(Castellvi de Raquiza v. Castellvi, L-17630, October 31, 1963; Jimoga-on v.
Belmonte, 84 Phil. 545; Sec. 1, Rule 90, Rules of Court).

Petitioners do not question the existence of the debts abovementioned. They


only contend that the properties involved having been ordered by final judgment
reconveyed to them, not to the estate the same are not properties of the estate
but their own, and thus, not liable for debts of the estate.

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

At any rate, the proceeds of Lot 6 alone (P41,184.00) appears more than
sufficient to pay the debt (P38,872.58); and there will remain the other parcels of
land not sold. As to the question of who will receive how much as heirs, the same
is properly determinable by the settlement court, after payment of the debts
(Pimentel v. Palanca, 5 Phil. 436; Maningat v. Castillo, 75 Phil. 532; Jimoga-on v.
Belmonte, supra).
Wherefore, the petition for certiorari is denied, without costs. So ordered.

Republic of the Philippines SUPREME COURT Manila

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 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

On 16 August 1961, decision was rendered decreeing the foreclosure of the


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

On 6 February 1962, Filemon Ramirez, Monica Ramirez and Jose Eguaras, the
first two being the heirs named in the petition for intestate proceedings, filed a
complaint designated "For the Annulment of all Proceedings in said Civil Case
No. SC-292 for the Foreclosure of the Mortgage", against the spouses Artemio
Baltazar and Susana Flores, and Artemio Diawan, in his capacity as
administrator of the estate of Victoriana Eguaras, deceased, and Silverio Talabis,
in his capacity as deputy provincial sheriff of Laguna, docketed as Civil Case No.
SC-319 of the Court of First Instance of Laguna.

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

The defendants spouses, Artemio Baltazar and Susana Flores, filed a motion to
dismiss the complaint on the ground that the plaintiffs have no legal capacity to
sue; defendant Diawan likewise moved to dismiss on two grounds: that plaintiffs
have no legal capacity to sue and that the complaint states no cause of action.
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Despite vigorous opposition interposed by the plaintiffs against the aforesaid


motions to dismiss, the court, on 13 March 1962, dismissed the complaint with
costs against the plaintiffs, reasoning thus: that "upon consideration of the
evidence, said defendant could not have offered any evidence to avoid the
foreclosure of the mortgage which the Court found to be in order. Under the
circumstances and with the apparent disinterestedness of Filemon and Rolando
to qualify as administrator when appointed, there could not have been any
connivance and/or collusion between plaintiffs in this case and Artemio Diawan
as administrator"; and that plaintiffs have no legal capacity to sue since their
status as legal heirs of the deceased has yet to be determined precisely in
Special Proceeding No. SC-99, and until such status is so fixed by the Court,
they have no cause of action against defendants.

In that order of 13 March 1962, the court also denied plaintiffs' petition for the
issuance of a writ of preliminary injunction to enjoin defendants from entering and
taking physical possession of the land in question on the ground "that possession
thereof was effected and delivered by the Provincial Sheriff to Artemio Baltazar
and Susana Flores on February, 1962."

Reconsideration of the aforesaid order having been denied, the plaintiffs took the
present appeal where they assigned the following errors: (1) in holding that
plaintiffs-appellants have no legal capacity to sue until their status as legal heirs
of the deceased is determined in Special Proceeding No. SC-99; (2) in ruling that
there was no collusion or connivance among the defendants-appellees, despite
the fact that the issue in the motion to dismiss is purely legal, not factual; and (3)
in denying the petition for a writ of preliminary injunction.

At the outset, let it be remembered that the defendants-appellees, in availing


themselves of the defense that the plaintiffs-appellants had not been declared to
be the heirs of the deceased Victoriana Eguaras, have overlooked the fact that
the (defendants-appellees) themselves in their petition for intestate proceedings
(Case SC-99) have alleged that Filemon Ramirez and Monica Ramirez, two of
herein plaintiffs-appellants, are the heirs of the deceased. Insofar as defendants-
appellees are concerned, it is our opinion that they are estopped from
questioning the heirship of these two named persons to the estate of the
deceased.

There is no question that the rights to succession are automatically transmitted to


the heirs from the moment of the death of the decedent. 1 While, as a rule, the
formal declaration or recognition to such successional rights needs judicial
confirmation, this Court has, under special circumstances, protected these rights
from encroachments made or attempted before the judicial declaration.2 In
Pascual vs. Pascual,3 it was ruled that although heirs have no legal standing in
court upon the commencement of testate or intestate proceedings, this rule
admits of an exception as "when the administrator fails or refuses to act in which
event the heirs may act in his place."

A similar situation obtains in the case at bar. The administrator is being charged
to have been in collusion and connivance with the mortgagees of a property of
the deceased, allowing its foreclosure without notifying the heirs, to the prejudice
of the latter. Since the ground for the present action to annul the aforesaid
foreclosure proceedings is the fraud resulting from such insidious machinations
and collusion in which the administrator has allegedly participated, it would be
farfetched to expect the said administrator himself to file the action in behalf of
the estate. And who else but the heirs, who have an interest to assert and to
protect, would bring the action? Inevitably, this case should fall under the
exception, rather than the general rule that pending proceedings for the
settlement of the estate, the heirs have no right to commence an action arising
out of the rights belonging to the deceased.

On the second point raised, We fully agree with the plaintiffs-appellants that the
lower court had gone too far in practically adjudicating the case on the merits
when it made the observation that "there could not have been any connivance
and/or collusion between plaintiffs in this case and Artemio Diawan as
administrator." A thorough scrutiny of the allegations in the motions to dismiss
filed by defendants-appellees does not indicate that that question was ever put at
issue therein. On the other hand, the controversy on the existence or
inexistence of collusion between the parties as a result of which judgment was
rendered against the estate is the very core of the complaint that was
dismissed. Undoubtedly, the cause of action is based on Section 30, Rule 132 of
the Rules of Court.

We are not, however, in accord with the third assigned error the denial of the
motion for the issuance of preliminary injunction for it puts at issue the factual
finding made by the lower court that the defendants had already been placed in
possession of the property. At this stage of the proceeding, and considering the
nature of the case before Us, such a question is, at this time, beyond the
competence of the Court.

PREMISES CONSIDERED, the order appealed from is hereby set aside insofar
as it dismissed the complaint in Civil Case No. SC-319, and the records be
remanded to the lower court for further proceedings. Costs against defendants-
appellees. The Clerk of Court is directed to furnish a copy of this decision to the
Department of Justice for its information.
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