CHAPTER I

GENERAL PROVISIONS

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.

Distinction Between Inheritance and Succession

The inheritance refers to the decedent's properties, as well as his rights and
obligations which are not extinguished by his death and which are transmitted to his
heirs. Succession, on the other hand, is a mode of acquisition by virtue of which the
decedent's property, rights and obligations are transmitted to his heirs. In sum,
succession is a mode of acquisition; the inheritance is its object.

Elements of Succession

1. A Mode of Acquisition
A mode of acquisition is the statutory basis of a claim of ownership. Article 712 of
the Civil Code enumerates the different modes of acquiring ownership. Thus:

"Art. 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by
law, by donation, by testate and intestate succession, and in consequence of certain
contracts, by tradition.
They may also be acquired by means of prescription."

A mode of acquisition is either original (i.e., the object of acquisition does not have
a previous owner) or derivative (i.e., the object of acquisition has an owner who
transmits title thereto to a transferee). Occupation and intellectual creation are original
modes of acquisition; the law, donation, succession, and tradition in consequence of
certain contracts, and prescription are derivative modes of acquisition.

2. Transmission of an Inheritance
"Art. 37. Juridical capacity, which is the fitness to be the subject of legal
relations, is inherent in every natural person and is lost only through death."

As death extinguishes the juridical capacity of a person, his title to or dominion

over the things he owned in his lifetime comes to an end. The assets and liabilities of

,....._.,,,
 .
L
fe·
~;

t
I:
~· ..

ART. 774

1
a person at the time of his death constitute his inheritance that must be transferred 11l111l1m1 1
to his heirs. Without a law that recognizes succession as a mode of acquisition, the i!d11m111inn1111!111tm

death of the decedent would leave his inheritance without an owner, converting his 1111ffl11111111iimnnmm

assets into res nullius and his outstanding obligations without an obligor; hence the IBIIIIJlai11Il1///ian
necessity of transmitting the inheritance from the decedent to his heirs upon the dlia• llllt1111I

fillllltiDIJAiilHIIIII~
death of the former.
lDl!Bll:. /llmi111
.lllllannmnilll'I
(a) Transmission of Property
afiE:Slllllla~"lllll
The automatic transmission of the inheritance to the heirs as of the time of the llll!!illllllllr IINIII
decedent's death is basic in the Civil Code. As a consequence of this fundamental rule ldW 11s; ll!llll
of succession, the heirs acquire title to the hereditary estate from the moment of the 1ll!lJIIllll!IIM!llll 1t

decedent's death, and from that instant, the heirs become co-owners of the lilllllJlm 111:!
inheritance. Acquisition of ownership is one thing; it should not be confused with the
· - ,1!11
right of possession of the things that constitute the inheritance. ...... '!lllllllllltt
lllwllillll!·m1111 t
BUTTE v. MANUEL UY & SONS, INC. ,iilllClllllilln1 llftmnr
No. L-15499, 28 February 1962 •·1-
....
4 SCRA 526 llffllmJllllllll\if111!!11111
!lllll1RlllllillllllllUll
Reyes, J.B.L, J.:

Jose V. Ramirez, during his lifetime, was co-owner of a house and lot located at Sta. ~.lld!IH!
Cruz, Manila, as shown by a certificate of title issued in the names of the following
Ullfflill!v,JIE!!
111:i111111!11&tet11111111
co-owners: Marie Garnier vda. de Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez,
1fnn!, ~
1/6; Belen T. Ramirez, 1/6; Rita de Ramirez, 1/6; and Jose Ma. Ramirez, 1/6.
r::cllllllllllllllill
On 20 October 1951, Jose V. Ramirez died. Special Proceeding No. 15026 was :swJilillCIIU111111~
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
1(1;)~
bequeathed his estate to his children and grandchildren and one-third (1/3) of the
free portion to Angela M. Butte, hereinafter referred to as plaintiff-appellant) has ~·dJ
slitniil!ll!!'ullill!I

---·
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 -.i11111i/llilllllr.ll
Bank of the Philippine Islands was appointed judicial administrator.
• illll1limll lllliill, 1m
On 9 December 1958, Marie Garnier vda. de Ramirez, one of the co-owners of
the Sta. Cruz property, sold her undivided 1/6 share to Manuel Uy & Sons, Inc.,
defendant-appellant, for the sum of PhP500,000.00. After the execution by her J:mrillmllillf
attorney-in-fact, Mrs. Elsa R. Chambers, of an affidavit to the effect that formal ~.1m
notices of the sale had been sent to all possible redemptioners, the deed of sale was ~ R1/ijll1 I
duly registered and a new certificate of title was issued in the name of the vendee
Bii!JJUJJ/
and the other co-owners.
.:~' ,Rl/lW
~l111m1

Ai!llllt
1
Article 776, Civil Code. emJll'JDiilllllllJllJJI
~.,1!11

2
 ART. 774

· iilln!!· '1!111::a!ITT::s.:e • • e d On the same day Manuel Uy & Sons, Inc. sent a letter to BPI as judicial
lllClllll!WJlll5iil"t::1,o - . the administrator of the estate of the late Jose V. Ramirez, informing it of the above-
. 11ll1111Dl111100•r.:~g his mentioned sale. This letter, together with that of BPI, was forwarded by BPI to Mrs .
l1pm:;: h!l',,ce the Butte c/o her counsel, and having received the 1ame on 10 December 1958, said law
office delivered them to plaintiff-appellant's son, Mr. Miguel Papa, who in turn
b!Ul5 IUIIPIC- the
personally handed the letters to his mother, Mrs. Butte, on 11 and 12 December
1958. Aside from this letter of defendant-appellant, the vendor (Marie Garnier vda.
de Ramirez) wrote BPI on 11 December 1958 confirming vendee's letter regarding
the sale of her 1/6 share in the Sta. Cruz property for the sum of PhP500,000.00. Said
• lllimnne :/ the letter was received by BPI on 15 December 1958 and having endorsed it to Mrs.
1111nll'llamm11e1n,ta, ~u Ie Butte's counsel, the latter received the same on 16 December 1958. Mrs. Butte
11m11U1D111111e1m1t ::if the received the letter on 19 December 1958.
the
D\lllllll1llllll!!ll!'S :::-' On 15 January 1959, Mrs. Butte sent a letter and a PNB cashier's check in the
nbnmlll 110111·i:1 the amount of PhP500,000.00 to Manuel Uy & Sons, Inc., offering to redeem the 1/6
share sold by Marie Garnier vda. de Ramirez. This tender having been refused, Mrs.
Butte 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, Mrs. Butte prayed for conveyance of the property, and for actual,
moral and exemplary damages.
After the filing by Manuel Uy & Sons of its answer containing a counterclaim, and
Mrs. Butte's reply thereto, trial was held after which the court rendered a decision on
1i:::iillllftl ..rt St3.
13 May 1959, dismissing Mrs. Butte's complaint on the grounds that she has no right
- if1imnm1oi1J1,ing
to redeem the property and that, if ever she had any, she exercised the same beyond
1 .IE. ~ 1·ez,
the statutory 30-day period for legal redemption provided by the Civil Code. The
counterclaim of Manuel Uy & Sons for damages was likewise dismissed for not being
5/UE ... 3 s sufficiently established. Both parties appealed directly to this Court.
· • ~ 11"1 :re
Based on the foregoing facts, the main issues posed in this appeal are:
• ~ I- e
(1) whether or not Mrs. Butte, having been bequeathed 1/3 of the free portion of the
11::mit''J))1 d :be
estate of Jose V. Ramirez, can exercise the right of legal redemption over the 1/6
,1!1J!H!!lllll;imt I r .3 S
share sold by Marie Garnier vda. de Ramirez, despite the presence of the judicial
dilne: ~111'11:52 - :
administrator and pending the distribution of her share in the testate proceedings.
miff!~ , .. e
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:

~·~. Y, Art. 1620. A co-owner of a thing may exercise the right of redemption in
m11umnm1 1~. ~. e r case the shares of all the other co-owners or of any of them are sold to a third
r.!ttll;.ttlt :lbr-31 person. If the price of the alienation is grossly excessive, the redemptioner shall
I ,:JJrtf gje ..,.35 pay only a reasonable one.
tlllne l!E"" ::ee
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.
Art. 1623. The right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing by the prospective
vendor, or by the vendor, as the case may be. The deed of sale shall not be

3
ART. 774

recorded in the Registry of Property, unless accompanied by an affidavit of the 1nemllll!lnmn111ntt1111:

vendor that he has given written notice thereof to all possible redemptioners. li!!IIIP'fll illli!!II W

The right of redemption of co-owners excludes that of adjoining owners. lMillll!llrnlmnlTi

lliliuml alllt11I1itf
That the appellant Angela M. Butte is entitled to exercise the right of legal '1!111Cl1ffl111!'1d "!Il

-I
redemption is clear. As testamentary heir of the estate of Jose V. Ramirez, she and 5ttnliiallt!!' bi.,!!
her co-heirs acquired an interest in the undivided one-sixth (1/6) share owned by her .amndiriiffl1!fllw
predecessor (causante) in the Santa Cruz property, from the moment of the death of DUll".l,
the aforesaid co-owner, Jose V. Ramirez. By law, the rights to the succession of a ~li.tlllli
deceased person are transmitted to his heirs from the moment of his death, and the edlllfflllPIJlll!61itn
right of succession includes all property rights and obligations that survive the 1J::oiumil5ilmlillt '111
decedent. llltt lll!li, ,,llll

Art. 776. The inheritance includes all the property, rights and ~,ollffllfflTIHll&fui
obligations of a person which are not extinguished by his death. tiiillt'll!frnreillim
llhl!'!ILI!lde111111!''~
Art. 777. The rights to the succession are transmitted from the ~lmll·m
moment of the death of the decedent. f'elffliiilffllllr 'llllhm
Art. 947. The legatee or devisee acquires a right to the pure and R:alrminill!IB 1:11
simple legacies and devises from the death of the testator, and transmits it nl0illlll,armm11
to his heirs. C:c)l"1IIJlllllllllllflW
~, ~HR!
The principle of transmission as of the time of the predecessor's death is basic in
f'E~III~
our Civil Code, and is supported by other related articles. Thus, the capacity of the heir E',illl!.'!ll'TI 1illf ':lllll
is determined as of the time the decedent died (Art. 1034); the legitime is to be
e~IIIIIW
computed as of the same moment (Art. 908); and so is the inofficiousness of the
owffl8':lllltln11111
donations inter vivas (Art. 771). Similarly, the legacies of credit and remission are valid
i: ~IIID\11
only in the amount due and outstanding at the death of the testator (Art. 935), and the
r:edieeml :r.lt
fruits accruing after that instant are deemed to pertain to the legatee (Art. 948).
i:s 'lilniii111t !IJ\l!tmr
As a consequence of this fundamental rule of succession, the heirs of Jose V. C'f~l!!I
Ramirez acquired his undivided share in the Sta. Cruz property from the moment of ,tl
COOl1illlllllll1ll!l!'
his death, and from that instant, they became co-owners in the aforesaid property, i;::,uu~ ,1
together with the original surviving co-owners of their decedent (causante).
m.11
A co-owner of an undivided share is necessarily a co-owner of the whole. Wherefore,
~1!11111lldiiii
any one of the Ramirez heirs, as such co-owner, became entitled to exercise the right
oJ!la"OUii= mnm1I
of legal redemption (retracto de comuneros) as soon as another co-owner (Marie
,l'Dlidert. lm!u
Garnier vda. de Ramirez) had sold her undivided share to a stranger, Manuel Uy &
~0!~11111111
Sons, Inc. This right of redemption vested exclusively in consideration of the
j,e.d mramm
redemptioner's share which the law nowhere takes into account.
estill!ltlE:;tlhm
The situation is in no wise altered by the existence of a judicial administrator of ::he ,aml\ltlmmm1
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 2.s,idlte
needed for the payment of the decedent's debts and the expenses of administration,
and the administrator may bring or defend actions for the recovery or protection of ObseJ:11111d
the property or rights of the deceased, such rights of possession and administration
do not include the right of legal redemption of the undivided share sold to Uy & --,,e willi~i
Company by Mrs. Garnier Ramirez. The reason is obvious: this right of legal 3S ~,e-g:ai!!'ds,11:h

4
 ART. 774

1/mDwlillt ~ t'i-e redemption only came into existence when the sale to Uy & Sons, Inc. was perfected
llllllm!!J!l'S. 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,
111ffl1111111! ,lll!Dlf l,egai none of the other co-owners of the Sta. Cruz property had as yet sold his undivided
'l!lf!l!!'l:,,'5lllinle·a~::: share to a stranger. Hence, there was nothing to redeem and no right of redemption;
llll!llrm&lli ~ re and if the late Ramirez had no such right at his death, he could not transmit it to his
~ rmlieal'tt' : : own heirs. Much less could Ramirez acquire such right of redemption eight years
'll!Ill!!!llllilr• ,:r' a after his death, when the sale to Uy & Sons, Inc. was made, because death
rllllltllhli\,, am :r € extinguishes civil personality, and therefore, all further juridical capacity to acquire or
transmit rights and obligations of any kind (Civil Code, 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 the 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 the right of legal
ntt!ltt 115 ba.s;c in redemption as soon as Mrs. Garnier sold her own pro-indiviso interest to Uy & Sons.
Ir/pl roi!lf f:he '1 eir
Even if subsequently, the undivided share of Ramirez (and of his heirs) should
irl111R iis t ::i be eventually be sold to satisfy the creditors of the estate, it would not destroy their
1Ji11111185S :r' t'le ownership of it before the sale, but would only convey or transfer it as in turn sold (if
mmimnm aire ,,alid
it actually is sold) to pay his creditors. Hence, the right of any of the Ramirez heirs to
1913!5))1, anc t'le redeem the Garnier share will not be retroactively affected. All that the law requires
9l,aJ):. is that the legal redemptioner should be a co-owner at the time the undivided share
11'5, ,d .llOSe \/. of another co-owner is sold to a stranger. Whether or not the redemptioner will
~- ~~: of continue being a co-owner after exercising the legal redemption is irrelevant for the
illlnl!lt pnooe·:y, purposes of the law.
(i,r:J/lll!IIS.'.i'rte). Nor can it be argued that if the original share of Ramirez is sold by the
:. \\ll!llne!"efJre. administrator, his heirs would stand in law as never having acquired that share. This
lc:IIR' 1tillIDe r g'lt
would only be true if the inheritance is repudiated or the heir's quality as such is
lllllUn•nrg I Va 0 ie voided. But where the heirship is undisputed, the purchaser of hereditary property is
irfllliillll'TIIIJII€'< - ', & not deemed to have acquired the title directly from the deceased Ramirez, because a
l!1t111CJIII'! ::-: :1 e dead man cannot 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
m1111111111strat: • of the administrator, as their trustee or legal representative.
1m1111!lil11J1r:.111.or 'las PREMISES CONSIDERED, the judgment appealed from is hereby reversed and set
m~itt.. ·so "a· as aside.
:1mm1111'11li1st:-a: ion .
~1Jl"aJ1t1ect : 1 of Observations on Butte
:111111'111111111115:t::-=: on
The following facts must be noted in order to appreciate the ruling of the Court
m::i1l11Il:1 tc u ', &
rw.Jt'ilrr r]'i' ::gal
as regards the timeliness of Angela Butte's exercise of the right of redemption:

1,.._.,,,
 :.rif I;:( lJ1
I
1111ll111l11 ' 'Ill

ART. 774

1. On 9 December 1958, Marie Garnier sold to Manuel Uy & Sons, Inc. her
undivided 1/6 share of the Sta. Cruz property. Marie Garnier did not send prior
written notice of the sale to the other co-owners of the Sta. Cruz property, who '11111111111111illlllllli
therefore became potential redemptioners of the property under Article 1088
of the Civil Code. '.,.,•.,11
{. . . . .lliln11ll!Blll
':i.'
lltw!
2. On 9 December 1958, Manuel Uy & Sons, Inc. sent written notice of sale to
BPI, as judicial administrator of the Estate of Jose V. Ramirez.
3. On 10 December 1958, BPI forwarded a copy of the written notice of Manuel
Uy & Sons, Inc. to the counsel of Angela Butte - not to Angela Butte. The
mllllllliadbu1n1, ·ttt
counsel forwarded the same letter to Angela Butte's son, Miguel Papa, who
in turn forwarded the same to her mother who received the same on 11 and ••.amrlnmm
12 December 1958. - " Ill 111,nn,
4. On 11 December 1958, Marie Garnier sent notice to BPI confirming the sale of
,....,111 ii

.I ..
her 1/6 share of the Sta. Cruz property. BPI received the letter of Marie Garnier :--1-111\1111Bm
on 15 December 1958. llalllllllllllllllt1B1QJJ1i111
1

5. BPI forwarded a copy of Marie Garnier's letter to Angela Butte's counsel who
received it on 16 December 1958.
Wna!·iiiida

·-··
6. Counsel forwarded the same letter to Angela Butte who received it on ,lllllliqp1illln!mlti!I
19 December 1958.
7. On 15 January 1959, Angela Butte exercised the right of redemption by ....,,, .... i imntl
tendering a manager's check for PhP500,000.00 to Manuel Uy & Sons, Inc. iiiiitllllii!WiiaBililln1
Given the relevant dates, the lower court ruled that assuming Angela Butte had 1•,11 •"n!!lj
the right of redemption, she failed to exercise the same in a timely manner; i.e.,
I.iii)! Qlanl1s
within 30 days from notice of sale.
liiiiiiilffliidl&
Two written notices of sale were respectively sent by Manuel Uy & Sons, Inc. and
~
Marie Garnier to BPI. Note that in Article 1623 of the Civil Code, "the right of legal
il1lllllffl
pre-emption or redemption shall not be exercised except within thirty days from the lll~ii1111
notice in writing by the prospective vendor, or by the vendor, as the case may be." miillllllffi
Clearly, Marie Garnier should have sent the written notice of sale directly to the co-
owners of the Sta. Cruz property, Angela Butte included. This she did not do. Instead, ._,am
she sent the written notice of sale to BPI, as judicial administrator of the Estate of I ~ !llllll!ln1 'IJ
Jose V. Ramirez. 1iin1111111aH11111iaill!m
iUlllm!E .RiiJillllfilii& 11
The written notice of sale that was prepared by Manuel Uy & Sons, Inc. and sent
1ii1111S1amitnmlffltt llln
to BPI was irrelevant and without any legal significance. This is because Manuel Uy &
1iilllllli!:i11ie!SII! tUIIJllll8t'°
Sons, Inc. was not the "vendor"; it was the vendee. The requirement of Article 1623
of the Civil Code is crystal clear on this point.
Given all of the foregoing, it would be an error to count the 30-day redemption a· l l m1 M1aallffl!'•·iff
11ffltlte,,IJlllllillllfftlf
period from 10 December 1958 {when counsel of Angela Butte received a copy of the 61
1Am11111illllli.Ull'J
written notice of sale sent by Manuel Uy & Sons, Inc.) or from 15 December 1958 {when

6
 ART. 774

Stmlnrns, ! 1 c.. h e r Angela Butte actually received the same) because Manuel Uy & Sons, Inc. (the vendee)
jjj• l11ll1lillllt se'1d prior was not the person required by law to send such notice.
Vl'. r,mu,pe ~ ,', W h0 The relevant notice of sale was that notice which originated from Marie Garnier
W/IM!tilCE 1088 and which BPI received on 15 December 1958. While BPI forwarded the same notice
to Angela Butte's counsel on 16 December 1958, counsel's receipt of the said notice
mttUlim ,Olf sa Ie to was irrelevant unless it was proved that counsel was specifically authorized by Angela
Butte to receive such notice for the purpose of enabling her to exercise the right of
redemption. The written notice of Marie Garnier actually reached Angela Butte only
rnlllim d !\~2:nuel
on 19 December 1958. If this written notice could be construed as sufficient
plllii lllitte. The
notification to possible redemptioners (given that the written notice was addressed
IJllllEII! 11111:.!!p 2: . w ho
,iiilllfflllle ,or ~ 1 and
to BPI and not to the co-owners of the Sta. Cruz property), then Angela Butte's 30-
day redemption period would expired on 18 January 1959.
Angela Butte exercised her right of redemption by tendering the redemption
llffl11Ul1fflll il:l'nie s.a Ie of
price to Manuel Uy & Sons, Inc. on 15 January 1959. Clearly, the redemption period
lllff!iM.illri>e Garnier
had not expired; Angela Butte exercised the right of redemption in a timely manner.

(b) Transmission of Rights

The inheritance of a person includes the rights that pertain to him which are not
extinguished by his death. However, not all rights are transmissible.
Rights that are personal in nature, not in the contractual sense but in the proper
~ction by sense, are intransmissible. They are extinguished by the death of the person. These
11 & Sons. Inc. intransmissible rights include, among others:

!119Ella Butte had (i) the right to hold public office;

~111\W m.a1,er; i.e., (ii) rights arising from certain relationships such as the rights of a usufructuary;2 and
(iii) rights arising from civil personality and family relations, such as marital rights,
,~ Sais l1c. and right to receive support, parental authority, right to file action for legal
/i!J~ 11"11(}1'1, of legal separation or declaration of nullity or annulment of marriage, and the right to
'..\W *rs j"rom the file an action to claim legitimacy, or otherwise to assert the status of legitimacy
11!' ,CllllSE ~ay be." or illegitimacy.
the co-
l!"!lfdti'lyi : :
de. Instead,
·'1110rtit Rights and obligations arising from a contract are generally transmissible except
ai th€ Estate of where such rights and obligations are purely personal, or by their very nature are
intransmissible, or where such transmission is prohibited by law or by stipulation of
3
the parties thereto. Thus, upon the death of the buyer of a parcel of land on
1rnl5i,.. l1ll'IIC. arid sent
installment basis, his rights and obligations under the relevant contract to sell and his
u• 1M.anuel Uy & interest over the property subject matter thereof are transferred to his heirs.
1t ~ A...-: cle 1623

2
1,.,dr.ll1w -ecemption In Article 603{a) of the Civil Code, the rights of a usufructuary are extinguished by the death of
the usufructuary unless a contrary intention appears.
1ieid a c::,-:Jy of the 3
Article 1311, Civil Code.
~11ttDJeor 19:i8 (when

,.........,..,,
-
i!imll

ART. 774

NATIONAL HOUSING AUTHORITY v. ALMEIDA :.Ill

G.R. No. 162784, 22 June 2007 iimmnnrml
525 SCRA 383 iai,m,
....m
Puna, CJ. (First Division):
ltl

On 28 June 1959 the Land Tenure Administration awarded to Margarita Herrera

several portions of land which are part of the Tunasan Estate in San Pedro, Laguna.
Margarita had two children: Beatriz Herrera-Mercado (the mother of private IIDllillllltlii

respondent) and Francisca Herrera. Beatriz predeceased her mother and left heirs. 11111,,

Margarita passed away on 27 October 1971.

On 22 August 1974, Francisca executed a Deed of Self-Adjudication claiming that . . . . . . . . .11

she is the only remaining relative, exclusive legal heir, and sole surviving daughter of ~ I

Margarita. The Deed of Self-Adjudication was based on a Sinumpaang Salsaysay dated Ri114,1Wml&11m
7 October 1960, allegedly executed by Margarita. The pertinent portions of which are 1111a' III
as follows: lllltaallllmn
S/NUMPAANG SALA YSA Y Gnni m.
....allMA.iiiillfffftllhi
Akong si MARGARITA HERRERA, Filipino, may 83 taong gulang, bolo, .~II
kasalukuyang naninirahan at tumatanggap ng sulat so Nayon ng San
lianliiillmimi '
Vicente, San Pedro, Laguna, sa ilalim ng panunumpa ay malaya at kusang .limmmlll'ii
loob kong isinasaysay at pinagtitibay itong mga sumusunod:
l!llim111
1. Na ako ay may tinatangkilik no isang lagay no lupang tirikan (SOLAR}, tilh!'· lhiinmi, ii
tumatayo sa Nayon ng San Vicente, San Pedro, Laguna, mayroong pitong daan llilllllJflli1''w1I
at pitumpu't isang (771) metro parisukat ang laki, humigit kumulang, at iiillllllildBllll ltlnn
makikilala sa tawag na Late 17, Bloke 55, at pag-aari ng Land Tenure dllllllllt lll!iii;anmm
Administration; lma/lP'ttffi
2. Na ang nasabing late ay aking binibi/e, sa pamamagitan ng aaftD!!am
paghuhulog so Land Tenure Administration, at noong ika-30 ng Julio 1959, ang lillaiiallnnnt '
Kasunduang sa Pagbibile (Agreement to Sell No. 3787} ay ginawa at fllllllllldllBtE•
pinagtibay so Lungsod ng Maynila, sa harap ng Notario Publico no si G. Jose C. --illlmnlmttt
Tolosa, at lumalabas sa kaniyang Libra Notarial bilang Documento No. 13, ID1all!'/,\II:, ilUI
Pagina No. 4, Libra No. IV, Serie ng 1959; lbill!!1111311111m·,
3. Na dahilan so ako'y matanda na at walang ano mang hanapbuhay, '1llffllne•liffl11
ako ay nakatira at pinagsisilbihan nang aking anak no si Francisca Herrera, . . . .illl1IIRUll '.1
at ang tinitirikan o solar na nasasabi sa unahan ay binayaran ng kaniyang iad 'farmmii!B!I
sariling cuarta sa Land Tenure Administration; mnmin m11111

4. Na along-along so nasasaysay so unahan nito, sakaling ako'y bawian llfnmmd!!!n' .

na ng Dias ng aking buhay, ang lupang nasasabi sa unahan ay aking "'SittllllllllfflP
ipinagkakaloob sa nasabi kong anak no Francisca Herrera, Filipino, nasa d!nnmll111·itltmm
katamtamang gulang, kasal kay Macario Berroya, kasalukuyang naninirahan !idlmmlttillllfflmll
at tumatanggap ng sulat sa Nayon ng San Vicente, San Pedro, Laguna, a sa 1lh!!··illltllmml11Bllill
kaniyang mga tagapagmana at; 1P
5. Na hinihiling ko so sino man kinauukulan no sakaling ako nga ay aualJ1llrll
bawian ng aking buhay ay kilalanin, igalang at pagtibayin ang nilalaman so iflll«llllJl1ll
pangalan ng aking anak no si Francisca Herrera ang loteng nasabi so unahan. t1'ramtttttt

8
 ART. 774

Sa katunayan ng Jahat, aka ay nag-didiit ng hinlalaki ng kanan kong

kamay sa ibaba nito at sa kaliwang gilid ng unang dahon, dito sa Lungsod ng
Maynila, ngayon ika 7 ng Octubre 1960."
The said document was signed by two witnesses and notarized. Margarita placed
her thumb mark above her name in the second page and at the left-hand margin of
the first page of the document.
l'iil!lllllltii r-i,e-re•a
~11rltnrnm, L.a,E ,.; :1 a. The surviving heirs of Beatriz filed a case for annulment of the Deed of Self-
Adjudication before the then Court of First Instance of Laguna which declared the
111mi llleft: ~e rs. deed null and void.
During trial on the merits of the case assailing the Deed of Self-Adjudication,
1mll m1111111ll ing :hat Francisca filed an application with the NHA to purchase the same lots, submitting
111;,~1e" ::: ' therewith a copy of the "Sinumpaang Salaysay" executed by her mother. Private
·//!IBIJIDIWD!W c:a:ea respondent Almeida, as heir of Beatriz, protested the application.
;, 1:lllff ·IIWillln111::, ;:; re The NHA granted the application made by Francisca, holding that the protestee
has a better preferential right to purchase the lots in question.
On 1 February 1987, Francisca died. Her heirs executed an extra judicial
settlement of her estate which they submitted to the NHA. Said transfer of rights was
1m111, m:1c approved by the NHA. The NHA executed several deeds of sale in favor of the heirs of
,Mllg/' 5,c-
Francisca and titles were issued in their favor. Thereafter, the heirs of Francisca
llt' ;/l{/l,l5C "'. ;;;
directed Segunda Mercado-Almeida to leave the premises that she was occupying.
Private respondent Segunda sought cancellation of the titles issued in favor of
' 1::§0/iA;:/ the heirs of Francisca. She filed a Complaint for "Nullification of Government Lot's
minmgr dr:;)C ~
Award" with the Regional Trial Court of San Pedro, Laguna. In her complaint, Segunda
1w1/1ll/1/llllg. :r: invoked her forty-year occupation of the disputed properties, and re-raised the fact
IU: 1/ffilU":; that Francisca's declaration of self-adjudication has been adjudged as a nullity
because the other heirs were disregarded. The defendant heirs of Francisca alleged
f!PlliQ1ll111111 r:; that the complaint was barred by laches and that the decision of the Office of the
1:.9!5!!, ,a:::,,; President was already final and executory. They also contended that the transfer of
11m11Jllllll!lllll c: purchase of the subject lots is perfectly valid as the same was supported by a
1i:i, Jj/ci5,e : consideration and that Francisca paid for the property with the use of her own
, illim, :3. money. Further, they argued that Segunda's occupation of the property was by mere
tolerance and that they had been paying taxes thereon.
illll/Plli!lroJalil.C',. The Regional Trial Court rendered a decision setting aside the resolution of the
I' I~:'",:;. NHA and the decision of the Office of the President awarding the subject lots in favor
1H«IJl/l/'lJI/IJ#lf]c; of Francisca. It declared the deeds of sale executed by the NHA in favor of Herrera's
heirs null and void. The Register of Deeds of Laguna was ordered to cancel the
~· ,bmmiJ/1/1•1.a- Transfer Certificate of Title issued. The Regional Trial Court ruled that the
l.'lIIIV 1SJ"·;
"Sinumpaang Salaysay'' \/\/,as not an assignment of rights but a disposition of property
11/m!lll:, r::1c:s.:: which shall take effect upon death. It then held that the said document must first be
·1m111im11ir::;iti,::;;r submitted to probate before it can transfer property. The Court of Appeals affirmed
'/111/JIIJJa, :; SC the decision of the Regional Trial Court.
There is no dispute that the right to repurchase the subject lots was
1::l l'llltgJC C , awarded to Margarita Herrera in 1959. There is also no dispute that Margarita
1:!llil/l/'l'TIV SC executed a "Sinumpaang Salaysay" on October 7, 1960. Defendant NHA claims
,.iJl~ICl//"IQ- that the "Sinumpaang Salaysay" is, in effect, a waiver or transfer of rights and

9
 .
)illii/1111
,,

,I11
II
ART. 774

interest over the subject lots in favor of Francisca Herrera. This Court is 1am
disposed to believe otherwise. After a perusal of the "Sinumpaang Salaysay" of
Margarita Herrera, it can be ascertained from its wordings taken in their ,llllfllflttltllnEnpm
ordinary and grammatical sense that the document is a simple disposition of lllllauU!lli!ln!mll
her estate to take effect after her death. Clearly, the Court finds that the ·1lla!•1utt111cr
"Sinumpaang Salaysay" is a will of Margarita Herrera. Evidently, if the naru•illlllllttl1t
intention of Margarita Herrera was to merely assign her right over the lots to ,lllllllllalrr1ltlnum1111!
her daughter Francisca Herrera, she should have given her "Sinumpaang illllfllllllr ,aJIII 11111!

Salaysay" to the defendant NHA or to Francisca Herrera for submission to the a8illmlimlllll\W 1

defendant NHA after the full payment of the purchase price of the lots or even \llllr!•1nmu
prior thereto but she did not. Hence it is apparent that she intended the lllllllltGIIIBmml
"Sinumpaang Salaysay" to be her last will and not an assignment of rights as llllldlllll 1ttffllnaal
what the NHA in its resolution would want to make it appear. The intention of . . .liiiimll
Margarita Herrera was shared no less by Francisca Herrera who after the iiillllldlllllllll
farmer's demise executed on August 22, 1974 a Deed of Self-Adjudication
11111/'l'IIIIIE

·-i.:1
claiming that she is her sole and legal heir. It was only when said deed was
questioned in court by the surviving heirs of Margarita Herrera's other 6mmiiiiiila11l!
daughter, Beatriz Mercado, that Francisca Herrera filed an application to
purchase the subject lots and presented the "Sinumpaang Salaysay" stating IIIIID. . aall!D
that it is a deed of assignment of rights.
When the NHA received the "Sinumpaang Salaysay", it should have noted that
the effectivity of said document commences at the time of death of the author of the
instrument; in her words "sakaling ako'y bawian na ng Dias ng aking buhay ... "
Hence, in such period, all the interests of the person should cease to be hers and
shall be in the possession of her estate until they are transferred to her heirs by
virtue of Article 774 of the Civil Code. By considering the document, the NHA should
have noted that the original applicant has already passed away. The NHA issued its
...
I'll-.. ./JI. i(W

~
111111f!11111811111tllllllllll

resolution on 5 February 1986; Francisca died in 1971. The NHA gave due course to ,ill mni- ,d !I
Millml:.almliilllll ,1/1(\'\1
Francisca's application without considering that Margarita's death would transfer all
her property rights and obligations to the estate including whatever interest she has 111wnm111111u
or may have had over the disputed properties. To the extent of the interest that [liliJnlammmfu ,iID
Margarita had over the property, the same should go to her estate. Margarita had an l11111111!!amffflllnu
interest in the property and that interest should go to her estate upon her demise so lfii,dlll1m~u1111tU1
as to be able to properly distribute them later to her heirs - in accordance with a will . ~ 111menr .rn
or by operation of law. The death of Margarita does not extinguish her interest over ,hmruiJllmi ·llllln
the property. Margarita had an existing Contract to Sell with the NHA as the seller. mtll!l'Ji1' l1l1lilmI.i!
Upon Margarita's demise, this Contract to Sell was neither nullified nor revoked. This lllhl11.an1111,
Contract to Sell was an obligation on both parties - Margarita and NHA. Obligations mur1mm,M11
are transmissible. Margarita's obligation to pay became transmissible at the time of ~lilllillllllH11f
her death either by will or by operation of law.
,d~1."
If we sustain the position of the NHA that this document is not a will, then the .~.·llntu
interests of the decedent should transfer by virtue of an operation of law (intestacy) 1tniiiti!lllnr'!fflf!
and not by virtue of a resolution of the NHA. For as it stands, the NHA cannot make
~
another contract to sell to other parties of a property already initially paid for by the
1111111111i!!1111\n11
decedent. Such would be an act contrary to the law on succession and the law on sales
R!INit6!1Ni1!!111!1: 'tt
and obligations.
• •1111111111

10
 ART. 774

When the original buyer died, the NHA should have considered the estate of the
aecedent as the next "person" likely to stand in to fulfill the obligation to pay the rest
I 11/111' dmie1 r of the purchase price. The opposition of other heirs to the repurchase by Francisca
IDJ/Hilllti!Ol!IT :1; should have put the NHA on guard as to the award of the lots. Further the Decision in
1:1/tn« C/':le the said Civil Case No. B-1263 (questioning the Deed of Self-Adjudication) which
llii,. .ij/f C/':le rendered the deed therein null and void should have alerted the NHA that there are
1/n!!'IIE'."C other heirs to the interests and properties of Margarita who may claim the property
Wllllffll1JlllmJmr;- after a testate or intestate proceeding is concluded. The NHA therefore acted
IDJllln. /!;111,e arbitrarily in the award of the lots.
$,Blf''Dlel: We need not delve into the validity of the will. The issue is for the probate court
1111111i1W
! 1r11i- ,ill/S
* to determine. We affirm the Court of Appeals and the Regional Trial Court which
noted that it has an element of testamentary disposition where (1) it devolved and
lrflll111tll/RII' c:,f transferred property; (2) the effect of which shall transpire upon the death of the
,llll/lflJfJr llr/"l,e instrument maker.
'1/JJIIIIJJimrrdl1or
~II!!- 111111'!!5
rn:·:i; limt,.,e·
IN VIEW THEREOF, the petition of the National Housing Authority is DENIED. The
decision of the Court of Appeals in CA-G.R. No. 68370 dated August 28, 2003,
affirming the decision of the Regional Trial Court of San Pedro, Laguna in Civil Case
11JID/11llll/lll':!' : :
No. B-2780 dated March 9, 1998 is hereby AFFIRMED.

VERDAD v. COURT OF APPEALS

will!' 1'1111::11::e,::ithat G.R. No. 109972, 29 April 1996
.ai~o,.. of the 256 SCRA 593
1m11f l!:M;ir:iy ... "
1

1 IIR riiers and Vitug, J. (First Division):

, "lle!lr ~,e,rs by
The petitioner, Zosima Verdad, is the purchaser of a 248 square meter
II!' IITllllHiA should
residential lot. Private respondent Socorro Cordero vda. de Rosales seeks to exercise
ij., l:SSu ed its
a right of legal redemption over the subject property and traces her title to the late
idllwJe rou·se to
Macaria Atega, her mother-in-law, who died intestate on 8 March 1956.
11l11dl1 t:Jrains~e, all
1!1!!!11115t sre has During her lifetime, Macaria contracted two marriages: the first with Angel
111r1111if'1'1es: that Burdeos and the second, following the latter's death, with Canuto Rosales. At the
lliffllililll!ilta ,ad an time of her death, Macaria was survived by her son Ramon A. Burdeos and her
ltn!H!nr idlerise so grandchild (by her daughter Felicidad A. Burdeos) Estela Lozada of the first marriage,
mc,e 1m1,::r 3 w i11 and her children of the second marriage, namely, David Rosales, Justo Rosales,
· 1111111tJ1ere-s: over Romulo Rosales and Aurora Rosales. Socorro is the widow of David who, sometime
.ail£ t~E seller. after Macaria's death, died intestate without an issue .
11E1•w111llKec. This In an instrument dated 14 June 1982, the heirs of Ramon Burdeos, namely, his
//Ji, ... :::Jlbi11,:gi::ions
1

widow Manuela Legaspi Burdeos and children Felicidad and Ramon Jr., sold to
,mt d'ile : ~e of petitioner Zosima Verdad (their interest) in the disputed lot supposedly for the price
of PhP55,460.00. In a duly notarized deed of sale, dated 14 November 1982, it would
11W111il l ,. tr'e1 the appear, however, that the lot was sold for only PhP23,000.00. Petitioner explained
Ul!Wll 1;1rrtestacy) that the second deed was intended merely to save on capital gains tax.
, :::anmrnc: ,1ake Socorro discovered the sale on 30 March 1987. On 31 March 1987, she sought the
11m1111i: for : 1 the intervention of the Lupong Tagapayapa for the redemption of the property. She
11e ::a1il bi :r sales tendered the sum of PhP23,000.00 to Zosima. The latter refused to accept the amount
for being much less than the lot's current value of PhP80,000.00. No settlement having

11

...........
ART.774

been reached before the Lupong Tagapayapa, private respondent on 16 October 1987, .~
initiated against petitioner an action for "Legal Redemption with Preliminary Injunction" :R11111111!''
before the Regional Trial Court of Butuan City. illllllllfljUU/11
1MllllllnHBnm
On 29 June 1990, following the reception of evidence, the trial court handed
down its decision holding, in fine, that private respondents' right to redeem the .i,111

property had already lapsed. Ulllllll!illl''~

,/,l1111!111!11111
An appeal to the Court of Appeals was interposed by private respondents. The
'1Jll!ljl'l1/IIJII
appellate court, in its decision of 22 April 1993, reversed the court a quo; thus
me rt
WHEREFORE, premises considered, the judgment appealed from is d!IIElliiPliJlilidDIH!JIJ
hereby reversed, and a new one is accordingly entered declaring plaintiff- 1(i-m-n1)1.
appellant, Socorro C. Rosales, entitled to redeem the inheritance rights
tlmilllTU!l,f/'1-
(Art. 1088, NCC} or pro indiviso share (Art. 1620, NCC} of the Heirs of Ramon lm.illla,'!Hlllll
Burdeos Sr. in Lot 529, Ts-65 of the Butuan Cadastre, within the remaining ,llllli~
eleven {11} days from finality hereof, unless written notice of the sale and its 1~·-1111
terms are received in the interim, under the same terms and conditions
appearing under Exhibit "J" and after returning the purchase price of Ccj JialJ!
PhP23,000.00 within the foregoing period. A.11"1 m1m1111p
Petitioner Verd ad appealed the decision of the Court of Appeals. amm oblli1P1iWllll1111,,

The thrust of the petition is the alleged incapacity of Socorro to redeem the
ltll1'eiach ~1:11
property, she being merely the spouse of David, a son of Macaria, and not being a 1"IID!I: ex1tinnwwu1il!ll!!'i
co-heir herself in the intestate estate of Macaria. '"r'u,,11inm1P/!m
We rule that Socorro can. It is true that Socorro, a daughter-in-law (or, for that c,il' the dlea!mcllemr
matter, a mere relative by affinity) is not an intestate heir of her parents-in-law. trrllE 5a "Tile ptl1ml)lll/ll
However, Socorro's right to the property is not because she rightfully can claim ~ ,"a,~ o!lf'l!l!niu
heirship in Macaria's estate but that she is a legal heir of her husband, David, part of -·.-,,e henn
whose estate is a share in his mother's inheritance.
.:.2 (r-ie nt 1'fflililI11ll!
David incontrovertibly survived his mother's death. When Macaria died on 8 ;; pa •,r-,,erJll: mi1111
March 1956 her estate passed on to her surviving children, among them David, who ::...,e r,e i "'S WICJJIIJIIIII
thereupon became co-owner of the property. When David later died, his own estate
:.,.., e t "=~~. "'a!mliiiq
which included the undivided interest over the property inherited from Macaria,
ext·rguisheid: lttJ1
passed on to his widow Socorro and her co-heirs pursuant to the law on succession.

Art. 995. In the absence of legitimate descendants and ascendants,

and illegitimate children and their descendants, whether legitimate or
illegitimate, the surviving spouse shall inherit the entire estate, without
prejudice to the rights of brothers and sisters, nephews and nieces, should 8E)'ES j .E,.~
there be any, under article 1001.
_.:..:.zonr }
Art. 1001. Should brothers and sisters or their children survive the a greeri,,e!11111t:!
widow or widower, the latter shall be entitled to one-half of the inheritance
and the brothers and sisters, of their children to the other half
"Ar:icle 1:511!:
Socorro and herein private respondents, along with the co-heirs of David, 'Arti:re 1:J:.S,'!)
thereupon became co-owners of the property that originally descended from =Artl: es 1lt6i
Macaria. When their interest in the property was sold by the Burdeos heirs to Art: e 1311.
petitioner, a right of redemption arose in favor of private respondents; thus:

12
 ART. 774

11::llmillll!IIT" 1.S S1 . Art. 1619. Legal redemption is the right to be subrogated upon the
WI! ://ttrlJI/Jl/1/fllfcti::: ,'I'' same terms and conditions stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment, or by any other transaction
whereby ownership is transmitted by onerous title.
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.
We hold that the right of redemption was timely exercised by private
//ilmlrlffn'1S respondent. Concededly, no written notice of the sale was given by the Burdeos heirs
11Dlll1JJ1'"'1£11f;'- (vendors) to the co-owners required under Article 1623 of the Civil Code. Hence, the
illf' illllia,l:rrts thirty-day period of redemption had yet to commence when private respondent
tf~ Rosales sought to exercise the right of redemption on 31 March 1987, a day after she
!ll1TIIIUl11illllfliln,g discovered the sale from the Office of the City Treasurer of Butuan city, or when the
case was initiated on 16 October 1987 before the trial court.
11iJIIIJIIJJii1111iors
,/ll)ll'IIICI?' J.~ (c) Transmission of Obligations
4
An obligation is a juridical necessity to give, to do or not to do. The performance of
an obligation, unless excused by law or waived by the obligee, is mandatory,5 and a
6
breach thereof constitutes an actionable wrong. As a rule, the death of the obligor does
7
not extinguish his contractual obligations.
t 1110t t'"2ing a
Thus, in Article 774, succession transfers to the heirs not only the properties and rights
, (,imnr fr• tnat of the decedent, but also his obligations which are not extinguished by his death. However,
HM!!'lllts- '1-1 aW. the same provision of the law limits the liability of the heirs for the debts of the decedent to
11111//1' rrar :laim the value of the inheritance. This rule is reiterated in Article 1311 of the Code.
:DJ1a11!111iiu:. ::ia'tof The heirs inherit the obligations of the decedent. The reason is that whatever
payment from the hereditary estate is made to the creditors of the decedent is ultimately
"liml ,jie,c J n 8 a payment made by the heirs because the amount of payment diminishes the shares that
1111' IClliaN,C. \\/ho the heirs would have otherwise been entitled to receive. The Supreme Court interpreted
ms •l:I/Wlll'I"' Eo:ate the term "obligation" to include the contingent liabilities of the decedent which are not
~001!1'1 fl.'~a:aria,
extinguished by his death.
suwu::u::ession.
ESTATE OF HEMADY v. LUZON SURETY CO., INC.
:iEl!mlJJil:llrltS
No. L-8437, 28 November 1956
11117111Ull1tlie Jr
100 Phil 388
111111i!l1Tc.,:
!!S;,, Si"71!:ll•u j Reyes, J.B.L., J.:
Luzon Surety had filed a claim against the estate based on 20 different indemnity
1r.w111111e ~'le agreements or counterbonds, each subscribed by a distinct principal and by the
lfflllf!f"lfl["Q::/'",:E
4
Article 1156, Civil Code.
5
!!111rs ::l1' )avid, Article 1159, Civil Code.
6
:1c::1e!1'111dtec: from Articles 1165, 1167 and 1168, Civil Code.
7
tue.•o!S r-eirs to Article 1311, Civil Code.

13

.,.............,1
 li:I

ART. 774

deceased Hemady, a surety (solidary guarantor) in all of them, in consideration of

Luzon Surety's having guaranteed the various principals in favor of different I~
creditors. Luzon Surety prayed for allowance, as a contingent claim, of the value of 11/1111111tmll
the 20 bonds it had executed in consideration of the counterbonds. 1Hirrn111111/i
Before answer was filed and upon motion of the administratrix of Hemady's •mm1,
estate, the lower court dismissed the claims of Luzon Surety on two grounds, among -}Jfi
others, that whatever losses may occur after Hemady's death are not chargeable to
his estate, because upon his death he ceased to be guarantor. The reasoning of the
•·
1//llli,.Jlli
court below ran as follows:
111111111!" 1

... upon the death of Hemady, his liability as guarantor terminated, and iillll~!linl
therefore, in the absence of a showing that a loss or damage was suffered, the h· !llllillwllillitin
claim cannot be considered contingent. This Court believes that there is merit ,la!JiiiB,ll#l!Rtwlll
in this contention and finds support in Article 2046 of the new Civil Code. It 11wllii1llmmml!li!il~
should be noted that a new requirement has been added for a person to 1lll!lllllliiin111inm1iffa
qualify as a guarantor, that is: integrity. As correctly pointed out by the lbi1111a11111liUi1111!:
administratrix, integrity is something purely personal and is not transmissible. llh'lnlllllml
Upon the death of Hemady, his integrity was not transmitted to his estate or llllillllljpllim
successors. Whatever loss therefore, may occur after Hemady's death, are not ,IJ!JIIMiiillW,UW
chargeable to his estate because upon his death he ceased to be a guarantor. ''lfill!Mtliumi, IJ!lla
We find this reasoning untenable. Under the present Civil Code (Article 1311) as !Dlllllliill!IIJll11 ill]

well as under the Civil Code of 1889 (Article 1257), the rule is that - m!!!'J!IISlllian1 1
lllqJti&!SIUlll\m
Contracts take effect only as between the parties, their assigns and heirs,
,p!!IIIBJiiillllll,,. ,Ii
except in the case where the rights and obligations arising from the contract
llffllDHllllm::pmer
are not transmissible by their nature, or by stipulation or by provision of law.
,1ntl1QIJJffllimnmnmn
While in our successional system the responsibility of the heirs for the debts of ia:llllff'llfflmte
the decedent cannot exceed the value of the inheritance they receive from him, the
'SillUlll11l!!l'tUi
principle remains intact that these heirs succeed not only to the rights of the lll&lllilllla ii!lm
deceased but also to his obligations. Articles 774 and 776 of the new Civil Code (and cmeml!llibnr lllliW
in Articles 659 and 661 of the preceding one) expressly so provide, thereby lffllTllllmllll1lltltili
confirming Article 1311 already quoted.
~--ll,111111!
Art. 774. Succession is a mode of acquisition by virtue of which the •, ,aml!JUiplll,11
slnmnuaulhllll lilme·
property, rights and obligations to the extent of the value of the inheritance,
_,,·-·
r

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 ICllreenid -·
obligations of a person which are not extinguished by his death. ma, bi 8'l]tm
,ii\l'!C!\iellllu1:ltli111
In Mojica v. Fernandez, 9 Phil 403, this Supreme Court ruled:
~-1\lmmmm
Under the Civil Code the heirs, by virtue of the rights of succession are •Wiiifii\jlllll11if'1'll,l

subrogated to all the rights and obligations of the deceased (Article 661) and 1aml!lmlliip!IIHll'Vl
cannot be regarded as third parties with respect to a contract to which the -.,11111n1111
deceased was a party, touching the estate of the deceased. (Barrios v. Dolor, ·IIIMlmim 6q/
2 Phil 44). l111Dl1 _ , 1 llliiillll

ilml.w'~i,,,illll

14
 ART. 774

The principle on which these decisions rest is not affected by the

,llll1i: !Cliimf~e-en~ provisions of the new Code of Civil Procedure, and, in accordance with that
~ 11t1afl..;: of principle, the heirs of a deceased person cannot be held to be 'third persons'
in relation to any contract touching the real estate of their decedent which
,imfft ,llitlllenffl,m.acy's comes into their hands by right of inheritance; they take such property
IUIJmmil!si,. ilJllll"llOrg subject to all the obligations resting thereon in the hands of him from whom
t i ~ i e :J they derive their rights. {See also Galasinao v. Austria, 51 Off Gaz. [No. 6},
i!llllllfflliillll ,Cllf ,:re p. 2874 and de Guzman v. Salak, 91 Phil 265.}

The binding effect of contracts upon the heirs of the deceased party is not
rtlt!r!!«ll/j, lfJlll'lllrd altered by the provision of our Rules of Court that money debts of a deceased must
1/f!l'/ff!IJJ/J; ,tl"lie be liquidated and paid from his estate before the residue is distributed among said
r I/Bi illllllllE!"'i': heirs (Rule 89). The reason is that whatever payment is thus made from the estate is
1
1:rm* r: ultimately a payment by the heirs and distributees, since the amount of the paid
11/l?!l"DDll'i''t~ claim in fact diminishes or reduces the shares that the heirs would have been entitled
11' /JJlJIJP t/",e to receive.
,1/lfflllll!filJJiila:DJIHe. Under our law, therefore, the general rule is that a party's contractual rights and
1f!!!S111!Ilt11t ~y obligations are transmissible to the successors. The rule is a consequence of the
Ii, ,{;1JJT1(E '':C:- progressive "depersonalization" of patrimonial rights and duties that, as observed by
Victoria Polacco, has characterized the history of these institutions. From the Roman
t111a:il1e :::::.:) as 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
;;/1111111troc: specific person and by no other. The transition is marked by the disappearance of the
;mf lt/DIJI imprisonment for debt.
t:ll!me· oe:i,s of Of the three exceptions fixed by Article 1311, the nature of the obligation of the
mm h1, :he surety or guarantor does not warrant the conclusion that his peculiar individual
r111gJltmn:s : ; : he qualities are contemplated as a principal inducement for the contract. What did the
umill Code 13nd creditor Luzon Surety expect of Hemady? Nothing but the reimbursement of the
1111a, trereby moneys that Luzon Surety 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
U/tt!/il[;/ll!l tr~ an obligation to give; and to Luzon Surety, it was indifferent that the reimbursement
11e!l'llrtml/lr:IC:"
should be made by Hemady himself or by someone else in his behalf, so long as the
11!!/lffllrer" :J ,, money was paid to it.
Because under the law (Article 1311), a person who enters into a contract is
deemed to have contracted for himself and his heirs and assigns, it is unnecessary for
him to expressly stipulate to that effect; hence, his failure to do so is no sign that he
intended his bargain to terminate upon his death. Similarly, that Luzon Surety did not
require bondsman Hemady to execute a mortgage indicates nothing more than the
!l'.Si/llCJn, ::i • ::
company's faith and confidence in the financial stability of the surety, but not that his
1t£riiI1 ::r~,: obligation was strictly personal.
Wll'IIIIU:::/i!r t~:: The third exception to the transmissibility of obligations under Article 1311 exists
ur J101/,c•. 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 in the case in legal support (Article 300), parental authority (Article 327),

15

._.,, ---~------- -----

 . i
'.: iii,'
1;: i;

I
I U ;

,;'jil:i. 'j
~~ i!11l,1t111·1li

ART. 774

usufruct (Article 603), contracts for a piece of work (Article 1726), partnership (Article rmmmlt//UIII
1830), and agency (Article 1919). By contrast, the articles of the Civil Code that regulate :BHB/•·
guaranty or suretyship (Articles 2047 to 2084) contain no provision that the guaranty is ;//Plmm11
extinguished upon the death of the guarantor or the surety. l!!Rimmr,lf!
The lower court sought to infer such a limitation from Art. 2056 to the effect that IIIWllllltlla•ttttttt111
1

"one who is obliged to furnish a guarantor must present a person who possesses 1111111m•:
integrity, capacity to bind himself, and sufficient property to answer for the -.w. 11111

obligation which he guarantees." It will be noted, however, that the law requires lll!illallllim, ·
these qualities to be present only at the time of the perfection of the contract of amalllll ffflllllffi'
guaranty. It is self-evident that once the contract has become perfected and binding, !illlmullllllll11ill!li11

....
the supervening incapacity of the guarantor would not operate to exonerate him of lil!!llllllllll•rlll!flf
the eventual liability he has contracted; and if that be true of his capacity to bind !iJunE!!lllw· mnn11
himself, it should also be true of his integrity, which is a quality mentioned in the l!!lilllllllll&rd
article alongside the capacity.
The following concept is confirmed by the next Article 2057 that runs as follows: 'llllllmf ti
aqp1ilnBlr'ttlttil
Art. 2057. If the guarantor should be convicted in first instance of a
IGIIJliwlrr II
crime involving dishonesty or should become insolvent, the creditor may
demand another who has all the qualifications required in the preceding i!llrledllii,,·-
aditlJplr
article. The case is excepted where the creditor has required and stipulated
that a specified person should be guarantor.
1i11Willlll
From this article, it should be apparent that the supervening dishonesty of the $twP1DDJJE11H11111iu
guarantor (that is to say, the disappearance of his integrity after he has become IJIUlllllllllDlllllll!·d!leE
bound) does not terminate the contract but merely entitles the creditor to demand a bi: lttlllilnE lllimiinrs.,,
replacement of the guarantor. But the step remains optional in the creditor: it is his
~ ,d
right, not his duty; he may waive it if he chooses, or hold the guarantor to his
nneBllllll/llidiiilllll!llll rrmif
bargain. Hence Article 2057 of the present Civil Code is incompatible with the trial
court's stand that the requirement of integrity in the guarantor or surety makes the !ICll!lilllfflldl!!!!A!illlll p
latter's undertaking strictly personal, so linked to his individuality that the guaranty (8Wlll1'ltt 1iltmi1 IIM/illll
automatically terminates upon his death. Ill'....... !ti
The contract of suretyship entered into by Hemady in favor of Luzon Surety not *amrmfl!'
being rendered intransmissible due to the nature of the undertaking, nor by the !(~$

stipulations of the contracts themselves, nor by provision of law, his eventual liability :di-/Jmnlrlf·
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
aruei11
(2 Moran, 1952 ed., p. 437; Gaskell & Co. v. Tan Sit, 43 Phil 810, 814).

The most common example of the contingent claim is that which arises 101/ft·;pnuum
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 111$ lilne ieSll
no claim whatever against his principal until he himself pays something by ~1im,il. .Ill
way of satisfaction upon the obligation which is secured. When he does this, - - ~ ilV' .. i
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 ll 5;;!5.~.
the payment of the debt, or has performed the secured obligation in whole "· 3illll31' SDlll!)II\,
- r oart, he has no right of action against anybody - no claim that could be
1

16

J1!'JJl!lni1i, i(\A1r:i c e
tt1t'mm: miegL..::te
11!!''ilUIJiill3n':'1 is
nnP"1dliKt :, a:
1TI11l11 i111J111Dl15SeSSeS
INlll' W :re
IIIIBlilWI mieq'L.I re s
~ illlllmJ1dnC: 0 f
,,Jll1111U1IJ :11im11111111C? in g,
!l!!llfrallllll! r'l11r-
Hllllllliblr/N 1IIIO Ji1C
IillllJIHlllil :~ : 1 e
1/IITil!lr of ,;;
l/ittmm'i'l"IIC",,'
,,1'11!!lCJf'di1r-;;
tai111JJwu/iatec:
lnmi!St'yJ • : he
Miz become
m, mller1a1a a
flli!jJttnw: It i S hj S
raimlll!Y ::: his
ilWJliO t:-;e rrial
f~,jl, m.aKES the
~e ,gt..aranty
:mm Su.Jre:,, not
~.. ~117 r= 1 the
~,l'llltll.ilal', ae:, lity
:n::s;,, tt:hiere:ore,
:11111. 5 F _ e 87
111r.i/'r ,r:lll"'ises
U/' IJllll/i'rrC 5
IUlll'l!f"t'1l/f !"\;;5
1P.T:i'n11lf'IM} ::;,
,:titimuE's t:"1,s.
' ;lir:1,m,c:1 CXJ
11~rrtn11,m,g; : C
II~ ~'hcJ,e
r :::::;11"11,c: ::;e
ART. 774
reduced to judgment. (May v. Vann, 15 Pia., 553; Gibson vs. Mithell, 16 Pia.,
519; Maxey v. Carter, 10 Yarg. [Tenn.], 521; Reeves v. Pulliam, 7 Baxt,
[Tenn.], 119; Ernst v. Nau, 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; and 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, Luzon Surety, 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
Jf estate of Hemady, since Hemady is a solidary co-debtor of his principals. What Luzon
Surety 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 without prejudice to the remedies of the administratrix
against the principal debtors under Articles 2071 and 2067 of the new Civil Code.
Our conclusion is that the solidary guarantor's liability is not extinguished by his
death, and that in such event, Luzon Surety had the right to file against the estate a
contingent claim for reimbursement.
(d) Transmission to the Heirs through the Estate
Succession is a transmission of the inheritance from the decedent to the heirs
upon the death of the former. However, before the inheritance could be distributed
to the heirs, certain procedures must be completed, such as, without limitation, the
payment of outstanding debts of the decedent, the payment of estate tax, the
resolution of issues relating to collation, the final determination of ownership of
contested property, etc. During this time, the inheritance, according to the Supreme
Court in NHA v. Almeida,8 should go to the estate of the decedent. The Court said:
" ... To the extent of the interest that the original owner had over the property,
the same should go to her estate. Margarita had an interest in the property and that
interest should go to her estate upon her demise so as to be able to properly
distribute them later to her heirs - in accordance with a will or by operation of law.
When the original buyer died, the NHA should have considered the estate of the
decedent as the next "person" likely to stand in to fulfill the obligation to pay the rest
of the purchase price."
Is the estate of the decedent a juridical perso~ and thus possessed with juridical
capacity? NHA answered the question in the affirmative. So did the earlier case of
Nazareno v. Court of Appeats9 which held that:
8
525 SCRA 383 (2007).
9
343 SCRA 637 (2000).
17
- .. -

ART. 774

"The estate of a deceased person is a juridical entity that has a personality of its ,amm,11111',1

own. Though Romeo represented at one time the estate of Maximina Sr., the latter ,11111 ,mmn11
has a separate and distinct personality from the former, Hence the judgment in ,•1111//m,
CA-GR CV No, 12932 regarding the ownership of Maximina, Jr. over Lot 3-8 binds llfflii/lhml
Romeo and Eliza only, and not the estate of Maximina Sr. which also has a right to ,/1/inmnulttn
recover properties which were wrongfully disposed." 1/IJJJ!mJmm11
ftafa
Nazareno relied on the earlier case of Limjoco v. Intestate Estate of Pedro idl!mni/Jm
10 11
Fragante, which in turn relied on Billings v. State. bl ,illltlf
ill!J111111111 ..
LIMJOCO v. INTESTATE ESTATE OF PEDRO 0. FRAGANTE J)/lM/l1Bltlllllli
No. L-770, 27 April 1948 /IRDllii
80 Phil 776 al/JJJnmJ/f'
!l!E!BJWIIIN
Hilado, J.:
S/MIJJJ/J/
~l1f1//111U
On 21 May 1946, the Public Service Commission granted a certificate of public
,1D111/Jllh11m1
convenience to the Intestate Estate of the Deceased Pedro 0. Fragante to operate
and maintain an ice plant pursuant to an application filed by the deceased in his *,i!JI
dma:::m
lifetime. The petitioner (oppositor to the application of Fragante) contends that it
Zl11Jl1Jmm11111
was error on the part of the Commission to allow the substitution of the legal
1~/11/
representative of the estate of Pedro 0. Fragante for the latter as party applicant in
1llllrJ1i/Ellllla
the case then pending before the Commission, and in subsequently granting to the
MlrDl»llfllil11llj
said estate the certificate applied for.
Jdliirol
An important question raised by the petitioner is whether the estate of Pedro 0. i~
Fragante is a "person" within the meaning of the Public Service Act. ~ 71111

Words and Phrases, First Series (Vol. 6, p. 5325), states the following doctrine in
Irr, titlnie·
the jurisdiction of the State of Indiana:
::ie,::ro 01. ·~
As the estate of a decedent is in law regarded as a person, a forgery 1 O Dtlinuenr 1
committed after the death of the man whose name purports to be signed to a rr, DIIJ-im:t:1111111~
the instrument may be prosecuted as with the intent to defraud the estate. a no 0111mum
Billings v. State, 107 Ind., 54, 55, 6 N.E. 914, 7 N.E. 763, 57 Am. Rep. 77. dL.·~ -;g !tlill!c
Ju r isd ,ic::m::i,rr
The Supreme Court of Indiana in the decision cited above had before it a case of
is a 5-0 c:011m
forgery committed after the death of one Morgan for the purpose of defrauding his
mos! rieicem
estate. The objection was urged that the information did not aver that the forgery
1:2 717. w
was committed with the intent to defraud any person. The Court, per Elliott, J.,
anc t+i 1is 1(.c
disposed of this objection as follows:
these i=i•IDl11"l
This intention (contention) cannot prevail. The estate of a decedent is a defe '"l'dalfl11t
person in legal contemplation. The word "person", says Mr. Abbott, "in its PhP245.l/l/Ql
legal signification, is a generic term, and includes artificial as well as natural
~ 1,:::ue1r
persons. It is said in another work that "persons are of two kinds: natural
Proce-::•i.iJl11ie .
the C:}~IIITIU~
10
80 Phil 776 (1948). Code :tr.iilllt
11
107 Ind., 54, 6 N.E. 914, 7 N.E. 763, 57 Am. Rep. 77. mere ~31Cl'.
Howe,'€'" i

18
 ART. 774

i(JJ]llffllll/l/Hll!il c; 'ts and artificial. A natural person is a human being. Artificial persons include (1)
/•,::::"'."er
n/1' .., ~ - a collection or succession of natural persons forming a corporation; (2) a
,//~.~~ ir collection of property to which the law attributes the capacity of having
d 31 t .,ds rights and duties. The latter class of artificial persons is recognized only to a
1'1/'9"'~ ~Q
IJlll/Jll ,/J/1 limited extent in our laws. Examples are the estate of a bankrupt or
deceased person." Our own cases inferentially recognize the correctness of
the definition given by the authors from whom we have quoted, for they
declare that it is sufficient, in pleading a claim against a decedent's estate,
to designate the defendant as the estate of the deceased person, naming
him. Unless we accept this definition as correct, there would be a failure of
justice in cases where, as here, the forgery committed after the death of the
person whose name is forged and this is a result to be avoided if it can be
done consistent with principle. We perceive no difficulty in avoiding such a
result; for, to our mind, it seems reasonable that the estate of a decedent
should be regarded as an artificial person. It is the creation of law for the
purpose of enabling a disposition of the assets to be properly made, and,
:;;mtl!E c:Jlf ;: ..,;blic
although natural persons as heirs, devisees or creditors, have an interest in
II!!' tJJlll CDCDEr3te
the property, the artificial creature is a distinct legal entity. The interest
m!ll!lli!l!!!li!!'C I" 'l iS
which natural persons have in it is not complete until there has been a due
nttll!!l1Mi5 :r 3t it
administration; and one who forges the name of the decedent to an
10Jrif t:l'T,e iE:gal
instrument purporting to be a promissory note must be regarded as having
~. .~wca r t in
intended to defraud the estate of the decedent and not the natural persons
:ru11111t1ltl'Tiig :o the
having diverse interests in it, since he cannot be presumed to have known
who those persons were, or what was the nature of their respective
ti!! 1:JJtlf P.e:·o 0. interests. The fraudulent intent is against the artificial person, - the estate -
and not the natural persons who have direct interest in it.

In the instant case there would also be a failure of justice unless the estate of
Pedro 0. Fragante is considered a "person", for the quashing of the proceedings for
r;z; ~ ~1 no other reason than his death would entail prejudicial results to his investment
'3/1/lg/ll'llff!'r.t ~ .:1 amounting to PhP35,000.00 as found by the Commission, not counting the expenses
111!?'· esr:c::e and disbursements which the proceeding can be presumed to have occasioned him
during his lifetime, let alone those defrayed by the estate thereafter. In this
jurisdiction there are ample precedents to show that the estate of a deceased person
11·11: 11!: ii :3 se of
is also considered as having legal personality independent of the heirs. Among the
111".!~r~'liS
most recent cases may be mentioned is that of Estate of Mota v. Concepcion, 56 Phil
111t mie ;:·6ery
712, 717, wherein the principal plaintiff was the estate of the deceased Lazaro Mota,
r,ineir IE:1'1' :::t. J.,
and this Court rendered judgment in favor of said estate along with other plaintiffs in
these words: '... the judgment appealed from must be affirmed so far as it holds that
mi:iter<rt ,s ::: defendants Concepcion and Whitaker are indebted to the plaintiffs in th.e amount of
11
·~s
11t"t1t ·' i1fl"T, PhP245,804.69 ... '
ms ,"!IIQ/1t!:..: ':J
Under the regime of the Civil Code and before the enactment of the Code of Civil
,;:· ,,"!lf!rt:J ''.J
Procedure, the heirs of a deceased person were considered in contemplation of law as
the continuation of his personality by virtue of the provision of Article 661 of the first
Code that the heirs succeed to all the rights and obligations of the decedent by the
mere fact of his death. It was so held by this Court in Barrios v. Dolor, 2 Phil 44, 46.
However, after the enactment of the Code of Civil Procedure, Article 661 of the Civil

19

.........,..,,
.
 iili.
i,Willl

ART. 774

Code was abrogated, as held in Suiliong & Co. v. Chio-Taysan, 12 Phil 13, 22. In that
case, as well as in many others decided by this Court after the innovations introduced
by the Code of Civil Procedure in the matter of estates of deceased persons, it has been
the constant doctrine that it is the estate or the mass of property, rights and assets left
by the decedent, instead of the heirs directly, that becomes vested and charged with
his rights and obligations which survive after his demise.
The heirs were formerly considered as the continuation of the decedent's
personality simply by legal fiction, for they might not be even of his flesh and blood -
the reason was one in the nature of a legal exigency derived from the principle that
the heirs succeeded to the rights and obligations of the decedent. Under the present
legal system, such rights and obligations as survive after death have to be exercised
and fulfilled only by the estate of the deceased. And if the same legal fiction were not
indulged, there would be no juridical basis for the estate, represented by the
executor or administrator, to exercise those rights and to fulfill those obligations of
the deceased. The reason and purpose for indulging the fiction is identical and the
same in both cases. This is why according to the Supreme Court of Indiana in Billings ,.lllttl
v. State, supra, among the artificial persons recognized by law figures "a collection of 1llflld/l IDlfltantt
property to which the law attributes the capacity of having rights and duties," as for :&DJlillllllfleu
instance the estate of a bankrupt or deceased person. ,mllmnll mlal /JJJJil
Within the philosophy of the present legal system, the underlying reason for the ,i'lllwllllllBimmt
legal fiction by which, for certain purposes, the estate of a deceased person is considered !IE,.·1111il1
a "person" is the avoidance of injustice or prejudice resulting from the impossibility of
exercising such legal rights and fulfilling such legal obligations of the decedent as survived 11111aia!!
. . . . . lttl!i
-1.
after his death unless the fiction is indulged. Substantially the same reason is assigned to
,. . . . . !l!l!ima
support the same rule in the jurisdiction of the State of Indiana, as announced in Billings
v. State, supra, when the Supreme Court of said State said: 1-..a•111111bm
iill;~,,UIJ'ffl!l
It seems reasonable that the estate of a decedent should be regarded as an jilljllllllliille l1!IBllllllllt
artificial person. It is the creation of law for the purpose of enabling a disposition of
am!lll11 IIIIIPlll ami
the assets to be properly made ... ,__.,(jim

The Limjoco, Billings and NHA Rulings Discussed lllliii~

lllhll11K111111J111111
We learn the following from Limjoco:
ltllillllllmliilDitm*II
First, the Indiana Court recognized two types of persons: the natural and the
artificial. As regards the artificial person, it recognized two sub-classes: (a) a collection pi!DD)IUiirls -
jliil!iillW1 -1ilIIII
1

or succession of natural persons forming a corporation; and (b) a collection of

property to which the law attributes the capacity of having rights and duties. The
~\lmf *'
SIIIIICl1 llilllll!iiB, 'Jlff
Indiana Court stressed that the latter class of artificial persons (i.e., the collection of
aiillllnultt n ,a
property) is recognized only to a limited extent, citing the estate of a bankrupt or
deceased person as examples.
,llnnlJliim:1111!·41
Second, in Billings, the Indiana Court argued that unless the estate of Morgan was
considered a juridical entity, there would be a failure of justice. Because the forgery ' "'llhn!!>,
was committed after Morgan's death, no one can be prosecuted for the crime as ,i!/lJ// lmlrn!!ill'
,li1f' ///J11iw11i;; It!
there would be no person who was defrauded by such forgery.
11•::,//SW/l"IK

20

lt U. In :1--at
lllli llllfflllr!IIOICIL.CeC
IBi,,,.1iltt lllniil5 :J-eer
mmm1:~left
11:1111111B11ilj//Bi!iic! """".r
~·-~ts
11,a11111w!'~m:i,cxl-
l]lll'lilmmifflD]l1e :h:
II" ·11f!w ~ E : 1 :
1ttnll!!' 1eer:: sed
IIIID!lllll 1\lle"e
:1111111l!!!iml b-, : he
ni!nlllli-io•" S c,f
1nn11all illl'"l•C : he
n• •i1111 Bi' irgs
1: i::nmrllllllel::t1,o r, of
IMUl1!li11es.. " as "or
·::,r the
l!!!illlffillI:II!"
I H$"Cc:DlliSICered
ITI1!11Jl!Cli$5ilibi Irty of
:rl'lll: ,iif5 s... ~.-ived
1r!li .ausiSlg"'1·ed to
11i::1!fli!ll 11r1 :Yl.ings
y1rJ1J/l'lrJile>c :: s an
1allil!li/l,mCS1: •. 0 ,'I
111att111.111ra
,;; l,cil11 a c:)llection
a, col e:tion of
d.J:ies. The
illffllS
mie oo,,,ection of
it a ba'l«rupt or
~ ilif' 11.1,:i~gan was
,!IILll!Ste t'"'e forgery
fcr:Jnr tr€ ::rime as
ART. 774
Third, Billings neither held nor suggested that the estate of a deceased person is a
juridical entity for all purposes. In this case the Indiana Court specifically stated that
the grant of juridical capacity to the estate of Morgan was for the limited purpose of
prosecuting the forger in order to avert a failure of justice.
Fourth, relying on Billings, the Supreme Court in Limjoco considered the Estate of
Fragante as a juridical entity. The Court argued that:
"[t}here would also be a failure of justice unless the estate of Pedro 0. Fragante is
considered a 'person', for the quashing of the proceedings for no other reason than his
death would entail prejudicial results to his investment amounting to PhP35,000.00 as
found by the commission, not counting the expenses and disbursements which the
r :J: proceeding can be presumed to have occasioned him during his lifetime, let alone those
defrayed by the estate thereafter."
In conclusion, Limjoco held that:
"Within the philosophy of the present legal system, the underlying reason for the
legal fiction by which, for certain purposes, the estate of a deceased person is
considered a "person" is the avoidance of injustice or prejudice resulting from the
impossibility of exercising such legal rights and fulfilling such legal obligations of the
decedent as survived after his death unless the fiction is indulged."
Is the rationale in Limjoco applicable to NHA v. Almeida? This writer does not
believe so. In NHA, the obligation of Margarita to make good her contractual
obligation to NHA was indeed fulfilled not by her estate, but personally by her
daughter Francisca. At no time was NHA exposed to the risk of loss following the
death of Margarita. Neither was the estate of Margarita exposed to the risk of losing
its rights under the contract to sell. At no time was there a risk of a miscarriage of
justice resulting from the impossibility of exercising such legal rights and fulfilling
Of
such legal obligations of Margarita that survived her death. It would seem that the
Supreme Court adopted the ruling in Fragante without regard to the compelling
circumstances that necessitated the grant of juridical capacity to the subject estate.
In contrast, Article 777 categorically states that the rights to succession are
transmitted from the moment of the death of the decedent. In turn, Article 776
a1d the
provides that the inheritance includes all the property, rights and obligations of a
person which are not extinguished by his death. Therefore, from the moment of the
death of the deceased person, his inheritance is transmitted to his heirs, even though
such heirs may not have been identified yet. At no point in time is the inheritance
without an owner; at no point in time is the estate, whether as a juridical entity or
otherwise, the owner of the inheritance or any part thereof.
Article 44 of the Civil Code enumerates the juridical persons:
''The following are juridical persons: (i) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created
by law; their personality begins as soon as they have been constituted according to
law; (3) Corporations, partnerships and associations for private interest or purpose to
21
...._,.... ,
 J1'fiHI
u;;,Htlill
:~-----~~-~----~---

ART. 774

which the law grants a juridical personality separate and distinct from that of each . .1
1 ,amltf1 ·tttt1
shareholder, partner or member." l. . .,iii.1111!

Nowhere in Article 44 does the law confer juridical capacity on the estate of a armtt
deceased person. Under this provision of law, the estate of a deceased person is not
a juridical entity.
Neither did Billings nor Limjoco establish a general rule; they created an
exception. To be precise, Billings holds that the latter class of artificial persons is
il/111
recognized as a juridical entity only to a limited extent and for a specific purpose.
NHA expanded the application of Billings when it ruled that "to the extent of the
interest that the original owner had over the property, the same should go to her
estate/' and more specifically in holding that "when the original buyer died, the NHA
should have considered the estate of the decedent as the next 'person' likely to stand
c=
in to fulfill the obligation to pay the rest of the purchase price."
,,..,
3. The Object of Succession is the Inheritance
The object of succession is the inheritance of the decedent. The inheritance of
.{-t0

Cii111
;,</-"I IE
the decedent includes his properties and transmissible rights and obligations.

(a) Future Property vs. Future Inheritance

Future property is anything which a person does not own at present but which
the person may acquire or proposes to acquire in the future. Future property may be
12
the object of a contract. In Article 793, it may be disposed by the testator in his will.
...
11!111ffG
J

,ISIIIDlliii110
1tll/&lll
"Art. 793. Property acquired after the making of a will shall only pass thereby, Jllllglmll
as if the testator had possessed it at the time of making the will, should it expressly
appear by the will that such was his intention."
l
13
On the other hand, future inheritance may not be the object of a contract. Mrmntt
JlllllllWIIIII
(b} Contracts Involving Future Inheritance
Future inheritance is defined as the contingent universality or complex of property,
.,,.
iPJllllllll

rights and obligations that are passed to the heirs upon the death of the grantor. llllmei 11 1

111balJllllllllllll
BLAS v. SANTOS ,nna:lamnm
No. L-14070, 29 March 1961 ,1H1ii1Enllle,,::
1 SCRA 899 •'MNIIIIIIIID!Mllln
Labrador, J.:
.11111111,ittll
Simeon Blas contracted a first marriage with Marta Cruz. They had three children,
only one of whom, Eulalia, left children, namely: Maria, one of the plaintiffs, Marta,
lfflnuld
12

13
Article 1461, Civil Code.
Article 1347, Civil Code.
,.,.
,ifl//E!llll

,IIIIJ1IIIBIIIID

22
 ART. 774

one of the defendants, and Lazaro. Lazaro died in 1953 and is survived by three
legitimate children who are plaintiffs herein, namely, Manuel, Leoncio and Loida.
Marta died in 1898, and the following year, Simeon contracted a second
l\tle esta~e of a
marriage with Maxima Santos. At the time of this second marriage, no liquidation of
d !Pfll"SOn :s not
the properties acquired by Simeon and Marta was made.

!l!!!t aeated an Marta Cruz Simeon Blas Maxima Santos

i1a::ma11 1pe--so,ns is
lJJHlilm:: purpose.
If' ,mr,rt ::Jf the
lmmli/111 ,go to her
'Ir ill/fa( t'i e "J HA
( //Iii/Im~ tc s-::and
Loida

Only over a week before his death on 9 January 1937, Simeon executed a last will
!i 1nm1me..-,tance of and testament. In the said testament Simeon makes the following declarations:
~1mnrs.

2. Sa panahon ng aking pangalawang awawa, MAXIMA SANTOS DE

BLAS, ay nagkaroon aka at nakatipon ng mga kayamanan {bienes} at
~siel!'lllt out which
pag-aari (propiedades} no ang lahat ng lupa, pa/aisdaan at iba pang pag-
n~maybe aari ay umabot so ha/agang ANIM NA RAAN P/TONG PU'T WALONG DAAN
~ - his will. L/BO WALONG DAAN AT WALONG PUNG PISO (PhP678,880.00} sang-ayon sa
iJlll!IID ttie re by, mga ha/ago so ami/larimento (valor amillarado}.
111/: 111t o.pressly II
1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang
lahat ng aking o aming pag-kakautang no mag-asawa, kung mayroon man,
yayamang ang lahat ng ito ay kita so Joob ng matrimonio (bienes
ganancia/es} ay bahagi ng para so aking asawa, MAXIMA SANTOS DE BLAS,
sang-ayon sa batas.
o.;: property,
!llJIIIH
~-~ntor. The reason why the testator ordered the preparation of Exhibit "A" was because
the properties that the testator had acquired during his first marriage with Marta had
not been liquidated and were not separated from those acquired during the second
marriage. The document which was marked as Exhibit "A" reads in Tagalog, and
which translated into English, reads as follows:

That I, MAXIMA SANTOS de BLAS, of legal age, married to SIMEON BLAS,

!!nnrreoie :::'- ,_:lren,
ml'llltnfllis Marta,
resident of Ma/abon, Rizal, Philippines, voluntarily state:
That I have read and know the contents of the will signed by my
husband, SIMEON BLAS, (2) and I promise on my word of honor in the
presence of my husband that I will respect and obey all and every disposition
of said will, (3) and furthermore, I promise in this document that all the
properties my husband and I will leave, the portion and share corresponding

23

--------- - - - -
 •
j
.. , .. ;.
;

ART. 774

to me when I make my will, I will give one-half (1/2) to the heirs and legatees 11111t111111!i .,m
or the beneficiaries named in the will of my husband, (4) and that I can select IIIIJam• rrr

-·
or choose any of them, to whom I will give, depending upon the respect, iNliMliiiiElli1111ie
service and treatment accorded to me. allllilllBlllq
IN WITNESS WHEREOF, I signed this document this 26th day of December
1936 at San Francisco def Monte, San Juan, Rizal, Philippines.
Sgd. MAXIMA SANTOS DE BLAS

The court below held that said Exhibit "A" has not created any right in favor of
......
11111111111111i1d

llQllllll111 IIMll1111E·
1ihe!•111111ll l l1 1111!!
plaintiffs which can serve as a basis for the complaint; that neither can it be :!lnmne,11111111:tt
considered as a valid and enforceable contract for lack of consideration and because !Mllillttt""~
it deals with future inheritance. The court also declared that Exhibit "A" is not a will l1file!!~II
because it does not comply with the requisites for the execution of a will; nor could it llllme!•'\t111
be considered as a donation. lll\!'111ft1!i•.1JjillJA
But the principal basis for the plaintiff's action in the case at bar is the document Sliiimaan ltbm
Exhibit "A". It is not disputed that this document was prepared at the instance of ,WllifflliE,lllllmiliNlu
Simeon for the reason that the conjugal properties of his first marriage had not been 111111l11!!41m!dllffl JI
liquidated; that it was prepared at the same time as the will of Simeon on 26 'iiliilllli!! ulillDJJ

December 1936, at the instance of the latter himself. It is also not disputed that the ,~lilll3illllll
document was signed by Maxima. 1B!lll&llll!t 1illf
,lllilliQlllliiiiiil!BDlll ill
Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement
1,i11aiidl•
and a contract in the nature of a compromise to avoid litigation. Defendants-
,aniii6mRD
appellees, in answer, claim that it is neither a trust agreement nor a compromise
lllllai- '1t
agreement. Considering that the properties of the first marriage of Simeon had not
!ilJDl!/lll#DIIIIIIIIDll11!!5

..,.
been liquidated when Simeon executed his will, and the further fact that such
llclliilbiiiwil!: 1
tll!lt
properties were actually included as conjugal properties acquired during the second
9maltt slime> a
marriage, we find, as contended by plaintiffs-appellants, that the preparation and
Olmmil)l111TI!
execution of Exhibit "A" was ordered by Simeon evidently to prevent his heirs by his
first marriage from contesting his will and demanding liquidation of the conjugal
amdffllille11Ptm
properties acquired during the first marriage, and an accounting of the fruits and
linl!iintlllJllll!!!S!
proceeds thereof from the time of the death of his first wife.
~llllllli1ii11tll!!
Exhibit "A" therefore, appears to be the compromise defined in Article 1809 of amdff1ft1Eir,J!Mll
the Civil Code of Spain, in force at the time of the execution of Exhibit "A", which 5iilii~IJWllll!llllllft!!
provides as follows: :iiill IHf:liNl il l D,11\'.
Compromise is a contract by which each of the parties in interest, by . .,.1111111
giving, promising, or retaining something avoids the provocation of a suit or Mir ia/111111, 11m

terminates one which has already been instituted. lltl!t1ilffu,,e1

fuia1111111D111Ji111UU
The agreement or promise that Maxima makes in Exhibit "A" is to hold one-half
of her said share in the conjugal assets in trust for the heirs and legatees of her
~IU!I' tttfttn
~.. 111111111
husband in her will, with the obligation of conveying the same to such of his heirs or
@lllllillllqAllll!:illllllue
legatees as she may choose in her last will and testament. It is to be noted that the
ti11P1'111ffhmmtr I
conjugal properties referred to are those that were actually existing at that time, 26
December 1936. Simeon died on 9 January 1937. Under Exhibit "A" therefore, lmll!Eill
Maxima contracted the obligation and promised to give one-half of the above ,mlle!!lliici1,m!laumnn
indicated properties to the heirs and legatees of Simeon. ~,illlill

24
 ART. 774

/J11!!!1p111tltt'S It is also contended that it deals with future inheritance. It is an obligation or

rammJie!iec promise made by the maker to transmit one-half of her share in the conjugal
/~. properties acquired with her husband, which properties are stated or declared to be
conjugal properties in the will of the husband. The conjugal properties were in
existence at the time of the execution of Exhibit "A" on 26 December 1936. As a
matter of fact, Maxima included these properties in her inventory of her husband's
estate. The promise does not refer to any properties that the maker would inherit
upon the death of her husband. The document refers to existing properties which
tnim: 111111111:ai,. :- of she will receive by operation of law on the death of her husband, because it is her
111!!!11' ,rca: : be share in the conjugal assets. That the kind of agreement or promise contained in
11 ,iJITIJllllt be•r:.a~se Exhibit "A" is not void under Article 1271 of the old Civil Code, has been decided by
;('"' nil£. lllllllllllt:;; ,viii the Supreme Court of Spain.
11111:. lll1ll1Dlllt IClOO I :: t The trial court held that the plaintiffs-appellants in the case at bar are concluded
by the judgment rendered in the proceedings for the settlement of the estate of
ttttn,e,rm!IOnJCu~e~,t Simeon for the reason that the properties left by him belonged to himself and his
nrre unmstt:ance Jf wife Maxima; that the project of partition in the said case, adjudicating to Maxima
;l!\iramml mllllClfl!: :-een one-half as her share in the conjugal properties, is a bar to another action on the
iiil11ffllftD]ll'I ,Jr 26 same subject matter, Maxima having become absolute owner of the said properties
nlllllllle:! tn a: : he adjudicated in her favor. As already adverted to above, these contentions would be
correct if applied to the claim of the plaintiffs-appellants that said properties were
acquired with the first wife of Simeon, Marta Cruz. But the main ground upon which
m!ilt ¥'i:€:Tent
plaintiffs base their present action is the document Exhibit "A", already fully
" 1:::Jllefer;,:J ants-
considered above. As this private document contains the express promise made by
,11. II::IIDll1ffll!,...:Jmise
Maxima to convey in her testament, upon her death, one-half of the conjugal
l11l111NllMI 1ad not
properties she would receive as her share in the conjugal properties, the action to
~re:: tha: such
enforce the said promise did not arise until and after her death when it was found
1111111 ltihe second
that she did not comply with her above-mentioned promise. (Art. 1969, old Civil
•lf!!ll)aloiti on and
Code) The argument that the failure of the plaintiffs-appellants herein to oppose the
lnima l'llle1rs by his
project of partition in the settlement of the estate of Simeon, especially that portion
rlt tll:mie conjugal
of the project which assigned to Maxima one-half of all the conjugal properties, bars
:!hue fr·~ i:s and
their present action, is therefore, devoid of merit. It may be added that plaintiffs-
appellants did not question the validity of the project of partition precisely because
tA\mltl!l]lll:lle :sog of of the promise made by Maxima in Exhibit "A"; they acquiesced in the approval of
1iil:J1i1t "'A' .vhich said project of partition because they were relying on the promise made by Maxima
in Exhibit "A", that she would transmit one-half of the conjugal properties that she
was going to receive as her share in the conjugal partnership, upon her death and in
1111rr:eres:: .::iy
her will, to the heirs and legatees of her husband, Simeon.
111¢ iJn SI.. : ~)(
It is evident that Maxima did not comply with her obligation to devise one-half of
her conjugal properties to the heirs and legatees of her husband. If she intended to
rl hucnl1d Jc;e-half
comply therewith by giving some of the heirs of Simeon the properties mentioned
1111!!~€:5 ::if her
above, the most that can be considered in her favor is to deduct the value of said
i .~ h1.:5 ... eirs or
properties from the total amount of properties which she had undertaken to convey
1111J11te-C : ... at the
upon her death.
lllt !'.!I'm.at ~.·ne, 26
'",lli"'' ".:'"erefore, WHEREFORE, the judgment appealed from is hereby reversed and the
r ~rt' ~:r-:: above defendant-appellee, administratrix of the estate of Maxima Santos, is ordered to
convey and deliver one-half of the properties adjudicated to Maxima Santos as her

i 25
,I
..._.,,
 ,i:
ART. 774 '

share in the conjugal properties in said Civil Case No. 6707, entitled "Testamentaria ,1111111t111B11J11m1
def Finado Don Simeon Blas, Maxima Santos vda. de Blas, Administradora," to the SIWmlffllllllmlN
heirs and the legatees of her husband Simeon. "ftm!,'
~llillttim
Reyes, J.B.L., J., concurring:
tllllnm1llt 611!!'
I concur in the opinion of Mr. Justice Labrador, and would only add that the «!lllllllll!!flUIJI/G

doctrine in the decision of 8 October 1915 of the Supreme Court of Spain, applied in ~11111

the main opinion, is not a mere accident nor an isolated instance, but one of a series l\llntlWJIHIIBlB1ttl\
of decisions reaffirming the legal proposition therein laid down. ru!lli~
IIIUllillllimllUIIIllt
And in a later decision of 25 April 1951, the Supreme Court of Spain once more
l/~'11111//1111/llll
insisted on the rule that a successional agreement concerning property already
i!lblh,qliil!illll~
owned by the granter at the time the contract was perfected is not banned by Article
111m,11rtr:t11111111
1271 of the Spanish Civil Code (corresponding to Article 1347 of the Civil Code of the
~id,1dha
Philippines).
lfflllitlllt
It has been contended that the doctrine thus stated confuses future inheritance
,d111m!!!ttlnran
(herencia futura) with future property (bienes futuros). This is a misapprehension. In
11i,»,a8Jt lilll1llllJ/I
construing the term "future inheritance" as the contingent universality or complex of
etll!IIClllllllllllll1111
property, rights and obligations that are passed to the heirs upon the death of the
p!lllJllllll!!l '.l!Il:Jt
granter, the rule advocated merely correlates the prohibition against contracts over
tffine,a&lll//illlffffl
"future inheritance" with the definition of "inheritance" given in Article 659 of the
JllllDJlll!lilllllf 111111111
Spanish Civil Code, which is now Article 776 of the Civil Code of the Philippines.
OICDliJltr 1111111 :I
Art. 776. The inheritance includes all the property rights and !lllnl!lii11111J1!3111!!'

obligations of a person which are not extinguished by his death. piill!"lt ,d ttt
,,.:roi:::1ii 11llnt!!!!!ll i i1
The inheritance of a person may, and usually does, include not only property
lld·,1111,
that he already owns at a given time, but also his future property, that is to say, the
P•tenm!ll"'Th it
property that he may subsequently acquire. But it may include only future property
~ 1im; i!
whenever he should dispose of the present property before he dies. And future
I!rlltlellmdiilc::ttJil~
inheritance may include only property he already owns at any given moment, if he
::,rOJIDllifl~ I
should thereafter acquire no other property until his death. In any case, the
--emiillinri •
inheritance or estate consists of the totality of assets and liabilities he holds at the
l'"l"Wies:i'. ~IIIS,
time of his demise, and not what he possesses at any other time. If the questioned
soie11111mil l l 111r1iH
contract envisages all or a fraction of that contingent mass, then it is a contract over
liei!\111115 willl
herencia futura, otherwise it is not. The statutory prohibition, in other words, is not
rannlh~· illl11111
so much concerned with the process of transfer as with the subject matter of the
1rn,2'll"11'111!I«IL
bargain. It is addressed to "future inheritance" not "future succession."
S,..J~.I
Of course, it can be said that every single item of property that a man should r,:;~!lftlll::
hold at any given instant of his life may become a part of his inheritance if he keeps it
WllUlci'l
long enough. But is that mere possibility (or even probability) sufficient to stamp
t-,a: 1t1ili11e· 11
upon a contract over an individualized item of existing property the outlaw brand of
~e t:!t1Tms 11!
"contract over future inheritance"? If it should ever be, then no agreement
:a IT¥'ilrnll; il
concerning present property can escape the legal ban. No donation inter vivas, no
::-·e·s::::1wmi 1
reversionary clause, no borrowing of money, and no alienation, not even a contract
:~e 5li.llttlls.'ti
of sale (or other contract in praesenti for that matter), with or without deferred
:re ~Err
delivery, will avoid the reproach that it concerns or affects the grantor's "future
se ec:tero:I \I

26
 ART. 774

BJIIIUl/))IIMD!Jlll 1t::: · :; inheritance." It is permissible to doubt whether the law ever contemplated the
lllJ1!lll!l,''" 1!11:: :re sweeping away of the entire contractual system so carefully regulated in the Code.
The restrictive interpretation given by the Spanish Supreme Court to the coda!
prohibition of agreements involving future inheritance is justified not only by the fact
that the prohibition limits contractual freedom (and therefore, should not be given
1111ltl!ill· 1ll6illlt t!ie extensive interpretation), but also because there is no real or substantial difference
nm,. winerl ;, between (1) an agreement whereby a person, for a valuable consideration, agrees to
I~ •1imff! <ill 5ierj,e5 bequeath some of the property he already owns, and (2) a contract whereby he
disposes of that property, subject to the condition that he will be entitled to its
usufruct until the time he dies. The court has repeatedly sanctioned even donations
m1 11lm111ll1Je mc ·e
inter vivas wherein the donor has reserved to himself the right to enjoy the donated
IH!J11lllll///' iiillre3::~·
property for the remainder of his days, and defers the actual transfer of possession
11!!1ilfl1ii11Jwi· Air::: e
to the time of his death. Whatever objection is raised against the effects of the first
H'.AnR of :~.e
kind of contracts can be made to apply to the second.
Mature reflection will show that where present (existing) property is the object
P. 11l111tiel"'lt3 ,, Ce
of the bargain, all arguments brandished against conventions over future succession
ltelllillfllll!IS,C - . In
(post mortem) are just as applicable to other contracts de praesenti with deferred
11r mmill,:'"ex of
execution, the validity of which has never been questioned. Thus the loss of the
dtealh :;• the
power to bequeath the bargained property to persons of the grantor's choice, and
~1mrttnr:,IIC"..S JVer
the awakening of the grantee's desire for the early death of the grantor (the Roman
I!!! 6:.55 ::f ':he votum mortis captandae) in order to obtain prompt control of the contracted goods,
ni;innrnres. occur in both cases. In truth, the latter ground would bar even a contract of life
insurance in favor of a stated beneficiary. It may also be noted that since the later
part of the nineteenth century, the civilists have recognized that the progress in
social relations has rendered such objections obsolete.
nnrnllil/l pro o erty But where the contract involves the universality of the estate that will be left at a
·15, tIICl ·say, the
person's death (the herencia futura as understood by the Spanish Tribunal Supremo),
ttt:.11irre property
there is another reason which I believe to be the true justification for the legal
i... ~~ f Jture
interdiction, and it is this: that if a man were to be allowed to bargain away all the
TI1l!llaer:. ;f he
property he expects to leave behind (i.e., his estate as a whole), he would practically
111111/11 case, the remain without any incentive to practice thrift and frugality, or to conserve and
i i'rn1Cldll1!:s at the
invest his earnings and property. He would then be irresistibly drawn to be a wasteful
lll!'~toned spendthrift, a social parasite, without any regard for his future, because whatever he
c:CIDll'rillr:3Ct over
leaves will belong to another by virtue of his contract. The disastrous effects upon
\11/1011"::i:S iS n O t
family and society if such agreements were to be held binding can be readily
m1ill!t'.ter o~ the imagined. Hence, the interpretation given to Article 1271 (now Art. 1347) by the
Supreme Court of Spain appears amply supported by practical reasons, and there is
,a, man sriould no ground to deny its application.
i· 111f ·'nle ~eeps it Much emphasis has been placed on the provisions of the contract Exhibit "A"
111e1M t: s:amp
that the widow, Maxima, would execute a testament in favor of the appellees. To
11t::llii11'1111i :J r3 nd of
me, this is purely secondary, since it is merely the method selected by the parties for
111:.· 311;,eement
carrying out the widow's agreement to convey to the appellees the property in
,,n11t.e.~ ,, , ,'JS, no question without her losing its enjoyment during her natural life, and does not affect
111e1!"' ,i :J ntract
the substance or the validity of the transaction. To ensure the widow's possession of
~11c11..::t :::eferred the property and the perception of its fruits while she was alive, the means logically
111··1t:1J,r s f :,iture selected was to return it by will, since such a conveyance could only be operative

27

,..........,...11
 ,.,i I"''!
; 'lh1l'i l';i''
HilfffllUi. .'

ART. 774

after death. There might be a doubt as to the validity of this arrangement if the l!l ID!m1 !
widow's promise had been purely gratuitous, because then it could be argued that 1lullll!llillllemn,..1L.
the promise involved a hybrid donation mortis causa yet irrevocable; but here the 11111fflfl lb111111111mn
obligation to return is concededly irrevocable and supported by adequate lailli11Dn1 I[
consideration duly received in advance. ,muitt1.alllll1111JD1!
Since the agreement in the instant case did not refer to the future estate of the 11111111B1B1111ll \w iiiill
widow of Blas, but only to part of her present property at the time the contract was ,illllllllllaall lltml1
made; since the promise to retransfer one-half of her conjugal share was supported lilnnmllllllPI
by adequate consideration as shown in the main decision; since the contract i«IJDhrn,.hJII
obviated protracted litigation and complicated accounting in settling the conjugal "Vllllll/P"fb ~
partnership of Blas and his first (deceased) wife; and since the testament that the 11!31111!' lbnr Ii
widow promised to make was merely the mode chosen to perform the contract and 111:-.,,r1
carry out the promised devolution of the property, being thus of secondary ,w)///a/JJJllll/lllBJ
importance, I can see no reason for declaring the entire arrangement violative of the 11111!:::il!IIIIIIIIIMHdlhem
legal interdiction of contracts over future inheritance, and disappoint the legitimate
1111111 fflll
expectation held by the heirs of the first wife during all these years.
lilWlllilljJll!d l!IJ!II
DE BELEN VDA. DE CABALU V. TABU ~· a
G.R. No. 188417, 24 September 2012 ~ l!lln\i

681 SCRA 625 l !m1 1tlln1!

ttllle p!1111111!11«
Mendoza, J. (Third Division): 11VIClllrrmi1~11

The property subject of the controversy is a 9,000 square meter lot situated in s::tiilll mw!11ili!Bl1t!1
Mariwalo, Tarlac, which was a portion of a property registered in the name of the CTIM1il111' m, l
late Faustina Maslum under Transfer Certificate of Title No. 16776 with a total area e:tK~' I
of 140, 211 square meters. 1..::nSi0lllilllMllmll11111

On 8 December 1941, Faustina died without any children. She left a holographic o,~ .:lllll!
will, dated 27 July 1939, assigning and distributing her property to her nephews and i!J::•s.lOJIIU:lllll!e !
nieces. The said holographic will, however, was not probated. One of the heirs was ~.art mrtf ID!
the father of Domingo Laxamana, Benjamin Laxamana, who died in 1960. On 5 March : :)1tW'il1rlljg <t
1975, Domingo allegedly executed a Deed of Sale of Undivided Parcel of Land r,e~1illll~
disposing of his 9,000 square meter share of the land to Laureano Cabalu. ::. ..;gwm J::9JI
On 1 August 1994, to give effect to the holographic will, the forced and 1111
legitimate heirs of Faustina executed a Deed of Extrajudicial Succession with lt&ll'IIIIIII
Partition. The said deed imparted 9,000 square meters of the land covered by
iall
TCT No. 16776 to Domingo. Thereafter, on 14 December 1995, Domingo sold 4,500
el
square meters of the 9,000 square meters to his nephew, Eleazar Tabamo. The
document was captioned Deed of Sale of a Portion of Land. On 7 May 1996, he i:!111

remaining 4,500 square meters of Domingo's share in the partition was registered ·e:J
under his name under TCT No. 281353. 11\111

·nm
On 4 August 1996, Domingo passed away.
3 1"/f
On 8 October 1996, two months after his death, Domingo purportedly executed
M
a Deed of Absolute Sale of TCT No. 281353 in favor of respondent Renato Tabu. The
resultant transfer of titled was registered as TCT No. 286484. Subsequently, Tabu and "we IIIT"
his wife, Dolores Laxamana (respondent spouses), subdivided the said lot into two :he ~TC ie!!rT
which resulted into TCT Nos. 291338 and 291339. c, ai r,e!d !!h,

28

p,!11ffl1H!ilffll ,"" t'le
,illlll!piE'C :rat
llWllli ~ere :he
w, ~,uate
~·dtre
IDillliindllma:t 1i11,·a s
~r.e::J
Dllli,
mtnie Cllllll'1'trac:
- ICl:lllll'l(J§:31
111!1111111t 1I:lllrnat :he
1::rumiMilltiii ,ola., 3 r. d
mt SK:01'1 Ca ry
nlllilll!miR of tr1 e
n,11!' lq,t:, r: a: e
ntt sm1t1u.a:e c in
l'TiiillllMl!lE Jf :he
r " tar.a a·ea
11 ~umll1~2: ph i
mi~"" s and
:ln111!!' 11111e-, rs was
L. il'.ll1111 '5 ~.·arch
1,rr::~1, rr;.: :_,md
l,,.
! lfulmrice-:1 and
:11::11e:s:s1i0.r .vith
11 r:::01111,e--ed by
@lrll' sole ..:.500
Taiti:J!at"": The
illliil!II/I 19'95 he
11ii115 ~ s:ered
~!d!ll\lil e•e:uted
i111!1S Tacc... The
mr::111, Taou and
I IIICJTt ,r:c :wo
ART. 774
On 5 January 1999, respondent Dolores Laxamana-Tabu, together with Julieta
Tubilan-Laxamana, Teresita Laxamana, Erlita Laxamana, and Gretel Laxamana, the heirs
of Domingo, filed an unlawful detainer action, docketed as Civil Case No. 7106, against
Meliton Cabalu, Patricio Abus, Roger Talavera, Jesus Villar, Marcos Perez, Arthur Dizon,
and all persons claiming rights under them. The heirs claimed that the defendants were
merely allowed to occupy the subject lot by their late father, Domingo, but, when
asked to vacate the property, they refused to do so. The case was ruled in favor of
Domingo's heirs and a writ of execution was subsequently issued.
On 4 February 2002, petitioners Milagros de Belen vda. de Cabalu, Meliton Cabalu,
Spouses Angela Cabalu and Rodolfo Talavera, and Patricio Abus (petitioners), filed a
case for Declaration of Nullity of Deed of Absolute Sale, Joint Affidavit of Nullity of
Transfer Certificate of Title Nos. 291338 and 291339, Quieting of Title, Reconveyance,
Application for Restraining Order, Injunction and Damages (Civil Case No. 9290) against
respondent spouses, before the Regional Trial Court, Branch 63, Tarlac City.
In their complaint, petitioners claimed that they were the lawful owners of the
subject property because it was sold to their father, Laureano Cabalu, by Domingo,
through a Deed of Absolute Sale, dated 5 March 1975. Hence, being the rightful
owners by way of succession, they could not be ejected from the subject property.
In their Answer, respondent spouses countered that the deed of sale from which
the petitioners anchored their right over 9,000 square meter property was null and
void because in 1975, Domingo was not yet the owner of the property, as the same was
still registered in the name of Faustina. Domingo became the owner of the property
only on 1 August 1994, by virtue of the Deed of Extrajudicial Succession with Partition
executed by the forced heirs of Faustina. In addition, they averred that Domingo was of
unsound mind having been confined in a mental institution for a time.
c On 30 September 2003, the RTC dismissed the complaint as it found the Deed of
Absolute Sale, dated 5 March 1975, null and void for lack of capacity to sell on the
part of Domingo. Likewise, the Deed of Absolute Sale, dated 8 October 1996,
covering the remaining 4,500 square meters of the subject property was declared
ineffective having been executed by Domingo two months after his death on 4
August 1996. The fa/lo of the Decision reads:
WHEREFORE, in view of the foregoing, the complaint is hereby
DISMISSED, and the decision is hereby rendered by way of:
1. declaring null and void the Deed of Absolute Sale dated 5 March 1975,
executed by Domingo Laxamana in favor of Laureano Cabalu;
2. declaring null and void the Deed of Absolute Sale dated 8 October 1996,
executed by Domingo Laxamana in favor of Renato Tabu, and that TCT
Nos. 291338 and 281339, both registered in the name of Renato Tabu,
married to Dolores Laxamana be cancelled;
3. restoring to its former validity, TCT No. 16770 in the name of Faustina
Masi um, subject to partition by her lawful heirs.
No in conformity, both parties appealed to the CA. Petitioners contended that
the RTC erred in declaring void the Deed of Absolute Sale, dated March 5, 1975. They
claimed that Domingo owned the property, when it was sold to Laureano Cabalu,
29
------~~~---
ART. 774

because he inherited it from his father, Benjamin, who was one of the heirs of
Faustina. Being a co-owner of the property left by Benjamin, Domingo could dispose
of the portion he owned, notwithstanding the will of Faustina not being probated.
'ffllfllE
Respondent spouses, on the other hand, asserted that the Deed of Sale, dated
Bli'/15
5 March 1975, was spurious and simulated as the signature, PTR and the document
llilll!HlC.I
number of the Notary Public were different from the latter's notarized documents.
alllll
They added that the deed was without consent, Domingo being of unsound mind at
the time of its execution. Further, they claimed that the RTC erred in canceling TCT
No. 266583 and insisted that the same should be restored to its validity because

[---~
Benjamin and Domingo were declared heirs of Faustina. ,m11
On 6 June 2009, the CA rendered its decision and disposed as follows:
moom
WHEREFORE, in the light of the foregoing, the instant appeal is partially
GRANTED in that the decision of the trial court is AFFIRMED WITH
MODIFICATION that sub-paragraph 2 and 4 of the disposition, which reads: lllllnef, II

"2. Declaring null and void the Deed of Absolute Sale dated 8 October liaailllld
1996, executed by Domingo Laxamana in favor of Renato Tabu, and TCT lllll!flbiwllll!llll
Nos. 291338 and 291339, both registered in the name of Renato Tabu, ~Iii
married to Dolores Laxamana be cancelled; lllllll!IIID IIIIJll!!l[

3. restoring to its former validity, TCT No. 16776 in the name of Faustina r~llttli
Mas/um subject to partition by her lawful heirs." 1lllilBwanr 11111ffi :11.
11ltlt1ll!Dll]JiJlll\\llllfflll
are DELETED. fldlllllim: ,a!
,illll
In finding Domingo as one of the heirs of Faustina, the CA explained as follows: lftm! anmml!!!:,
illllfi1ellllan•
"It appears from the records that Domingo was a son of Benjamin as
lllll!f11IIDllll1ll1alll
apparent in his Marriage Contract and Benjamin was a nephew of Faustina as
stated in the holographic will and deed of succession with partition. By lllfinl!w,y•t
representation, when Benjamin died in 1960, Domingo took the place of his 11&1me,dll!Jll1m1
father in succession. In the same vein, the holographic will of Faustina 1lllmilldm!mr l
mentioned Benjamin as one of her heirs to whom Faustina imparted 9,000 1lll!lNlllll!!Dliim1
square meters of her property. Likewise, the signatories to the Deed of 1•iilllll i6mmtu,
Extrajudicial Succession with Partition, heirs of Faustina, particularly declared 'ilM1mllltalllh·
Domingo as their co-heir in the succession and partition thereto. Furthermore, ~
the parties in this case admitted that the relationship was not an issue." naiial,iiil/11111!'

Although the CA found Domingo to be of sound mind at the time of the sale on 5 illll~1IPJlllll
March 1975, it sustained the RTC's declaration of nullity of the sale on the ground
,a118E l l l l l l l1
1

that the deed of sale was simulated. 11J111!!11111i11m

,ll8JIBliliillnttftm
The CA further held that the RTC erred in canceling TCT No. 266583 in the name
illlttt 1i~ ·.
of Domingo and in ordering the restoration of TCT No. 16770, registered in the name
of Faustina, to its former validity, Domingo being an undisputed heir of Faustina. -Ill••
lll/tlfflnm1i111111111
Hence, petitioners interpose the present petition before this Court, anchored on
~
the following:
"'"11
11111111111111m
illfffltll11nl!!

30
 ART. 774

ttl1ni!!· lltmeiirs :if GROUNDS

lllWillilW mlli1s,0,J se
Ill~.
I 'Mil!!:, d:.atec
111!'· ,idl!lmm::Julrrr e 'l t
! ralltmm:Iuwmn,e-rts,.
iuud ·lfflllllic,d a~
l !11111lrnll li 11111g T CT
llllll!ftW ·IIIDeca r.. se
-1PJllllllffllli11i11llU11W
1 IIIRlit
1
(A)
THE DEED OF SALE OF UNDIVIDED PARCEL OF LAND EXECUTED ON 5 MARCH
1975 BY DOMINGO LAXAMANA IN FAVOR OF LAUREANO CABALU IS VALID
BECAUSE IT SHOULD BE ACCORDED THE PRESUMPTION OF REGULARITY
AND DECLARED VALID FOR ALL PURPOSES AND INTENTS.
(B)
THE SUBPARAGRAPH NO. 2 OF THE DECISION OF THE REGIONAL TRIAL
COURT SHOULD STAY BECAUSE THE HONORABLE COURT OF APPEALS DID
NOT DISCUSS THE ISSUE AND DID NOT STATE THE LEGAL BASIS WHY SAID
PARAGRAPH SHOULD BE DELETED FROM THE 30 SEPTEMBER 2003 DECISION
OF THE REGIONAL TRIAL COURT.

1rrll1!l!lfillllll: The core issues to be resolved are: (1) whether the Deed of Sale of Undivided
r;J~er
Parcel of Land covering 9,000 square meter property executed by Domingo in favor
of Laureano Cabalu on 5 March 1975, is valid; and (2) whether the Deed of Sale,
rwM JiC'"
lftml J::iaJJlil,11..
dated 8 October 1996, covering 4,500 square meter portion of the 9,000 square
meter property, executed by Domingo in favor of Renato Tabu, is null and void.
Petitioners contend that the Deed of Absolute Sale executed by Domingo in
favor of Laureano Cabalu on 5 March 1975 should have been declared valid because
it enjoyed the presumption of regularity. According to them, the subject deed, being
a public document, had in its favor the presumption of regularity, and to contradict
llillh~llllll'S. the same, there must be clear, convincing and more than preponderant evidence,
otherwise the document should be upheld. They insist that the sale transferred rights
llliiiilffllll"I 3. S
of ownership in favor of the heirs of Laureano Cabalu.
1IW1!!nl:lllllmci 3 S
They further argue that the CA, in modifying the decision of the RTC, should not
llitt!IOO. :3',
IIICilE ICDlf. r S
have deleted the portion declaring null and void the Deed of Absolute Sale, dated 8
;:;iilllulSt:na
October 1996, executed by Domingo in favor of Renato Tabu, because at the time of
execution of the said deed of sale, the seller, Domingo, was already dead. Being a
Ill!!irf S.OOC
)ttt!O Jf
void document, the titles originating from the said instrument were also void and
should be cancelled.
::ltiEICilarec
1'1ne!rim,orE Respondent spouses, in their Comment and Memorandum, counter that the issues
P..1/1' raised are not questions of law and call for another calibration of the whole evidence
already passed upon by the RTC and the CA. Yet, they argue that petitioners' reliance
·ttnie s.a eon 5
on the validity of the 5 March 1975 Deed of Sale of Undivided Parcel of Land, based on
1n ltTE 5 :-:iund
presumption of regularity, was misplaced because both the RTC and the CA, in
appreciation of evidence on record, had found said deed as simulated.
3 11n th~ 'lame
It is \,\'ell to note that both the RTC and the CA found that the evidence
d 11r :!"le :1ame
established that the 5 March 1975 Deed of Sale of Undivided Parcel of Land executed
1:=.a11u::s::::r 3.
by Domingo in favor of Laureano Cabalu was a fictitious and simulated document. As
. ~1!1'11,C"'·-:::red on expounded by the CA, viz.:

"Nevertheless, since there are discrepancies in the signature of the

notary public, his PTR and the document number on the lowermost portion
of the document, as well as the deed of sale being found only after the

31
ART. 774

plaintiffs-appellants were ejected by the defendants-appellants; that they 11D111miwlllllll1IIIJ

were allegedly not aware that the said property was bought by their father, 1illllt1_, U

and that they never questioned the other half of the property not occupied illllmmmlll11JHilQ
by them, it is apparent that the sale dated 5 March 1975 had the earmarks IGllllallU111111JTI
of a simulated deed written all over it. The lower court did not err in 4itill!lllllliilf
pronouncing that it be declared null and void." ·~Ille·
·•111m1iilHlnn11c
Petitioners, in support of their claim of validity of the said document of deed,
·lli_il_
again invoke the legal presumption of regularity. To reiterate, the RTC and later the
:dllenr:tttlt1m!
CA had ruled that the sale, dated 5 March 1975, had the earmarks of a simulated
. .,ali!mmt1
deed, hence, the presumption was already rebutted. Verily and as aptly noted by the
respondent spouses, such presumption of regularity cannot prevail over the facts 1Tilfltme,
proven and already established in the records of this case. idlllmm:a
Even on the assumption that the 5 March 1975 deed was not simulated, still the
1lillllbJllllluwl
'lllllCllll'IIIIIIIJlm,
sale cannot be deemed valid because, at that time, Domingo was not yet the owner
blllillrllilUDJ111(!
of the property. There is no dispute that the original and registered owner of the
subject property covered by TCT No. 16776, from which the subject 9,000 square 11111hme· 1
meter lot came from, was Faustina, who during her lifetime had executed a will,
dated 27 July 1939. In the said will, the name of Benjamin, father of Domingo,
.-.1-
.md.Bi1Il31
appeared as one of the heirs. Thus, and as correctly found by the RTC, even if 'allll
Benjamin died sometime in 1960, Domingo in 1975 could not yet validly dispose of 1iJJiilllJJlnl!,lIIIJ
the whole or even a portion thereof for the reason that he was not the sole heir of
I.,
Benjamin, as his mother only died sometime in 1980.
Besides, under Article 1347 of the Civil Code, "no contract may be entered into
upon future inheritance except in cases expressly authorized by law." Paragraph 2 of
Article 1347 characterizes a contract entered into upon future inheritance as void. Ji..
u
The law applies when the following requisites concur: (1) the succession has not yet
,'l
been opened; (2) the object of the contract forms part of the inheritance; and (3) the
·,n
promissor has, with respect to the object, an expectancy of a right which is purely
1!
hereditary in nature.
3!li 1
In this case, at the time the deed was executed, Faustina's will was not yet

....,.
probated; the object of the contract, the 9,000 square meter property, still formed '"
part of the inheritance of his father from the estate of Faustina; and Domingo wad a
mere inchoate hereditary right therein.
Domingo became the owner of the said property only on 1 August 1994, the
time of execution of the Deed of Extrajudicial Succession with Partition by the heirs ,il!lli 1ill&il6B11s, 1111D
of Faustina, when the 9,000 square meter lot was adjudicated to him. 1111l111Giilllilllll1ataa1m
The CA, therefore, did not err in declaring the 5 March 1975 Deed of Sale null 111111,,:.
and void. ...,,aillllaulr
Domingo's status as an heir of Faustina by right of representation being . . , , ·-ltpJiil
undisputed, the RTC should have maintained the validity of TCT No. 266583 covering _,.._,1auioo
the 9,000 square meter subject property. As correctly concluded by the CA, this
"'llltm1
served as the inheritance of Domingo from Faustina.
1/IIIJljllllilrrnimlJIJIJl
Regarding the deed of sale covering the remaining 4,500 square meter of the IRlllllndltlM/JJmm, "
subject property executed in favor of Renato Tabu, it is evidently null and void. The

32
 ART. 774

iillllll 1tli'nle'~ document itself, the Deed of absolute Sale, dated 8 October 1996, readily shows that
1 ~l!'I" it was executed on 4 August 1996, more than two months after the death of
llllllll1llUllleC Domingo. Contracting parties must be juristic entities at the time of the
111111!1ffl11o111'its consummation of the contract. Stated otherwise, to form a valid and legal
It ,RIil' urn agreement, it is necessary that there be a party capable of contracting and a party
capable of being contracted with. Hence, if any one of the party (sic) to a supposed
contract was already dead at the time of its execution, such contract is undoubtedly
!l1l1111t id dieed, simulated and false and, therefore, null and void by reason of it having been made
11t11111ffl lliall!ier : ., e
after the death of the party who appears as one of the contracting parties therein.
<ill, 'llllll'ffllU:11-2:ec
The death of a person terminates contractual capacity.
m111Jl111Bmitb) :"le
111111111' llllilh! f3c:s The contract being null and void, the sale to Renato Tabu produced no legal
effect and transmitted no rights whatsoever. Consequently, TCT No. 286484 issued to
Tabu by virtue of the 8 October 1996 Deed of Sale, as well as its derivative titles,
ntml!!llll!,.$l11Jillll :'"e
TCT Nos. 291338 and 291339, both registered in the name of Renato Tabu, married
!!1tr • · (J\lji,{: e'
to Dolores Laxamana, are likewise void.
OIIWIJll!ff ,:Jf : - e
~:,11!D1)1 '50c..are The CA erred in deleting that portion in the RTC decision declaring the Deed of
rr::lllll!IBit a ,\ i 11, Absolute Sale, dated 8 October 1996, null and void and canceling TCT Nos. 291338
1Cllff' '[J)IC!lrr' 150, and 291339.
lfflC, e,.er if WHEREFORE, the petition is partially GRANTED. The decretal portion of the
111\1£ ,illlii5j:DIC52 of 6 June 2009 Decision of the Court of Appeals is hereby MODIFIED to read as follows:
?. ·!liimile reir of
1. The Deed of Absolute Sale, dated 5 March 1975, executed by Domingo
Laxamana in favor of Laureano Cabalu, is hereby declared as null and
i!!1mrrt1Fe::: into void.
11ira~ - 2 of
2. The Deed of Absolute Sale, dated 6 October 996, executed by Domingo
mtt as •,oid.
Laxamana in favor of Renato Tabu, and TCT No. 286484 as well as the
111 ci o: yet
hini!!S
derivative title TCT Nos. 291338 and 291339, both registered in the
If'.; i8l1lld 31 the
name of Renato Tabu, married to Dolores Laxamana, are hereby
1111111r.mi 1:s :JL.. rely
declared null and void and cancelled.
3. TCT No. 281353 in the name of Domingo Laxamana is hereby ordered
\WIJ:a:s r J: yet
restored subject to the partition by his lawful heirs.
'· .millll ·:,r-ned
11mi111111gc ,,, ad a
Observations on vda. de Cabalu
There are several compelling reasons why the ruling in vda. de Cabalu may give
W!5t :_95..:_ the
its readers pause. (Note that the law that governs the succession to Faustina is the
~ l::Jll/1 :~e heirs
old Civil Code.)

11:t JJ11' S.a e null First, the facts of the case categorically stated that "on 8 December 1941 Faustina
died without any children" and accordingly "she left a holographic will dated 17 July
1939 assigning and distributing her property to her nephews and nieces." The
being
~!II:iilll!llllJ~
~SB::3 covering Supreme Court contradicted itself when it made the following statement:
, t:hie 1:)... th is "On 1 August 1994, to give effect to the holographic will, the forced and
legitimate heirs of Faustina executed a Deed of Extrajudicial Succession with
~,e,::·e·· ::f the Partition."
i111n111:: ,,c: c. The

33

, .........tt•
 ill
::I//IJIII

ART. 774

The heirs of Faustina who executed the aforesaid document were her nephews 11Ri1u1111Hn,,
14
and nieces who were not her "forced heirs." 1iiiNnl*lmlllilW 1
'11tttn11

Second, the Deed of Extrajudicial Succession with Partition which Faustina's heirs 11t1m1m•nn11i!l$i,
executed on 1 August 1994 "imparted 9,000 square meters of the land covered by iiiilllll*lmlliillllmallilttittnu
TCT No. 16776 to Domingo." Note that under the explicit terms of the holographic ll&dlllllillwmmt1illlll1l
_1,l!llf.1,([i
will, this 9,000 square meter lot was given by the testatrix Faustina to her nephew
Benjamin Laxamana, the father of Domingo Laxamana. Clearly, there was no legal alllill.illumlliiiiill1 .aim
basis for Faustina's nephews and nieces to award the 9,000 square meter lot to ltlllllllilBlllll, iii~
Domingo, if their precise objective was to give effect to Faustina's holographic will. --.i,aa1rrt
Nowhere in the holographc will was Domingo named as one of the heirs of Faustina.
- --
m111111 - ·•1d
a11111tt1
Had the holographic will been admitted to probate, Benjamin would have inherited
the property from Faustina unless there was a statutory ground to exclude Benjamin
from the distribution of Faustina's estate. If Faustina's estate were to be distributed
...,.;,,lilt
allinliillllllmll b 1

by intestate succession, Domingo (who as a grandnephew of Faustina was four illllll\WI ~ 1, 1littt \II

degrees remote from her) would be excluded by Faustina's surviving nephews and d illll!ll/lllllC&i1111111

nieces (who were Faustina's relatives in the third degree). Note that in intestacy, the -ai1n1,, llllUlil
relatives nearer in degree exclude the more distant ones. 15 milRIIIES IIIIDlf ll!till
,l!!!!IIICIIUilllllllllll!lilllllDlrllln
Third, the Court of Appeals ruled that Domingo inherited from Faustina
"by representation." Incredible as it may be, the Supreme Court sustained this patently ,...,,ftll
erroneous ruling. It was legally impossible for Domingo to have inherited from Faustina '"'&llf!i
by right of representation. First, the right of representation takes place in the direct nl/lf·am
descending line - never in the ascending. In the collateral line (and only in case of l!D1//f'!l1Mnf11/JJ1"
intestacy), it takes place only in favor of the children of brothers and sisters, whether DJJ/JIJJJ!S11f 1/111
16
they be of the full or half blood. Without a doubt, Benjamin was not a relative of ~1/lmlll
Faustina in the direct descending line; he was a relative of Faustina in the collateral line. *1i!llllU n
~/Klfia/J
Benjamin was a nephew (not a brother) of Faustina. Clearly, Domingo could not have
flnmjJJnmm1111m
exercised the right to represent his father Benjamin in the succession to Faustina's
11:IMlr·mllmllllllh
estate. Second, when Faustina died, there was no vacancy in the inheritance which flnmillrmm111m1
could be the object of the right of representation. The instituted heir, Benjamin,
survived Faustina. In addition, there was no finding that Benjamin was incapacitated to Trhus ·liilt.mtt
inherit from Faustina. In sum, had the holographic will been admitted to probate, 'FlDlllm, F;aJiU!l!ilnnr
Benjamin would have inherited from Faustina as an instituted heir. If the holographic '11e1:'.11iam1111111111t lllu
)~IIIMI
will were to be denied probate (or otherwise not probated at all), Benjamin would still
ili)otn;i1il11m@!llilID":!i, 1
inherit as an intestate heir of Faustina concurrently with the other surviving nephews
and nieces, to the exclusion of Domingo, a grandnephew of Faustina. As earlier stated, Dom:i~" :!i .:::1
!ltt,ie pii l:pelllilltr;~!
in intestacy, the relatives nearer in degree exclude the more distant ones.
mia·v iiil!lliiemnatlt!f
5Jll.Jio>Jled . , 81

14
Article 807, old Civil Code, Article 887, new Civil Code.
15
Article 921, old Civil Code, Article 962, new Civil Code. · Die lltmnni:11m1
16
Article 925, old Civil Code, Article 972, Civil Code. 11B1g,71,

34
 ART. 774

!' M1e- .,e::ihews Fourth, had the holographic will been admitted to probate, Benjamin would have
inherited the 9,000 square meter lot from his aunt Faustina who died in 1941. Upon
Benjamin's demise in 1960 (presumably without a will), Domingo and his mother
•,illlll6!:i1na s heirs
inherited the same property from him. This would have been the definitive conclusion
Utnllill CO'Oi'E red bY
tnne 11imo1,og:-aphic
had Faustina's holographic will been probated. However, it was not the case. In Article
IIIm) illmer nephew
838 of the Code, no will shall pass either real or personal property unless it is proved and
allowed in accordance with the Rules of Court. Because the will was not probated, it was
l!f' \llllliill5 re legal
totally inappropriate to distribute Faustina's estate based on the provisions thereof
l!f' 11'1111111!!!.'er ot to
through a deed of extrajudicial partition. As the trial court was fully aware of the
imlll~h i C w i 11.
existence of Faustina's holographic will, it should have ordered the production of such
111115 d Fa~st"na.
ll'!lliJl!JIE ,n,erited
will and the commencement of probate proceedings. Only after the will has been
admitted to probate may a partition of the estate be made in accordance therewith.
a::llltwmillle 6€,jamin
n ·Imme· di:s::r; b uted
Otherwise, Faustina's estate should have been distributed under the rules of intestacy. In
any case, it was not legally possible for Domingo to have inherited from Faustina by right
!ffi111ilm '""as four
of representation or by intestate succession because Domingo, a grandnephew of
rg; me,:,he·.vs and
Faustina, was four degrees remote from Faustina. The other surviving nephews and
1111• 1111'11rt!!es:acy, the
nieces of Faustina who were relatives three degrees remote from her, would have
excluded Domingo from the inheritance.
~ Faustina
Fifth, the Supreme Court made an even more disturbing ruling when it said:
111eicl t:n1s patently
id fi-orr Faustina "Even on the assumption that the 5 March 1975 deed was not simulated, still the
roe i1l "T :,e direct sale cannot be deemed valid because, at that time, Domingo was not yet the owner
,: l 1111111~ ,-1 case of of the property. There is no dispute that the original and registered owner of the
s;11!$1!iers. whether
subject property covered by TCT No. 16776, from which the subject 9,000 square
nlClllt a relative of
meter lot came from, was Faustina, who during her lifetime had executed a will,
dated 27 July 1939. In the said will, the name of Benjamin, father of Domingo,
mecciil,ateal line.
appeared as one of the heirs. Thus, and as correctly found by the RTC, even if
. 1:IJJ11:J1l1d not have
Benjamin died sometime in 1960, Domingo in 1975 could not yet validly dispose of
]JPil tc Faustina's
the whole or even a portion thereof for the reason that he was not the sole heir of
11,11fflita,ce which Benjamin, as his mother only died sometime in 1980."
1"1lleiir. Ber1jamin,
This statement is premised on the correct assumption that Benjamin inherited
1111111!uBpcl:ci:ated to
from Faustina, while Domingo (and his mother) inherited the same property from
tie•d tc ::irobate,
etm,e h,olographic Benjamin. However, it is erroneous to conclude that Domingo could not have sold the
property in 1975 because he was not the sole heir of Benjamin. It appears that
11,ami'I"! ,1, ::iu Id stil I
Domingo's mother (presumably Benjamin's wife) died in 1980. Thus, she was
1N1111J11i,n-§: nephews
Domingo's co-heir with respect to the property. Domingo could alienate his share of
11!:s ean'er stated,
the property after Benjamin died in 1960. The Supreme Court has ruled that a co-heir
may alienate his or her undivided interest in a property co-owned with other heirs,
17
subject to the payment of the estate tax and the creditors' claims, if any. After all, in

17
De Borja v. vda. de Borja, 16 SCRA 577 (1972); Go Ong v. Court of Appeals, 154 SCRA 270
(1987).

35

...,,_..,,
 ---------- --
I,
ART.774 ·i

18
Article 777 of the Code, the rights to the succession are transmitted from the 1(illlij))1 1/111/tJi

moment of the death of the decedent. .,1l!llllll'llltbllll

!llllisiwllJediinmllBI IN!i
Sixth, the Supreme Court made a further disturbing statement as follows:
1111!!1111111!11' 1\lllll/lllllli
"Domingo became the owner of the said property only on 1 August 1994, the illilmdiimll'1l!i, tlln
time of execution of the Deed of Extrajudicial Succession with Partition by the heirs of ,iii1,..m1@lwllllim:iiilllllii
Faustina, when the 9,000 square meter lot was adjudicated to him."
lmmlim' dliilfflll$:
This statement is likewise patently erroneous. Article 777 of the Code is clear on :lmmtmmalllliiB ;
this point: "The rights to the inheritance are transmitted from the moment of the death llllHl6dll@m1. .airm 111

of the decedent." Death of the decedent transmits ownership of the inheritance to the 11!11imllilDlllil1111!11111111111/lli, :n
heirs; the adjudication of specific shares under a deed of extrajudicial partition does 1iliQl\lllll!!ll11ill!IIII ,nwJ
not. In Article 1078, "where there are two or more heirs, the whole estate of the 1ellllllide''\IUll1Wlili
decedent is, before partition, owned in common by such heirs, subject to the payment of ll~))i 11111H!it1
debts of the. deceased." Thus in Article 1079 of the same Code, partition is simply -.11111R,!,1m
defined as "the separation, division and assignment of a thing held in common among IO!l!NWlli . , lilJJ
those to whom it may belong." The statement made by the Supreme Court, in no . . . laHmn
uncertain terms, confused the concepts of succession and partition. 11IJD111Gifffflllll!d 1U
Seventh1 the ruling in this case misappreciated the concept of future inheritance, ij1111i111$,5, 111m, :lbmr
including the general prohibition against contracts involving future inheritance. The Wlmenc.a1111e 1P1Rmt
Supreme Court said: m!fDmilllil1nffllllltll
"Besides, under Article 1347 of the Civil Code, 'no contract may be entered into upon mlilllidl lmmmmnm
future inheritance except in cases expressly authorized by law.' Paragraph 2 of Article 1immdwninalli!: 11111il
1347 characterizes a contract entered into upon future inheritance as void. The law i(l31))1 Jlrrl/inH
applies when the following requisites concur" (1) the succession has not yet been opened; :is:~l!,llilmenn
(2) the object of the contract forms part of the inheritance; and (3) the promissor has, with m ill!mie· ,1,,IIJI
respect to the object, an expectancy of a right which is purely hereditary in nature.
~.ausJlllum 1111!1,

In finding that Domingo's transactions were void because they breached the ~Jj.arnimm, ,1inm
prohibition on contracts involving future inheritance, the Supreme Court made the ~11111/iil
following pronouncement: inberilillf'Jlllll ,iilllt
In this case, at the time the deed was executed, Faustina's will was not yet l)om1i~''s; 1111
probated; the object of the contract, the 9,000 square meter property, still formed w,1it:h ~
part of the inheritance of his father from the estate of Faustina; and Domingo wad a Ortolbetr US
mere inchoate hereditary right therein." oealth !)
19
In the earlier case of Blas v. Santos, the Supreme Court, this time speaking figlllll/jtl,, -
through Mr. Justice J.B.L. Reyes, defined "future inheritance" as "the contingent a~r'l"tlecl, n
universality or complex of property, rights and obligations that are passed to the heirs t'.'1ererli1C1J111e llllita
upon the death of the grantor." Using this definition against the elements of a contract
involving future inheritance, we reach the following conclusions:
llil.rt mi7
18
Article 657, old Civil Code. !ra11i1S,1!111nl111111rmil ithm
19
1 SCRA 899 (1961). : . S.iil!lllllilllllllt!li$,

36

nllllll!IIDms:
ttr .JI::94. :.., e
lttttlllB? /lmre>11rs oj
am*: i1s. oe:ar on
!Id r4 mtiie death
!diilah::e :o the
i flilldii1tt11rc11 does
r· ,lf!!JJIJIJd!ie of the
lflllmB'!,milll)/,rirnent of
ttllll!liim ,:s s:--rply
t!ll1RlilDllllJ r:rnong
mE IUDIUrt. in no
u• 1in•1r11,,.e~'ta nee,
n1M18i11tt:2nce. The
•1111/!111CJ{:)On
11 2. ,!Of A.rticle
The law
1m111ilt.
~//f!91: qoe.'led;
,1Hl/lWll"}IIIC:5. .Vi th
Dll'II!!.
i blllrieac:1ed the
:IClllu!ll't '"'lade the
111111m:s "'<:J: yet
J;TtJ1111/f _fc ,..,.., ed
immilr'f9C) ,1i. ad
; tn1nne s::ieaking
m,r!l,i~CJntingent
,:••cl tc ;he heirs
~11".5 ::rf 3 :ontract
ART. 774
(1} The succession has not yet been opened. - The property subject matter of
the controversy was a 9,000 square meter lot which formed part of the estate of
Faustina Maslum who died in 1941. At that precise time, succession to Faustina's
estate was opened in accordance with Article 657 of the old Code. 20 The probate of
Faustina's holographic will has nothing to do with the opening of succession. Probate
is a judicial proceeding that the law prescribes solely for the purpose of determining
four things: (i} testamentary capacity of the testator, {ii} compliance with the
formalities prescribed by law, (iii} identification of the purported will as that of the
testator, and (iv} that the testator freely and voluntarily executed the will. 21 It is
erroneous to infer that until the will is admitted to probate, succession has not yet
opened and that therefore any transaction involving properties forming part of the
estate would constitute a contract involving future inheritance.
(2} The object of the contract forms part of the inheritance. - While it is true
that the 9,000 square meter property formed part of Faustina's estate, the same
ceased to be future inheritance in 1941 when Faustina died. In no uncertain terms,
during Faustina's lifetime, the said property was part of her future inheritance, or the
contingent universality or complex of property, rights and obligations that she would
pass to her heirs upon her death. However, upon her demise in 1941, the property
became part of Faustina's actual inheritance. Viewed therefore from the perspective
of Domingo's sale thereof in 1975, it cannot be said that Domingo sold something
which formed part of Faustina's future inheritance over which he merely had an
inchoate right.
(3} The promissor has, with respect to the object, an expectancy of a right which
is purely hereditary in nature. - The crux of the issue in this case was Domingo's right
to the 9,000 square meter property. His father, Benjamin, inherited the same from
Faustina in 1941. Domingo and his mother inherited the same property from
Benjamin in 1960. When Domingo sold the property on 5 March 1975, his right to the
property was not a mere expectancy which is hereditary in nature. Domingo had
inherited at least a part of it from his father. It is error to conclude that in 1975,
Domingo's right to the property was merely inchoate. (The same thing cannot be said
with respect to Domingo's alleged sale of a portion of the same property on 8
a October 1996 because it was established that the sale took place after Domingo's
death.)
Eighth, the trial court and the Court of Appeals found, and the Supreme Court
affirmed, that the 1975 sale of the property was fictitious and simulated and
therefore void. The Supreme Court said:
20
Art. 657 of the old Code reads as follows: "The rights to the succession of a person are
transmitted from the moment of his death."
21
Gallanosa v. Arcangel, 83 SCRA 676, 685.
37
............ , -- ------ -- ---------------
ART. 774

"It is well to note that both the RTC and the CA found that the evidence IN~'

established that the 5 March 1975 Deed of Sale of Undivided Parcel of Land executed ~ .!

by Domingo in favor of Laureano Cabatu was a fictitious and simulated document." ,line lllllilDsiem1
:;jtara1111
However, the legal conclusions reached by the RTC and the CA were not =~'1:l!]
supported by their factual findings. The Court of Appeals expounded its ruling as
'"M..
follows:
'.:i"!l"IS11Cl1l71:J',1!J111
"Nevertheless, since there are discrepancies in the signature of the notary public,
111 '
his PTR and the document number on the lowermost portion of the document, as well ,m
as the deed of sale being found only after the plaintiffs-appellants were ejected by the
Jll
defendants-appellants; that they were allegedly not aware that the said property was
bought by their father, and that they never questioned the other half of the property 1Z1 ii
not occupied by them, it is apparent that the sale dated 5 March 1975 had the 1i
earmarks of a simulated deed written all over it. The lower court did not err in 13:' 4
pronouncing that it be declared null and void." {!

The circumstances cited by the Court of Appeals do not conclusively demonstrate

I '1 Ai.f'lll1irct
a fictitious or simulated contract. The following provisions of law are particularly
occu··ed ;aJtt
relevant:
the end mm'
"Art. 1345. Simulation of a contract may be absolute or relative. The former disappearaBn
takes place when the parties do not intend to be bound at all; the latter, when the
I.'.' /A\.rtuu
parties conceal their true agreement."
di sap oeaw:-~m
"Art. 1346. An absolutely simulated or fictitious contract is void. A relative the fou1r-l\'1e1,
simulation, when it does not prejudice a third person and is not intended for any
purpose contrary to law, morals, good customs, public order or public policy binds the (a) Siu
parties to their real agreement."
Art1Clie
The circumstances cited by the Court of Appeals at best prove either of two nove, t,pE·
possibilities: (i) that there were serious lapses committed in the notarial processes, or annulme"1"111t
(ii) falsification of document. Nonetheless, even if we accept the conclusion that the below:
contract "had the earmarks of a simulated deed written all over it," it does not
"'~ii"
necessarily follow that the contract is void for being absolutely simulated.
43 CJ~IIC
Falsification of a document is one thing; the simulation of contract is another. Note
aec:area
that the law recognizes the potential validity of a relatively simulated contract, where
T!llill!'
the parties merely intended to conceal their true agreement. This rule leads to the
C;st•·1iitJJIJJ/I
conclusion that a relatively simulated contract may yet be enforced insofar as the
Cr ; I ClT""!e!l'I
concealed intention of the parties thereto is concerned.
bee""' C1JICI

,11,~,r"
4. Death Triggers Succession
COr"ll"l'IIICJJI
The transmission of the inheritance to the heirs occurs only upon the death of the
5 ('! C: I /!)If/''
decedent. Hereditary succession cannot occur during the lifetime of the person
ag·e<Erm
whose inheritance is sought to be transmitted to the heirs.
7"'1'/1~
Death may be actual or presumed. The presumed death is classified into e r:"ci,...r:::e1
(i) ordinary, and (ii) extraordinary. Thus:

38

C.A ,111,1ere not
id! i·ts r j ing as
11t'.:J11"')1 pc,:JliC,
11ie1Milt,. ::rs ,.,, eII
!!d'.a:± t, • : he
lrr:lJ//ll~, was
w ,rooe .-ry
'7"'5 ,/lroa ~t:e
Ii rmu:JJrt e" in
1~ rcl,emonstrate
1ll"te' part cularly
"1/'IJIE _fyrner
iir ,11111/',e-: the
I:. .4 "1!" 1ative
1at1Iel!Jft f:JC any
illl::W, 1:/lflf"l,CS the
e1itri-e of two
.ail, pro,:esses, or
::!11Lll!s,11cM that the
t "' i·t :Joes not
:ie.li1)1 s 'llulated.
; ar"'IOther. Note
:i:lll11'1tra ct , w he re
ul11e l1eaas to the
[ 111'"1.S(r=a as ther
::r,,,e creath of the
,:if :,e person
1:1:ass fi ed into
ART. 774
"Art. 390. After an absence of seven years, it being unknown whether or not the
absentee still lives, he shall be presumed dead for all purposes, except those of succession.
The absentee shall not be presumed dead for the purpose of opening his succession till
after an absence of ten years. If he disappeared after the age of seventy-five years, an
absence of five years shall be sufficient in order that his succession may be opened."
"Art. 391. The following shall be presumed dead for all purposes, including the
division of the estate among his heirs:
(1) A person on board a vessel lost during a sea voyage, or an aeroplane which is
missing, who has not been heard of for four years since the loss of the vessel or
aeroplane;
(2) A person in the armed forces who has taken part in war, and has been missing
for four years;
(3) A person who has been in danger of death under other circumstances and his
existence has not been known for four years."
In Article 390, death for the purpose of opening succession is presumed to have
occurred at the end of the ten years from the disappearance of the absentee (or at
the end of the five years, if the absentee was over 75 years old at the time of
disappearance).
In Article 391, death is presumed to have occurred on the date of the
disappearance of the absentee, although the presumption arises only at the end of
thefou~yearperiod.
(a) Succession Inter Vivos
Article 50 of the Family Code, alongside with Articles 51 and 52, introduced a
novel type of succession that is triggered not by the death of a person, but by the
annulment or declaration of nullity of marriage. The relevant provisions are cited
below:
"Article 50. The effects provided for by paragraphs (2), (3), (4) and (5) of Article
43 and by Article 44 shall also apply in the proper cases to marriages which are
declared void ab initio or annulled by final judgment under Articles 40 and 45.
The final judgment in such cases shall provide for the liquidation, partition and
distribution of the properties of the spouses, the custody and support of the common
children, and the delivery of their presumptive legitimes, unless such matters had
been adjudicated in previous judicial proceedings."
"Article 51. In said partition, the value of the presumptive legitimes of all
common children, computed as of the date of the final judgment of the trial court,
shall be delivered in cash, property or sound securities, unless the parties, by mutual
agreement judicially approved, had already provided for such matters.
The children or their guardian, or the trustee of their property, may ask for the
enforcement of the judgment,
39
 Ul~

ART. 774

The delivery of the presumptive legitimes herein prescribed shall in no way prejudice

.
' .'111111~
the ultimate successional rights of the children accruing upon the death of either or both taalllllllllffllW/li
of the parents; but the value of the properties already received under the decree of .mt/181111111
annulment or absolute nullity shall be considered as advances on their legitime." .,,,.,
"Article 52. The judgment of annulment or of absolute nullity of marriage, the i/JIJmm
partition and distribution of the properties of the spouses, and the delivery of the
_ _,,,,_,I
children's presumptive legitimes shall be recorded in the appropriate civil registry and
registries of property; otherwise, the same shall not affect third persons." lllldi••
. . . .,www
The legitime is an integral part of the inheritance of a deceased person which is --IIH
reserved for the compulsory heirs. 22 To the extent that Article 50 of the Family Code • 111.....,'IIWIJ
mandates the payment of the legitime of the children following the annulment or the . . . .IIIIDQIII
declaration of nullity of the marriage of their parents, succession inter vivos has Aaiilllllmi111i1iii1
become a virtual reality.
Article 50 of the Family Code implicitly amends Article 774 of the Civil Code in
that succession may now occur even during his lifetime. The legal consequences of
Article 50 of the Family Code are discussed elsewhere in this work. ''11

(b) Contractual Succession

Contractual succession is not contractual in the literal sense. Contractual succession
is not founded upon a valuable consideration. It is a gratuitous disposition of future
property mortis causa made by one future spouse to the other (or bilaterally) in their
ante-nuptial contract. Article 1331 of the old Civil Code allowed contractual succession.
It reads:

"Affianced persons may give to one another by their marriage contract not to
exceed one tenth of their property; with respect to their future property they may
,. 'Il e
:a1111111

liilr

i1ll11IIII
make donations to each other to take effect only in case of the donor's death, within
the limits established by this code with respect to testamentary succession."

The donation was referred to as contractual succession because the donation

mortis causa was part and parcel of the ante-nuptial contract.
Article 130 of the new Civil Code amended Article 1331 of the old Civil Code:
"Article 130. The future spouses may give each other in their marriage
settlements as much as one-fifth of their present property, and with respect to their
future property, only in the event of death, to the extent laid down by the provisions
of this Code referring to testamentary succession."
Article 130 of the new Civil Code was amended by Article 84 of the Family Code
as follows:

22
Article 886, Civil Code.

40

IJl!l!W.~J/JJ.PC::.e
tttlttn!Jr ia:JJfl' oorh
Iii!' ~ Of
!E;,J//1
rmJll!ll'!llflllJIJI::. 7l;e
/iWlllfll'IW ,a;;f 7"E
rterjli1Bitir't1 G"ld
l!B"mlffl, Ch iS
',!,
\mf!!, f.nn,i, t1 Code
nmU11Jll11m1EITT: ::::~ the
111mr1Jln' 11VJi'1.1os has
rne Ci~11! Coae in
~Jml~ '1 Ce S Of
iClllllJlimHI 5,jccession
llffiilil!:nion ·J"' future
iJl1111lel1!3iih1, ;n their
~ , succession.
,mrt;,rmc. r::it
111'1\II :1:/"flie-, .71 a y
1i/Jlrf!ulllJi1: ,,,;thin
111n:.
1/1'
;;e tl:'loe donation
Cii'l£'1il C::::de:
11ie111r· ':<'f,:; r-1'age
'l!ii/J:)Jlf!'1C: ~ J
trnrlf' pre ,1isions
tl:"!lie Fami.ly Code
ART. 774
"Article 84. If the future spouses agree upon a regime other than the absolute
community of property, they cannot donate to each other in their marriage
settlements more than one-fifth of their present property. Any excess shall be
considered void.
Donations of future property shall be governed by the provisions on testamentary
succession and the formalities of wills."
Notice that in the first paragraph of Article 84 of the Family Code, future spouses
are expressly permitted to give donations of present property to each other in their
'1 ante-nuptial contract. However, the first paragraph omits donations of future
property which are dealt with in the second paragraph. In respect of donations of
future property, the second paragraph of Article 84 imposed two requisites: first, the
donation mortis causa shall be governed by the law on testamentary succession; and
second, the donor must comply with the formalities of a will. The necessary inference
is that Article 84 of the Family Code effectively disallowed contractual succession in
that if either or both the future spouses should wish to give to the other a donation
of future property, the donor must observe the formalities of a will. In effect, there
can be no contractual succession under Article 84 of the Family Code. Donations
mortis causa between future spouses now require the execution of wills.
5. Succession is Governed by the Will or by law
Succession may be governed by (i) the rules of testamentary succession, if the
decedent left a will; (ii) by the rules of intestate succession, if the decedent died
without a will, or with a void will, or with a will that has subsequently lost its validity,
23
or with a valid will which is totally inoperative; and (iii) by a combination of the rules
to of testate and intestate succession if the decedent executed a valid will which did not
or could not completely dispose the inheritance.
Succession may be classified as:
As to effectivity Succession is either inter vivas or mortis causa.
As to the existence of a will Succession is either testamentary, intestate or mixed.
As to the transferees Compulsory succession relates to the succession of compulsory
heirs to the legitime; voluntary succession relates to succession
their of voluntary heirs, legatees and devisees to the disposable free
portion.
As to the extent Universal succession is succession to the entire estate;
particular succession is succession to specific property or to a
portion of the estate.
23
Article 960, Civil Code.
41
ART. 775 AND ART. 782

Art. 775. In this Title, "decedent" is the general term applied to the person iiiinnllllllbllllll ti

..
whose property is transmitted through succession, whether or not he left a will. If fliiamnlilmalll ll!ll
he left a will, he is also called the testator. ,....... ,111ill111!ffll1111lt

Art. 782. An heir is a person called to the succession either by the provision of
a will or by operation of law. Devisees and legatees are persons to whom gifts of
-.
11

.......
1aliiia
real and personal property are respectively given by a will.

Definitions of Heir, Legatee and Devisee

7 --111
An heir is a person called to the succession in the testator's will, who pursuant to aliiidl1nllillllarR
the terms thereof will either receive the entirety or a fractional part of the
inheritance. The testator does not give to an heir a specific property from the mass of . .,lllllaililllla
the estate. However, an heir may receive a specific property pursuant to the partition 'TI!ffla·1iiimlm
of the hereditary estate. ·•11.-,imli, ·
A legatee is a person called to the succession in the testator's will, who pursuant to
the terms thereof, will receive a movable property specifically identified by the testator.
A devisee is a person called to the succession in the testator's will, who pursuant
to the terms thereof, will receive an immovable property specifically identified by the
testator.
1~.--
,-.u1,urMW1 ml
,61iiHl!ll,. ,Mim::11

utMle@te11••,.,Dtt.. Iliff'
1d!'Ullh!•lll!mmntl!lt
llllne!r lllliilBlllllll
1

Importance of the Distinction Miim!IIIE·-- ,:1 1

The distinction between an heir on the one hand, and a legatee and a devisee on "'ll#ir.1111111W11nn
the other, is important in two specific cases: ~•. ,u

(1) In Article 854, preterition annuls the institution of heirs, but the legacies and
devises which are not otherwise inofficious remain valid. The annulment of the
institution of heirs is total, leaving the instituted heirs with nothing under the
will. The legatees and devisees will get the gifts of movable and immovable illiiiilr1~iltll1
properties respectively, as long as these gifts do not impair the legitime. llii6m,llllf • 11111

••.--
(2) In Article 918, an invalid disinheritance results in the annulment of the lldhMilihb
institution of heirs insofar as it prejudices the invalidly disinherited heir, but the •·1iiidmilillliamr
devises and legacies shall be valid to the extent they do not impair the legitime. 1111'•1llimllllt 1Bdi11111
The institution of heirs may be annulled either totally or partially to the extent
necessary to make whole the legitime of the compulsory heir who was invalidly . .,11.1Httc1e•llfflflliiil
disinherited. The legatees and devisees will get the gifts of movable or 1/11 ll~lllmialil
immovable properties respectively, but the same may be reduced or abated laailllllam!•1(f!~
only if the total annulment of the institution of heirs is insufficient to make lllllmmillllllllam!· le
whole the legitime of the compulsory heir who was invalidly disinherited. amJli1ftm!•1di11111P
IE li1111M1llt .au!
The legatees and devisees, clearly, enjoy a preference over the instituted heirs in
illllla,B:tllilme!R•
the two articles cited. The distinct advantage of legatees and devisees is based on the
. illlllllltllfemeniadlbrr
preference given them over the specific movable or immovable properties which the
testator had set aside for them, to the exclusion of all other persons. In contrast,
r 8IIDlllillBIBl1aubi, 11tt

l•---··d
42

•iee person
tll!Wt .it will. If
hae1p I son of
,.._.gifts of
11\mJ, ~ a n t to
nlli 1,-t ::· the
mm111!1111111E r12ss of
1'11Iml1 lll!llllne partition
~.Jant to
1Jlll1nmll,
Ii' 11,ne tes':a tor.
::ursuant
,: \JIIIIIITilt:J.
l!tlen'm1llirflied ':JV the
rnrmli a O€visee on
tniE legacies and
rnmmu11me'lt of the
dmlrnmg .nder the
iillmnMll imr1ovable
l11e1~1!11:i:m e.
11UJJ11me-,: of the
tte!IOII hie but the
r.
millllll" '!he legitime.
11ll l11p 1110 :he extent
~il':lltO 'il*/25 nvalidly
at m011able or
~11J1oed r abated
.IFincuren: to make
Hilll'll/nier:ed.
1::sit::tuted 'leirs in
,; iS b,ased on the
11e.!""'::nes which the
~11111~.. I~ :ontrast,
ART. 776 AND ART. 781
instituted heirs are not given specific property by the testator; they are given
fractional parts of the estate and the actual composition of such aliquot part will
depend entirely on the project of partition.
Art. 776. The inheritance includes all the property, rights and obligations of a
person which are not extinguished by his death.
Art. 781. The inheritance of a person includes not only the property and the
transmissible rights and obligations existing at the time of his death, but also those
which have accrued thereto since the opening of succession.
The Inheritance
The inheritance of a person includes his properties and transmissible rights and
obligations which are not extinguished by his death. Article 781 appears to have
expanded the definition of "inheritance" by including the accruals thereto. In so
doing, Article 781 created a seeming conflict with Article 777, which states that the
rights to the succession are transmitted from the moment of the death of the
decedent. If indeed successional rights are transmitted to the heirs from the moment
of the death of the decedent, accruals to the inheritance following the death of the
latter cannot form part of the inheritance, but instead belong to the heirs. Thus in
Article 440, pursuant to the law on accession:
"The ownership of property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially."
Nonetheless Article 781, if read in the proper context, is not in conflict with
Article 777. The objective of Article 781 is to make the accruals to the hereditary
estate liable for the payment of the outstanding obligations of the decedent. This is a
fair proposition inasmuch as the claims of the creditors of the decedent must be paid
before the residual estate is distributed to the heirs. Viewed in this light, the conflict
between Articles 777 and 781 is not real. The rule may thus be restated as follows:
the inheritance of a person includes only his properties, rights and obligations which
are not extinguished by his death. However, accruals thereto, while not forming part
of the hereditary estate, are liable for the payment of the claims of the creditors of
the decedent.
A literal interpretation of Article 781 will result in absurdities. If accruals to the
hereditary estate were treated as part of the inheritance, the calculation of the net
hereditary estate cannot be finalized; neither can the determination of the legitime
and the disposable free portion. The actual amount due to the instituted heirs cannot
be fixed; and neither can the amount of the estate tax be definitively computed as
long as there are accruals received from time to time until the final distribution of the
net hereditary estate. Indeed the National Internal Revenue Code recognizes that the
accruals to the hereditary estate after the opening of succession are not included in
the estate of the decedent for the purpose of computing the estate tax.
43
ART. 776 AND ART. 781

Exclusion to the Inheritance

There are certain properties, however, that are excluded from the hereditary
estate of a deceased person even though owned by him in his lifetime.
,~Ii
(1) Properties subject of fideicommissary substitutions - In Article 863, a testator
1Dm1 ::
may simultaneously institute two heirs to one and the same inheritance. Upon .ilJJBllnml1~
the death of the testator, the first heir receives the inheritance. He is, however, l~lllill
burdened with the obligation to preserve and to transmit to the second heir the nt!l!llllll!lllllilll!lIIUI:
whole or a part of the inheritance. Thus, upon the death of the first heir, the ll lllulJmme
property passes to the second heir. It does not form part of the inheritance of 1ill!mnnuml!!!lrr
the first heir. "'lllfllllllllll
(2) Properties subject of reserva troncal - In Article 891, an ascendant who inherits ,lllnll//llt
from his descendant any property which the latter may have acquired by llffJfS/IIUIII
gratuitous title from another ascendant, or a brother or sister, is obliged to 1//IIB//Jsn,m
reserve such property as he may have acquired by operation of law for the J.
benefit of relatives who are within the third degree and who belong to the line lilnillnuH!l
from which the property came. The reservable property neither comes nor falls *'"
,RIJlll/l"1Jll
under the absolute dominion of the ascendant who inherits and receives the
same from his descendant. Therefore it does not form part of his own property jJmrlJJIJ
nor become the legitime of his forced heirs. It becomes his own property only in 2. ]
lllll/lllll,,i
case all the relatives of his descendant (the reservees) shall have died, or shall
lllhmwi1,
have repudiated, or are otherwise incapable of receiving the reservable
.!ill/111/11111,
property, in which case the said reservable property losses such character. 24 For
llll1Jhmlf'1,
which reason, a reservor cannot will the reservable property to his or her heir(s)
,illlllllnlf'·11
of choice. 25
,1Jm·1/
(3) Properties which are subject matter of valid aleatory contracts - It is legally ,Dlfflll!'11
permissible for two or more persons to pool their resources in a joint ,illlllllnlf'·,1
investment and to stipulate that the survivor between or among them shall take 111/m/lllllf''il
absolute title to the entirety of the investment upon the death of one of them. 111/mllllllf' i

Note that in the following cases, two persons (two friends, a master and his ,a:JJ/IIJll!!''I
111iUllllllJJ,,1,
servant, and a husband and his wife) contributed properties into a single
111illllUll:J,,:,
investment Uoint tenancy in various movable and immovable properties, and
GR:I
bank deposit) with the express agreement that the survivor between them
takes absolute title to whatever is left of the investment upon the death of the Ji. ,/;,
other. The remaining balance of the investment does not form part of the estate nrllllJll/ll1tt

of the deceased party and his or her relatives have no successional rights illlllllJIJJ' II
llfflllllll)/Slt
thereto.
illlmn::: ,a
411: m
&JIB
24

25
Florentino v. Florentino, 40 Phil 480 (1919).
Gonzales v. Court of First Instance of Manila, 104 SCRA 481 (1981). .,
a,J/iBf·;;tfil,

,Ml/j///lU/11

44

w hie~editary
liiJ,, a, testator
1naiWtamce Upon
Ille 1iis.,, Miawever,
~ · h e i r the
nHe Im h€ir, the
e'· iilf!fflil!lle"it.a1ce of
!nmtll: Idle inherits
,R ac:c::pu ired by
ell",,, ill5 ,ob,, ged to
1 I01llf liiNii for the
~!IIIClllmll: ts the line
: r::lllll1lme5 nor falls
1m oreceives the
1111!:i ,iJllllm ::i roperty
~i'onlyin
R idliiec:. or shall
6ie reservable
::)~rt er. 24 For
~m!li or 1'1€r heir(s)
115. - It s legally
,ll'lmlll5 fn a joint
i!IIIM>m s1all take
rai il:l!f'liE of them.
mll'illlSte a n d his
~!S 1111'1111:a
~rtes, and
J:mdwieen them
me ,cileat1
11ia11rt: d 1:'" e
estate
i:m::e;siiO, a I rights
P
l1·
/1/. ''
.
.
ART. 776ANDART. 781
MACAM v. GATMAITAN AND GATMAITAN
No. 42519, 11 March 1937
64 Phil 187
Avancena, C.J.:
On 24 September 19229, the deceased Leonarda Macam and the defendant
Juana Gatmaitan purchased the house in question for PhP3,000.00 from the spouses
Generoso lnducil and Flora Ramos. It is stated in the deed of sale that the vendors
received the purchase price of the house from the vendees, both single. However, on
12 June 1932, the deceased Leonarda and the defendant Juana subscribed a
document which reads as follows:
"Know all men by these presents:
That we, Leonarda Macam and Juana Gatmaitan, both single, of age and
residents of the municipality of Calumpit, Province of Bulacan, Philippine
Islands, by means of this document, freely and voluntarily state as follows:
1. That during the time we lived together as friends, we have purchased a
house of strong materials built on a lot belonging to the Diocese, situated in
the municipality of Calumpit, Province of Bulacan, and declared for taxation
purposes under Tax No. 6977, one Buick automobile, and furniture necessary
for the house.
2. That I, Juana Gatmaitan, hereby declare that the house purchased by us
was paid with my friend Leonarda Macam's own money in the sum of three
thousand pesos (PhP3,000.00} and therefore, said house truly belongs to my
said friend. The following furniture likewise truly belong to her:
One (1) wardrobe with mirror and carved top.
One (1) narra bed.
One (1) small wooden wardrobe.
One (1) small wooden table.
One (1) narra chair.
One (1) rattan sofa.
One (1) dining room table.
One (1) kitchen table.
Two (2) dining table benches.
a single
Two (2) kitchen benches.
One (1) ice box.
of the 3. I, Leonarda Macam also hereby declare that the Buick automobile and
most of the furniture in the house where we live, as the narra chairs, wardrobe
and bed, truly belong to my friend Juana Gatmaitan, said automobile and
most of said furniture having been bought with money exclusively belonging to
her; and she was also the one who had my house painted.
4. That in consideration of the friendship we mutually profess, considering
ourselves almost as sisters, we have voluntarily agreed that whoever of us will
die first shall /eave to the survivor, as the latter's property, the house and all
the furniture therein together with the Buick automobile above-stated,
excluding the furniture belonging to Leonarda Macam stated in paragraph 2 of
45
~ ..
ART. 776 AND ART. 781

this document which may be taken by the heirs of said Leonarda Macam if she
will be the first to give up her soul to God, as a remembrance to her surviving

-··
friend, and this agreement shall be equivalent to a transfer of the rights of the
one who dies first and shall be kept by the survivor; and none of our heirs shall
claim the property mentioned in this document, left by any of us who dies first.
In witness whereof, we affix our signature at the foot of this document as a 1llimE
proof of the acceptance by each of us of this agreement, this 12 th day of July, nlllllldlll!· ·~
1932, in the municipality of Calumpit, Province of Bulacan, P.I." lllne!miii11111,, '\IM

It is inferred from the foregoing document that the deceased Leonarda and the
defendant Juana lived together as friends, Leonarda having contributed the house
and Juana the Buick automobile and most of the furniture to such companionship,
..
""1111/nma

-~
both having thereby established between themselves a de facto joint ownership of
the properties respectively contributed by them, which, judging from their nature '~1111111
and description, are more or less of the same value. Such must be the case, judging
from the fact that, although the house was purchased with money exclusively ..,_i/JJJJma
belonging to Leonarda, it was made to appear that both were the purchasers. IJJillJIJl11Jtm1iJJJ/I
The plaintiff contends that with respect to the house, Exhibit C, on the part of B1i11111111111BJ1,m
Leonarda, constitutes a donation mortis causa in favor of Juana, and as it had not ajjja,id'ttn
been executed with all the formalities required by law for a will, it is entirely invalid 1//UllJll!!lt, lilJl1llJJJJ
and did not produce the effect of conveying the ownership of the house to Juana. S/l/lJllllll11iWll1JJ1f1'., ,I

The lower court, in absolving the defendants from the complaint, considered the lill\'tnmalt!,
act of the deceased Leonarda as a transfer of ownership of the house in favor of il1111rilll1lllllllll!!B/111f!
Juana, but not in the concept of a donation. This conclusion of the court below is .d!mllt"
supported by the literal interpretation of Exhibit C, wherein the parties described the DJJIJin;JIIBflllJlfl'.
act performed by them as an agreement and a transfer.
lllnrf·dl
This court is of the opinion that Exhibit C is an aleatory contract whereby, ~·:rm
26
according to Article 1790 of the Civil Code, one of the parties or both reciprocally
111111/m; ,
bind themselves to give or do something as an equivalent for that which the other
~
party is to give or do in case of the occurrence of an event which is uncertain or will
happen at an indeterminate time. As already stated, Leonarda was the owner of the ,1//IIIJJ,llj////h

house and Juana of the Buick automobile and most of the furniture. By virtue of
Exhibit C, Juana would become the owner of the house in case Leonarda dies first,
and Leonarda would become the owner of the automobile and the furniture if Juana
were to die first. In this manner, Leonarda and Juana reciprocally assigned their Bil/llml11
respective property to one another conditioned upon who might die first, the time of :.ipt/, ,
death determining the event upon which the acquisition of such right by the one or $pl,!
the other depended. This contract, as any other contract, is binding upon the parties $,,illl\,;//,
thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon acquired
the ownership of the house, in the same manner as Leonarda would have acquired ~IITliill n

the ownership of the automobile and of the furniture if Juana died first. 1'al1iwmmttil
.mcJltJIIIIDWJnmtt ,un
In view of the foregoing considerations, the judgment appealed from is affirmed
lmllf~.,illll
with costs to the appellant.
aiamliillilll1IIIlll1
iWlCJIIIDWJlll11t Iii
26
Article 1790 refers to the old Civil Code, now Article 2010 of the new Civil Code. '61!'1!11inmlnlf•,1
·allmniI:i!f·111rr

46
 ART. 776 AND ART. 781

mr,if$/lme RIVERA v. PEOPLE'S BANK AND TRUST COMPANY

U//!\11111/ll/llJl'!lllg No. 47747, 17 April 1942
i 11Jllff fflie 73 Phil 546
111l'!li 51MU
le$ Jff,irst. Ozaeta, J.:

The question raised in this appeal is the validity of the survivorship agreement
made by and between Edgar Stephenson, now deceased, and Ana Rivera, appellant
herein, which reads as follows:

n11!lllill and :1e Survivorship Agreement

lt t\lltlrae ~o,.1se
ll~IICl1'Sr i J: ,
"Know all Men by These Presents:
\IMlll/111111!11"'$:l'il::: ::if That we hereby agree with each other and with the People's Bank and Trust
bnnr r"T.a::...re Company, Manila, Philippine Islands (hereinafter called the Bank), that all moneys now
.Jll!Hle,. jlJOCl: 5 ing or hereafter deposited by us or either of us with the Bank in our savings account shall be
aac:i1JJ1si11ely deposited in and received by the Bank with the understanding and upon the condition
ill!!!ll'S., that said money be deposited without consideration of its previous ownership, and that
par.: Of
I', 1l!Jttliie
said money and all interest thereon, if any there be, shall be the property of both of us
Ill iii'. ~ac
1ot as joint tenants, and shall be payable to and collectible by either of us during our joint
m11111Eill;' invalid lives, and after the death of one of us shall belong to and be the sole property of the
mr JiJlw91rT,a. survivor, and shall be payable to and collectible by such survivor.
muaR!!'ec t!ie And we further covenant and agree with each other and the Bank, its successors
~ 11111'! t..Nor of or assigns, that the receipt of check of either of us during our joint lives, or the receipt
IWlll'it be•O ',',' iS of check of the survivor, for any payment made from this account, shall be valid and
1aD1itlec the sufficient release and discharge to the Bank for such payment.
The Bank is hereby authorized to accept and deposit to this account all checks made
11ct: 111111'1,eeby, payable to either or both of us, when endorsed by either or both of us or one for the other.
1, :m&:1ipt"ocally This is a joint and several agreement and is bonding upon each of us, our heirs,
m• l!:lih!E c:her executors, administrators and assigns.
ll!!1'11131111"f or will
In witness whereof we have signed our names hereto this 1 fh day of October, 1931.
~111111111fflliE'1" c~ ~he

IB!\ip; llll!r':U, of Sgd. EDGAR STEPHENSON

1i!fum tdfuie; frst, Sgd. ANA RIVERA
illw/l'le /1/f J~ana Address: 799 Sta. Mesa, Manila
,:!!iiupec: :1eir Witnesses:
r: . tl!'iie t Te of Sgd. Fred W. Bohler
11.\11 the ::1e or Sgd. Y. E. Cox
I/IT me ;:;a'"'.ies S.A. #4146"
l)m:m i!l<C=.:...ired
Ana Rivera was employed by Edgar Stephenson as housekeeper from the year
lil!Wlle aic:.i.; ired
1920 until his death on 8 June 1939. On 24 December 1929, Stephenson opened an
account in his name with the defendant People's Bank by depositing therein the sum
ITT!' ,is: ,rhrmed of Phpl,000.00. On 17 October 1931, when there was a balance of PhP2,072.00 in
said account, the survivorship agreement in question was executed and the said
account was transferred to the name of "Edgar Stephenson and/or Ana Rivera." At
:m::ne the time of Stephenson's death Ana Rivera held the deposit book, and there was a
balance in said account of PhP701.43, which Ana Rivera claimed but which the bank

47

..
,~ - -------~----···--- ------
ART. 776ANDART. 781

refused to pay to her upon advice of its attorneys, who gave the opinion that the
survivorship agreement was of doubtful validity. Thereupon Ana Rivera instituted the IJlmmnt
present action against the bank. Minnie Stephenson, administratrix of the estate of
the deceased, intervened and claimed the amount for the estate, alleging that the
money deposited in said account was and is the exclusive property of the deceased.
The trial court held that the agreement in question, viewed from its effect during
the lives of the parties, was a mere power of attorney authorizing Ana Rivera to
-;ffllmll'

!l!!itwnnt
llllilllllml IJIIDU
llliilllllte!•1ltllmt!
withdraw the deposit, which power terminated upon the death of the principal,
l!fflll11IIIIIIIII
Edgar Stephenson; but that, viewed from its effect after the death of either of the
.nml!il !IIIWl1!111
parties, the agreement was a donation mortis causa with reference to the balance
remaining at the death of one of them, which, not having been executed with the lbl!t
27 rmllQIJJle11lillllll
formalities of a testamentary disposition as required by article 620 of the Civil Code,
was of no legal effect. t.illlllll!·Dml
IIQlllmlWJlllllll!lll:I~~
Counsel for the intervenor-appellee in his brief contends that the survivorship
Bliiilillimm111
agreement was a donation mortis causa from Stephenson to Ana Rivera of the bank
e5111i1111i11111illllitl
account in question and that, since it was not executed with the formalities of a will,
it can have no legal effect. 'lllffitme
llllfflliltiilwwmnr
We find no basis for the conclusion that the survivorship agreement was a mere
~.. i
power of attorney from Stephenson to Ana Rivera, or that it is a gift mortis causa of the
111111N11111111
bank account in question from him to her. Such conclusion is evidently predicated on
the assumption that Stephenson was the exclusive owner of the funds deposited in the
bank, which assumption was in turn based on the facts (1) that the account was
originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only
as housemaid of the deceased." But it not infrequently happens that a person deposits
money in the bank in the name of another; and in the instant case it also appears that 5amlllllill!!lmntt
Ana Rivera served her master for about nineteen years without actually receiving her
salary from him. The fact that subsequently Stephenson transferred the account to the •nlli
name of himself and/or Ana Rivera and executed with the latter the survivorship '111.iiDDbi!Dl!f' II
agreement in question although there was no relation of kinship between them but i.i.111..S..A.,,. 1im11
only that of master and servant, nullifies the assumption that Stephenson was the ~11111(

exclusive owner of the bank account. In the absence, then, of clear proof to the ~llliil
contrary, we must give full faith and credit to the certificate of deposit which recites in pdlillliiDmmnlrel

~-·
effect that the funds in question belonged to Edgar Stephenson and Ana Rivera; that aI:Dl1m ]l
they were joint owners thereof; and that either of them could withdraw any part or the 1tlinn!f'pndnu
whole of said account during the lifetime of both, and the balance, if any, upon the
death of either, belonged to the survivor. lilllllllll!!!illlellltt:h ...
Is the survivorship agreement valid? Prima facie, we think it is valid. It is an 1ilme·iillllliqfff
aleatory contract supported by a lawful consideration - the mutual agreement of the A1fl5B,,iff!I
joint depositors permitting either of them to withdraw the whole deposit during their ~lillllll!
lifetime, and transferring the balance to the survivor upon the death of one of them. $iillllllllffll$,.iiffU
The trial court said that the Civil Code "contains no provisions sanctioning such an
IICIDIIII 1:
agreement." We think it is covered by article 1790 of the (old) Civil Code, which
~ ·$Dlllll!
provides as follows:
IIQJlliiillillllllll!!llrt:1111111
[llffllllDllll11llirllJ
27
Article 620 refers to the old Civil Code, now Article 728 of the new Civil Code. 1i111111',11111!!!!1111111m

48
 ART. 776ANDART. 781

"Art. 1790. By an aleatory contract one of the parties binds himself, or

~1~:,e both reciprocally bind themselves, to give or to do something as an equivalent
nl!!:·~eJf for that which the other party is to give or do in case of the occurrence of an
1111; 1!lillnalt t,e event which is uncertain or will happen at an indeterminate time."
m~ Furthermore, "it is well established that a bank account may be so created that
fffielctimlurr.§; two persons shall be joint owners thereof during their mutual lives, and the survivor
illi lilllillPl!!lra : 0 take the whole on the death of the other. The right to make such joint deposit has
,e ,im1nmwc11 p.a . generally been held not to be done away with by statutes abolishing joint tenancy
1ilttl!nenr rof ::--e and survivorship generally as they existed at common law." (7 Am Jur., 299)
:fhlu! baliar ce
But although the survivorship agreement is per se not contrary to law, its
!!irJII lllllidr t~e
operation or effect may be violative of the law. For instance, it is be shown in a given
Cii111J1il l UliciE -
case that such agreement is a mere cloak to hide an inofficious donation, to transfer
property in fraud of creditors, or to defeat the legitime of a forced heir, it may be
llllJINllfllOl"'S,'1,:J
assailed and annulled upon such grounds. No such vice has been imputed and
,rnrtf tie o,a 1 k
established against the agreement involved in this case.
111e!!! ,d a•'• :I,
The judgment appealed from is reversed and another judgment will be entered
in favor of the plaintiff ordering the defendant bank to pay to her the sum of
'.1111/iillS a -rere
PhP701.43, with legal interest thereon from the date of the complaint, and the costs
r::ICt//,1/SiC:r of :he
in both instances.
miu:::aitec on
~1s1il1!e:i: 1r :he
VITUG v. COURT OF APPEALS
11mi:ntlUll'l:t Nas
G.R. No. 82027, 29 March 1990
"'~only 183 SCRA 755
,11Cl111TI*1:•o sits
n~ars :hat Sarmiento, J. (Second Division):
l!!!lll:l!!ll!lliflg her
mUilllllll1t to the This case is a chapter in an earlier suit decided by this Court involving the
$11l1Nllll0'"Ship probate of the two wills of the late Dolores Luchangco Vitug, who died in New York,
mn:taer- but U.S.A., on 10 November 1980, naming private respondent Rowena Faustino-Corona
Himnnr •as the executrix. In our said decision, we upheld the appointment of Nenita Alonte as
11NlIC111' tc the co-special administrator of Mrs. Vitug's estate with her (Mrs. Vitug's) widower,
,cli'r r'lleC:;:e s in petitioner Romarico G. Vitug, pending probate.
H!llil.lllel'"i! :hat On 13 January 1985, Romarico G. Vitug filed a motion asking for authority from
'ii,·~ Ythe the probate court to sell certain shares of stock and real properties belonging to the
111/#, Uillp:Y1 the estate to cover allegedly his advances to the estate in the sum of PhP667,731.66, plus
interests, which he claimed were personal funds. As found by the Court of Appeals,
11ll 11t.. :t s a n the alleged advances consisted of PhP58,147 .40 spent for the payment of estate tax,
111ffl1lffllt :;~ the PhP518,834.27 as deficiency estate tax, and PhP90,749.99 as "increment thereto."
jlllJ11!1ill'1\g :reir According to Mr. Vitug, he withdrew sums of PhP518,834.27 and PhP90,749.99 from
,:if ::,em.
11111111!! savings account No. 35342-038 of the Bank of America, Makati, Metro Manila.
,11w11rg SJ.;C" an On 12 April 1985, Rowena Corona opposed the motion to sell on the ground that
:.::im:lne. "", ich the same funds withdrawn from savings account No. 35342-038 were conjugal
partnership properties and part of the estate, and hence, there was allegedly no
ground for reimbursement. She also sought his ouster for failure to include the sums
in question for inventory and for" concealment of funds belonging to the estate."

49

, ............
ART. 776 AND ART. 781

Vitug insists that the said funds are his exclusive property having acquired the !mllmiUlll!''IJT
same through a survivorship agreement executed with his late wife and the bank on . , J$i3I

19 June 1970. The agreement provides: ~ l l e11 !

i111111111181llii1111n
"We hereby agree with each other and with the Bank of America
u11m1111nnmi
National Trust and Savings Association (hereinafter referred to as the Bank},
that all money now or hereafter deposited by us or any or either of us with

,.
the Bank in our joint savings/current account shall be the property of all or :Jtlmi/1
both of us and shall be payable to and collectible or withdrawable by either ll11Bl1Jllli

or any of us during our lifetime, and after the death of either or any of us ~
shall belong to and be the sole property of the survivor or survivors, and shall ail
be payable to and collectible or withdrawable by such survivor or survivors.

-
,/111/h
We further agree with each other and the Bank that the receipt of check
11111//ttlt/
of either, any or all of us during our lifetime, or the receipt of check of the
survivor or survivors, for any payment or withdrawal made for our above-
8lllllJ
mentioned account shall be valid and sufficient release and discharge of the
dJl!lll
Bank for such payment or withdrawal."
l ffllUJil/1/
The trial court upheld the validity of this agreement and granted "the motion to iilllRII

sell some of the estate of Dolores L. Vitug, the proceeds of which shall be used to pay _d/iln11tt11

the personal funds of Romarico Vitug in the total sum of PhP667,7311.66 ......... " jffim1,mu
murarr
On the other hand, the Court of Appeals, in the petition for certiorari filed by the
111111/ittttt
herein private respondent, held that the above-quoted survivorship agreement
mmii
constitutes a conveyance mortis causa which "did not comply with the formalities of
a valid will as prescribed by Article 805 of the (new) Civil Code, and secondly, l lmi1 ii
assuming that it is a mere donation inter vivas, it is a prohibited donation under the
provisions of Article 133 of the (new) Civil Code.
ill1JfilJl
The dispositive portion of the decision of the Court of Appeals states: illllBIIl:IJ#
wi11h111a
"WHEREFORE, the order of the respondent Judge dated 26 November 111£ iU
1985 is hereby set aside insofar as it granted private respondent's motion to Ji.el«JJII
sell certain properties of the estate of Dolores L. Vitug for reimbursement of his ,ffllllll!Jlll
alleged advances to the estate, but the same order is sustained in all other lltill!"'
respects. In addition, respondent Judge is directed to include provisionally the MIE

-
deposits in Savings Account No. 35342-038 with the Bank of America, Makoti, ;UfilJ!l
in the inventory of actual properties possessed by the spouses at the time of
the decedent's death. With costs against private respondent." le'lll///f/11

In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on ft11!1E

the strength of our decisions in Rivera v. People's Bank and Trust Co. and Macam v. l/lfll1111JH
,,mJlllll/lff
Gatmaitan in which we sustained the validity of "survivorship agreements"
considering them as aleatory contracts. Wlin1E11

The petition is meritorious. l'lmi!!n

:rtt1fflllllJl/lll!~
The conveyance in question is not, first of all, one of mortis causa, which should be
l'!lffilll!ibll·m-
embodied in a will. A will has been defined as "a personal, solemn, revocable and free
act by which a capacitated person disposes of his property and rights and declares or lllt!!lilt
complies with duties to take effect after his death." In other words, the bequest or ~11

50
 ART. 776 AND ART. 781

~1WJ11111e¢ : , e device must pertain to the testator. In this case, the monies subject of savings account
ttnll!' IINn" Jr No. 35342-038 were in the nature of conjugal funds. In the case relied on, Rivera v.
People's Bank and Trust Co., we rejected claims that a survivorship agreement purports
to deliver one party's separate properties in favor of the other, but simply, their joint
11111!111er':IICC
holdings:
~i
IJJ/$•i!t/1" "Such conclusion is evidently predicated on the assumption that
1f l///l/l/l,::;irr Stephenson was the exclusive owner of the funds deposited in the bank, which
w e,iit11kr
assumption was in turn based on the facts (1) that the account was originally
l11W 1rmf [li/.'S opened in the name of Stephenson alone and (2) that Ana Rivera "served only
n111Jii 5i/lilmrl'i as housemaid of the deceased." But it not infrequently happens that a person
deposits money in the bank in the name of another; and in the instant case it
also appears that Ana Rivera served her master for about nineteen years
,,~/( without actually receiving her salary from him. The fact that subsequently
timifi;Jlilr,e
Stephenson transferred the account to the name of himself and/or Ana Rivera
,llllilJlim»w,-
and executed with the latter the survivorship agreement in question although
f' ,!!Jf tJl,r,e there was no kinship between them but only that of master and servant,
nullifies the assumption that Stephenson was the exclusive owner of the bank
1~ ~ra::rti::'l to account. In the absence, then, of clear proof to the contrary, we must give full
,~~c ::iay faith and credit to the certificate of deposit which recites in effect that the
funds in question belonged to Edgar Stephenson and Ana Rivera; that they
were joint (and several} owners thereof; and that either of them could
I fiilhect b,' ~he
withdraw any part or the whole of said account during the lifetime of both,
aoee ';I ent and the balance, if any, upon the death of either, belonged to the survivor."
:i1rnmialin::: es of
mill: sec:11aly, In Macam v. Gatmaitan, it was held:
1111! 1J11111de the 'This court is of the opinion that Exhibit C is an aleatory contract whereby,
according to Article 1790 of the (old} Civil Code, one of the parties or both
reciprocally bind themselves to give or do something as an equivalent for that
which the other party is to give or do in case of the occurrence of an event which
~IUll/1!!~,e ' is uncertain or wi/1 happen at an indeterminate time. As already stated,
llr:Jlttil/QJ/1"! ':C' Leonarda was the owner of the house and Juana of the Buick automobile and
:umrt i2f ,"' s most of the furniture. By virtue of Exhibit C, Juana would become the owner of
:mil/I uJtti•:r,e • the house in case Leonarda dies first, and Leonarda would become the owner of
ITTll///l///l.1/1 ':I'"-:: the automobile and the furniture if Juana were to die first. In this manner,
~·
Leonarda and Juana reciprocally assigned their respective property to one
another conditioned upon who might die first, the time of death determining the
event upon which the acquisition of such right by the one or the other depended.
trt s r1:.111 rg on This contract, as any other contract, is binding upon the parties thereto.
m11ill Maca,1 v.
Inasmuch as Leonarda had died before Juana, the latter thereupon acquired the
,illlJill"iel!i:'r'"' en ts"
ownership of the house, in the same manner as Leonarda would have acquired
the ownership of the automobile and of the furniture if Juana died first."
There is no showing that the funds exclusively belonged to one party, and hence
it must be presumed to be conjugal, having been acquired during the existence of the
111dl!i s;h::uld be
marital relations.
1:w/!l111e c,,d free
1:r.t ~ :1,::;-es or
Neither is the survivorship agreement a donation inter vivas, for obvious
11• :iiec~est or reasons, because it was to take effect after the death of one party. Secondly, it is not

51

............,,
ART. 776 AND ART. 781

a donation between the spouses because it involved no conveyance of a spouse's

,.,
own properties to the other. riJDIIMllll!

It is also our opinion that the agreement involves no modification of the conjugal
,q,,m
28
partnership, as held by the Court of Appeals, by mere stipulation, and that it is no 11111flmmr
"cloak" to circumvent the law on conjugal property relations. Certainly, the spouses iflNIBIIIHIUIIHeu
are not prohibited by law to invest conjugal property, say, by way of a joint and ~
several bank account, more commonly denominated in banking parlance as an
"and/or'' account. In the case at bar, when the spouses Vitug opened savings account
No. 35342-038, they merely put what rightfully belonged to them in a money-making
•·
illm!nr:aeBltt
1111111118JTIT~
venture. They did not dispose of it in favor of the other, which would have arguably
11111a1namnm1tll1
been sanctionable as a prohibited donation. And since the funds were conjugal, it
aehlhlll!
cannot be said that one spouse could have pressured the other in placing his or her
8111111115,, IJIIHR
deposits in the money pool.
\aiJi,ljj
The validity of the contract seems debatable by reason of its "survivor-take-al/"
~ 1111!!$,,!JII
feature, but in reality, that contract imposed a mere obligation with a term, the term
being death. Such agreements are permitted by the Civil Code.
fttmmml11!11
Under Article 2010 of the Code:
SllUlll"'Wli~ill!ll
"Art. 2010. By an aleatory contract, one of the parties or both bid:alli!!!lllllll1,.
reciprocally bind themselves to give or to do something in consideration of
suc:tl ~ "
what the other shall give or do upon the happening of an event which is tll 01nmaall i 11111111111115;,, ,a
uncertain, or which is to occur at an indeterminate time."
of a SW11111V11im
Under the aforequoted provision, the fulfillment of an aleatory contract depends (21~·-
on either the happening of an event which is (1) "uncertain," (2) "which is to occur at t1ille rlE!WilllniR!!!!•
an indeterminate time." A survivorship agreement, the sale of a sweepstake ticket, a
transaction stipulating on the value of currency, and insurance have been held to fall l~n
under the first category, while a contract for life annuity or pension under Article iarWrl.111'1 U111ll
2021, et sequentia, has been categorized under the second. In either case, the ii.1111'"1 ireilab!!mli! IIIIB!

element of risk is present. In the case at bar, the risk was the death of one party and ,oir ::ommnuwinmut
survivorship of the other. 0\1~11•
However, as we have warned: ex:c~ iil111111!J,1l!ll!t
"But although the survivorship agreement is per se not contrary to law, tt'll,E ::Dllll!Wll/iildl
its operation or effect may be violative of the law. For instance, it is be g.ratuiillillllwll5 l:11

shown in a given case that such agreement is a mere cloak to hide an rncir::1:s mJ///J/Hill
inofficious donation, to transfer property in fraud of creditors, or to defeat death aif ftll!E

28 Art. TJl7i
In the words of the Court of Appeals: "Since private respondent and his late wife did not enter
into a marriage settlement before marriage, their property relationship was that of conjugal U1e de.111111111111
partnership governed by the Civil Code. The system of conjugal partnership prohibits, as already
mentioned, donation between the spouses during the marriage, except that which takes effect after rameofDeal
the death of the donor, in which case, the donation shall comply with the formalities of a will (Arts. S.I...IICU5i:s1rn
133, 728, 805). To allow the prohibited donation by giving it a cloak of aleatory contract would t'"1€ i11111heir1i1tt;.111
sanction a (modification) of a marriage settlement during marriage by a mere stipulation. As ;p,t;,,,,,5,j,u111il deiiliiu
mandated by Art. 52, the nature, consequences and incidents of marriage, which is not a mere
contract but an inviolable social institution are governed by law, and not subject to stipulation." ,r,~llem
:p,rre~1im

52
 11

ART. 777

the legitime of a forced heir, it may be assailed and annulled upon such
grounds. No such vice has been imputed and established against the
111ne, ,mtl"!J..: ga I
agreement involved in this case."
111\nlilltt 'II!: i:S 10 There is no demonstration here that the survivorship agreement had been
dl1illl!' '$111J1Cl'L Sc: S executed for such unlawful purpose, or, as held by the respondent court, in order to
iill]lllllllllll!t: ;d frustrate our laws on wills, donations and conjugal partnership.
lilllllffll:le as 21
The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased
J111i(S, ,KCO'L. ~:
her husband, the latter has acquired upon her death a vested firth over the amounts
mmlll!''ljf'-fi11111.ail!; i r, g
under savings account No. 35342-038 of the Bank of America. Insofar as the
nw ,;ay....al::!y
respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug,
1::1W11111Jlilll,g3 t we hold that the court was in error. Being the separate property of petitioner, it
1m; ~1i1S 1:J(" , er
forms no more part of the estate of the deceased.
WHEREFORE, the decision of the respondent appellate court dated 9 June 1987.
WJ(JJJJr"--e -,J If"
And its resolution, dated 9 February 1988, are set aside.
m1, h :,:;"11

From the foregoing decisions of the Supreme Court, it is established that

survivorship agreements are valid and binding, not only between the parties thereto,
::i,r i!JJ«~ but also against their respective successors, provided however, that the operation of
rmrJIIIM ,:;j such agreements is not violative of the law, particularly those relating to wills,
1W11/ltm,c;/".' s donations, and property relations between spouses. Examples of the violative effects
of a survivorship agreement are: (1) when used to conceal an inofficious donation,
"JlllCt !ClleOE'1 dS (2) when used to transfer property in fraud of creditors, or (3) when used to defeat
!5 t:n:.,; oc:'-'· at the legitime of compulsory heirs .
.mH<4e t:ic~ et , a
Therefore, from the perspective of the law on hereditary succession, a person may
m' Mielld ~:) fall
u1111TI!be!r A'."ticle lawfully enter into a survivorship agreement with his or her spouse, or with any
w ,:arse the unrelated person, with respect to any of his or her separate property, or any conjugal
mnre pliiltT,: a'.ld or community property. If upon the death of such person he or she should be survived
by compulsory heirs, the latter cannot assail the validity of such survivorship agreement
except insofar as it prejudiced their legitime. Note that the Supreme Court stressed that
the consolidation of the ownership of the property in the survivor is not a form of a
!' tllll //IIJ1,li,
11tr .1/S be
gratuitous conveyance by the deceased party to the survivor, whether inter vivas or
l'llllu:/JJe :;- mortis causa. Therefore, such consolidation of ownership in the survivor upon the
' *1e·::: death of the counterparty is neither subject to the donor's tax nor to the estate tax.

Art. 777. The rights to the succession are transmitted from the moment of
enter
IWllli/ftft' r;;1,,.;;1 rot
the death of the decedent.
t1ilfll1Jt ,:_• :onjugal
111t1111i/J111tt:s :;;s already
Time of Death of the Decedent
,, ~IE'I! :',";'ect after
t'.11111!:~; cf:;; ,viii (Arts. Succession opens from the moment of death of the decedent. The ownership of
'"'' ;::;i,r,:·:;;ct would the inheritance passes to the heirs at the time of such death. Nonetheless, the
1irrei st:u:...;iction. As
physical delivery of the inheritance to the heirs may be delayed by legal formalities.
'mr::/'r 1:s ~ :;;: a mere
r~: .7it.ll/Pi.. J·:ion." In settlement proceedings, the payment of outstanding debts of the decedent, the
preparation of the CPA Statement on itemized assets and deductions from gross

53
 II!"
,..

ART. 777

29
estate, the preparation of the estate tax returns and the payment of estate tax, the [llJDlliefllHmmm
execution of the deed of partition, and the completion of the publication requirement, tft&mm"lilitoo
among others, are conditions precedent to the delivery of the inheritance to the heirs. illllllUUJIRnlllllH!

In testamentary proceedings, the probate of the will, the appointment of the executor all!lililll•11
IJIIIIIMlllni'
or administrator, the determination of the validity of the provisions of the will, the
resolution of issues relating to the capacity of the heirs to succeed, the settlement of 1llllnu
issues of collation, and the preparation and approval of the project of partition, among aGllmenttli 1',
other things, can delay the distribution of the estate to the heirs. In intestate
proceedings, the declaration of heirship, completion of the inventory of the assets and
the payment of the liabilities of the decedent, the appointment of an administrator and
the approval of his final accounts, among other things, often result in years of litigation.
Nonetheless, ownership of the inheritance immediately passes to the heirs from the
moment of death of the decedent.
The time of death of the decedent is a critical element of succession. It is the 8 F 1UltttDD
precise time on which the following, among other things, are determined: {i) the law IIIPlllllllai
applicable to the substantive validity of his will; {ii) the composition of the decedent's mlllllittllwl
assets and their va/uation; 30 the outstanding liabilities of the decedent and their
31
payment; (iii) the compulsory heirs who are to succeed the decedent and their
32 33 ,Alm'lillinm
capacity to succeed; (iv) determination of issues relating to preterition; (v) the
34 ,ailllllJlluu!llm!
testamentary capacity of the testator; and (vi) the timeliness of acceptance or

....
35 mlheeitlteum1
repudiation of the inheritance and the effects thereof.
1,-miiiJillemll

....
Consequences of Article 777 ,amquuiiJR a

1. Death, the Defining Moment il iWl l lmli ldl l111l1

The death of the decedent is the defining moment when the heirs acquire a
111111119mi1111
definite right to the inheritance, whether such right is pure or contingent.
llidflt11111111im1111

BONILLA v. BARCENA z.. IDIIII

No. L-41715, 18 June 1976
-ilttllln
71 SCRA 491
nl#ltem1e•Me111rttt,, tmtt
Martin, J. (First Division): 111111dt ifllBIIamn1tn1111111

Fortunata Barcena, mother of minors Rosalia and Salvacion Bonilla and wife of 1ii l n lftm!· illfaDrme, !
Ponciano Bonilla, instituted a civil action to quiet title over certain parcels of land. 1iii11mcll~i11illlilllt ,iill1111l
11111Ni-lllilil!t··1d
29
Applicable when the gross estate exceeds PhP2 Million.
30
Articles 781 and 908 Civil Code; Dizon-Rivera v. Dizon, 33 SCRA 554 {1970).
31
Article 887, Civil Code.
32
Article 1025, Civil Code.
33
Article 854, Civil Code. ..,..llll,,
34
Articles 797 and 798, Civil Code.
35 5iflwel'
Article 1043, Civil Code.
i!uiuilliilialllll11W

54
 ART. 777

~tax.the Defendants filed two motions to dismiss the complaint; the second on the ground
n 'J1181i,W!i"E"nent,
that Fortunata in the meantime passed away and lost legal capacity to sue. Plaintiff's
counsel confirmed Fortunata's death and asked for the substitution by her minor
e·'lllml!,tre heirs.
children and husband. The court dismissed the case on the ground that a dead
1f1111111me executor
person cannot be a real party in interest and has no legal personality to sue.
' l!lllme ~ii, the
The Supreme Court reversed the respondent Court and set aside its order. While
·Sidll:l1ement of
a dead person cannot sue in court, he can be substituted by his heirs in pursuing the
111imii111Ji1Dl"I a 11ong
case up to its completion. The records show that Fortunata died on 9 July 1975 while
, 1111111 ,rtestate
the complaint was filed on 31 March 1975. This means that when the complaint was
aie ass.ets and filed Fortunata was still alive and the court acquired jurisdiction over her person. If
TTJJ111ffl111islltnrat or a nd thereafter she died, the Rules of Court prescribe a procedure whereby a party who
n. ICD1f !llitigation. died during the pendency of the proceeding can be substituted.
~1n 'Torn the Under the Rules of Court, whenever a party to a pending case dies, his attorney
must inform the court promptly of such death and give the name and residence of his
,!5ili100 t ;s the executor, administrator, guardian or other legal representatives. Fortuna's counsel
111eirt: ( 1 t1e law complied with this duty. The respondent court, however, instead of allowing the
~ oe•:edent's substitution dismissed the complaint on the ground that a dead person has no legal
ie!11'111t: a~d their
personality to sue. This is a grave error. Article 777 of the Civil Code provides "that
31 the rights to the succession are transmitted from the moment of the death of the
11'1111t anc their
decedent." From the moment of the death of the decedent, the heirs become the
ntuarn; ll 1V) the
absolute owners of his property, subject to the rights and obligations of the
,il!llCClf?ta 'l ce or decedent, and they cannot be deprived of their rights thereto except by the methods
provided for by law. 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.
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. When
Fortunata therefore died, her claim or right to the parcels of land in litigation was not
nlf!ll!"S .acquire a extinguished but was transmitted to her heirs. Her heirs acquired interest in the
!llffl:.. properties in litigation and became parties in interest to the case.

2. Distribution Subject to the Existence of a Residual Estate

Notwithstanding the transmission of hereditary rights upon the death of the
decedent, the right of the heirs to specific distributive shares of the inheritance does
not become finally determinable until all the debts of the estate are paid. Until then,
in the face of said claims, the right of the heirs to their final distributive shares is
~111'11itt 'JJDJ··e of
::1e11is :if and. inchoate and cannot be enforced. The distribution of the estate is subject to the
existence of a residual estate after payment of the decedent's debts.

SALVADOR v. STA. MARIA

No. L-25952, 30 June 1967
20 SCRA 603

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

55

...........,.
ART. 777

them in favor of the spouses Alfonso Salvador and Anatolia Halili. Alleging that the
sale was void for lack of consideration, he filed against said vendees a suit for
reconveyance of said parcels of land (CFI of Bulacan, Br. I, Civil Case No. 1082).
On 27 April 1956, Celestino died testate. As his alleged heirs, twenty-one persons
were 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). The administrator filed in Sp. Proc.
No. 940 an inventory of properties of the estate, covering the same parcels of land
subject matter of the reconveyance action. Celestine's will was admitted to probate
and Dominador Cardenas was appointed executor of said will.
Twenty-three persons were instituted heirs in this will. Of these, nine were not
among the twenty-one alleged relatives substituted in the reconveyance case and of
the twenty-one substituted alleged heirs, seven were not instituted in the will.
In the reconveyance suit, Branch I rendered judgment ordering defendants '\lmiinr·1U11Jnn1.
therein (Spouses Alfonso and Anatolia) to reconvey the parcels of land to the estate !iem1ialll :U:

of Celestino. The Court of Appeals affirmed the reconveyance judgment, with the llldl~illiladl!iill
correction that reconveyance be in favor of the twenty-one heirs substituted as ~ ; 1!llilme n
plaintiffs therein. lldllllbimlM, ll1ttln
Three years later pursuant to an order of Branch II in the testacy proceedings, one l(ll!llll!!!lllllimi"1
of the parcels of land (Lot 6) was sold so that with its proceeds debtors who filed claims p!11111Ill1!!1115, d
may be paid. The Philippine National Bank bought it at PhP41,184.00. Said amount was ~iiuaumll :tt
then deposited in the same bank by the administrator, subject to court order. "il!ffln!>ll!!llllltilttl
'.lll!~ll!!!llldlliBll!!lllwli!!!
On 18 December 1964, defendants in the suit for reconveyance executed a deed
of reconveyance over the subject parcels of land in favor of Celestina's estate. lllt.illlllTI\1

Revoking the same as not in accordance with the final judgment therein, Branch I 511W111im:niaml'.1
ordered a new deed of reconveyance to be executed in favor of the twenty-one ,liilBlfflllmll:mnldSII
persons substituted as plaintiffs in that action. Accordingly, a new deed of ~lllj\i
reconveyance was made in favor of twenty-one persons as heirs of Celestino. ll1llilihnl!!!Jiiiii!!llfumil•lt

Following this, Branch I ordered the corresponding title certificate (TCT No. 54639) 3. ......
in the administrator's name canceled; new title certificate to be issued in the names of
the same twenty-one persons. TCT No. 63734 was issued in the names of the twenty- T11iie 1111i1P1111

one persons. :101T1e"1111: l1Clllf .:di

:;eceasea:11 f)en
On 7 December 1965, Branch I (reconveyance court) ordered PNB to release the
-eeds ammmiffiim
PhP41,184.00 proceeds of the sale of Lot 6 to the twenty-one plaintiffs in the
reconveyance case. Apparently, although the passbook was given by the administrator e-cr~
to said twenty-one persons, no release was made, as the PNB awaited Branch ll's order. a::'Tliri11~

Branch II approved the claims against the estate. Branch II (probate court) ordered
ctt e ~ mQf bl!

the return of passbook to the administrator, and release to the administrator by PNB of
PhP41,184.00, or so much thereof as needed to pay the debts of the estate.
After failing to get reconsideration of said order, the twenty-one substituted
heirs 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 PhP41,184.00 A.r,g,e1ffES 1,. j

proceeds of the sale of Lot 6; and to question Branch ll's (probate court) power to iltil:a!IIDIDI
dispose of the parcels of land involved in the reconveyance suit in Branch I. 2 real emttii

56
 ART. 777

~Jml tli"r.ar: th e Raised are these issues: (1) Are the parcels of land and the proceeds of the sale
ai s1urrt for of one of them, properties of the estate or not? (2) Does final judgment in the
IBl:J} reconveyance suit in favor of the twenty-one so-called heirs who substituted
Celestino bar the disposition of the reconveyed properties by the settlement court?
~'"sens
11J1111$
~nille, s;o~cal It is a settled point of law that the right of heirs to specific distributive shares of
a, ,11111&:r'.:~.:ed the inheritance does not become finally determinable until all the debts of the estate
111m Sjp. Froc. are paid. Until then, in the face of said claims, their rights cannot be enforced, are
11E!l!5 cf and inchoate, and subject to the existence of a residue after payment of the debts
clllJ p-c::iate (Castel/vi de Raquiza v. Castel/vi, L-17630, 31 October 1963; Jimoga-on v. Belmonte,
84 Phil 545; Sec. 1, Rule 90, Rules of Court).

nie •ere rot Petitioners do not question the existence of the debts above mentioned. They
,::::aise ar d of only contend that the properties involved having been ordered by final judgment
·•illll. 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.
1:Jliefier. : a n'!: s
:i d'nie estate Said contention is self-refuting. Petitioners rely for their rights on their alleged
TIit, 'llllll'tr : h e character as heirs of Celestino; as such they were substituted in the reconveyance
~1$11tiirt::ut ec as case; the reconveyance to them was reconveyance to them as heirs of Celestino. It
follows that the properties they claim are, even by their own reasoning, part of
Celestina's estate. The right thereto as allegedly his heirs would arise only if said
!!!e!ldliill'llgs one
parcels of land are part of the estate of Celestino, not otherwise. Their having
: fiilied :.aims
received the same, therefore, in the reconveyance action, was perforce in trust for
,ill!ffl~in: v.:as
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.
:UJ11t!ellt a ceed
1n1tOJ s estate. At any rate, the proceeds of Lot 6 alone (PhP41,184.00) appeared more than
!1111111., B.nnch I
sufficient to pay the debt (PhP38,872.58); and there will remain the other parcels of
~t"ll-one land not sold. As to the question of who will receive, how much as heirs, the same is
111111/J a:be€-d of properly determinable by the settlement court, after payment of the debts.
llll'lliCL
Wherefore, the petition for certiorari is denied, with costs.

- ·~. 5.!639) 3. Automatic Transmission of the Hereditary Estate

:j'i,1e n,ar ES of
The rights to succession are automatically transmitted to the heirs from the
, r:Miie :,..,, e rty-
moment of death of the decedent. While in a judicial settlement of the estate of a
deceased person the formal declaration or recognition of such successional rights
:: r~e!liease the
needs confirmation, the court is duty-bound to protect these rights from
J11111llJif!f~ , the
encroachments made or attempted prior to such judicial declaration. If the
11idim1ll".1·.:s-:rarnr
TI1ctr !II s ;:,rder. administrator or executor fails or refuses to act to protect the rights of the heirs, the
latter may take action in place of such administrator or executor.
:mwrtl J-r:ered
l!i::11r b·~ :J"-.B of RAMIREZ v. BALTAZAR
No. L-25049, 30 August 1968
f sa..ui:::i-s-: tJted 24 SCRA 918
1 1l1'1"7e·, -r inary
1

~1•11F41184.00 Angeles, J.:

mrt) pc·,1,1er to It appears that on 6 January 1959, Victoriana Eguaras, single, made and executed
~ i.. a real estate mortgage over a parcel of land owned by her in fee simple, as security

57
ART. 777

for a loan of PhP2,170.00 in favor of the spouses Artemio Baltazar and Susana Flores. 1111111in111CJl!1i, 1m
Upon the demise of the mortgagor, the mortgagees, as creditors of the deceased, S.Ulid l!rni!!HIII
filed a petition for the intestate proceedings of her estate in the Court of First 111n 11111!li, ilfutl!1,
Instance of Laguna, wherein said mortgagees, as petitioners, alleged that Filemon sail!!. llllt 111! 1

Ramirez and Monica Ramirez are the heirs of the deceased. Filemon Ramirez was Sillllle iiB!t ri)D
appointed administrator of the estate; however, having failed to qualify, the court 1iihnE'
appointed Artemio Diawan, then deputy clerk of court, administrator of the estate C011nn1111llilil!IIIII
who, in due time, qualified for the office. Diallll/Jal11!'1
The mortgagees Baltazar and Flores filed a complaint for foreclosure of the :~Hl1ti,1\1'
aforesaid mortgage against Artemio Diawan in his capacity as administrator of the ~ICII
estate. The defendant-administrator was duly served with summons but he failed to the : ~ $
answer, whereupon, on petition of the plaintiffs said defendant was declared in ::;i.a.ilffft,-
default. The case was referred to a commissioner to receive the evidence for the :J'f"C!Eiil!l!llllflll
plaintiffs, and defendant-administrator, as deputy clerk of court, acted as such a.,-,11orrng 1
hearing commissioner. ::: ::s.mus:m; 1

A decision was rendered decreeing the foreclosure of the mortgaged property :Yei1n11111nrn
and the sale thereof, if within ninety days from finality of the decision, the obligation At ti
was not fully paid. The judgment not having been satisfied, a writ of execution was :·'"'·e'mStE!li~

issued for the sale of the mortgaged property, and after compliance with the t '1€ -1111"'1
requirements of the law regarding the sending, posting and publication of the notice 1ce1fan11tmil!I
of sale, the sheriff sold the property at public auction to the highest bidder, who 3i1~1d 1
happened to be the plaintiffs themselves. On petition of the plaintiffs, the sale was 3ppeliliilllllm
confirmed by the court. ::::n.cerm11!!
Filemon Ramirez, Monica Ramirez and Jose Eguaras, the first two being the heirs :i".ese't:111111
named in the petition for intestate proceedings, filed a complaint designated "For the T'tneir:
Annulment of all Proceedings in said Civil Case No. SC-292 for the Foreclosure of the :c- the 'ltni!!
Mortgage", against the spouses Baltazar and Flores, and Artemio Diawan, in his d ec.~1u1
capacity as administrator of the estate of Victoriana Eguaras, and Silverio Talabis, in COL~ "'iiiil!rr

his capacity as deputy provincial sheriff of Laguna. ma:Je c:nr

The facts hereinabove narrated are succinctly contained in the complaint with th at al!ltlhi:
the additional averments that the defendant Diawan, the deputy clerk of court tes:a1te :i
appointed as administrator of the intestate estate of the deceased, acted in collusion aaf:'"l,1"11/st:•
with the other defendants Baltazar and Flores, deliberately and in fraud of the !1 SIIIMT
plaintiffs: (a) in allowing the reglementary period within which to file an answer to to haw<e t
lapse without notifying and/or informing the said plaintiffs of the complaint for decea:s.e1Cll
foreclosure, as a result of which he was declared in default to the prejudice of the latter 5iiurr
estate which he represents; (b) that had the plaintiffs (Monica and Filemon) been pro ce-ediurr
notified of the pendency of the case, the defendant-administrator could have whict tlltnf
interposed a counterclaim because payment in the sum of PhPl,548.52 had been the .5,,HC: il
made and received by the mortgagees on account of the debt; (c) in presiding as but t.~.e +11
hearing officer in the ex parte hearing to receive evidence for plaintiffs therein, In ev i:311:Jl111w
notwithstanding the fact that there was another deputy clerk of court available who penc nig, i
could have acted in his stead, as a result of which an anomalous situation was com~-e11n11c
created whereby he was a defendant and at the same time a commissioner receiving ;:RiEiliuJ
evidence against himself as administrator; (d) in allowing judgment to become final dis rr 15.5.t!!!•r::
without notifying the plaintiffs; (e) in deliberately allowing the 90-day period within the lcw·e.~

58
 ART. 777

Siillllll'ml flO"ES. which to make payment to expire without notifying the heirs, as a result of which the
~ mlllH:eas.ed. said heirs were not afforded an opportunity to make payments ordered by the court
lllllllllt mf First in its decision; and (f) in refusing to help the heirs seek postponement of the auction
flnd Fiil~or. sale. It is also alleged that it was only when the property foreclosed was published for
illll11ffllllll!lll!!:Z: ,i.::5 sale at public auction that the heirs came to know about the foreclosure proceedings.
Re CC~rt
j\',,. The defendant spouses Baltazar and Flores filed a motion to dismiss the
i 1l!ll!raE es-:a:e 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
H!lllllR d t.,e capacity to sue and that the complaint states no cause of action.
l"allllllllll ,cf t.,e Reconsideration of the aforesaid order having been denied, the plaintiffs took
·1nre aiiiec : o the present appeal where they assigned the following errors: (1) in holding that
ci!IH:11.ifrec i ri plaintiff-appellants have no legal capacity to sue until their status as legal heirs of the
lTfflm:HI!' fu,r :-,e deceased is determined; (2) in ruling that there was no collusion or connivance
t!!!!liCt z; 5.JCh 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
l!!'lilt ,p-o,;:,e rty preliminary injunction.
nut' ICltilDliiga::ion At the outset, let it be remembered that the defendants-appellees, in availing
11!!11I:1111mt11,011 was themselves of the defense that the plaintiffs-appellants had not been declared to be
Cl!!!' \Ill/It-, the the heirs of the deceased Victoriana Eguaras, have overlooked the fact that they
:Jllftffi!Te ro:ice (defendants-appellees) themselves in their petition for intestate proceedings have
t: alleged that Filemon Ramirez and Monica Ramirez, two of the herein plaintiffs-
l!:Jmllllimlle'I'" W'lO
11,ie sa1,,e w as 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.
11!11lli ffle "lei rs
1111i!!!id "',~Jr the There is no question that the rights to succession are automatically transmitted
1/r:JJ!Jll/Jl/tt J f th e to the heirs from the moment of death of the decedent. While, as a rule, the formal
fillllll!a. ' r his
declaration or recognition to such successional rights needs judicial confirmation, this
i11r1, T.a;aois, in court has, under special circumstances, protected these rights from encroachments
made or attempted before the judicial declaration. In Pascual v. Pascual, it was ruled
that although heirs have no legal standing in court upon the commencement of
nn~lliim": ,vi th
testate or intestate proceedings, this rule admits of an exception as "when the
~1rll < of :ourt
administrator fails or refuses to act, in which event the heirs may act in his place."
tt ·11!'l 1coll JS ion
~ cf the
A similar situation obtains in the case at bar. The administrator is being charged
:11'1' ii11!111S·~er :o
to have been in collusion and connivance with the mortgagees of a property of the
n1111111q:mllai r: fo r deceased, allowing its foreclosure without notifying the heirs, to the prejudice of the
llll!mliliRCe C; th e
latter. Since the ground for the present action to annul the aforesaid foreclosure
!f11'1t111Wi'i ::ieen
proceedings is the fraud resulting from such insidious machinations and collusion in
:J1:11uw,j1d rave
which the administrator has allegedly participated, it would be farfetched to expect
i..::: ~a.ct ::ieen the said administrator himself to file the action in behalf of the estate. And who else
;;nr:es,d "lg as but the heirs, who have an interest to assert and to protect, would bring the action?
tull'fs :~e-ein, Inevitably, this case should fall under the exception, rather than the general rule that
w1:a11ii,oflb,,e ,vho pending proceedings for the settlement of the estate, the heirs have no right to
11t.:.i,arr.::10~ was commence an action arising out of the rights belonging to the deceased.
111ef '"ec'°i·,ing PREMISES CONSIDERED, the order appealed from is hereby set aside insofar as it
~ieH:::aiirr e fi n a I dismissed the complaint in Civil Case No. SC-319, and the records are remanded to
11e1!"111::i1d ,\ 1th in the lower court for further proceedings. Cost against defendants-appellants.
lJ

59

......_..., ----------~-~~- -~~-

 rl
'i

::,i.: 1:11/jlJq -
il!ll!I Ii .
.. ,.,11 .,...,,

ART. 777

4. Recognition of Ownership by Reason of Succession 11111mE!111D111Unt

'llllll!lllll1Btt11r.ail
It is a general rule that the rights to the succession are transmitted from the
,unntffimJmnmmm
moment of the decedent's death. However, the recognition of ownership of the 1llllllllll!lllle1mr
inheritance by reason of succession is not, in certain cases, self-executory. One clear tl!!!lllllllml!r!!llffllllli
example is the transfer of ownership of shares of stock of a corporation. Upon the
ll/1T111 ii
death of a shareholder, the heirs do not automatically become stockholders of the
\lllllliim . illlllll!!
corporation and acquire the rights and privileges of the deceased as a former
shareholder. The shares of stocks must first be transferred to the heirs and such
transfer must be recorded in the stock and transfer books of the corporation. Section
llfflll/111111
63 of the Corporation Code provides that no transfer of shares shall be valid except as
rtl!!UU!Hi
between the parties until the transfer is recorded in the books of the corporation.
,IJJu//B/1

,_
The next two cases demonstrate this point.
lllllll/11/IJI

PUNO v. PUNO ENTERPRISES, INC.

G.R. No. 177066, 11 September 2009
599 SCRA 585 :iBl#mmll
Nachura, J. (Third Division): lltlnl!!'

Carlos L. Puna, who died in 1963, was an incorporator of Puno Enterprises, Inc. ~ ·UU

On 14 March 2003, petitioner Joselito Musni Puno, claiming to be an heir of Carlos L. $i!!llffl-.,-nt
Puno, initiated a complaint for specific performance against respondent. Petitioner illlllDmwat,m
averred that he is the son of the deceased with the latter's common-law wife, Amelia m'f··lll:II
Puna. As surviving heir, he claimed entitlement to the rights and privileges of his late emnffllifflllll!!!ldJI
father as stockholder of respondent. The complaint thus prayed that respondent ~

allow petitioner to inspect its corporate books, render an accounting of all the i1111JnID1
transactions it entered into from 1962, and give petitioner all the profits, earnings, ~1111
dividends or income pertaining to the shares of Carlos L. Puna. The court rendered a i3!$,-.1
Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering Jesusa Puna and/or

~'"
tllnE' min,i.
Felicidad Fermin to allow the plaintiff to inspect the corporate books and be,allillffl.
records of the company from 1962 up to the present including the financial !tite· lCllCl1llilllll
statements of the corporation. cllff••
fllllf'
wrrtlliJrl
On appeal, the CA ordered the dismissal of the complaint, noting that petitioner -eflf!em,i::i.
was not a stockholder of the corporation but was merely claiming rights as an heir of ~II
Carlos L. Puno. His action for specific performance therefore appeared to be ~ll!llll!!''"
premature; the proper action to be taken was to prove the paternity of and his
Thuumh
filiation to Carlos L. Puna in a petition for the settlement of the estate of the latter.
1111: ris Dlte'
Petitioner's motion for reconsideration was denied by the CA.
~.a,m1
The petition is without merit. Petitioner failed to establish the right to inspect t:s 1ttt:dilmiilii11
respondent's books and receive dividends on the stocks owned by Carlos L. Puno. :::i 1mt11n1, "l!
Petitioner anchors his claim on his being an heir of the deceased stockholder. r;,;as ;mm1illl
However, we agree with the appellate court that petitioner was not able to prove
l'A'AfllifflE
satisfactorily his filiation to the deceased stockholder, thus, the former cannot claim
to be an heir of the latter. A certificate of live birth purportedly identifying the
putative father is not competent evidence of paternity when there is no showing that

60
 ART. 777

the putative father had a hand in the preparation of the certificate. The local civil
registrar has no authority to record the paternity of an illegitimate child on the
lttt:Hed f~om the
information of a third person. As correctly observed by the CA, only petitioner's
111effl1i,p :: • th e
mother supplied the data in the birth certificate and signed the same. There was no
mim1r O·ne clear evidence that Carlos L. Puno acknowledged petitioner as his son.
11m1.. U oo n the
In any case, Sections 74 and 75 of the Corporation Code enumerate the persons
lnll!Dllliml!eirs J: the
who are entitled to the inspection of corporate books, thus -
: ,iil5 a fymer
neiinrs ana such Sec. 74. Books to be kept, stock transfer agent.- ...
a1M_ S.ection The records of all business transactions of the corporation and the
Wla!lliiDIIII except as minutes of any meeting shall be open to the inspection of any director,
~ ,OOJlllX) rat iO n. trustee, stockholder or member of the corporation at reasonable hours on
business days and he may demand, in writing, for a copy of excerpts from
said records of minutes, at his expense ...
Sec. 75. Right to financial statements.-Within ten (10) days from
receipt of a written request of any stockholder or member, the corporation
shall furnish him its most recent financial statements ...
The stockholders' right of inspection of the corporation's books and records is
~iri:ses n c. based upon his ownership of shares in the corporation and the necessity for
r::nfi' (ar:s L. self-protection. After all, a shareholder has the right to be intelligently informed
:. ~:t·oner about corporate affairs. Such right rests upon the stockholders' underlying ownership
111Jllll'ie ... A.rei!ia of the corporation's assets and property. Similarly, only stockholders of record are
.is imtF '"!rs ate
1 entitled to receive dividends declared by the corporation, a right inherent in the
~cent ownership of the shares.
F IDIJ1i! ail :he Upon the death of a shareholder, the heirs do not automatically become
!Ji,. ,earnings, stockholders of the corporation and acquire the rights and privileges of the deceased
'l"1e'lllllle'"E0 a as shareholder of the corporation. The stocks must be distributed first to the heirs in
estate proceedings, and the transfer of the stocks must be recorded in the books of
the corporation. Section 63 of the Corporation Code provides that no transfer shall
.:J11111,mt.:r.r
be valid, except as between the parties, until the transfer is recorded in the books of
ml«:s liln.C
iumu;mmc::,c; the corporation. During such interim period, the heir stands as the equitable owner
of the stocks, the executor or administrator duly appointed by the court being vested
with the legal title to the stock. Until a settlement and division of the estate is
utr ~rc,oner effected, the stocks of the decedent are held by the administrator or executor.
ll!fu ~I h,e 'of Consequently, during such time, it is the administrator or executor who is entitled to
iill\l;lreclt : C be exercise the rights of the deceased as stockholder.
, lJ111' a11c ris
Thus, even if petitioner presents sufficient evidence in his case to establish that
111T tl'me at:er.
he is the son of Carlos L. Puno, he would still not be allowed to inspect respondent's
books and be entitled to receive dividends from respondent, absent any showing in
11t to 1·1ispect its transfer book that some of the shares owned by Carlos L. Puno were transferred
ll1CJ15 L :iv10. to him. This would only be possible if petitioner has been recognized as an heir and
s1t:11DJ11clic:-io Icer. has participated in the settlement of the estate of the deceased.
~Iii~ ti: ::irJve
WHEREFORE, premises considered, the petition is DISMISSED.
:::illll'IIT"IIO't : aim
1

1:r,m::1:M11·1r s :he
:1:i1101111111"n§" that

61

.,
F""
, ......_....,
ART. 777

REYES v. REGIONAL TRIAL COURT OF MAKATI, BR. 142 ·lbmm1q1111111u

G.R. No. 165744, 11 August 2008 l\11111111imDlllitt<ff
561 SCRA 593 llllm,,A
Brion, J. (Second Division): ~ilffill[
n,m,nmnum )I
We point out at the outset that while Rodrigo holds shares of stock in Zenith, he 11111E11!f"ffum
holds them in two capacities: in his own right with respect to the 4,250 shares lmauml1tlmlll
registered in his name, and as one of the heirs of Anastacia Reyes with respect to the ,mmi11111tt., ,11g
136,598 shares registered in her name. What is material in resolving the issues of this nmillb amtlt
case under the allegations of the complaint is Rodrigo's interest as an heir since the ,111111111111111111 •.nlllll

subject matter of the present controversy centers on the shares of stocks belonging emllliillllll!mllll
to Anastacia, not on Rodrigo's personally-owned shares. In this light, all reference to ~·ll!IIEIIIIIIIII
shares of stocks in this case shall pertain to the shareholdings of the deceased
Anastacia and the parties in interest therein as her heirs.
ammmt
Article 777 of the Civil Code declares that the successional rights are transmitted

~-.,m
,Pll/111
from the moment of death of the decedent. Accordingly, upon Anastacia's death, her
Hlni!!J1111
children acquired legal title to her estate (which title includes her shareholdings in
Zenith), and they are, prior to the estate's partition, deemed co-owners thereof. This
status as co-owners, however, does not immediately and necessarily make them
stockholders of the corporation. Unless and until there is compliance with Section 63 lilltlml!~
of the Corporation Code on the manner of transferring shares, the heirs do not ~llimimlll
become registered stockholders of the corporation. Section 63 provides: Hl!'Sl!t,. ~!ft!'
amna:I· '.l!ll!nlll!
Section 63. Certificate of stock and transfer of shares.-The capital
stock of stock corporations shall be divided into shares for which certificates ~IIII
5,11:iiiiB/11!!,a!I
signed by the president or vice-president, countersigned by the secretary or
tnllf!i Wme· ii
assistant secretary, and sealed with the seal of the corporation, shall be
ClllllfflieJ1'1Jlt
issued in accordance with the by-laws. Shares of stock so issued are personal
Clle.'1ni11n11illlle:
property and may be transferred by delivery of the certificate or certificates
::i11stmilllm11llltt
indorsed by the owner or his attorney-in-fact or other person legally
::3/l"lllllllll :1
authorized to make the transfer. No transfer, however, shall be valid except
,ntr.11~mn
as between the parties until the transfer is recorded in the books of the
ul"15ildli11t:tt11
corporation so as to show the names of the parties to the transaction, the
date of the transfer, the number of the certificate or certificates, and the 11t1111 :f
number of shares transferred. sti.~.:,
No shares of stock against which the corporation holds any unpaid C::,,1rnsema111
claims shall be transferable in the books of the corporation. ,11i·DUJ1lm:li
: i..;,..!!$,m!lill!C:lt
Simply stated, the transfer of title by means of succession, though effective and :-;~
valid between the parties involved (i.e., between the decedent's estate and her
heirs), does not bind the corporation and third parties. The transfer must be COftllllll
registered in the books of the corporation to make the transferee-heir a stockholder
-.,i.,.s \111(/11
entitled to recognition as such both by the corporation and by third parties.
uniess ai,iur:I
We note, in relation with the above statement, that in Abejo v. de la Cruz, and
TCL Sales Corporation v. Court of Appeals we did not require the registration of the maae:ins/i;
transfer before considering the transferee a stockholder of the corporation (in effect dee arei:::, ·nr
upholding the existence of an intra-corporate relation between the parties and decedenrr'i

62

mm liernl1;t, he
~.'.25[1 s,, c res
~!!llllJllee :c the
11mill1Ue5 cf :his
1!fl11ir 5,111K e t he
llf:s l:mE!'k:i:ig,i ng
,~~ll"er·c e to
nue ,«llle(eased
, m11111:sr1 :t ed
',, ,clllE.an::r. her
lt!!lffmcDiicbi-,gs in
lt11ie.rnec.;. -his
:'1Tllae :hem
lM: 'Sec:: Jr 63
~uemrs ,:io not
··~ta!
-01)ffeiucates
Ta:m1'il :; .'
slitnmln/d. be
~Jem'SOl'TQ/
':tl1//liialtes
I ,/i/figDI r'
rrt ,IElH/1:1:'t::
i;, rJJt tre
~um,. tr-e
,iJJtmlllll tr-e
!!11'1fien::i". e a nd
:aitl!:e .a:11:: her
11!!11' rnL.5: be
1· 'it!:JICl('"::Jlder
unless and until a liquidation of the assets and debts left the decedent shall have been
,u:r :.~c.::: and
r;aT1tJ1,or: :if the
made and all his creditors are fully paid." There is no law that requires succession to be
111:11r , - effect declared; in Article 777 succession takes place automatically from the moment of the
:i1a,r.: es and decedent's death.
ART. 777
bringing the case within the jurisdiction of the SEC as an intra-corporate controversy).
A marked difference, however, exists between these cases and the present one.
In Abejo and TCL Sales, the transferees held definite and uncontested titles to a
specific number of shares of the corporation; after the transferee had established
prima facie ownership over the shares of stock in question, registration became a
mere formality in confirming their status as stockholders. In the present case, each of
Anastacia's heirs holds only an undivided interest in the shares. This interest, at this
point, is still inchoate and subject to the outcome of a settlement proceedings; the
right of the heirs to specific, distributive shares of inheritance will not be determined
until all the debts of the estate of the decedent are paid. In short, the heirs are only
entitled to what remains after payment of the decedent's debts; whether there will
be residue remains to be seen. Justice Jurado aptly puts it as follows:
No succession shall be declared unless and until a liquidation of the assets
and debts left the decedent shall have been made and all his creditors are fully
paid. Until a final liquidation is made and all the debts are paid, the right of the
heirs to inherit remains inchoate. This is so because under our rules of
procedure, liquidation is necessary in order to determine whether or not the
decedent has left any liquid assets which may be transmitted to his heirs.
Rodrigo must, therefore, hurdle two obstacles before he can be considered a
stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia.
First, he must prove that there are shareholdings that will be left to him and his co-heirs,
and this can be determined only in a settlement of the decedent's estate. No such
proceeding has been commenced to date. Second, he must register the transfer of the
shares allotted to him to make it binding against the corporation. He cannot demand that
this be done unless and until he has established his specific allotment (and prima facie
ownership) of the shares. Without the settlement of Anastacia's estate, there can be no
definite partition and distribution of the estate to the heirs. Without the partition and
distribution, there can be no registration of the transfer. And without the registration, we
cannot consider the transferee-heir a stockholder who may invoke the existence of an
intra-corporate relationship as premise for an intra-corporate controversy within the
jurisdiction of a special commercial court.
In sum, we find that - insofar as the subject shares of stock (i.e., Anastacia's
shares) are concerned - Rodrigo cannot be considered a stockholder of Zenith.
Consequently, we cannot declare that an intra-corporate relationship exists that
would serve as basis to bring this case within the special commercial court's
jurisdiction under Section S{b) of PD 902-A, as amended. Rodrigo's complaint,
therefore, fails the relationship test.
Comments on Reyes
This writer takes exception to the statement that "no succession shall be declared
63
ART. 777

This writer also takes exception to the statement that "until a final liquidation is ~

made and all the debts are paid, the right of the heirs to inherit remains inchoate." The llmnlanmnrn:1111
,a«!fflm!lllllll
right of an heir to inherit arises from the moment of the death of the decedent, although
mlllllmmml,
his right to specific distributive is inchoate. In Salvador v. Sta. Maria, 36 the Court ruled:
'll!!!!ll!llim1
"It is a settled point of law that the right of heirs to specific distributive shares of
\111111
the inheritance does not become finally determinable until all the debts of the estate
,a.,i1i111111
are paid. Until then, in the face of said claims, their rights cannot be enforced, are
iiill!!ll!ttlllmw
inchoate, and subject to the existence of a residue after payment of the debts
°TilnE"lllllllilll
{Castel/vi de Raquiza v. Castel/vi, L-17630, 31 October 1963; Jimoga-on v. Belmonte,
84 Phil 545; Sec. 1, Rule 90, Rules of Court)." m
'111a!!puen
It is clear that the right to inherit is not a mere expectancy pending the payment of 91111111H!!' ,ff
the outstanding debts of the decedent. What is uncertain is whether or not the heir ~·U
will receive anything after the debts are paid. The process of liquidating the estate bi-J
does not reduce the successional rights of the heir to a mere expectancy. The "right Odiml!IIDe!l
to inherit" is not synonymous to the "right to specific distributive share." :111B1111111ell4w
llTDIJPilllli
Finally, this writer takes exception to the statement that liquidation is necessary in
1hb111
order to determine whether or not the decedent has left any liquid assets which may
37
be transmitted to his heirs. "Liquid asset" means cash or easily convertible into cash;
or cash asset (e.g., cash or the unrestricted credit balance in a bank account} or readily
38
marketable security. That a decedent left no cash or "liquid asset" does not mean
1/llll!ltl
succession will not take place or that the heirs will not inherit anything at all. mu
1/llll!ltl
5. Disposal of Hereditary Share after Death of the Decedent
As the hereditary share of an heir in the decedent's estate is transmitted or vested .,I
11/illJIIJJ

immediately from the moment of the death of the causante or predecessor in interest,
there is no legal bar to a successor (with requisite contracting capacity} to dispose his 11111mu

hereditary share immediately after such death, even if the actual extent of such share is ,W/111111

not determined until the subsequent liquidation of the estate. The effect of such
alienation is deemed limited to what is ultimately adjudicated to the vendor heir. The
aleatory character of the contract does not affect the validity of the transaction. ,D/111111

:/I/Ill~,
DE BORJA v. VDA. DE BORJA j//~11m
No. L-28040, 18 August 1972 ,(IJlDl
46 SCRA 577
Jfuii1i/l

Reyes, J.B.J., J.:

lllf1
11/11:1,
It is uncontested that Francisco de Borja, upon the death of his wife Josefa

.,
:;l1IIMll
Tangco on 6 October 1940, filed a petition for the probate of her will which was JJila11eB
:/l)lW/lm
36
20 SCRA 603 (1967). ~
37
Barron's Dictionary of Finance and Investment Terms.
38
Barron's Dictionary of Accounting Terms.
'll'fftnl!l

64
 ART. 777

11/ 11/ia,JJll,dction is
1 docketed as Special Proceeding No. R-7866 of the Court of First Instance of Rizal,
1i1l'!lldimoate." The Branch I. The will was probated on 2 April 1941. In 1946, Francisco was appointed
iUltt1le!1Mllt... cilthough executor and administrator; in 1952, their son, Jose, was appointed co-administrator.
When Francisco died on 14 April 1954, Jose became the sole administrator of the
.1~n..,1ed:
testate estate of his mother, Josefa.
ul!!' $ilnores of
While a widower, Francisco allegedly took unto himself a second wife, Tasiana
lfw estate
Ongsingco. Upon Francisco's death, Tasiana instituted testate proceedings in the Court of
1,tftmmmr~ cJ re
First Instance of Nueva Ecija, wherein in 1955 she was appointed special administratrix.
' IZ/lw aeots
The validity ofTasiana's marriage to Francisco was questioned in said proceeding.
ltfllmc "1,e,
The relationship between the children of the first marriage and Tasiana has been
plagued with several court suits and counter-suits; including the three cases at bar,
~ie· ~-nent of
some eighteen (18) cases remain pending determination in the courts. The testate
nnr i1'lllC!t t'le heir estate of Josefa alone has been unsettled for more than a quarter of a century. In order
111mn11 1th€ estate to put an end to all these litigations, a compromise agreement was entered into on 12
mop . r·.,e "right October 1963 by and between the heir and son of Francisco by his first marriage,
1/1'
namely, Jose de Borja, personally and as administrator of the Testate Estate of Josefa
Tangco, and the heir and surviving spouse of Francisco by his second marriage, Tasiana.
Jl5 l'leCessary in
The terms and conditions of the compromise agreement are as follows:
el5 ·W"': ,ch may
..i· .
~11e 1,nto cas h; 37 AGREEMENT
nlllilJll'lllt) or readily
THAT, it is the mutual desire of all the parties herein to terminate and
lliones not mean
settle, with finality, the various court litigations, controversies, claims,
:.aillll,. 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
ul!Jed or vested of Francisco de Borja.
HSilllDII!' 'n interest, THAT, with this end in view, the parties herein have agreed voluntarily
, m diispose his and without any reservations, to enter into and execute this agreement
llf soc:-i share is under the following terms and conditions:
.!E1ffiect of such
~mn~ 1eir. The 2. That Jose de Borja agrees and obligates himself to pay Tasiana
iiialdllOr'. Ongsingco vda. de Borja the total amount of Eight Hundred Thousand
(PhPS00,000} Philippine currency, in cash, which represent PhP200,000 as his
share in the payment and PhP600,000 as pro-rota 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-Riza/ respectively, and to any
•rrfie , osefa properties bequeathed or devised in her favor by the late Francisco de Borja by
lllll1hi11d· .vas Last Will and Testament or by Donation Inter Vivas 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 Taciana Ongsingco vda. de Borja hereby assumes payment of
that particular obligation incurred by the late Francisco de Borja in favor of

65
ART. 777

the Rehabilitation Finance Corporation, now Development Bank of the

Philippines, amounting to approximately PhP30,000 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 PhP3,500 more or less, which shall
be deducted by the buyer of Jalajala "Poblacion" from the payment to be
made to Taciana 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.

5. In consideration of above payment to Taciana Ongsingco vda. de

Borja, Jose de Borja personally and as administrator of the Testate Estate of
Josefa Tangco, and Taciano Ongsingco vda. de Borja, for themselves and for
the heirs, successors, executors, administrators and assigns, hereby forever
•··i-11
·~lltttm!
mutually renounce, withdraw, waive, remise, release and discharge any and illll1 ,flllrl.arJIDm
all manner of action or actions, cause or causes of actions, suits, debts, sum ,.-ilmllw/1 llll!ibWI
or sums of money, accounts, damages, claims and demands whatsoever, in ·al!lllliiill,illlllililllJllill!
law or in equity, which they ever had, or now have, or may have against th!1pdma
each other, more specifically Sp. Proc. Nos. 7866 and 1955 CFI-Rizal, and Sp.
Wme!idlttll
Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI-Nueva Ecija, and Civil
1111mis 1ii1, ,QiJJlll
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, anll: 111111B1iiilllmm
absolutely and finally release each other, their heirs, successors and assigns, IINtallllll-
from any and all liability arising wholly or partially, directly or indirectly,
from the administration, settlement, and distribution of the assets as well as IHtm!!mmrl/11!
liabilities of the estates of Francisco de Borja and Josefa Tangco, first spouse !!lllllllll!l!f.
of Francisco de Borja, and lastly, Tasiana Ongsingco vda. de Borja expressly
and specifically renounce absolutely her rights as heir over any hereditary - jJruJ
/lllmmmJlttrl
share in the estate of Francisco de Borja. ammB/ltJJ/1,

Wnii11,,~n

On 16 May 1966, Jose submitted for court approval the agreement of 12 October
w111ia111111111f·
,elll1:ldll!· ,d if!ii
1963 to the Court of First Instance of Rizal; and again on 8 August 1966, to the Court
of First Instance of Nueva Ecija. Tasiana opposed in both instances. The Rizal court
,.lfJIICl!t,imilft I
1immlllliilaliim!lbaumlll·:
approved the compromise agreement, but the Nueva Ecija court declared it void and
1ll11!ltmemii! 11Hfu ·rr
unenforceable. Taciana appealed the Rizal Court's order of approval, while Jose
appealed the order of disapproval by the Court of First Instance of Nueva Ecija.
.-lbmw·
HIIIQIJliillit!!IIRlm IDl
The genuineness and due execution of the compromise agreement of !tna!bi•iii.
12 October 1963 is not disputed, but its validity is nevertheless attacked by Tasiana Mtnll!!llllllbnr,w1
on the ground that: (1) the heirs cannot enter into such kind of agreement without ~1li11li,IITT1l~
first probating the will of Francisco; (2) that the same involves a compromise on the ~,niu
validity of the marriage between Francisco and Tasiana; and (3) that even if it were "1:!mll! llllll!!lllllll!m:lll
valid, it has ceased to have force and effect. ,111:allilllllil!!r/N IOl1

In assailing the validity of the agreement of 12 October 1963, Tasiana and the ~ '

Probate Court of Nueva Ecija rely on this Court's decision in Guevara v. Guevara, i:li11$l111111lllll!llmllti,
74 Phil 479, wherein the Court's majority held the view that the presentation of a will

66
 ART. 777

,::iljf ~e for probate is mandatory and that the settlement and distribution of an estate on the
$$:li.111111"'1€5 basis of intestacy when the decedent left a will, is against the law and public policy. It
~c."' is likewise pointed out by appellant Tasiana that Section 1 of Rule 74 of the Revised
rr:Jlill' :!ii00/1 Rules explicitly conditions the validity of an extra judicial settlement of a decedent's
11'"
1
t"D OE estate by agreement between heirs, upon the facts that "(if) the decedent left no will
r:))f d'r,s 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 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
IIJ/laitrJ:. :IE
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
critmlJJIJl'for the extra judicial settlement of the estate of a deceased person regardless of
,'ii!Jil"'l!"W<e r whether he left a will or not. He also relies on the dissenting opinion of Justice Moran
mirn1w crrr,,~ in Guevara v. Guevara wherein was expressed the view that if the parties have
nrt:!i.. $Ur"' already divided the estate in accordance with a decedent's will, the probate of the
lll!!''J/16' ~
will is a useless ceremony; and if they have divided the estate in a different manner,
1:l1Ujlll11Jlr"5:
the probate of the will is worse than useless.
crJrrmro!Sp.
The doctrine of Guevara v. Guevara, ante is not applicable to the case at bar.
11m111JJ: Cv•,
This is apparent from an examination of the terms of the agreement between Jose
'IW111j11D11i ;'c '
and Tasiana. Paragraph 2 of said agreement specifically stipulates that the sum of
nl1'J//l/!'tE f , I

PhP800,000 payable to Tasiana -

1r:l/s:S1q,r1S,
1aili111'1f'a:i.1,, ... shall be considered as full - complete payment - settlement of her
,; ilflMf:liP cs hereditary share in the estate of the late Francisco de Borja as well as the
r s;pioo:se estate of Josefa Tangco ... and to any properties bequeathed or devised in
,~ss·,, her favor by the late Francisco de Borja by Last Will and Testament or by
i11'11fWJiiirta ....,1 Donation Inter Vivas 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
111 1.2 J,:tober
estate of Francisco among the heirs thereto before the probate of his will. The clear
r;i: t:lh.e Court
object of the contract was merely the conveyance by Tasiana of any and all her
11!' fili:i:za : 0 Urt
!II:± :It ~,c, j and
individual share and interest, actual or eventual, in the estate of Francisco and Josefa.
,, 111111!,,1,f,,e Jose
There is no stipulation as to any other claimant, creditor or legatee. And as
hereditary share in decedent's estate is transmitted or vested immediately from the
, ::c::ij,a
moment of the death of such causante or predecessor in interest, there is no legal
jl:le!e!l'l";'<e~t of bar to a successor (with requisite contracting capacity) disposing of her or his
!1!:l !:mi¥· :asiana hereditary share immediately after such death, even if the actual extent of such
m11e!1'!1111: w1i :hout share is not determined until the subsequent liquidation of the estate. Of course, the
~,m,se on the effect of such alienation is to be deemed limited to what is ultimately adjudicated to
meirr 1f :-: ·.vere 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 are to be considered settled and should be
dismissed, although stipulations as noted by the Rizal Court gives the contract such
~n::1100 ::' a will

67
ART. 777
,,
1"

character of a compromise that the law favors, for obvious reasons, if only because it j~lii!lWJUll!lllnll!\\I' d!L~
serves to avoid multiplicity of suits. 1~1d'1ttt!I
It is likewise worthy of note that as the surviving spouse of Francisco, Tasiana lllilll11illll!111111&1111111'lli
was his compulsory heir. Wherefore, barring unworthiness or valid disinheritance, 1ii1mll!ilJeiRIIMIP·,i!lll1
her successional interest existed independent of Francisco's last will and testament, •·1i!l!!lmliillllll!!ll!
and would exist even if such will were not probated at all. Thus, the prerequisite of a immlii\vi"lBll!illlPl!ltniiH
previous probate of the will, as established in the Guevara and analogous cases,
cannot apply to the case of Tasiana.
Since the compromise contract 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 Borja," it is clear that the transaction lfiAmammm,,
was binding on both in their individual capacities, upon the perfection of the
mIDlrr
contract, even without previous authority of the Court to enter into the same. The
only difference between an extra judicial compromise and one that is submitted and
~m
l#JilmllMilllmllillltt
approved by the Court, is that the latter can be enforced by execution proceedings.
llldlt!W
Art. 2037 of the Civil Code is explicit on the point:
am1111mmn
Art. 203 7. A compromise has upon the parties the effect and authority 'm!!IIPIIIDmmt
of res judicata; but there shall be no execution except in compliance with a lamwumlll
judicial compromise. ,IIIRimlff

This brings us to the plea that the Court of First Instance of Rizal has no alitlmnimmillB
jurisdiction to approve the compromise with Jose because Tasiana was not an heir in 1Pl]m,i111
the estate of Josefa, but she was an heir of Francisco. This circumstance is irrelevant, 1
iliDIIIIPB!ilttti
since what was sold by Tasiana was only her eventual share in the estate of her late rmmdilill!lilll,,
husband, not the estate itself; and as already shown, that eventual share she owned ,01nm !JIPa
from the time of Francisco's death and the Court of Nueva Ecija could not bar her dlm1immi!il
selling it. As owner of her undivided hereditary share, Tasiana could dispose of it in ffl!ll1llllllami,
favor of whomsoever she chose. Such alienation is expressly recognized and provided bllin, V

for by article 1088 of the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights to a
'"' ~ r o
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, '"'b1 - · 8Hfll!ffll111
~r eBlbllll!f'"' ,il
provided they do so within the period of one month from the time they were
-~llmll
notified in writing of the sale of the vendor.
,i»IIJ~41D"'l/a
If the sale of a hereditary right can be made to a stranger, then a fortiori the sale ~I •lkniin:llrn, 11t11
thereof to a co-heir could not be forbidden. illJlelalllJJ!l1 /linJmlluttf·111
llli111111! • "'l!llllllll!ll
We conclude that in so doing, the Rizal Court acted in accordance with law, and iE, mil.£.. 1
~,. 71
therefore, its order should be upheld, while the contrary resolution of the Court of ~ Jlllllll/B
First Instance of Nueva Ecija should be, and is, reversed. -~-~lll!lllllDH!I
anttt1im11)11IIID!!iftlllnm
6. Sale of an Undivided Share of the Inheritance llttt 'lmillllllllall J
An heir can sell his right, interest, or participation in the property under ~u1111:ilmmtttlt
administration. Article 533 of the Civil Code provides that possession of hereditary ~1llllll!!llliJl,,11111t"tttr

68
 ART. 777

property is deemed transmitted to the heir without interruption from the moment of
39
death of the decedent. However, an heir can only alienate such portion of the estate
11m, Tas ana that may ultimately be allotted to him in the division of the estate by the probate or
11~c.a,ce, intestate court after final adjudication, that is, after all debts shall have been paid or
c'.l!fs:t::alr E "1 t, the devisees or legatees shall have been given their shares. This means that an heir may
111PU115irte of a only sell his ideal or undivided share in the estate, not any specific property therein.
PJIUll5 cases,
LEE v. REGIONAL TRIAL COURT OF QUEZON CITY, BR. 85
Hi,e Jlne 6:: ·ja, G. R. No. 146006, 23 February 2004
1]1111! 11:!hE Jne 423 SCRA 497
!lflllm:jiurr t ,· 1is
~a:": io n Corona, J. (Third Division):
:111iinrn: f :he
Dr. Juvencio P. Ortanez incorporated the Philippine International Life Insurance
· same. ~he
Company, Inc. At the time of the company's incorporation, Dr. Ortanez owned ninety
~1111m11rtt:e•j :ir d
percent {90%) of the subscribed capital stock. On 21 July 1980, Dr. Ortanez died. He
1ll"!Xeoecirgs.
left behind a wife (Juliana Salgado-Ortanez), three legitimate children (Rafael, Jose
and Antonio Ortanez) and five illegitimate children by Legaya Novicio (herein private
J111!Jimor".'.- respondents Ma. Divina Ortanez-Enderes and her siblings Jose, Romeo, Enrico,
' 1111111'1!:!"r :; Manuel and Cesar, all surnamed Ortanez).
Rafael filed before the Court of First Instance of Rizal a petition for letters of
1i;z:;;al1 has no administration of the intestate estate of Dr. Ortanez.
~It a111 1e r in 1
Private respondent Ma. Divina Ortanez-Enderes and her siblings filed an
IS.. l/r:ce:"€'.3nt, opposition to the petition for letters of administration and, in a subsequent urgent
r QJ1I' "ie late motion, prayed that the intestate court appoint a special administrator. Judge Ernani
1 imiie J"""' n ed Cruz Pano, presiding judge, appointed Rafael and Jose Ortanez joint special
b.a· her
1:i11C11t administrators of their father's estate. Hearings continued for the appointment of a
;JJllllis.e :::; : in regular administrator. Rafael and Jose submitted an inventory of the estate of their
m111ll ::iir:-, iced father, which included, among other properties, 2,029 shares of stock in Philippine

39
Reference is made to NHA v. Almeida (525 SCRA 383) where the Supreme Court ruled that
iiJllltleir.:t ~c
"to the extent of the interest that the original owner had over the property, the same should go to
n,~ s;c,1€
her estate" and that "when the original buyer died, the NHA should have considered the estate of
the decedent as the next 'person' likely to stand in to fulfill the obligation to pay the rest of the
purchase price." NHA v. Almeida relies on Limjoco v. Intestate Estate of Pedro 0. Fragante (80 Phil
'.llllllll"'" t11e sale 776) which held that "under the present legal system, such rights and obligations as survived after
death have to be exercised and fulfilled only by the estate of the deceased person." Following this
line of reasoning, the Supreme Court in NHA, this time relying on Billings vs. State (107 Ind. 54,
·11rt:i!'t ·::arlo\ and 6 N.E. 914, 7 N.E. 763, 57 Am. Rep. 77), declared that "it seems reasonable that the estate of a
:Mi,e: Cul..": of decedent should be regarded as an artificial person." Thus, the estate of a deceased person (i.e., his
or her properties, transmissible rights and obligations) passes through the estate (as a juridical
entity) before it passes to the heirs.
It would seem that NHA v. Almeida is inconsistent with Articles 533 and 777 of the Civil Code
11r··JJoe~ under wherein both the possession and ownership of the hereditary estate is transmitted to the heirs
.. ,:if ;.,ereditary precisely at the moment of the death of the decedent, provided the latter accepted the inheritance .

69

1111!
ART.777

International Life Insurance Company (hereafter Philinterlife), representing 50.725% ttllllnfte,•rq1a

of the company's outstanding capital stock. 1111Emirm;,,tttt1

On 15 April 1989, the decedent's wife, Juliana, claiming that she owned 1,014 1\1,wJiJJJmlll

Philinterlife shares of stock as her conjugal share in the estate, sold said shares with .-mmm111
right to repurchase in favor of herein petitioner Filipino Loan Assistance Group lllilttll!
(FLAG), represented by its president, herein petitioner Jose C. Lee. Juliana failed to ~
repurchase the shares of stock within the stipulated period, thus ownership thereof llm!·e!!
was consolidated by petitioner FLAG in its name.
ll!lltmi
On 30 October 1991, Jose, acting in his personal capacity and claiming that he htr!MI!
owned the remaining 1,011 Philinterlife shares of stock as his inheritance share in the lm!mc;;muw!B!
estate, sold said shares with right to repurchase also in favor of herein petitioner ,Wf!!!llllill
FLAG, represented by its president, herein petitioner Jose C. Lee. After one year, Mmm1in11111
petitioner FLAG consolidated in its name the ownership of the Philinterlife shares of ~
stock when Jose failed to repurchase the same. 1ipn!llll1l!!llll
It appears that several years before (but during the pendency of the intestate l!ll!!e!tl
proceedings at the Regional Trial Court), Juliana and her two children, Rafael and illJl!llllil!liimnm
Jose, entered into a memorandum of agreement dated 4 March 1982 for the extra il(JIJJ)l1mm11
judicial settlement of the estate of Dr. Ortanez, partitioning the estate (including the iOJ'.!)i imD!lltU!I!
Philinterlife shares of stock) among themselves. This was the basis for the number of amflfftmmr
shares separately sold by Juliana on 15 April 1989 (1,014 shares) and by Jose on 30
M
October 1991 (1,011 shares) in favor of herein petitioner FLAG.
""1iillillll1ttl!!J
On 12 July 1995, herein private respondents Ma. Divina Ortanez-Enderes and her limi•rkllu

· -~
siblings (hereafter private respondents Enderes, et al.) filed a motion for appointment ~
of special administrator of Philinterlife shares which was opposed by Jose. The intestate llma:iiBIWIHlle
court granted the motion of private respondents Enderes, et al. and appointed private
respondent Enderes special administratrix of the Philinterlife shares of stock. ·Ullllll!e· 111111
On 20 December 1995, Enderes filed an urgent motion to declare void ab initio Mi1111JJJ111l111l11

the memorandum of agreement dated 4 March 1982. On 9 January 1996, she filed a llltne
motion to declare the partial nullity of the extra judicial settlement of the decedent's
!111 II
estate. These motions were opposed by Jose. On 22 March 1996, Enderes filed an
~II!
urgent motion to declare void ab initio the deeds of sale of Philinterlife shares of
•e.s:t:oll!!lf ,i
stock, which move was again opposed by Jose.
,:::l:a1fflill1JTII
Jose filed an omnibus motion for (1) the approval of the deeds of sale of the :::cn1unrt 1
Philinterlife shares of stock, and (2) the release of Ma. Divina Ortanez-Enderes as ,.il)mlf:., !Iii
Special Administratrix of the shares on the ground that there were no longer any

-I
.11J:l!Sie:tt!ID,
shares for her to administer. The intestate court denied the omnibus motion of Jose
for the approval of the deeds of sale.
aiclnrnm1111111111Jli
The intestate court issued another order granting the motion of Special ~lillti
Administratrix Enderes for the annulment of the 4 March 1982 memorandum of 1"'i'1IOlffll!!!ll111
agreement or extra judicial partition of estate. ttnie esa
Jose filed a petition for certiorari in the Court of Appeals. The appellate court 1mte5lltiilntt
denied his petition, however, ruling that there was no legal justification whatsoever :::!'ii€' :IClilflWI
for the extra judicial partition of the estate by Jose, his brother Rafael, and mother miilllW' ~1m1

Juliana during the pendency of the settlement of the estate of Dr. Ortanez, without tMetme1mn.

70
 ART. 777

the requisite approval of the intestate court, when it was clear that there were other
heirs to the estate who stood to be prejudiced thereby. Consequently, the sale made
IIWI/IITie!!@ : J14 by Jose and his mother Juliana to FLAG of the shares of stock they invalidly
'$~',i.ith appropriated for themselves, without the approval of the intestate court, was void.
n1mm::HE GoL.p He elevated the case to the Supreme Court via petition for review which the
1TI111l11, f.ai1ie·a to Supreme Court dismissed. His motion for reconsideration was denied with finality.
nllni 111)1 thiereof The resolution of the Supreme Court dismissing the petition of Jose became final.
Private respondent-Special Administratrix Enderes and her siblings filed a motion
rn11~11 th.a': 'le for execution of the Orders of the intestate court dated 11 and 29 August 1997
.ltllare 1r :'le because the orders of the intestate court nullifying the sale (upheld by the Court of
1111 ~ltJO'ler Appeals and the Supreme Court) had long become final. Respondent-Special
11ir ,alDlllll'IE viear, Administratrix Enderes served a copy of the motion to petitioners Jose Lee and Alma
Ifni!!, S11i'n;a,re s :if Aggabao as president and secretary respectively, of Philinterlife, but petitioners
ignored the same. The intestate court granted the motion for execution.
lhnre inrntes:ate Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a
~iiilll!:ae and petition for certiorari, alleging that the intestate court gravely abused its discretion in
19nr t:illne extra (1) declaring the ownership of FLAG over the Philinterlife shares was null and void;
1m1cilllilUil'trs :he (2) ordering the execution of its order declaring such nullity; and (3) depriving petitioners
1e nnlUlffl t er of of their right to due process. The Court of Appeals dismissed the petition outright.
I' Ju::wse Jr 30
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively of
Philinterlife) and FLAG now raise the following error for our consideration: In failing
IE!ll'!e5 a,r. ::: her to declare null and void the orders of the intestate court which nullified the sale of
Blilll!liilllOnllT:Ment shares of stock between the legitimate heir Jose S. Ortanez and petitioner FLAG
r'llie irtestate because of settled law and jurisprudence; i.e., that an heir has the right to dispose of
11111111118! ::i·rivate the decedent's property even if the same is under administration pursuant to Civil
Code provision that possession of hereditary property is transmitted to the heir the
u;rniml: cu:i nitio moment of death of the decedent (Acebedo v. Abesamis, 217 SCRA 194).
ffii, lill1le filed a The petition has no merit.
11c idlleo::,:::ent's
It is clear that Juliana and her three sons, Jose, Rafael and Antonio, invalidly
1!!'r1es; f1 ,ed an
entered into a memorandum of agreement extra judicially partitioning the intestate
iR s;itrcFes of estate among themselves, despite their knowledge that there were other heirs or
claimants to the estate and before final settlement of the estate by the intestate
tr s;iillhe .Jf the court. Since the appropriation of the estate properties by Juliana and her children
z, . .;IE:ridEres as (Jose, Rafael and Antonio) was invalid, the subsequent sale thereof by Juliana and
:i lurnnge' any Jose to a third party (FLAG), without court approval, was likewise void.
11J11t:1i111JJ11" c-· Jose An heir can sell his right, interest, or participation in the property under
administration under Art. 553 of the Civil Code which provides that possession of
TI 01tl' S::iecial hereditary property is deemed transmit(E{d to the heir without interruption from the
mo11ra11nc J 'Tl of moment of death of the decedent. However, an heir can only alienate such portion of
the estate that may be allotted to him in the division of the estate by the probate or
intestate court after final adjudication, that is, after all debts shall have been paid or
1p1eilll,;2:e court
, ,,11111"!,a:soever the devisees or legatees shall have been given their shares. This means that an heir
31riic: ~:ither
may only sell his ideal or undivided share in the estate, not any specific property
111'i1e•:, ,~ hout therein. In the present case, Juliana and Jose sold specific properties of the estate

71

'.,,,..,.11
ART. 777

(1,014 and 1,011 shares of stock in Philinterlife) in favor of petitioner FLAG. This they hlin, a11111li1i!!i1~
could not lawfully do pending the final adjudication of the estate by the intestate dsllll/lllllll!'tll
court because of the undue prejudice it would cause the other claimants to the anl!hmiitlnilllBlll!1!imllli
estate, as what happened in the present case. 1llll!muiE ,di!edliuw1i
Juliana and Jose sold specific properties of the estate, without court approval. It
is well settled that court approval is necessary for the validity of any disposition of
the decedent's estate. In the early case of Godoy v. Orellano, we laid down the rule
that the sale of the property of the estate by an administrator without the order of
the probate court is void and passes no title to the purchaser. And in the case of
Dillena v. Court of Appeals, we ruled that:
1'>:npmmiillt
... On November 1, 1978, the questioned deed of sale of the fishponds
:lllie!!n!mli
was executed between petitioner and private respondent without notice and
..mmbllm1i111111emt1
approval of the probate court. Even after the sale, the administratrix Aurora 111
"1111R411 '11flll1
Carreon still included the three fishponds as among the real properties of the
111!!1Illl11D11, :IT
estate in her inventory submitted on August 13, 1981. In fact, as stated by
;;i, IIWl!hmt111111mmm
the Court of Appeals, petitioner, at the time of the sale of the fishponds in
question, knew that the same were part of the estate under administration. illnn•i[
iill~~i!I
:ElnllmllBmllID1..
The subject properties therefore are under the jurisdiction of the probate iiB1111mll1i111111Slt111
court which according to our settled jurisprudence has the authority to ~l!Q
approve any disposition regarding properties under administration. More f..ammnHtt! ·!I
emphatic is the declaration We made in Estate of Glave v. Reyes {123 SCRA
767} where We stated that when the estate of the deceased person is already
:ll'!itirllJJWI
the subject of a testate or intestate proceeding, the administrator cannot enter
!l!Jn1111HI.
into any transaction involving it without prior approval of the probate court.
z,ama
Only recently, in Manotok Realty, Inc. v. Court of Appeals (149 SCRA
174), We held that the sale of an immovable property belonging to the
estate of a decedent, in a special proceedings, needs court approval. This
pronouncement finds support in the previous case of Dolores vda. de Gil v. Jlmrm1,
Agustin Cancio {14 SCRA 797} wherein We emphasized that it is within the DlJII' ril
jurisdiction of the probate court to approve the sale of properties of a JJJlllll!lltilf
deceased person by his prospective heirs before final adjudication ... * #
J:J!IJtllnlfJ/1
Our jurisprudence is therefore clear that (1) any disposition of estate property by
m///r iCJ
an administrator or prospective heir pending final adjudication requires court approval;
m1111!.'lil
and (2) any unauthorized disposition of estate property can be annulled by the probate
J/iJ/1llllllllll
court, there being no need for a separate action to annul the unauthorized disposition.
•·il
WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals
in CA-G.R. S.P. No. 59736 dated 26 July 2000, dismissing petitioners' petition for
certiorari and affirming the 6 July 2000 order of the trial court which ordered the
execution of its (trial court's) 11 and 29 August 1997 orders, is hereby AFFIRMED. RIITlll!II
'MI/B:IE

7. Court Approval for Disposition of the Hereditary Estate rill!plM

ltll1iJJ11111111
Court approval is required in any disposition of the decedent's estate. The
·*11/nmw
requisite judicial approval, however, cannot adversely affect the substantive rights of

72
 ART. 777

(Iii. . ri,m:s t '1 ey
tTI11!' inri:test3te
11ii11Jmdl:5 tJ :he
illlllllllllWC',:a,. It
i1~ticn of
tlUllllllll th€ rule
t:r'lnt ooe· of
::miie case of
heirs to dispose of their own pro indiviso shares in the co-heirship or co-ownership. In
other words, they can sell their rights, interest or participation in the property under
administration. A stipulation requiring court approval does not affect the validity and
the effectivity of the sale as regards the selling heirs.
HEIRS OF SPOUSES REMEDIOS R. SANDEJAS AND
ELIODORO P. SANDEJAS SR. v. LINA
G.R. No. 141634, 5 February 2001
351 SCRA 183

Panganiban, J. (Third Division):

,1/t!pmlr'Q5
Letters of Administration were issued appointing Eliodoro Sandejas Sr. as
lt:11/filf' Q/.1:'d
administrator of the estate of the late Remedios Sandejas. On 19 November 1981,
' A\1uiJlll'O'-:J th
the 4 floor of Manila City Hall was burned and among the records burned were the
!'S-~t/"'e
records of Branch XI of the Court of First Instance of Manila. As a result, Eliodoro filed
1JlJl1Jj/ff/ Oy
a Motion for Reconstitution of the records of the case.
llllllmi:iis ' _'1

"f:11ttill/QIM'. An Omnibus Pleading for motion to intervene and petition-in-intervention was

filed by Movant Alex A. Lina alleging among others that on 7 June 1982, movant and
Eliodoro, in his capacity as seller, bound and obligated himself, his heirs,
1;;i1mrit,a,e administrators and assigns, to sell in their entirety the following parcels of land which
l!llll'llll!'W t:J formed part of the estate of the late Remedios R. Sandejas. The Receipt of the
n. ,Wore Earnest Money with Promise to Sell and to Buy is hereunder quoted to wit:
1:3 50/A
r:mll~dy
"Received today from MR. ALEX A LINA, the sum of One Hundred
d,e,rrte Thousand {PhPl00,000.00) Pesos, Philippine Currency, per Metropolitan
:iCJIIJIJirt.
Bank & Trust Company Check No. 319913 dated today for PhPl00,000.00 ...
as additional earnest money for the following:
~- sc.;q.:,
, ro :re
U(J]J//;. "'";'1;5 all registered with the Registry of Deeds of the Province of Rizal (Makoti
ttEE' (S1ij 1 11
1
Branch Office) in the name of SELLER ELIODORO SANDEJAS, Filipino citizen,
~/III"' tre of legal age, married to Remedios Reyes de Sandejas, and which
11!!5 1'Pf .J undersigned, as SELLER, binds forever and absolutely in their entirety (all of
the four (4) parcels of land above described, which are contiguous to each
other as to form one big lot) to said Mr. Alex A. Lina, who has agreed to buy
,;:llll'1:lli0erty by
all of them, also binding on his heirs, administrators and assigns, for the
wl"!'. aiop·:::ival;
consideration of One Million (PhPl,000,000.00} Pesos, Philippine Currency,
".:hlie pl"Jbate
upon such reasonable terms of payment as may be agreed upon by them.
idiliiSl;D)OS:ton.
The parties have however, agreed on the following terms and conditions:
~ -:if <!,.c::Jeals
~1e1!:11"t: ,: '1 for
,::imdie,...e:: the 3. Considering that Mrs. Remedios Reyes de Sandejas is already
::11p.;M~:::·. deceased and as there is a pending intestate proceedings for the settlement of
her estate ... wherein Seller was appointed as administrator of said Estate, has
informed Buyer that he {Seller) already filed a Motion with the Court for
authority to sell the above parcels of land to herein Buyer, but which has been
·': ,es:ate. The
delayed due to the burning of the records of said Spec. Pro No. 138398, which
:a,r"'.:',,E rights of

73
ART. 777

records are presently under reconstitution, the parties shall have at least 1ll111l11111D1Winn11nn111

ninety (90} days from receipt of the order authorizing Seller, in his capacity as IIWmllllllittl11•
administrator, to sell all the above described parcels of land to herein Buyer 111111111»1
(but extendible for another period of ninety (90) days upon the request of lllflllerffiml( rr
either of the parties upon the other}, within which to execute the deed of adlliiaili l !l h11H1
absolute sale covering all above parcels of land; ar,•@q,
l1lll1lllllllll llllt
111111111/1111B1,aJ!lff
5. Whether indicated or not, all of the above terms and conditions
·aJIIIIIIJJJNllllir a
shall be binding on the heirs, administrators and assigns of both Seller
1111111nie'·I:
(undersigned Mr. Eliodoro P. Sandejas Sr.} and Buyer (Mr. Alex A. Lina}."
,aBIIJlllllff's, :IJm)
Counsel for Eliodoro filed a Manifestation alleging among others that Eliodoro 1iili5IIIIIWIA1uDill!
died. The lower court issued an Order directing, among others, that the counsel for tflllllili..i1i11111
the four heirs and other heirs of Teresita R. Sandejas to move for the appointment of 1iiilnllllll!l!lla
a new administrator within fifteen days from receipt of this order. !lldlllBll!IWlll1Hml
Alex A. Lina as petitioner filed with the Regional Trial Court of Manila an ,~1111111
Omnibus Pleading for (1) petition for letters of administration and (2) to consolidate 1111u!>,1q
instant case with Sp. Proc. No. R-83-15601 RTC Branch XI-Manila entitled In Re:
Intestate Estate of Eliodoro P. Sandejas Sr., Alex A. Lina, Petitioner, for letters of
administration. Branch XXXVI of the Regional Trial Court of Manila issued an Order
consolidating Sp. Proc No. 85-33707 with SP. Proc No. R-83-15601. The Regional Trial lenttittn1
Court of Manila, Branch XI, issued an Order stating that this court has no objection to )l///$o1d11ltt1il
the consolidation of Special Proceedings No. 85-331707, now pending before Branch lmJllllllttt,QQ
XXXVI of this Court, with the present proceedings now pending before this Branch. fllmm,m n

Intervenor filed an Omnibus Motion (a) to approve the deed of conditional sale llllt111d: llim!mII:.i
executed between Plaintiff-in-Intervention Alex A. Lina and Eliodoro Sandejas Sr. on rllli.-«1111:
7 June 1982; (b) to compel the heirs of Remedios Sandejas and Eliodoro Sandejas Sr., 1me, '11
thru their administrator, to execute a deed of absolute sale in favor of Intervenor l!lllilllDilll!mnmm; ,i
Alex A. Lina pursuant to said conditional deed of sale to which the administrator filed Pll,\PIBlll1tt
a Motion to Dismiss and/or Opposition to said omnibus motion. !IIDlilidlllipllimrr
The lower court rendered the questioned Order granting Intervenor's Motion for 01111ttltt
the Approval of the Receipt of Earnest Money with promise to buy between Plaintiff-
bi11'9llllllllBJII
in-Intervention Alex A. Lina and Eliodoro Sandejas Sr. dated 7 June 1982. Thus:
~.
WHEREFORE, Intervenor's motion for the approval of the Receipt of • •1'1uJ!milll
Earnest Money with Promise to Sell and to Buy dated June 7, 1982, is 1ltDllMlfl1l"b1m1
granted. The Intervenor is directed to pay the balance of the purchase price pill!\llll!lll!!!ITl1t1,
amounting to PhP729,000.00 within thirty (30) days from receipt of this Id!!$; 1imll!l!lb!mrnm

Order and Administrator is directed to execute within thirty (30} days 18ittnl!!ln
thereafter the necessary and proper deeds of conveyancing. lltillR· ,111anm:1
Overturning the RTC, the CA held that the contract between Eliodoro and 1Cm11111111!''~1oonr

respondent was merely a contract to sell, not a perfected contract of sale. It ruled •ltlliionnerr
that ownership of the four lots was to remain in the intestate estate of Remedios 1l1ln!> ,Mllll1ldl
~11115,\IWIIII
Sandejas until the approval of the sale was obtained from the settlement court. That
approval was a positive suspensive condition, the non-fulfillment of which was not 11Cim1m
tantamount to a breach. It was simply an event that prevented the obligation from ID!mJ, J-1iummmll

74
 ART. 777

mtil~ maturing or becoming effective. If the condition did not happen, the obligation
llllr.JJ!t'µu ,as would not arise or come into existence.
~' :hi,,«t.>' The CA held that Section 1, Rule 89 of the Rules of Court was inapplicable, because
JIU/te?S/t o;• the lack of written notice to the other heirs showed the lack of consent of those heirs
1/tiE/Ed c.· other than Eliodoro. For this reason, bad faith was imputed to him, for no one is allowed
to enjoy a claim arising from one's own wrongdoing. Thus, Eliodoro was bound, as a
matter of justice and good faith, to comply with his contractual commitments as an
owner and heir. When he entered into the agreement with respondent, he bound his
n1111J/itr;1,ons
conjugal and successional shares in the property. Hence this petition.
r 'Snei/He'
The Petition poses the main issue of whether the CA erred in modifying the trial
/1,.'"'
court's Decision and in obligating petitioner to sell 3/5 of the disputed properties to
niillllt IE:lirioc oro respondent, even if the suspensive condition had not been fulfilled. It also raises the
·i:::IIDll1illll' ·or following collateral issues: (1) the settlement court's jurisdiction; (2) respondent-
l!ll111Jll1tl!Jime1 t of intervenor's standing to file an application for the approval of the sale of realty in the
settlement case, (3) the decedent's bad faith, and (4) the computation of the
:~il2. an decedent's share in the realty under administration.
,l::Jmll1'ill50!icate The Petition is partially meritorious.
111!iillifl!Ct /r- Re:
Main Issues:
mr l1ette's of
Obligation With a Suspensive Condition
ruct. ill!'II Order
~1111CW1al Trial Petitioners argue that the CA erred in ordering the conveyance of the disputed
ajiect:,on to 3/5 of the parcels of land, despite the non-fulfillment of the suspensive condition -
mll"e Branch court approval of the sale - as contained in the "Receipt of Earnest Money with
i. ,llr:i3Jl'Xr, . Promise to Sell and To Buy (also referred to as the "Receipt"). Instead, they assert
tilhtt:illJll"l<li sale that because this condition had not been satisfied, their obligation to deliver the
l!RJicll6 S· on disputed parcels of land was converted into a money claim.
nilllmnalejas Sr., We disagree. Petitioners admit that the agreement between the deceased
; IIIM1Ttle!'l'",enor Eliodoro and respondent was a contract to sell. Not exactly. In a contract to sell, the
15i1lllra!ltr0,. "'iled payment of the purchase price is a positive suspensive condition. The vendor's
obligation to convey title does not become effective in case of failure to pay.
; Miali'.:i'c 1 ·or On the other hand, the agreement between Eliodoro and respondent is subject
1em,, ~.ai 1tiff-
to a suspensive condition - the procurement of a lower court approval, not full
~!'111l.l!s.: payment. There was no reservation of ownership in the agreement. In accordance
:11E1ip;,l!t o.· with paragraph 1 of the Receipt, petitioners were supposed to deed the disputed lots
'.'911/J.2, .s over to respondent. This they could do upon the court's approval, even before full
111/P: r,ir'IIC E payment. Hence, their contract was a conditional sale, rather than a contract to sell
.Jf d'r,s as determined by the CA.
::i11 rvys When a contract is subject to a suspensive condition, its birth or effectivity can
take place only if and when the condition happens or is fulfilled. Thus, the intestate
court's grant of the Motion for Approval of the sale filed by respondent resulted in
ilin:JJOOll'J and
,a1111e !·-: ·JI ed
petitioners' obligation to execute the Deed of Sale of the disputed lots in his favor.
nt ,~.e..,..ecios The condition having been satisfied, the contract was perfected. Henceforth, the
parties were bound to fulfill what they had expressly agreed upon.
· ::i:J11u.r: That
111c::r \Jlll,::S 1ot Court approval is required in any disposition of the decedent's estate. Reference
f [
1!!'.:a11t:11c,r ·r om to judicial approval, however, cannot adversely affect the substantive rights of heirs

75

''""'·"-" ,,,,..
'
ART. 777

to dispose of their own pro indiviso shares in the co-heirship or co-ownership. In i-li!llllll!l1111R!!!I
other words, they can sell their rights, interest or participation in the property under IIIRtl!!!!QIJIJlllllllltll!
administration. A stipulation requiring court approval does not affect the validity and llllle llllllllflH
the effectivity of the sale as regards the selling heirs. It merely implies that the lllllllllllai1111ilwurr111m
property may be taken out of custodia /egis, but only with the court's permission. ~,t
It would seem that the suspensive condition in the present conditional sale was
1«:mnm :tt11
imposed only for this reason. :UJ1111'111hruci .
Thus we are not persuaded by petitioner's argument that the obligation was ,~I
converted into a mere monetary claim. Paragraph 4 of the Receipt, which petitioners rely
on, refers to a situation wherein the sale has not materialized. In such a case, the seller is
r[Jlnm1 *'
'T'llllmlllllnemtr't
·ffi

bound to return to the buyer the earnest money plus interest at 14% per annum. But the ::17/' AllllllllllJUIII
sale was approved by the intestate court; hence, the proviso does not apply. ~!illltl
Because the petitioners did not consent to the sale of their ideal shares in the 11:linneinr $IIIJIII
disputed lots, the CA correctly limited the scope of the Receipt to the pro-indiviso nm!'llll!n 11W.
share of Eliodoro. Thus, it correctly modified the intestate court's ruling by excluding ~a11111111nmnm1 ,,111
their shares from the ambit of the transaction.
.Milell'.
WHEREFORE, the Petition is hereby PARTIALLY GRANTED. The appealed Decision ;:]tl:ll!!iil!illl!IIIIDI
and Resolution are AFFIRMED with the MODIFICATION that respondent is entitled to em:IIIIUl1!1i1iWlllf'
only a pro-indiviso share equivalent to 11/20 of the disputed lots. 1,1E!'l!'iNII ,1!1111

PJl!!"!lnilll!illllDIITill!!n
8. Co-ownership during the Period of lndivision
S$illllllalll!!'·
While an estate remains undivided, the co-owners each have full ownership of
their respective undivided shares and may therefore alienate, assign or mortgage 111ffit,.11illllllltlili#'!it:l1

them. The co-owner, however, has no right to sell or alienate a specific or ~:

determinate part of the thing owned in common. The fact that the deed purports to ~ ..,.d 1n111Dl1! '/J/11

transfer a specified portion does not per se render the sale void. The sale is valid, but iCJllll'I, .2
only with respect to the aliquot share of the selling co-owner. The sale is subject to a'"ld ,111111 1tr.i:

the results of the partition. adjl l.ianiHim:autt1111

!l.1;aru.a,. 111/lhl
It is a general rule that heirs are bound by contracts entered into by their
40 a,o ffl1llll:JJll// ,
predecessors-in-interest. Whatever rights and obligations the decedent had over
Soo11Jl51115.u.u
the property are transmitted to the heirs by way of succession. Thus the heirs cannot
receiJmltt d
escape the legal consequences of a transaction entered into by their predecessor-in-
p:~11
interest because they have inherited the property subject to the liability affecting fyReim!11lU
their common ancestor.
~lill!!i
1-. a c ±:liee1rr1
SANTOS v. LUM BAO
G.R. No. 169129, 28 March 2007
De-e-d m 11
V,35 duuilil\1111
519 SCRA 408
ijies;,i:m1
Chico-Nazario, J. (Third Division): becau!5ie
Herein petitioners Virgilio, Victorio, Ernesto and Tadeo, all surnamed Santos, are pe:::t11011me1r
the legitimate and surviving heirs of the late Rita Catoe Santos (Rita). The other said Jlselfl!I
Tlhne '!11
40
Article 1311, Civil Code. µ
""11!E!ii".lll'.

76
 ART. 777

WIU1!111!11'V' · c . In petitioners, Esperanza Lati and Lagrimas Santos are the daughter-in-law of Rita.
IIJl;lllfl!'tW .irder Respondents Spouses Jose Lumbao and Proserfina Lumbao are the alleged owners of
: iallilCltli"t, 3:ld the 107-square meter lot (subject property), which they purportedly bought from
IHI!$ mat t:ie Rita during her lifetime.
~am1iss; on. The facts of the present case are as follows:
111m1l1 s;a,i,e ,.., as
On two separate occasions during her lifetime, Rita sold to respondent Spouses
Lumbao the subject property which is a part of her share in the estate of her
11lli1[iii11ttno,r, .1i as
deceased mother, Maria Catoe (Maria}, who died intestate on 19 September 1978.
!1tt11JmilllJllllllE!!'S ·eiy
On the first occasion, Rita sold 100 square meters of her inchoate share in her
~. $IE se,,er is
mother's estate through a document denominated as "Bilihan ng Lupa," dated
TT11iu111'11l11. ~ : the
17 August 1979. Respondents Spouses Lumbao claimed the execution of the
aforesaid document was witnessed by petitioners Virgilio and Tadeo, as shown by
ll\liiilHlf!f!S I -. t :l e their signatures affixed therein. On the second occasion, an additional seven square
,/lll111Gl11-1inc: · ,1iso meters was added to the land as evidenced by a document also denominated as
~\\II, e!llllCLC:i,ng "Bilihan ng Lupa," dated 9 January 1981.
After acquiring the subject property, respondents Spouses Lumbao took actual
1111ellll Decision possession thereof and erected thereon a house which they have been occupying as
I~ 1i!!l'illt::1t:td to exclusive owners up to the present. Respondent Spouses Lumbao made several
verbal demands upon Rita, during her lifetime, and thereafter upon herein
petitioners, for them to execute the necessary documents to effect the issuance of a
separate title in favor of respondents Lumbao insofar as the subject property is
Ill 1::v.·riership of concerned. Respondent Spouses Lumbao alleged that prior to her death, Rita
rr1 CDJr mortgage informed respondent Proserfina Lumbao she could not deliver the title to the subject
iii specific or property because the entire property inherited by her and her co-heirs form Maria
~iellllt pi1.. 'DO rts to had not yet been partitioned.
ma1ilie i:s 11alid, but On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently
11l111E irs subject to and in conspiracy with one another, executed a Deed of Extrajudicial Settlement,
adjudicating and partitioning among themselves and the other heirs, the estate left by
Maria, which included the subject property already sold to respondent Spouses Lumbao
~· irmo by their
and now covered by TCT No. 81729 of the Registry of Deeds of Pasig City. Respondent
!!~ j-,ad over
Spouses Lumbao, through counsel, sent a formal demand letter to petitioners but despite
Mue l!me,~s cannot
receipt of such demand letter, petitioners still failed and refused to reconvey the subject
~~es so r - in- property to the respondents Spouses Lumbao. Consequently, the latter filed a complaint
nlbliiilHit't a.:f ect i ng for Reconveyance with Damages before the RTC of Pasig City.
Petitioners filed their Answer denying the allegations that the subject property
had been sold to the respondent Spouses Lumbao. They likewise denied that the
Deed of Extrajudicial Settlement had been fraudulently executed because the same
was duly published as required by law.
Respondent Spouses Lumbao, with leave of court, amended their complaint
because they discovered that on 16 February 1990, without their knowledge,
I: Sii,i!i1'11t::s are petitioners executed a Deed of Real Estate Mortgage in favor of Julieta S. Esplana. The
1•• nme J:1er said Deed of Real Estate Mortgage was annotated at the back ofTCT No. PT-81729.
The trial court rendered a Decision the dispositive portion of which reads as follows:
Premises considered, the instant complaint is hereby denied for lack of
merit. Considering that [petitioners] have incurred expenses in order to

77

'fJIJtl,
 11iil il ~

ART. 777

protect their interest, [respondent spouses Lumbao] are hereby directed to _,'llfll!!Jl"'tttltn
pay [petitioners], to wit: 1) the amount of PhP30,000 as attorney's fees and ~R:,,
litigation expenses, and 2) cost of suit. im!lilld 111ln1i
JCIJIIIUIIIB'!Bllt
Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals which
ilf!illll!IPI l:ll
rendered a Decision, thus:
5illlD8Clilffii11::
WHEREFORE, premises considered, the present appeal is hereby GRANTED. Dl!!1!111nllllllli
The appealed Decision dated June 17, 1998 of the Regional Trial Court of Pasig 'Imm Ull,yl :ii.i
City, Branch 69 in Civil Case No. 62175 is hereby REVERSED and SET ASIDE. A new ~pi',
judgment is hereby entered ordering [petitioners] to reconvey 107 square meters !!ilmiiillffltf' iCJJli
of the subject [property] covered by TCT No. PT-81729 of the Registry of Deeds of ~iit1Jlll!IDIT
Pasig City, Metro Manila, and to pay to [respondents spouses Lumbao] the sum
llltrn 1111
of PhP30,000,00 for attorney's fees and litigation expenses.
?51111Bi, 'll\''
Hence, this Petition. b,\l' ttllinte'
Petitioners allege that they are in good faith in executing the Deed of ,!biJlllhwm:lttn
Extrajudicial Settlement because even respondents Spouses Lumbao's witness, RlllDllllnn .,
Carolina Morales, testified that neither petitioner Virgilio nor petitioner Tadeo was .ailllalqy1
present during the execution of the "Bi/ihan ng Lupo," dated 17 August 1979 and 9 p!llllillll1m11
January 1981. Petitioners affirm that the Deed of Extrajudicial Settlement was aillRdlW
published in a newspaper of general circulation to give notice to all creditors of the llll!lu
estate subject of partition to contest the same within the period prescribed by law. cillltl1ldll;i1!111l11im
Since no claimant appeared to interpose a claim within the period allowed by law, a Silllldl1,1illumn
title to the subject property was then issued in favor of petitioners; hence they are
iii1111m
considered as holders in good faith and therefore cannot be barred from entering
~
into any subsequent transactions involving the property.
lllmaii~ l!ll1ff
Petitioners also contend that they are not bound by the "Bilihan ng Lupo" d!N-1111
because the same was null and void for the following reasons: (1) for being falsified 'IJlllllllll,\II !d
documents because one of those documents made it appear that petitioners Virgilio ,~rr
and Tadeo were witnesses to its execution and that they appeared personally before 11Ci111111111111
the notary public, when in truth and in fact they did not; (2) the identities of the lllllffll!!iDlll
properties in the "Bilihan ng Lupo" dated 17 August 1979 and 9 January 1981 in lllliilllllillllltttvN
relation to the subject property in litigation were not established by the evidence '~n
presented by the respondents Spouses Lumbao; (3) the right of the respondents I ~

Spouses Lumbao to lay their claim over the subject property had already been barred iilflillllil1llllllllt
through estoppel by !aches; and (4) the respondent Spouses Lumbao's claim over the aMlinincltln,111rr
subject property had already prescribed. fl!IDl!fll!lllllllllillll

The defense of petitioners that the identities of the properties described in the 1111»\Wllbll!>a
"Bilihan ng Lupo" in relation to the subject property were not established by ID1iilllllllbll!ll'II

respondents Spouses Lumbao's evidence is likewise not acceptable. !~

It is noteworthy that at the time of the execution of the "Bilihan ng Lupo," the ,illl!m:JIIIBIIIIIIIIIT

entire property owned by Maria, the mother or Rita, was not yet divided among her illMl:::lbilllllffil

and her co-heirs and so the description of the entire estate is the only description lllll!!!IIIIIDJllllllltt

that can be placed in the "Bilihan ng Lupo, dated 17 August 1979 and 9 January ifllllmB; ,,ilBfflTid
1981" because the exact metes and bounds of the subject property sold to
respondents Spouses Lumbao could not be possibly determined at the time.

78
 ART. 777

Nevertheless, that does not make the contract of sale between Rita and respondents
Spouses Lumbao invalid because both the law and jurisprudence have categorically
held that even while an estate remains undivided, co-owners have each full
ownership of their respective aliquot or undivided shares and may therefore alienate,
assign or mortgage them. The co-owner, however, has no right to sell or alienate a
specific or determinate part of the thing owned in common, because such right over
Mn:::: the thing is represented by an aliquot or ideal portion without any physical division.
ef 1/l1lclrsli;, In any case, the mere fact that the deed purports to transfer a concrete portion does
. 1.111,y,~. not per se render the sale void. The sale is valid, but only with respect to the aliquot
I~ share of the selling co-owner. Furthermore, the sale is subject to the results of the
lll!'JSJ:ilS c: partition upon the termination of the co-ownership.
t'Tilf' $/W/1'"'"
In the case at bar, when the estate left by Maria had been partitioned on 2 May
1986 by virtue of the Deed of Extrajudicial Settlement, the 107-square meter lot sold
by the mother of the petitioners to respondents Spouses Lumbao should be
,e: D,e,ec of deducted from the total lot inherited by them in representation of their deceased
u ,, •1111\"'.:r ess, mother, which in this case measures 467 square meters. The 107-square meter lot
ladec was already sold to respondent Spouses Lumbao can no longer be inherited by the
1:3J'9 and 9 petitioners because the same was no longer part of their inheritance as it was
1e!1ffll'llre>nt was already sold during the lifetime of their mother.
l!i1mnrs cf :he Hence, the ' 1Bilihan ng Lupa 11 dated 17 August 1979 and 9 January 1981, being valid
lbmed ,o,. law. and enforceable, herein petitioners are bound to comply with their provisions. In short,
!!!ml b~ aw,. a such documents are absolutely valid between and among the parties thereto.
mcie tt:inMe, are
Finally, the general rule that heirs are bound by contracts entered into by their
nnnw en:ering predecessors-in-interest applies in the present case. Article 1311 of the NCC is the
basis of this rule. It is clear from the said provision that whatever rights and
11
1m l'!lrg Lupa obligations the decedent have over the property were transmitted to the heirs by
111llll1~ fa1sified way of succession, a mode of acquiring property, rights and obligations of the
1m11ell"S ,.·.rgilio decedent to the extent of the value of the inheritance of the heirs. Thus, the heirs
1M1ii!lllli11 OEfore cannot escape the legal consequences of a transaction entered into by their
m111t11ies of the predecessor-in-interest because they have inherited the property subject to the
iilllll"~ 1.3S: in liability affecting their common ancestor. Being heirs, there is privity of interest
Mile! 1!:'11'1,aence between them and their deceased mother. They only succeed to what rights their
.,.,..sipor,dents mother had and what is valid and binding against her is also valid and binding as
~ft>l!T !J.a -red against them. The death of a party does not excuse nonperformance of a contract
!11111'111' C',IE' :he which involves a property right and the rights and obligations thereunder pass to the
personal representatives of the deceased. Similarly, nonperformance is not excused
:f:'l1ilhltec 1 the by the death of a party when the other party has a property interest in the subject
;,nllll1lii1Snec by matter of the contact.
WHEREFORE, premises considered, the instant Petition is h~reby DENIED. The
rg; L1.1,::r,c the Decision and Resolution of the Court of Appeals dated 8 June 200~ and 29 July 2005,
j·,aimori g he r respectively are hereby AFFIRMED. Herein petitioners are ordered to reconvey to
, :lltes,cr,.:;:ion respondents Spouses Lumbao the subject property and to pay the latter attorney's
1
1ct 3 ,:;;r::.10ry fees and litigation expenses.
!!I~), S,C d t 0
ir ::r-·e :ime.

79
 :1iililli

ARTS. 778-779

Summary of Jurisprudence on Article 777 . . . 'ill

The hereditary estate passes in ownership to the heirs from the moment of
(1) ·•Ii . .illlnn11 0 1

the decedent's death. The heirs become co-owners of the hereditary estate as
1lrillm1alllf'Sll
completely as if the ancestor had executed and delivered to them a deed for the
same before his death, subject to the rights and obligations of the decedent. The IIIE·IW
heirs cannot be deprived of the rights to the hereditary estate except by methods lllfl6!!!llllbmml
provided by law. IDJIDli!!i11,aim·111
However, the right of heirs to specific distributive shares of the inheritance
(2) ~.lbl1tltt
does not become finally determinable until all the debts of the estate are paid. allillllilili" .111
~iimn1..lllmi
Pending partition, each co-heir/co-owner may convey the whole or a portion
(3)
tl1dtlllillll1lllulllii«m1111
of his undivided interest in the inheritance. There is no legal obstacle to the
disposition by an heir of his hereditary share immediately after the death of the liilllR!!Jlltiiill
w1nu11.. 111nm1 ,,itmlllltf!:
decedent, even if the actual extent of his share is yet to be determined upon the
liquidation of the estate. Nonetheless, if any co-owner sells his or her undivided MHlllfi!lml!l:1
interest in the property co-owned, the other co-heirs/co-owners are entitled to ±iDd aillla!I :nm
41
exercise the right of redemption under Article 1088 of the Civil Code. TeSlilUllbwtuilll :~
(4) Pending partition, co-heirs may enter into such compromise agreements as tl1'1St:illllili8mll ·llm
they may deem appropriate even if the compromise should alter the distribution of admimmiii!Sllimal
the estate as prescribed by the will of the testator. Jli" a111111f a11111!ililntt
and((,iiiii1)))iifil,;
Court approval is required in any disposition of specific property forming
(5)
l'l"l1capaal!mille 1
part of the decedent's estate. The judicial approval, however, cannot adversely affect
-epireset111111iiimt
the substantive rights of heirs to dispose of their pro indiviso shares in the co-heirship
:S pa:1111 IIIDJffll
or co-ownership. The heirs therefore can sell their rights, interest or participation in
the estate under administration.
42 Te.5ibncW,J

Upon the death of a shareholder, his heirs do not automatically become

(6)
stockholders of the corporation. The shares must first be distributed to the heirs and
thereafter registered in the stock and transfer books of the corporation. Pending the
registration of the transfer of shares, the heir stands as the equitable owner of the
stocks, the executor or administrator duly appointed by the court being vested with ",f'~••. J.
the legal title thereto.
:iPIElttli
::httS C.ICJIUI
Art. 778. Succession may be: (1) testamentary; (2) legal or intestate; or (3)
5.1..1111.au::aml'I,
mixed.
:331.,. IIIIIJ/1

Art. 779. Testamentary succession is that which results from the designation rlhme
of an heir, made in a will executed in the form prescribed by law. ::ai:ne11d 11
Ill! ·115,

:;,::i11!litml1@1!111J~
41
See also Article 1620, Civil Code. ::as,e 111111 w
42
Subject to the formalities prescribed in Article 1620 and the rights of the co-heirs in Article :::)E'CISalllll!l!!!l

1088. :::,""'OOeeiail
:;,f'lili ;i:;11' ,

80
 ART. 780

Art. 780. Mixed succession is that effected partly by will and partly by
operation of law.
~11e ;:r,,c':1 e nt
of
;;;inril estate as Types of Succession
1:te<ed for the
The Code enumerates three types of succession.
l!ueice<dle1:. The
nit: ·i:11\11 rrethods Testamentary succession takes place when a testator dies with a valid and
operative will. A will must be both extrinsically and intrinsically valid. Extrinsic validity
refers to the testator's compliance with the formal requirements of a will; intrinsic
r1lll!: i1ITTher:tance
validity relates to the substantive validity of the testator's dispositions contained
•:re p.a11,C .
therein. In testamentary succession, the testator controls to a certain degree the
1ll1e er 2 portion
distribution of his estate.
n5i11la:I e to the
Intestate succession takes place when a person dies without a valid and operative
ialae:atn of the
will. In intestacy, the distribution of the estate of the decedent is controlled by law.
ill1'1edl L.POn the
i'nr!E!!'" t..rdivided Mixed succession occurs in the following cases: (i} if the testator executed a valid will
1mie er,titled to but failed to distribute the entirety of his estate and he made no provision as to how the
residual property shall be disposed, there being no right of accretion among the
instituted heirs; (ii} where the sole provision of the will relates to the appointment of an
,il!lfVlf'€ rn en ts as
administrator, or the payment of debts, or the acknowledgement of an illegitimate child,
1::l!i1st::-; :::ution of
or any other provision that are not considered as testamentary/property dispositions;
and (iii} if any of the beneficiaries (whether instituted heirs, legatees or devisees} is
Jillil!lE'l'tY -=arming incapable to accept or enter into the inheritance, there being no substitution,
d,IUJef"S.e ly affect
representation or accretion. In mixed succession, the distribution of the hereditary estate
:t:~ c.::-heirship
is partly controlled by the testator, and partly controlled by law.
partiicipation in
Testacy is preferred over intestacy.

1rtt:illcaM·.-:J ecom e RODRIGUEZ, ET AL. v. BORJA, ET AL.

io, me ".eirs and No. L-21993, 21 June 1966
n11~,. P.e'1ding the 17 SCRA418
ie ,ClJ11111H1er of the
Reyes, J.B.L., J.:
innig •..ested with
Petitioners Angela, Maria, Abelardo and Antonio, surnamed Rodriguez, petition
this Court for a writ of certiorari and prohibition to the Court of First Instance of
1111!5tot.e; or (3)
Bulacan, for its refusal to grant their motion to dismiss its Special Proceeding No.
1331, which said Court is alleged to have taken cognizance of without jurisdiction.

h designation
::::::·-··~oe -s n A rt icl e
The facts and issues are succinctly narrated in the order of the respondent court,
dated 13 June 1963 in this wise:
It is alleged in the motion to dismiss filed by Angela, Maria, Abelardo and Antonio
Rodriguez, through counsel, that this Court has no jurisdiction to try the above-entitled
case in view of the pendency of another action for the settlement of the estate of the
deceased Rev. Fr. Celestino Rodriguez in the Court of First Instance of Rizal, namely, Sp.
Proceedings No. 3907 entitled "In the matter of the Intestate Estate of the deceased
Rev. Fr. Celestino Rodriguez" which was filed ahead of the instant case.

81

,,, .
 j ;

·-
,;rl
. ii/11 11111.1

•• ·. .•

ART. 780

in.1
The records show that Fr. Celestino Rodriguez died on 12 February 1963 in the mt ,min
City of Manila; that on 4 March 1963, Apolonia Pangilinan and Adelaida Jacalan .ilW/1//t I
delivered to the Clerk of Court of Bulacan a purported last will and testament of i/lDll"llllll/11
Fr. Rodriguez; that on 8 March 1963, Maria Rodriguez and Angela Rodriguez, through
\\Iliff ~
counsel filed a petition for leave of court to allow them to examine the alleged will;
1111Jliaam:amm1 I
that on 11 March 1963 before the Court could act on the petition, the same was
ltmoilllnllJpi!PJl
withdrawn; that on 12 March 1963, aforementioned petitioners filed before the
:llmerau1•IM' ~
Court of First Instance of Rizal a petition for the settlement of the intestate estate of
.,.11tllnff!
Fr. Rodriguez alleging, among other things, that Fr. Rodriguez was a resident of
an111llb11li!l mma1
Paranaque, Rizal, and died without leaving a will and praying that Maria Rodriguez be
appointed as Special Administratrix of the estate; and that on 12 March 1963
Apolonia Pangilinan and Adelaida Jacalan filed a petition in this Court for the ,/P)llJJ/JJJl/1/i
probation of the will delivered by them on 4 March 1963. It was stipulated by the lltlll/i/11/111
parties that Fr. Rodriguez was born in Paraf\aque, Rizal; that he was Parish Priest of .lf#J!lltlra
the Catholic Church of Hagonoy, Bulacan from the year 1930 up to the time of his 1111/l/lirlnlWo
death in 1963; that he was buried in Paranaque, and that he left real properties in ,n,JlJJlJ1/b1/l/i
Rizal, Quezon City and Bulacan. t!IElllll//!1

The movants contend that since the intestate proceedings in the Court of First 1lilnaf,i
Instance of Rizal was filed at 8:00 a.m. on 17 March 1963 while the petition for
probate was filed in the Court of First Instance of Bulacan at 11:00 a.m. on the same
··*ill1111
ffli!!R'l-
day, the latter court has no jurisdiction to entertain the petition for probate, citing as !15 i5 l/1111!!111 t
authority in support thereof the case of Ongsingco vda. de Borja v. Tan and de Borja, *''p!!!llilttt11
G.R. No. L-7792, July 27, 1955. h1ll!!!!!!ttltiiil
Petitioners Pangilinan and Jacalan, on the other hand, take the stand that the 001 dlli umm
Court of First Instance of Bulacan acquired jurisdiction over the case upon delivery by l"rn1$llliinmI:il!!'
them of the will to the Clerk of Court on 4 March 1963, and that the case in this Court IIUll!"l/$111111111Clttil!~
therefore has precedence over the case filed in Rizal on 12 March 1963. ll!!nell"\'l
The Court of First Instance, as previously stated, denied the motion to dismiss on :s'llllil1tt:tttll1
the ground that a difference of a few hours did not entitle one proceeding to ::lie1il1Wllll'WI i
preference over the other; that, as early as 7 March, movants were aware of the :101111111:· 1111Uli1tttt
existence of the purported will of Father Rodriguez, deposited in the Court of :er"iti!l111111llly:
Bulacan, since they filed a petition to examine the same, and that movants clearly :o IOlillll1l1lllllrr
filed the intestate proceedings in Rizal "for no other purpose than to prevent this ,\lill,'D1111i1111l!!'·,1
Court (of Bulacan} from exercising jurisdiction over the probate proceedings." 111:me,
Reconsideration having been denied, movants, now petitioners, came to this Court, s;ubsi1ilullli1amr~
relying principally on Rule 73, Section 1 of the Rules of Court, and invoking our ruling ~!!!''I[
in Ongsingco v. Tan and de Borja, L-7792, July 27, 1955.
M.
Section 1. Where estate of deceased person settled. -If the decedent is
/l.)
an inhabitant of the Philippines at the time of his death, whether a citizen or
an alien, his will shall be proved, or letters of administration granted, and his
estate settled, in the Court of First Instance in the province in which he (}.
1
1 I
resides at the time of his death, and if he is an inhabitant of a foreign u
country, the Court of First Instance of any province in which he had estate.
The court first taking cognizance of the settlement of the estate of the /'J:)
decedent, shall exercise jurisdiction to the exclusion of all other courts. The
jurisdiction assumed by a court, as far as it depends on the place of residence

82
 ART. 780

~11T"t-ie of the decedent, or of the location of his estate, shall not be contested in a
1C::lill J~1an suit or proceeding, except in an appeal from that court, in the original case,
or when the want of jurisdiction appears on record.
!!!:, 'lllltmro1c.1gh
We find this recourse untenable. The jurisdiction of the Court of First Instance of
11lllhe~,d: Bulacan became vested upon the delivery thereto of the will of the late Father
·$iill!l'li'IIII!: ,,11, 35
Rodriguez on 4 March 1963, even if no petition for its allowance was filed until later,
~:rie
because upon the will being deposited the court could, motu proprio, have taken steps
i!!' ,iest::atE: : f
to fix the time and place for proving the will, and issued the corresponding notices
reiiilil!lllel""t c,f conformably to what is prescribed by section 3, Rule 76 of the Revised Rules of Court:
:mdlim11pe.: ::ie
ffiilld :9i:,3 Section 3. Court to appoint time for proving will. Notice thereof to be
ml'!!tr 1br :rie published.-When a will is delivered to, or a petition for the allowance of a
1mal Cll\i· :~e will is filed in, the Court having jurisdiction, such Court shall fix a time and
ffil~I Pliniest Of place for proving the will when all concerned may appear to contest the
tt11lll!"llre c~ 1is allowance thereof, and shall cause notice of such time and place to be
"Ol~li!'rt!2S :In published three (3) weeks successively, previous to the time appointed, in a
newspaper of general circulation in the province.
111U111"'.' crf =irst The use of the disjunctive in the words "when a will is delivered to OR a petition
~1e!!:J1ttt:1io r fo r for the allowance of a will is filed" plainly indicates that the court may act upon the
111'1 m,e 5.3 m e mere deposit therein of a decedent's testament, even if no petition for its allowance
tt:e:. ci':ir.g as is as yet filed. Where the petition for probate is made after the deposit of the will,
mer ,;Jire Sorja, the petition is deemed to relate back to the time when the will was delivered. Since
the testament of Fr. Rodriguez was submitted and delivered to the Court of Bulacan
1111ict th.a: the on 4 March, while petitioners initiated intestate proceedings in the Court of First
,::lte!lfl'a'E~)' by Instance of Rizal only on 12 March, eight days later, the precedence and exclusive
Ill' ti!lllis :::.ourt jurisdiction of the Bulacan court is incontestable.
There are two other reasons that militate against the success of petitioners. One
1: crltitSll"!"',5:5 ::in is that their commencing intestate proceedings in Rizal, after they learned of the
111::i~ll±ir.g to delivery of the decedent's will to the Court of Bulacan, was in bad faith, patently
l#liil!R o+ :he done with a view to divesting the latter court of precedence awarded it by the Rules.
me- of
[.:i,11...-: Certainly the order of priority established in Rule 73 (old Rule 75) was not designed
1m1r111"i.5 :1 early to convert the settlement of the decedent's estate into a race between applicants,
»/ll!lf''IPE~= th is with the administration of the properties as the price for the fleetest.
Yr:J1u::1E,e,c ,.. gs." The other reason is that, in our system of civil law, intestate succession is only
I "1iims :::::iurt, subsidiary or subordinate to the testate, since intestacy only takes place in the
1ig 1::iJC:Ur -~ling absence of a valid operative will. Says Article 960 of the Civil Code of the Philippines:

Art. 960. Legal or intestate succession takes place:

~11:tt/El"I', 5
(1) If a person dies without a will, or with a void will, or one which has
lr.r:rel"' c-
subsequently lost is validity;
i:11r1,c ~ s
/m1111r;;!'r "E (2) When the will does not institute an heir, or dispose of all the property
:rt:JJll'f/E'ltq,.. belonging to the testator. In such case, legal succession shall take place
~:$1:'C:E. only with respect to property which the testator has not disposed;
cl1l" t.'YE (3) If the suspensive condition attached to the institution of heir does not
,.i
1'""'.:S:. '"'=' happen or is not fulfilled, or if the heir dies before the testator, or
':::;il/lJIIE'"'•:E

83
 .,ii''i

'''l
1
I H•
!

ART. 780

repudiates the inheritance, there being no substitution, and no right of

accretion takes place;
(4) When the heir instituted is incapable of succeeding, except in cases
provided in this Code.
Therefore, as ruled in Castro, et al. v. Martinez, 10 Phil 307, "only after final
decision as to the nullity of testate succession could an intestate succession be
instituted in the form of pre-established action." The institution of intestacy
proceedings in Rizal may not thus proceed while the probate of the purported will of

....
Father Rodriguez is pending.
We rule that the Bulacan Court of First Instance was entitled to priority in the
settlement of the estate in question, and that in refusing to dismiss the probate
proceeding, said court did not commit any abuse of discretion. It is the proceedings
in the Rizal Court that should be discontinued. presu,llidl
Wherefore, the writ of certiorari applied for is denied.
talre·eaa:t,

Chaaa:ainus

L .5illll
JhE ~
0 : : ) ~ llllltn

statlADfr'<I' •

2. Ulm/I,
,;,1'111iiillme· il
thE"~ttl ll!li
exec.it,mi ·~
of : ,e ±Dime
the a;:i,~

3. Fam
,"'1,e ll:e$i11
and 8,1)6 ,mm1 'tt
The tes:tmi!lll!lrom
resu ts if'! 'lll:ltn11

· G ,, \\iQll1w11r
1

:. :...~1c.lie$. ·:..:

' A e: 1,c:he :JJ.ii:11

- --,:·~e iilllWP.!
excec:.0111,ii111! ::~,
0
:i.,-:de l!E::!l!

84