notified of any renewal or extension of this
UNOFFICIAL CASE LIST 1
GENERAL PRINCIPLES
1. ESTATE OF K. H. HEMADY, deceased,
vs. LUZON SURETY CO., INC., claimant-
Appellant.
DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order
of the Court of First Instance of Rizal, presided
by Judge Hermogenes Caluag, dismissing its
claim against the Estate of K. H. Hemady
(Special Proceeding No. Q-293) for failure to
state a cause of action.
The Luzon Surety Co. had filed a claim against
the Estate based on twenty different indemnity
agreements, or counter bonds, each subscribed
by a distinct principal and by the deceased K. H.
Hemady, a surety solidary guarantor) in all of
them, in consideration of the Luzon Surety Co.s
of having guaranteed, the various principals in
favor of different creditors. The twenty
counterbonds, or indemnity agreements, all
contained the following
stipulations:chanroblesvirtuallawlibrary
Premiums. As consideration for this
suretyship, the undersigned jointly and severally,
agree to pay the COMPANY the sum of
________________ (P______) pesos,
Philippines Currency, in advance as premium
there of for every __________ months or
fractions thereof, this ________ or any renewal
or substitution thereof is in effect.
Indemnity. The undersigned, jointly and
severally, agree at all times to indemnify the
COMPANY and keep it indemnified and hold
and save it harmless from and against any and
all damages, losses, costs, stamps, taxes,
penalties, charges, and expenses of whatsoever
kind and nature which the COMPANY shall or
may, at any time sustain or incur in consequence
of having become surety upon this bond or any
extension, renewal, substitution or alteration
thereof made at the instance of the undersigned
or any of them or any order executed on behalf
of the undersigned or any of them; chan
roblesvirtualawlibraryand to pay, reimburse and
make good to the COMPANY, its successors
and assigns, all sums and amount of money
which it or its representatives shall pay or cause
to be paid, or become liable to pay, on account
of the undersigned or any of them, of
whatsoever kind and nature, including 15% of
the amount involved in the litigation or other
matters growing out of or connected therewith
for counsel or attorneys fees, but in no case less
than P25. It is hereby further agreed that in case
of extension or renewal of this ________ we
equally bind ourselves for the payment thereof
under the same terms and conditions as above
mentioned without the necessity of executing
another indemnity agreement for the purpose
and that we hereby equally waive our right to be
________ which may be granted under this
indemnity agreement.
Interest on amount paid by the Company.
Any and all sums of money so paid by the
company shall bear interest at the rate of
12% per annum which interest, if not paid, will
be accummulated and added to the capital
quarterly order to earn the same interests as the
capital and the total sum thereof, the capital and
interest, shall be paid to the COMPANY as soon
as the COMPANY shall have become liable
therefore, whether it shall have paid out such
sums of money or any part thereof or not.
xxx xxx xxx
Waiver. It is hereby agreed upon by and
between the undersigned that any question
which may arise between them by reason of this
document and which has to be submitted for
decision to Courts of Justice shall be brought
before the Court of competent jurisdiction in the
City of Manila, waiving for this purpose any
other venue. Our right to be notified of the
acceptance and approval of this indemnity
agreement is hereby likewise waived.
xxx xxx xxx
Our Liability Hereunder. It shall not be
necessary for the COMPANY to bring suit
against the principal upon his default, or to
exhaust the property of the principal, but the
liability hereunder of the undersigned
indemnitor shall be jointly and severally, a
primary one, the same as that of the principal,
and shall be exigible immediately upon the
occurrence of such default. (Rec. App. pp. 98-
102.)
The Luzon Surety Co., prayed for allowance, as
a contingent claim, of the value of the twenty
bonds it had executed in consideration of the
counterbonds, and further asked for judgment
for the unpaid premiums and documentary
stamps affixed to the bonds, with 12 per cent
interest thereon.
Before answer was filed, and upon motion of the
administratrix of Hemadys estate, the lower
court, by order of September 23, 1953,
dismissed the claims of Luzon Surety Co., on
two grounds:chanroblesvirtuallawlibrary (1) that
the premiums due and cost of documentary
stamps were not contemplated under the
indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since
they were not liabilities incurred after the
execution of the counterbonds; chan
roblesvirtualawlibraryand (2) that whatever
losses may occur after Hemadys death, are not
chargeable to his estate, because upon his death
he ceased to be guarantor.
Taking up the latter point first, since it is the one
more far reaching in effects, the reasoning of the
court below ran as
follows:chanroblesvirtuallawlibrary
The administratrix further contends that upon
the death of Hemady, his liability as a guarantor
terminated, and therefore, in the absence of a
showing that a loss or damage was suffered, the
claim cannot be considered contingent. This
Court believes that there is merit in this
contention and finds support in Article 2046 of
the new Civil Code. It should be noted that a
new requirement has been added for a person to
qualify as a guarantor, that
is:chanroblesvirtuallawlibrary integrity. As
correctly pointed out by the Administratrix,
integrity is something purely personal and is not
transmissible. Upon the death of Hemady, his
integrity was not transmitted to his estate or
successors. Whatever loss therefore, may occur
after Hemadys death, are not chargeable to his
estate because upon his death he ceased to be a
guarantor.
Another clear and strong indication that the
surety company has exclusively relied on the
personality, character, honesty and integrity of
the now deceased K. H. Hemady, was the fact
that in the printed form of the indemnity
agreement there is a paragraph entitled Security
by way of first mortgage, which was expressly
waived and renounced by the security company.
The security company has not demanded from
K. H. Hemady to comply with this requirement
of giving security by way of first mortgage. In
the supporting papers of the claim presented by
Luzon Surety Company, no real property was
mentioned in the list of properties mortgaged
which appears at the back of the indemnity
agreement. (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the
present Civil Code (Article 1311), as well as
under the Civil Code of 1889 (Article 1257), the
rule is that
Contracts take effect only as between the
parties, their assigns and heirs, except in the case
where the rights and obligations arising from the
contract are not transmissible by their nature, or
by stipulation or by provision of law.
While in our successional system the
responsibility of the heirs for the debts of their
decedent cannot exceed the value of the
inheritance they receive from him, the principle
remains intact that these heirs succeed not only
to the rights of the deceased but also to his
obligations. Articles 774 and 776 of the New
Civil Code (and Articles 659 and 661 of the
preceding one) expressly so provide, thereby
confirming Article 1311 already quoted.
ART. 774. Succession is a mode of
acquisition by virtue of which the property,
rights and obligations to the extent of the value
of the inheritance, of a person are transmitted
through his death to another or others either by
his will or by operation of law.
ART. 776. The inheritance includes all the
property, rights and obligations of a person
which are not extinguished by his death.
In Mojica vs. Fernandez, 9 Phil. 403, this
Supreme Court
ruled:chanroblesvirtuallawlibrary
Under the Civil Code the heirs, by virtue of the
rights of succession are subrogated to all the
rights and obligations of the deceased (Article
661) and cannot be regarded as third parties with
respect to a contract to which the deceased was a
party, touching the estate of the deceased
(Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
The principle on which these decisions rest is
not affected by the provisions of the new Code
of Civil Procedure, and, in accordance with that
principle, the heirs of a deceased person cannot
be held to be third persons in relation to any
contracts touching the real estate of their
decedent which comes in to their hands by right
of inheritance; chan roblesvirtualawlibrarythey
take such property subject to all the obligations
resting thereon in the hands of him from whom
they derive their rights.
(See also Galasinao vs. Austria, 51 Off. Gaz.
(No. 6) p. 2874 and de Guzman vs. Salak, 91
Phil., 265).
The binding effect of contracts upon the heirs of
the deceased party is not altered by the provision
in our Rules of Court that money debts of a
deceased must be liquidated and paid from his
estate before the residue is distributed among
said heirs (Rule 89). The reason is that whatever
payment is thus made from the estate is
ultimately a payment by the heirs and
distributees, since the amount of the paid claim
in fact diminishes or reduces the shares that the
heirs would have been entitled to receive.
Under our law, therefore, the general rule is that
a partys contractual rights and obligations are
transmissible to the successors. The rule is a
consequence of the progressive
depersonalization of patrimonial rights and
duties that, as observed by Victorio Polacco, has
characterized the history of these institutions.
From the Roman concept of a relation from
person to person, the obligation has evolved into
a relation from patrimony to patrimony, with the
persons occupying only a representative
position, barring those rare cases where the
obligation is strictly personal, i.e., is contracted
intuitu personae, in consideration of its
performance by a specific person and by no
other. The transition is marked by the
disappearance of the imprisonment for debt.
Of the three exceptions fixed by Article 1311,
the nature of the obligation of the surety or
guarantor does not warrant the conclusion that
his peculiar individual qualities are
contemplated as a principal inducement for the
contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the
latter as surety in the counterbonds? Nothing but
the reimbursement of the moneys that the Luzon
Surety Co. might have to disburse on account of
the obligations of the principal debtors. This
reimbursement is a payment of a sum of money,
resulting from an obligation to give; chan
roblesvirtualawlibraryand to the Luzon Surety
Co., it was indifferent that the reimbursement
should be made by Hemady himself or by some
one else in his behalf, so long as the money was
paid to it.
The second exception of Article 1311, p. 1, is
intransmissibility by stipulation of the parties.
Being exceptional and contrary to the general
rule, this intransmissibility should not be easily
implied, but must be expressly established, or at
the very least, clearly inferable from the
provisions of the contract itself, and the text of
the agreements sued upon nowhere indicate that
they are non-transferable.
(b) Intransmisibilidad por pacto. Lo general
es la transmisibilidad de darechos y
obligaciones; chan roblesvirtualawlibraryle
excepcion, la intransmisibilidad. Mientras nada
se diga en contrario impera el principio de la
transmision, como elemento natural a toda
relacion juridica, salvo las personalisimas. Asi,
para la no transmision, es menester el pacto
expreso, porque si no, lo convenido entre partes
trasciende a sus herederos.
Siendo estos los continuadores de la
personalidad del causante, sobre ellos recaen los
efectos de los vinculos juridicos creados por sus
antecesores, y para evitarlo, si asi se quiere, es
indespensable convension terminante en tal
sentido.
Por su esencia, el derecho y la obligacion
tienden a ir ms all de las personas que les
dieron vida, y a ejercer presion sobre los
sucesores de esa persona; chan
roblesvirtualawlibrarycuando no se quiera esto,
se impone una estipulacion limitativa
expresamente de la transmisibilidad o de cuyos
tirminos claramente se deduzca la concresion del
concreto a las mismas personas que lo otorgon.
(Scaevola, Codigo Civil, Tomo XX, p. 541-542)
(Emphasis supplied.)
Because under the law (Article 1311), a person
who enters into a contract is deemed to have
contracted for himself and his heirs and assigns,
it is unnecessary for him to expressly stipulate to
that effect; chan roblesvirtualawlibraryhence, his
failure to do so is no sign that he intended his
bargain to terminate upon his death. Similarly,
that the Luzon Surety Co., did not require
bondsman Hemady to execute a mortgage
indicates nothing more than the companys faith
and confidence in the financial stability of the
surety, but not that his obligation was strictly
personal.
The third exception to the transmissibility of
obligations under Article 1311 exists when they
are not transmissible by operation of law. The
provision makes reference to those cases where
the law expresses that the rights or obligations
are extinguished by death, as is the case in legal
support (Article 300), parental authority (Article
327), usufruct (Article 603), contracts for a piece
of work (Article 1726), partnership (Article
1830 and agency (Article 1919). By contract, the
articles of the Civil Code that regulate guaranty
or suretyship (Articles 2047 to 2084) contain no
provision that the guaranty is extinguished upon
the death of the guarantor or the surety.
The lower court sought to infer such a limitation
from Art. 2056, to the effect that one who is
obliged to furnish a guarantor must present a
person who possesses integrity, capacity to bind
himself, and sufficient property to answer for the
obligation which he guarantees. It will be
noted, however, that the law requires these
qualities to be present only at the time of the
perfection of the contract of guaranty. It is self-
evident that once the contract has become
perfected and binding, the supervening
incapacity of the guarantor would not operate to
exonerate him of the eventual liability he has
contracted; chan roblesvirtualawlibraryand if
that be true of his capacity to bind himself, it
should also be true of his integrity, which is a
quality mentioned in the article alongside the
capacity.
The foregoing concept is confirmed by the next
Article 2057, that runs as
follows:chanroblesvirtuallawlibrary
ART. 2057. If the guarantor should be
convicted in first instance of a crime involving
dishonesty or should become insolvent, the
creditor may demand another who has all the
qualifications required in the preceding article.
The case is excepted where the creditor has
required and stipulated that a specified person
should be guarantor.
From this article it should be immediately
apparent that the supervening dishonesty of the
guarantor (that is to say, the disappearance of his
integrity after he has become bound) does not
terminate the contract but merely entitles the
creditor to demand a replacement of the
guarantor. But the step remains optional in the
creditor:chanroblesvirtuallawlibrary it is his
right, not his duty; chan roblesvirtualawlibraryhe
may waive it if he chooses, and hold the
guarantor to his bargain. Hence Article 2057 of
the present Civil Code is incompatible with the
trial courts stand that the requirement of
integrity in the guarantor or surety makes the
latters undertaking strictly personal, so linked to
his individuality that the guaranty automatically
terminates upon his death.
The contracts of suretyship entered into by K. H.
Hemady in favor of Luzon Surety Co. not being
rendered intransmissible due to the nature of the
undertaking, nor by the stipulations of the
contracts themselves, nor by provision of law,
his eventual liability thereunder necessarily
passed upon his death to his heirs. The contracts,
therefore, give rise to contingent claims provable
against his estate under section 5, Rule 87 (2
Moran, 1952 ed., p. 437; chan
roblesvirtualawlibraryGaskell & Co. vs. Tan Sit,
43 Phil. 810, 814).
The most common example of the contigent
claim is that which arises when a person is
bound as surety or guarantor for a principal who
is insolvent or dead. Under the ordinary contract
of suretyship the surety has no claim whatever
against his principal until he himself pays
something by way of satisfaction upon the
obligation which is secured. When he does this,
there instantly arises in favor of the surety the
right to compel the principal to exonerate the
surety. But until the surety has contributed
something to the payment of the debt, or has
performed the secured obligation in whole or in
part, he has no right of action against anybody
no claim that could be reduced to judgment.
(May vs. Vann, 15 Pla., 553; chan
roblesvirtualawlibraryGibson vs. Mithell, 16
Pla., 519; chan roblesvirtualawlibraryMaxey vs.
Carter, 10 Yarg. [Tenn.], 521 Reeves vs.
Pulliam, 7 Baxt. [Tenn.], 119; chan
roblesvirtualawlibraryErnst vs. Nou, 63 Wis.,
134.)
For Defendant administratrix it is averred that
the above doctrine refers to a case where the
surety files claims against the estate of the
principal debtor; chan roblesvirtualawlibraryand
it is urged that the rule does not apply to the case
before us, where the late Hemady was a surety,
not a principal debtor. The argument evinces a
superficial view of the relations between parties.
If under the Gaskell ruling, the Luzon Surety
Co., as guarantor, could file a contingent claim
against the estate of the principal debtors if the
latter should die, there is absolutely no reason
why it could not file such a claim against the
estate of Hemady, since Hemady is a solidary
co-debtor of his principals. What the Luzon
Surety Co. may claim from the estate of a
principal debtor it may equally claim from the
estate of Hemady, since, in view of the existing
solidarity, the latter does not even enjoy the
benefit of exhaustion of the assets of the
principal debtor.
The foregoing ruling is of course without
prejudice to the remedies of the administratrix
against the principal debtors under Articles 2071
and 2067 of the New Civil Code.
Our conclusion is that the solidary guarantors
liability is not extinguished by his death, and
that in such event, the Luzon Surety Co., had the
right to file against the estate a contingent claim
for reimbursement. It becomes unnecessary now
to discuss the estates liability for premiums and
stamp taxes, because irrespective of the solution
to this question, the Luzon Suretys claim did
state a cause of action, and its dismissal was
erroneous.
Wherefore, the order appealed from is reversed,
and the records are ordered remanded to the
court of origin, with instructions to proceed in
accordance with law. Costs against the
Administratrix- Appellee. SO ORDERED.
2. LAURA ALVAREZ, FLORA ALVAREZ
and RAYMUNDO ALVAREZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE
APELLATE COURT and JESUS YANES,
ESTELITA YANES, ANTONIO YANES,
ROSARIO YANES, and ILUMINADO
YANES, respondents.
Francisco G. Banzon for petitioner.
Renecio R. Espiritu for private respondents.
FERNAN, C.J.:
This is a petition for review
on certiorari seeking the reversal of: (a) the
decision of the Fourth Civil Cases Division of
the Intermediate Appellate Court dated August
31, 1983 in AC-G.R. CV No. 56626 entitled
"Jesus Yanes et al. v. Dr. Rodolfo Siason et
al." affirming the decision dated July 8, 1974 of
the Court of First Instance of Negros Occidental
insofar as it ordered the petitioners to pay jointly
and severally the private respondents the sum of
P20,000.00 representing the actual value of Lots
Nos. 773-A and 773-B of the cadastral survey of
Murcia, Negros Occidental and reversing the
subject decision insofar as it awarded the sums
of P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees,
respectively and (b) the resolution of said
appellate court dated May 30, 1984, denying the
motion for reconsideration of its decision.
The real properties involved are two parcels of
land identified as Lot 773-A and Lot 773-B
which were originally known as Lot 773 of the
cadastral survey of Murcia, Negros Occidental.
Lot 773, with an area of 156,549 square meters,
was registered in the name of the heirs of
Aniceto Yanes under Original Certificate of
Title No. RO-4858 (8804) issued on October 9,
1917 by the Register of Deeds of Occidental
Negros (Exh. A).
Aniceto Yanes was survived by his children,
Rufino, Felipe and Teodora. Herein private
respondents, Estelita, Iluminado and Jesus, are
the children of Rufino who died in 1962 while
the other private respondents, Antonio and
Rosario Yanes, are children of Felipe. Teodora
was survived by her child, Jovita (Jovito)
Alib. 1 It is not clear why the latter is not
included as a party in this case.
Aniceto left his children Lots 773 and 823.
Teodora cultivated only three hectares of Lot
823 as she could not attend to the other portions
of the two lots which had a total area of around
twenty-four hectares. The record does not show
whether the children of Felipe also cultivated
some portions of the lots but it is established that
Rufino and his children left the province to settle
in other places as a result of the outbreak of
World War II. According to Estelita, from the
"Japanese time up to peace time", they did not
visit the parcels of land in question but "after
liberation", when her brother went there to get
their share of the sugar produced therein, he was
informed that Fortunato Santiago, Fuentebella
(Puentevella) and Alvarez were in possession of
Lot 773. 2
It is on record that on May 19, 1938, Fortunato
D. Santiago was issued Transfer Certificate of
Title No. RF 2694 (29797) covering Lot 773-A
with an area of 37,818 square meters. 3 TCT No.
RF 2694 describes Lot 773-A as a portion of Lot
773 of the cadastral survey of Murcia and as
originally registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of
118,831 square meters was also registered in the
name of Fortunato D. Santiago on September 6,
1938 Under TCT No. RT-2695 (28192 ). 4 Said
transfer certificate of title also contains a
certification to the effect that Lot 773-B was
originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and
773-B to Monico B. Fuentebella, Jr. in
consideration of the sum of
P7,000.00. 5 Consequently, on February 20,
1956, TCT Nos. T-19291 and T-19292 were
issued in Fuentebella's name. 6
After Fuentebella's death and during the
settlement of his estate, the administratrix
thereof (Arsenia R. Vda. de Fuentebella, his
wife) filed in Special Proceedings No. 4373 in
the Court of First Instance of Negros Occidental,
a motion requesting authority to sell Lots 773-A
and 773-B. 7 By virtue of a court order granting
said motion, 8 on March 24, 1958, Arsenia Vda.
de Fuentebella sold said lots for P6,000.00 to
Rosendo Alvarez. 9 Hence, on April 1, 1958
TCT Nos. T-23165 and T-23166 covering Lots
773-A and 773-B were respectively issued to
Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora
Yanes and the children of her brother Rufino,
namely, Estelita, Iluminado and Jesus, filed in
the Court of First Instance of Negros Occidental
a complaint against Fortunato Santiago, Arsenia
Vda. de Fuentebella, Alvarez and the Register of
Deeds of Negros Occidental for the "return" of
the ownership and possession of Lots 773 and
823. They also prayed that an accounting of the
produce of the land from 1944 up to the filing of
the complaint be made by the defendants, that
after court approval of said accounting, the share
or money equivalent due the plaintiffs be
delivered to them, and that defendants be
ordered to pay plaintiffs P500.00 as damages in
the form of attorney's fees. 11
During the pendency in court of said case or on
November 13, 1961, Alvarez sold Lots 773-A,
773-B and another lot for P25,000.00 to Dr.
Rodolfo Siason. 12 Accordingly, TCT Nos.
30919 and 30920 were issued to Siason, 13 who
thereafter, declared the two lots in his name for
assessment purposes. 14
Meanwhile, on November 6, 1962, Jesus Yanes,
in his own behalf and in behalf of the other
plaintiffs, and assisted by their counsel, filed a
manifestation in Civil Case No. 5022 stating that
the therein plaintiffs "renounce, forfeit and
quitclaims (sic) any claim, monetary or
otherwise, against the defendant Arsenia Vda. de
Fuentebella in connection with the above-
entitled case." 15
On October 11, 1963, a decision was rendered
by the Court of First Instance of Negros
Occidental in Civil Case No. 5022, the
dispositive portion of which reads:
WHEREFORE, judgment is
rendered, ordering the defendant
Rosendo Alvarez to reconvey to
the plaintiffs lots Nos. 773 and
823 of the Cadastral Survey of
Murcia, Negros Occidental, now
covered by Transfer Certificates
of Title Nos. T-23165 and T-
23166 in the name of said
defendant, and thereafter to
deliver the possession of said
lots to the plaintiffs. No special
pronouncement as to costs.
SO ORDERED. 16
It will be noted that the above-mentioned
manifestation of Jesus Yanes was not mentioned
in the aforesaid decision.
However, execution of said decision proved
unsuccessful with respect to Lot 773. In his
return of service dated October 20, 1965, the
sheriff stated that he discovered that Lot 773 had
been subdivided into Lots 773-A and 773-B; that
they were "in the name" of Rodolfo Siason who
had purchased them from Alvarez, and that Lot
773 could not be delivered to the plaintiffs as
Siason was "not a party per writ of execution." 17
The execution of the decision in Civil Case No.
5022 having met a hindrance, herein private
respondents (the Yaneses) filed on July 31,
1965, in the Court of First Instance of Negros
Occidental a petition for the issuance of a new
certificate of title and for a declaration of nullity
of TCT Nos. T-23165 and T-23166 issued to
Rosendo Alvarez. 18 Thereafter, the court
required Rodolfo Siason to produce the
certificates of title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating
that he purchased Lots 773-A, 773-B and 658,
not Lots 773 and 823, "in good faith and for a
valuable consideration without any knowledge
of any lien or encumbrances against said
properties"; that the decision in the cadastral
proceeding 19 could not be enforced against him
as he was not a party thereto; and that the
decision in Civil Case No. 5022 could neither be
enforced against him not only because he was
not a party-litigant therein but also because it
had long become final and executory. 20 Finding
said manifestation to be well-founded, the
cadastral court, in its order of September 4,
1965, nullified its previous order requiring
Siason to surrender the certificates of title
mentioned therein. 21
In 1968, the Yaneses filed an ex-parte motion
for the issuance of an alias writ of execution in
Civil Case No. 5022. Siason opposed it. 22 In its
order of September 28, 1968 in Civil Case No.
5022, the lower court, noting that the Yaneses
had instituted another action for the recovery of
the land in question, ruled that at the judgment
therein could not be enforced against Siason as
he was not a party in the case. 23
The action filed by the Yaneses on February 21,
1968 was for recovery of real property with
damages. 24 Named defendants therein were Dr.
Rodolfo Siason, Laura Alvarez, Flora Alvarez,
Raymundo Alvarez and the Register of Deeds of
Negros Occidental. The Yaneses prayed for the
cancellation of TCT Nos. T-19291 and 19292
issued to Siason (sic) for being null and void; the
issuance of a new certificate of title in the name
of the Yaneses "in accordance with the sheriffs
return of service dated October 20, 1965;"
Siason's delivery of possession of Lot 773 to the
Yaneses; and if, delivery thereof could not be
effected, or, if the issuance of a new title could
not be made, that the Alvarez and Siason jointly
and severally pay the Yaneses the sum of
P45,000.00. They also prayed that Siason render
an accounting of the fruits of Lot 773 from
November 13, 1961 until the filing of the
complaint; and that the defendants jointly and
severally pay the Yaneses moral damages of
P20,000.00 and exemplary damages of
P10,000.00 plus attorney's fees of P4, 000.00. 25
In his answer to the complaint, Siason alleged
that the validity of his titles to Lots 773-A and
773-B, having been passed upon by the court in
its order of September 4, 1965, had become res
judicata and the Yaneses were estopped from
questioning said order. 26 On their part, the
Alvarez stated in their answer that the Yaneses'
cause of action had been "barred by res judicata,
statute of limitation and estoppel." 27
In its decision of July 8, 1974, the lower court
found that Rodolfo Siason, who purchased the
properties in question thru an agent as he was
then in Mexico pursuing further medical studies,
was a buyer in good faith for a valuable
consideration. Although the Yaneses were
negligent in their failure to place a notice of lis
pendens "before the Register of Deeds of Negros
Occidental in order to protect their rights over
the property in question" in Civil Case No. 5022,
equity demanded that they recover the actual
value of the land because the sale thereof
executed between Alvarez and Siason was
without court approval. 28 The dispositive
portion of the decision states:
IN VIEW OF THE
FOREGOING
CONSIDERATION, judgment
is hereby rendered in the
following manner:
A. The case against the
defendant Dr. Rodolfo Siason
and the Register of Deeds are
(sic) hereby dismmissed,
B. The defendants, Laura, Flora
and Raymundo, all surnamed
Alvarez being the legitimate
children of the deceased
Rosendo Alvarez are hereby
ordered to pay jointly and
severally the plaintiffs the sum
of P20,000.00 representing the
actual value of Lots Nos. 773-A
and 773-B of Murcia Cadastre,
Negros Occidental; the sum of
P2,000.00 as actual damages
suffered by the plaintiff; the
sum of P5,000.00 representing
moral damages and the sum of
P2.000 as attorney's fees, all
with legal rate of interest from
date of the filing of this
complaint up to final payment.
C. The cross-claim filed by the
defendant Dr. Rodolfo Siason
against the defendants, Laura,
Flora and Raymundo, all
surnamed Alvarez is hereby
dismissed.
D. Defendants, Laura, Flora and
Raymundo, all surnamed
Alvarez are hereby ordered to
pay the costs of this suit.
SO ORDERED. 29
The Alvarez appealed to the then Intermediate
Appellate Court which in its decision of August
31, 1983 30 affirmed the lower court's decision
"insofar as it ordered defendants-appellants to
pay jointly and severally the plaintiffs-appellees
the sum of P20,000.00 representing the actual
value of Lots Nos. 773-A and 773-B of the
cadastral survey of Murcia, Negros Occidental,
and is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees,
respectively." 31 The dispositive portion of said
decision reads:
WHEREFORE, the decision
appealed from is affirmed
insofar as it ordered defendants-
appellants to pay jointly and
severally the plaintiffs-
appellees the sum of P20,000.00
representing the actual value of
Lots Nos. 773-A and 773-B of
the cadastral survey of Murcia,
Negros Occidental, and is
reversed insofar as it awarded
the sums of P2,000.00,
P5,000.00 and P2,000.00 as
actual damages, moral damages
 and attorney's fees, respectively.
No costs.
SO ORDERED. 32
Finding no cogent reason to grant appellants
motion for reconsideration, said appellate court
denied the same.
Hence, the instant petition. ln their memorandum
petitioners raised the following issues:
1. Whethere or not the defense
of prescription and estoppel had
been timely and properly
invoked and raised by the
petitioners in the lower court.
2. Whether or not the cause
and/or causes of action of the
private respondents, if ever
there are any, as alleged in their
complaint dated February 21,
1968 which has been docketed
in the trial court as Civil Case
No. 8474 supra, are forever
barred by statute of limitation
and/or prescription of action and
estoppel.
3. Whether or not the late
Rosendo Alvarez, a defendant in
Civil Case No. 5022, supra and
father of the petitioners become
a privy and/or party to the
waiver (Exhibit 4-defendant
Siason) in Civil Case No.
8474, supra where the private
respondents had unqualifiedly
and absolutely waived,
renounced and quitclaimed all
their alleged rights and interests,
if ever there is any, on Lots Nos.
773-A and 773-B of Murcia
Cadastre as appearing in their
written manifestation dated
November 6, 1962 (Exhibits "4"
Siason) which had not been
controverted or even impliedly
or indirectly denied by them.
4. Whether or not the liability or
liabilities of Rosendo Alvarez
arising from the sale of Lots
Nos. 773-A and 773-B of
Murcia Cadastre to Dr. Rodolfo
Siason, if ever there is any,
could be legally passed or
transmitted by operations (sic)
of law to the petitioners without
violation of law and due process
. 33
The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is
powerless and for that matter so is the Supreme
Court, to review the decision in Civil Case No.
5022 ordering Alvarez to reconvey the lots in
dispute to herein private respondents. Said
decision had long become final and executory
and with the possible exception of Dr. Siason,
who was not a party to said case, the decision in
Civil Case No. 5022 is the law of the case
between the parties thereto. It ended when
Alvarez or his heirs failed to appeal the decision
against them. 34
Thus, it is axiomatic that when a right or fact has
been judicially tried and determined by a court
of competent jurisdiction, so long as it remains
unreversed, it should be conclusive upon the
parties and those in privity with them in law or
estate. 35 As consistently ruled by this Court,
every litigation must come to an end. Access to
the court is guaranteed. But there must be a limit
to it. Once a litigant's right has been adjudicated
in a valid final judgment of a competent court,
he should not be granted an unbridled license to
return for another try. The prevailing party
should not be harassed by subsequent suits. For,
if endless litigation were to be allowed,
unscrupulous litigations will multiply in number
to the detriment of the administration of
justice. 36
There is no dispute that the rights of the Yaneses
to the properties in question have been finally
adjudicated in Civil Case No. 5022. As found by
the lower court, from the uncontroverted
evidence presented, the Yaneses have been
illegally deprived of ownership and possession
of the lots in question. 37 In fact, Civil Case No.
8474 now under review, arose from the failure to
execute Civil Case No. 5022, as subject lots can
no longer be reconveyed to private respondents
Yaneses, the same having been sold during the
pendency of the case by the petitioners' father to
Dr. Siason who did not know about the
controversy, there being no lis pendens
annotated on the titles. Hence, it was also settled
beyond question that Dr. Siason is a purchaser in
good faith.
Under the circumstances, the trial court did not
annul the sale executed by Alvarez in favor of
Dr. Siason on November 11, 1961 but in fact
sustained it. The trial court ordered the heirs of
Rosendo Alvarez who lost in Civil Case No.
5022 to pay the plaintiffs (private respondents
herein) the amount of P20,000.00 representing
the actual value of the subdivided lots in dispute.
It did not order defendant Siason to pay said
amount. 38
As to the propriety of the present case, it has
long been established that the sole remedy of the
landowner whose property has been wrongfully
or erroneously registered in another's name is to
bring an ordinary action in the ordinary court of
justice for reconveyance or, if the property has
passed into the hands of an innocent purchaser
for value, for damages. 39 "It is one thing to
protect an innocent third party; it is entirely a
different matter and one devoid of justification if
deceit would be rewarded by allowing the
perpetrator to enjoy the fruits of his nefarious
decided As clearly revealed by the undeviating
line of decisions coming from this Court, such
an undesirable eventuality is precisely sought to
be guarded against." 40
The issue on the right to the properties in
litigation having been finally adjudicated in
Civil Case No. 5022 in favor of private
respondents, it cannot now be reopened in the
instant case on the pretext that the defenses of
prescription and estoppel have not been properly
considered by the lower court. Petitioners could
have appealed in the former case but they did
not. They have therefore foreclosed their rights,
if any, and they cannot now be heard to
complain in another case in order to defeat the
enforcement of a judgment which has longing
become final and executory.
Petitioners further contend that the liability
arising from the sale of Lots No. 773-A and 773-
B made by Rosendo Alvarez to Dr. Rodolfo
Siason should be the sole liability of the late
Rosendo Alvarez or of his estate, after his death.
Such contention is untenable for it overlooks the
doctrine obtaining in this jurisdiction on the
general transmissibility of the rights and
obligations of the deceased to his legitimate
children and heirs. Thus, the pertinent provisions
of the Civil Code state:
Art. 774. Succession is a mode
of acquisition by virtue of which
the property, rights and
obligations to the extent of the
value of the inheritance, of a
person are transmitted through
his death to another or others
either by his will or by operation
of law.
Art. 776. The inheritance
includes all the property, rights
and obligations of a person
which are not extinguished by
his death.
Art. 1311. Contract stake effect
only between the parties, their
assigns and heirs except in case
where the rights and obligations
arising from the contract are not
transmissible by their nature, or
by stipulation or by provision of
law. The heir is not liable
beyond the value of the property
received from the decedent.
As explained by this Court through Associate
Justice J.B.L. Reyes in the case of Estate of
Hemady vs. Luzon Surety Co., Inc. 41
The binding effect of contracts
upon the heirs of the deceased
party is not altered by the
provision of our Rules of Court
that money debts of a deceased
must be liquidated and paid
from his estate before the
residue is distributed among
said heirs (Rule 89). The reason
is that whatever payment is thus
made from the state is
ultimately a payment by the
heirs or distributees, since the
amount of the paid claim in fact
diminishes or reduces the shares
that the heirs would have been
entitled to receive.
Under our law, therefore. the
general rule is that a party's
contractual rights and
obligations are transmissible to
the successors.
The rule is a consequence of the
progressive "depersonalization"
of patrimonial rights and duties
that, as observed by Victorio
Polacco has characterized the
history of these institutions.
From the Roman concept of a
relation from person to person,
the obligation has evolved into a
relation from patrimony to
patrimony with the persons
occupying only a representative
position, barring those rare
cases where the obligation is
strictly personal, i.e., is
contracted intuitu personae, in
consideration of its performance
by a specific person and by no
other.
xxx xxx xxx
Petitioners being the heirs of the late Rosendo
Alvarez, they cannot escape the legal
consequences of their father's transaction, which
gave rise to the present claim for damages. That
petitioners did not inherit the property involved
herein is of no moment because by legal fiction,
the monetary equivalent thereof devolved into
the mass of their father's hereditary estate, and
we have ruled that the hereditary assets are
always liable in their totality for the payment of
the debts of the estate. 42
It must, however, be made clear that petitioners
are liable only to the extent of the value of their
inheritance. With this clarification and
considering petitioners' admission that there are
other properties left by the deceased which are
sufficient to cover the amount adjudged in favor
of private respondents, we see no cogent reason
to disturb the findings and conclusions of the
Court of Appeals.
WHEREFORE, subject to the clarification
herein above stated, the assailed decision of the
Court of Appeals is hereby AFFIRMED. Costs
against petitioners.
SO ORDERED.
3. Intestate of the late AGUSTIN
MONTILLA, SR.; PEDRO LITONJUA, a
movant-appellant,
vs.
AGUSTIN B. MONTILLA,
JR., administrator-appellee;
CLAUDIO MONTILLA, oppositor-appellee.
Carlos Hilado and Jose V. Corua for the
administrator.
Jose M. Estacion for movant. Gaudencio Occeo
and Jose Ur. Carbonell for oppositor.
PARAS, C.J.:
In Civil Case No. 868 of the court of First
Instance of Negros Occidental, Pedro L.
Litonjua obtained a judgment against Claudio
Montilla for the payment of the sum of P4,000
with legal interest, plus costs amounting to
P39.00 In due time, a writ of execution was
issued, but no property of Claudio Montilla was
found which could be levied upon.
On June 12, 1950 Pedro L. Litonjua filed in
special Proceeding No 32 of the Court of First
Instance of Negros Occidental, Intestate Estate
of Agustin Montilla, Sr., deceased, a motion
praying that the interest, property and
participation of Claudio Montilla, one of the
heirs of Agustin Montilla, Sr., in the latter's
intestate estate be sold and out of the proceed the
judgment debt of Claudio Montilla in favor of
Pedro L. Litonjua be paid. This motion was
opposed by Claudio Montilla and by Agustin
Montilla, Jr., administrator of the intestate estate.
On August 7, 1950, the Court of First Instance
of Negros Occidental issued an order denying
the motion. From this order Pedro L. Litonjua
appealed. In the case of Ortiga Brothers and Co.
vs. Enage and Yap Tico, 18 Phil. 345, it was
held that the creditor of the heirs of a deceased
person is entitled to collect his claim out of the
property which pertains by inheritance to said
heirs, only after the debts of the testate or
intestate succession have been paid and when
the net assets that are divisible among the heirs
are known, because the debts of the deceased
must first be paid before his heirs can inherit. It
was therein also held that a person who is not a
creditor of a deceased, testate or intestate, has no
right to intervene either in the proceedings
brought in connection with the estate or in the
settlement of the succession. We quote
hereunder pertinent passages of the decision.
A person who, having claim against a
deceased person which should be
considered by the committee does not,
after publication of the required notice,
exhibit his claim to the committee as
provided by law, shall be barred from
recovering such demand or from
pleading the same as an offset to any
action, under the provisions of section
695 of the Code of Civil Procedure,
excepting the case referred to in section
701 of the same; with still less reason
can one who is not a creditor of the said
deceased intervene in the proceedings
relative to the latter's intestate estate and
to the settlement of his succession
(article 1034 of the Civil Code), because
such creditor has no right or interest that
call for the protection of the law and the
courts, except in any remainder which
may be found due the heir.
It is true that Yap Tico, as the creditor of
the widow and heirs of the deceased
Ildefonso, is entitled to collect what is
due him out of the property left by the
latter and which was inherited by such
widow and heirs, but it is no less that
only after all the debts of the said estate
have been paid can it be known what net
remainder will be left for division
among the heirs, because the debts of
the deceased must be paid before his
heirs can inherit. (Arts. 659 et seq. 1026,
1027, and 1032 of the civil Code, and
secs. 734 et seq., Code of Civil Code
Procedure.)
An execution cannot legally be levied
upon the property of an intestate
succession to pay the debts of the widow
and heirs of the deceased, until the
credits held against the latter at the time
of his death shall have been paid can the
remaining property that pertains to the
said debtors heirs can be attached (Art.
1034, aforecited, Civil Code.) (pp. 350-
251)
The foregoing pronouncements are perfectly
applicable to the case at bar, because the
appellant is not a creditor of the deceased
Agustin Montilla, Sr. and he seeks to collect his
claim out of the inheritance of Claudio Montilla,
an heir, before the net assets of the intestate
estate have been determined.
Wherefore, the appealed order is affirmed, and it
is so ordered with costs against the appellant.
4. HEIRS OF PEDRO REGANON,
JOVENCIA REGANON, MENCIA
REGANON, JOSEFA REGANON,
VIOLETA REGANON, and FLORA
REGANON, plaintiffs-appellees,
vs.
RUFINO IMPERIAL, defendant-appellant.
Torcuato L. Galon for plaintiffs-appellees.
V. Lacaya for defendant-appellant.
BENGZON, J.P., J.:
This is an appeal from the orders dated June 9,
1964, July 14, 1964 and August 11, 1964,
respectively, of the Court of First Instance of
Zamboanga del Norte (Dipolog, Branch II).
The facts of the case are admitted by both
parties.
On February 22, 1963, the heirs of Pedro
Reganon filed a complaint for recovery of
ownership and possession of about one-hectare
portion of a parcel of land (Lot No. 1 or Lot No.
4952, situated at Miasi, Polanco, Zamboanga del
Norte, covered by O.T.C. No. 1447, with an area
of 7.9954 hectares), with damages, against
Rufino Imperial.
Defendant not having filed an answer within the
reglementary period, the plaintiffs on April 8,
1963 filed a motion to declare the former in
default. The trial court granted the motion in its
order dated April 10, 1963.
On April 23, 1963, the plaintiffs presented their
evidence ex parte before the Clerk of Court
acting as Commissioner. The court a quo on
May 6, 1963, rendered a decision declaring the
plaintiffs lawful owners of the land in question
and entitled to its peaceful possession and
enjoyment; ordering defendant immediately to
vacate the portion occupied by him and to
restore the peaceful possession thereof to
plaintiffs; and sentencing defendant to pay
plaintiffs the amount of P1,929.20 and the costs.
On November 29, 1963, the plaintiffs filed a
motion for issuance of a writ of execution. This
was granted by the trial court in its order of
December 9, 1963.
The Deputy Provincial Sheriff submitted on
February 8, 1964 a sheriff's return of
proceedings reporting the garnishment and sale
of a carabao and goat belonging to defendant for
P153.00, and the attachment and sale of
defendant's parcel of land covered by Tax
Declaration No. 4694, situated in Sicet, Polanco,
Zamboanga del Norte, for P500.00 both sales
having been made to the only bidder, plaintiffs'
counsel Atty. Vic T. Lacaya.
On March 13, 1964, the Philippine National
Bank deposited in the Philippine National Bank-
Dipolog Branch the residuary estate of its former
ward, Eulogio Imperial, in the sum of
P10,303.80, pursuant to an order of Branch I of
the Court of First Instance of Zamboanga del
Norte in Sp. Proc. No. R-145.
On May 25, 1964, the heirs of said Eulogio
Imperial, one of whom is defendant, executed a
Deed of Extrajudicial Partition of the residuary
estate, wherein was apportioned P1,471.97 as
defendant Rufino Imperial's share.
Informed of this development, the plaintiffs filed
on June 5, 1964 an ex parte motion for issuance
of an alias writ of execution and of an order
directing the manager, or the representative, of
the Philippine National Bank-Dipolog Branch, to
hold the share of defendant and deliver the same
to the provincial sheriff of the province to be
applied to the satisfaction of the balance of the
money judgment. This was granted by the trial
court (Branch II) in its order dated June 9, 1964.
On June 17, 1964, the Deputy Provincial Sheriff
issued a sheriffs notification for levy addressed
to defendant, giving notice of the garnishment of
the rights, interests, shares and participation that
defendant may have over the residuary estate of
the late Eulogio Imperial, consisting of the
money deposited in the Philippine National
Bank-Dipolog Branch.
Defendant, through counsel, appearing for the
first time before the trial court, on June 24, 1964
filed a motion for reconsideration of the order
dated June 9, 1964, and to quash the alias writ of
execution issued pursuant to it, to which
plaintiffs filed their opposition on July 6, 1964.
On July 14, 1964, the trial court denied
defendant's aforesaid motion.
Defendant's second motion for reconsideration
likewise having denied by the trial court in its
order of August 11, 1964, defendant appealed to
Us, raising the following issues:
(1) Upon the death of a ward, is the
money accumulated in his guardianship
proceedings and deposited in a bank,
still considered in custodia legis and
therefore cannot be attached?
(2) Is the residuary estate of a U.S.
veteran, which consists in the aggregate
accumulated sum from the monthly
allowances given him by the United
States Veterans Administration (USVA)
during his lifetime, exempt from
execution?
Defendant-appellant argues that the property of
an incompetent under guardianship is in custodia
legis and therefore can not be attached.
It is true that in a former case 1 it was held that
property under custodia legis can not be
attached. But this was under the old Rules of
Court. The new Rules of Court 2 now
specifically provides for the procedure to be
followed in case what is attached is in custodia
legis. 3 The clear import of this new provision is
that property under custodia legis is now
attachable, subject to the mode set forth in said
rule.
Besides, the ward having died, the guardianship
proceedings no longer subsist:
 The death of the ward necessarily
terminates the guardianship, and
thereupon all powers and duties of the
guardian cease, except the duty, which
remains, to make a proper accounting
and settlement in the probate court. 4
As a matter of fact, the guardianship proceedings
was ordered conditionally closed by Branch I of
the Court of First Instance of Zamboanga del
Norte in which it was pending, in its order of
February 8, 1964, where it stated
In the meantime, the guardian Philippine
National Bank is hereby directed to
deposit the residuary estate of said ward
with its bank agency in Dipolog, this
province, in the name of the estate of the
deceased ward Eulogio Imperial,
preparatory to the eventual distribution
of the same to the heirs when the latter
shall be known, and upon proof of
deposit of said residuary estate, the
guardian Philippine National Bank shall
forthwith be relieved from any
responsibility as such, and this
proceeding shall be considered closed
and terminated. 5
And the condition has long been fulfilled,
because on March 13, 1964 the Philippine
National Bank-Manila deposited the residuary
estate of the ward with the Philippine National
Bank-Dipolog Branch, evidenced by a receipt
attached to the records in Sp. Proc. No. R-145. 6
When Eulogio Imperial died on September 13,
1962, the rights to his succession from the
moment of his death were transmitted to his
heirs, one of whom is his son and heir,
defendant-appellant herein. 7 This automatic
transmission can not but proceed with greater
ease and certainty than in this case where the
parties agree that the residuary estate is not
burdened with any debt. For,
The rights to the succession of a person
are transmitted from the moment of
death, and where, as in this case, the heir
is of legal age and the estate is not
burdened with any debts, said heir
immediately succeeds, by force of law,
to the dominion, ownership, and
possession of the properties of his
predecessor and consequently stands
legally in the shoes of the latter. 8
That the interest of an heir in the estate of a
deceased person may be attached for purposes of
execution, even if the estate is in the process of
settlement before the courts, is already a settled
matter in this jurisdiction. 9
It is admitted that the heirs of Eulogio Imperial,
including herein defendant-appellant, have on
May 25, 1964 executed a Deed of Extrajudicial
Partition. This instrument suffices to settle the
entire estate of the decedent provided all the
requisites for its validity are fulfilled 10 even
without the approval of the court. Therefore, the
estate for all practical purposes have been
settled. The heirs are at full liberty to withdraw
the residuary estate from the Philippine National
Bank-Dipolog Branch and divide it among
themselves. The only reason they have not done
so is because of the alleged illegal withdrawal
from said estate of the amount of P1,080.00 by
one Gloria Gomez by authority of Branch I of
the Court of First Instance of Zamboanga del
Norte, which incident is now on appeal before
the Court of Appeals. This appeal, however,
does not detract any from the fact that the
guardianship proceedings is closed and
terminated and the residuary estate no longer
under custodia legis.
Finally, it is defendant-appellant's position that
the residuary estate of Eulogio Imperial, a
former U.S. veteran, having been set aside from
the monthly allowances given him by the United
States Veterans Administration (USVA) during
his lifetime, is exempt from execution.
Any pension, annuity, or gratuity granted by a
Government to its officers or employees in
recognition of past services rendered, is
primordially aimed at tiding them over during
their old age and/or disability. This is therefore a
right personalissima, purely personal because
founded on necessity. It requires no argument to
show that where the recipient dies, the necessity
motivating or underlying its grant necessarily
ceases to be. Even more so in this case where the
law 11 providing for the exemption is calculated
to benefit U.S. veterans residing here, and is
therefore merely a manifestation of comity.
Besides, as earlier stated, the heirs of Eulogio
Imperial, one of whom is appellant, have already
executed a Deed of Extrajudicial Partition the
end result of which is that the property is no
longer the property of the estate but of the
individual heirs. And it is settled that:
When the heirs by mutual agreement
have divided the estate among
themselves, one of the heirs can not
therefore secure the appointment of an
administrator to take charge of and
administer the estate or a part
thereof. The property is no longer the
property of the estate, but of the
individual heirs, whether it remains
undivided or not. 12
WHEREFORE, the orders appealed from are
hereby affirmed, with costs against defendant-
appellant. So ordered.1wph1.t
5. TESTATE ESTATE OF JOSEFA
TANGCO, JOSE DE BORJA, administrator-
appellee; JOSE DE BORJA, as
administrator, CAYETANO DE BORJA,
MATILDE DE BORJA and CRISANTO DE
BORJA (deceased) as Children of Josefa
Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special
Administratrix of the Testate Estate of
Francisco de Borja, appellant. .
G.R. No L-28568 August 18, 1972
TESTATE ESTATE OF THE LATE
FRANCISCO DE BORJA, TASIANA O.
VDA. DE DE BORJA, special Administratrix
appellee,
vs.
JOSE DE BORJA, oppositor-appellant.
G.R. No. L-28611 August 18, 1972
TASIANA 0. VDA. DE BORJA, as
Administratrix of the Testate Estate of the
late Francisco de Borja, plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the
Testate Estate of the late Josefa
Tangco, defendant-appellant.
REYES, J.B.L., J.:p
Of these cases, the first, numbered L-28040 is an
appeal by Tasiana Ongsingco Vda. de de Borja,
special administratrix of the testate estate of
Francisco de Borja,1 from the approval of a
compromise agreement by the Court of First
Instance of Rizal, Branch I, in its Special
Proceeding No. R-7866, entitled, "Testate Estate
of Josefa Tangco, Jose de Borja, Administrator".
Case No. L-28568 is an appeal by administrator
Jose Borja from the disapproval of the same
compromise agreement by the Court of First
Instance of Nueva Ecija, Branch II, in its Special
Proceeding No. 832, entitled, "Testate Estate of
Francisco de Borja, Tasiana O. Vda. de de Borja,
Special Administratrix".
And Case No. L-28611 is an appeal by
administrator Jose de Borja from the decision of
the Court of First Instance of Rizal, Branch X, in
its Civil Case No. 7452, declaring the Hacienda
Jalajala Poblacion, which is the main object of
the aforesaid compromise agreement, as the
separate and exclusive property of the late
Francisco de Borja and not a conjugal asset of
the community with his first wife, Josefa
Tangco, and that said hacienda pertains
exclusively to his testate estate, which is under
administrator in Special Proceeding No. 832 of
the Court of First Instance of Nueva Ecija,
Branch II.
It is uncontested that Francisco de Borja, upon
the death of his wife Josefa Tangco on 6 October
1940, filed a petition for the probate of her will
which was docketed as Special Proceeding No.
R-7866 of the Court of First Instance of Rizal,
Branch I. The will was probated on 2 April
1941. In 1946, Francisco de Borja was appointed
executor and administrator: in 1952, their son,
Jose de Borja, was appointed co-administrator.
When Francisco died, on 14 April 1954, Jose
became the sole administrator of the testate
estate of his mother, Josefa Tangco. While a
widower Francisco de Borja allegedly took unto
himself a second wife, Tasiana Ongsingco. Upon
Francisco's death, Tasiana instituted testate
proceedings in the Court of First Instance of
Nueva Ecija, where, in 1955, she was appointed
special administratrix. The validity of Tasiana's
marriage to Francisco was questioned in said
proceeding.
The relationship between the children of the first
marriage and Tasiana Ongsingco has been
plagued with several court suits and counter-
suits; including the three cases at bar, some
eighteen (18) cases remain pending
determination in the courts. The testate estate of
Josefa Tangco alone has been unsettled for more
than a quarter of a century. In order to put an end
to all these litigations, a compromise agreement
was entered into on 12 October 1963,2 by and
between "[T]he heir and son of Francisco de
Borja by his first marriage, namely, Jose de
Borja personally and as administrator of the
Testate Estate of Josefa Tangco," and "[T]he
heir and surviving spouse of Francisco de Borja
by his second marriage, Tasiana Ongsingco Vda.
de Borja, assisted by her lawyer, Atty. Luis
Panaguiton Jr." The terms and conditions of the
compromise agreement are as follows:
AGREEMENT
THIS AGREEMENT made and
entered into by and between
The heir and son of Francisco de
Borja by his first marriage,
namely, Jose de Borja
personally and as administrator
of the Testate Estate of Josefa
Tangco,
AND
The heir and surviving spouse
of Francisco de Borja by his
second marriage, Tasiana
Ongsingco Vda. de Borja,
assisted by her lawyer, Atty.
Luis Panaguiton Jr.
WITNESSETH
THAT it is the mutual desire of
all the parties herein terminate
and settle, with finality, the
various court litigations,
controversies, claims,
counterclaims, etc., between
them in connection with the
administration, settlement,
partition, adjudication and
distribution of the assets as well
as liabilities of the estates of
Francisco de Borja and Josefa
Tangco, first spouse of
Francisco de Borja.
THAT with this end in view, the
parties herein have agreed
voluntarily and without any
reservations to enter into and
execute this agreement under
the following terms and
conditions:
1. That the parties agree to sell
the Poblacion portion of the
Jalajala properties situated in
Jalajala, Rizal, presently under
administration in the Testate
Estate of Josefa Tangco (Sp.
Proc. No. 7866, Rizal), more
specifically described as
follows:
Linda al Norte
con el Rio
Puwang que la
separa de la
jurisdiccion del
Municipio de
Pililla de la
Provincia de
Rizal, y con el
pico del Monte
Zambrano; al
Oeste con
Laguna de Bay;
por el Sur con
los herederos de
Marcelo de
Borja; y por el
Este con los
terrenos de la
Familia
Maronilla
with a segregated area of
approximately 1,313 hectares at
the amount of P0.30 per square
meter.
2. That Jose de Borja agrees and
obligates himself to pay Tasiana
Ongsingco Vda. de de Borja the
total amount of Eight Hundred
Thousand Pesos (P800,000)
Philippine Currency, in cash,
which represent P200,000 as his
share in the payment and
P600,000 as pro-rata shares of
the heirs Crisanto, Cayetano and
Matilde, all surnamed de Borja
and this shall be considered as
full and complete payment and
settlement of her hereditary
share in the estate of the late
Francisco de Borja as well as
the estate of Josefa Tangco, Sp.
Proc. No. 832-Nueva Ecija and
Sp. Proc. No. 7866-Rizal,
respectively, and to any
properties bequeathed or
devised in her favor by the late
Francisco de Borja by Last Will
and Testament or by Donation
Inter Vivos or Mortis Causa or
purportedly conveyed to her for
consideration or otherwise. The
funds for this payment shall be
taken from and shall depend
upon the receipt of full payment
of the proceeds of the sale of
Jalajala, "Poblacion."
3. That Tasiana Ongsingco Vda.
de de Borja hereby assumes
payment of that particular
obligation incurred by the late
Francisco de Borja in favor of
the Rehabilitation Finance
Corporation, now Development
Bank of the Philippines,
amounting to approximately
P30,000.00 and also assumes
payment of her 1/5 share of the
Estate and Inheritance taxes on
the Estate of the late Francisco
de Borja or the sum of
P3,500.00, more or less, which
shall be deducted by the buyer
of Jalajala, "Poblacion" from the
payment to be made to Tasiana
Ongsingco Vda. de Borja under
paragraph 2 of this Agreement
and paid directly to the
Development Bank of the
Philippines and the heirs-
children of Francisco de Borja.
4. Thereafter, the buyer of
Jalajala "Poblacion" is hereby
authorized to pay directly to
Tasiana Ongsingco Vda. de de
Borja the balance of the
payment due her under
paragraph 2 of this Agreement
(approximately P766,500.00)
and issue in the name of Tasiana
Ongsingco Vda. de de Borja,
corresponding certified
checks/treasury warrants, who,
in turn, will issue the
corresponding receipt to Jose de
Borja.
5. In consideration of above
payment to Tasiana Ongsingco
Vda. de de Borja, Jose de Borja
personally and as administrator
of the Testate Estate of Josefa
Tangco, and Tasiana Ongsingco
Vda. de de Borja, for
themselves and for their heirs,
successors, executors,
administrators, and assigns,
hereby forever mutually
renounce, withdraw, waive,
remise, release and discharge
any and all manner of action or
actions, cause or causes of
action, suits, debts, sum or sums
of money, accounts, damages,
claims and demands
whatsoever, in law or in equity,
which they ever had, or now
have or may have against each
other, more specifically Sp.
Proceedings Nos. 7866 and
1955, CFI-Rizal, and Sp. Proc.
No. 832-Nueva Ecija, Civil
Case No. 3033, CFI Nueva
Ecija and Civil Case No. 7452-
CFI, Rizal, as well as the case
filed against Manuel Quijal for
perjury with the Provincial
Fiscal of Rizal, the intention
being to completely, absolutely
and finally release each other,
their heirs, successors, and
assigns, from any and all
liability, arising wholly or
partially, directly or indirectly,
from the administration,
settlement, and distribution of
the assets as well as liabilities of
the estates of Francisco de Borja
and Josefa Tangco, first spouse
of Francisco de Borja, and
lastly, Tasiana Ongsingco Vda.
de de Borja expressly and
specifically renounce absolutely
her rights as heir over any
hereditary share in the estate of
Francisco de Borja.
6. That Tasiana Ongsingco Vda.
de de Borja, upon receipt of the
payment under paragraph 4
hereof, shall deliver to the heir
Jose de Borja all the papers,
titles and documents belonging
to Francisco de Borja which are
in her possession and said heir
Jose de Borja shall issue in turn
the corresponding receive
thereof.
7. That this agreement shall take
effect only upon the fulfillment
of the sale of the properties
mentioned under paragraph 1 of
this agreement and upon receipt
of the total and full payment of
the proceeds of the sale of the
Jalajala property "Poblacion",
otherwise, the non-fulfillment of
the said sale will render this
instrument NULL AND VOID
AND WITHOUT EFFECT
THEREAFTER.
IN WITNESS WHEREOF, the
parties hereto have her unto set
their hands in the City of
Manila, Philippines, the 12th of
October, 1963.
On 16 May 1966, Jose de Borja submitted for
Court approval the agreement of 12 October
1963 to the Court of First Instance of Rizal, in
Special Proceeding No. R-7866; and again, on 8
August 1966, to the Court of First Instance of
Nueva Ecija, in Special Proceeding No. 832.
Tasiana Ongsingco Vda. de de Borja opposed in
both instances. The Rizal court approved the
compromise agreement, but the Nueva Ecija
court declared it void and unenforceable. Special
administratrix Tasiana Ongsingco Vda. de de
Borja appealed the Rizal Court's order of
approval (now Supreme Court G.R. case No. L-
28040), while administrator Jose de Borja
appealed the order of disapproval (G.R. case No.
L-28568) by the Court of First Instance of
Nueva Ecija.
The genuineness and due execution of the
compromised agreement of 12 October 1963 is
not disputed, but its validity is, nevertheless,
attacked by Tasiana Ongsingco on the ground
that: (1) the heirs cannot enter into such kind of
agreement without first probating the will of
Francisco de Borja; (2) that the same involves a
compromise on the validity of the marriage
between Francisco de Borja and Tasiana
Ongsingco; and (3) that even if it were valid, it
has ceased to have force and effect.
In assailing the validity of the agreement of 12
October 1963, Tasiana Ongsingco and the
Probate Court of Nueva Ecija rely on this
Court's decision in Guevara vs. Guevara. 74
Phil. 479, wherein the Court's majority held the
view that the presentation of a will for probate is
mandatory and that the settlement and
distribution of an estate on the basis of intestacy
when the decedent left a will, is against the law
and public policy. It is likewise pointed out by
appellant Tasiana Ongsingco that Section 1 of
Rule 74 of the Revised Rules explicitly
conditions the validity of an extrajudicial
settlement of a decedent's estate by agreement
between heirs, upon the facts that "(if) the
decedent left no will and no debts, and the heirs
are all of age, or the minors are represented by
their judicial and legal representatives ..." The
will of Francisco de Borja having been
submitted to the Nueva Ecija Court and still
pending probate when the 1963 agreement was
made, those circumstances, it is argued, bar the
validity of the agreement.
Upon the other hand, in claiming the validity of
the compromise agreement, Jose de Borja
stresses that at the time it was entered into, on 12
October 1963, the governing provision was
Section 1, Rule 74 of the original Rules of Court
of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person
regardless of whether he left a will or not. He
also relies on the dissenting opinion of Justice
Moran, in Guevara vs. Guevara, 74 Phil. 479,
wherein was expressed the view that if the
parties have already divided the estate in
accordance with a decedent's will, the probate of
the will is a useless ceremony; and if they have
divided the estate in a different manner, the
probate of the will is worse than useless.
The doctrine of Guevara vs. Guevara, ante, is
not applicable to the case at bar. This is apparent
from an examination of the terms of the
agreement between Jose de Borja and Tasiana
Ongsingco. Paragraph 2 of said agreement
specifically stipulates that the sum of P800,000
payable to Tasiana Ongsingco
shall be considered as full
complete payment settlement
of her hereditary share in the
estate of the late Francisco de
Borja as well as the estate of
Josefa Tangco, ... and to any
properties bequeathed or
devised in her favor by the late
Francisco de Borja by Last Will
and Testament or by Donation
Inter Vivos or Mortis Causa or
purportedly conveyed to her for
consideration or otherwise.
This provision evidences beyond doubt that the
ruling in the Guevara case is not applicable to
the cases at bar. There was here no attempt to
settle or distribute the estate of Francisco de
Borja among the heirs thereto before the probate
of his will. The clear object of the contract was
merely the conveyance by Tasiana Ongsingco of
any and all her individual share and interest,
actual or eventual in the estate of Francisco de
Borja and Josefa Tangco. There is no stipulation
as to any other claimant, creditor or legatee. And
as a hereditary share in a decedent's estate is
transmitted or vested immediately from the
moment of the death of such causante or
predecessor in interest (Civil Code of the
Philippines, Art. 777)3 there is no legal bar to a
successor (with requisite contracting capacity)
disposing of her or his hereditary share
immediately after such death, even if the actual
extent of such share is not determined until the
subsequent liquidation of the estate.4 Of course,
the effect of such alienation is to be deemed
limited to what is ultimately adjudicated to the
vendor heir. However, the aleatory character of
the contract does not affect the validity of the
transaction; neither does the coetaneous
agreement that the numerous litigations between
the parties (the approving order of the Rizal
Court enumerates fourteen of them, Rec. App.
pp. 79-82) are to be considered settled and
should be dismissed, although such stipulation,
as noted by the Rizal Court, gives the contract
the character of a compromise that the law
favors, for obvious reasons, if only because it
serves to avoid a multiplicity of suits.
It is likewise worthy of note in this connection
that as the surviving spouse of Francisco de
Borja, Tasiana Ongsingco was his compulsory
heir under article 995 et seq. of the present Civil
Code. Wherefore, barring unworthiness or valid
disinheritance, her successional interest existed
independent of Francisco de Borja's last will and
testament and would exist even if such will were
not probated at all. Thus, the prerequisite of a
previous probate of the will, as established in the
Guevara and analogous cases, can not apply to
the case of Tasiana Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was
entered into by and between "Jose de Borja
personally and as administrator of the Testate
Estate of Josefa Tangco" on the one hand, and
on the other, "the heir and surviving spouse of
Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear
that the transaction was binding on both in their
individual capacities, upon the perfection of the
contract, even without previous authority of the
Court to enter into the same. The only difference
between an extrajudicial compromise and one
that is submitted and approved by the Court, is
that the latter can be enforced by execution
proceedings. Art. 2037 of the Civil Code is
explicit on the point:
8. Art. 2037. A compromise has
upon the parties the effect and
authority of res judicata; but
there shall be no execution
except in compliance with a
judicial compromise.
It is argued by Tasiana
Ongsingco that while the
agreement Annex A expressed
no definite period for its
performance, the same
was intended to have a
resolutory period of 60 days for
its effectiveness. In support of
such contention, it is averred
that such a limit was expressly
stipulated in an agreement in
similar terms entered into by
said Ongsingco with the
brothers and sister of Jose de
Borja, to wit, Crisanto, Matilde
and Cayetano, all surnamed de
Borja, except that the
consideration was fixed at
P600,000 (Opposition,
Annex/Rec. of Appeal, L-
28040, pp. 39- 46) and which
contained the following clause:
III. That this agreement shall
take effect only upon the
consummation of the sale of the
property mentioned herein and
upon receipt of the total and full
payment of the proceeds of the
sale by the herein owner heirs-
 children of Francisco de Borja,
namely, Crisanto, Cayetano and
Matilde, all surnamed de Borja;
Provided that if no sale of the
said property mentioned herein
is consummated, or the non-
receipt of the purchase price
thereof by the said owners
within the period of sixty (60)
days from the date hereof, this
agreement will become null and
void and of no further effect.
Ongsingco's argument loses validity when it is
considered that Jose de Borja was not a party to
this particular contract (Annex 1), and that the
same appears not to have been finalized, since it
bears no date, the day being left blank "this
day of October 1963"; and while signed by the
parties, it was not notarized, although plainly
intended to be so done, since it carries a
proposed notarial ratification clause.
Furthermore, the compromise contract with Jose
de Borja (Annex A), provides in its par. 2
heretofore transcribed that of the total
consideration of P800, 000 to be paid to
Ongsingco, P600,000 represent the "prorata
share of the heirs Crisanto, Cayetano and
Matilde all surnamed de Borja" which
corresponds to the consideration of P600,000
recited in Annex 1, and that circumstance is
proof that the duly notarized contract entered
into wit Jose de Borja under date 12 October
1963 (Annex A), was designed to absorb and
supersede the separate unformalize agreement
with the other three Borja heirs. Hence, the 60
days resolutory term in the contract with the
latter (Annex 1) not being repeated in Annex A,
can not apply to the formal compromise with
Jose de Borja. It is moreover manifest that the
stipulation that the sale of the Hacienda de
Jalajala was to be made within sixty days from
the date of the agreement with Jose de Borja's
co-heirs (Annex 1) was plainly omitted in Annex
A as improper and ineffective, since the
Hacienda de Jalajala (Poblacion) that was to be
sold to raise the P800,000 to be paid to
Ongsingco for her share formed part of the estate
of Francisco de Borja and could not be sold until
authorized by the Probate Court. The Court of
First Instance of Rizal so understood it, and in
approving the compromise it fixed a term of 120
days counted from the finality of the order now
under appeal, for the carrying out by the parties
for the terms of the contract.
This brings us to the plea that the Court of First
Instance of Rizal had no jurisdiction to approve
the compromise with Jose de Borja (Annex A)
because Tasiana Ongsingco was not an heir in
the estate of Josefa Tangco pending settlement
in the Rizal Court, but she was an heir of
Francisco de Borja, whose estate was the object
of Special Proceeding No. 832 of the Court of
First Instance of Nueva Ecija. This circumstance
is irrelevant, since what was sold by Tasiana
Ongsingco was only her eventual share in the
estate of her late husband, not the estate itself;
and as already shown, that eventual share she
owned from the time of Francisco's death and
the Court of Nueva Ecija could not bar her
selling it. As owner of her undivided hereditary
share, Tasiana could dispose of it in favor of
whomsoever she chose. Such alienation is
expressly recognized and provided for by article
1088 of the present Civil Code:
Art. 1088. Should any of the
heirs sell his hereditary rights to
a stranger before the partition,
any or all of the co-heirs may be
subrogated to the rights of the
purchaser by reimbursing him
for the price of the sale,
provided they do so within the
period of one month from the
time they were notified in
writing of the sale of the vendor.
If a sale of a hereditary right can be made to a
stranger, then a fortiori sale thereof to a coheir
could not be forbidden.
Tasiana Ongsingco further argues that her
contract with Jose de Borja (Annex "A") is void
because it amounts to a compromise as to her
status and marriage with the late Francisco de
Borja. The point is without merit, for the very
opening paragraph of the agreement with Jose de
Borja (Annex "A") describes her as "the heir and
surviving spouse of Francisco de Borja by his
second marriage, Tasiana Ongsingco Vda. de de
Borja", which is in itself definite admission of
her civil status. There is nothing in the text of
the agreement that would show that this
recognition of Ongsingco's status as the
surviving spouse of Francisco de Borja was only
made in consideration of the cession of her
hereditary rights.
It is finally charged by appellant Ongsingco, as
well as by the Court of First Instance of Nueva
Ecija in its order of 21 September 1964, in
Special Proceedings No. 832 (Amended Record
on Appeal in L-28568, page 157), that the
compromise agreement of 13 October 1963
(Annex "A") had been abandoned, as shown by
the fact that, after its execution, the Court of
First Instance of Nueva Ecija, in its order of 21
September 1964, had declared that "no amicable
settlement had been arrived at by the parties",
and that Jose de Borja himself, in a motion of 17
June 1964, had stated that the proposed amicable
settlement "had failed to materialize".
It is difficult to believe, however, that the
amicable settlement referred to in the order and
motion above-mentioned was the compromise
agreement of 13 October 1963, which already
had been formally signed and executed by the
parties and duly notarized. What the record
discloses is that some time after its
formalization, Ongsingco had unilaterally
attempted to back out from the compromise
agreement, pleading various reasons restated in
the opposition to the Court's approval of Annex
"A" (Record on Appeal, L-20840, page 23): that
the same was invalid because of the lapse of the
allegedly intended resolutory period of 60 days
and because the contract was not preceded by
the probate of Francisco de Borja's will, as
required by this Court's Guevarra vs.
Guevara ruling; that Annex "A" involved a
compromise affecting Ongsingco's status as wife
and widow of Francisco de Borja, etc., all of
which objections have been already discussed. It
was natural that in view of the widow's attitude,
Jose de Borja should attempt to reach a new
settlement or novatory agreement before seeking
judicial sanction and enforcement of Annex "A",
since the latter step might ultimately entail a
longer delay in attaining final remedy. That the
attempt to reach another settlement failed is
apparent from the letter of Ongsingco's counsel
to Jose de Borja quoted in pages 35-36 of the
brief for appellant Ongsingco in G.R. No.
28040; and it is more than probable that the
order of 21 September 1964 and the motion of
17 June 1964 referred to the failure of the
parties' quest for a more satisfactory
compromise. But the inability to reach a
novatory accord can not invalidate the original
compromise (Annex "A") and justifies the act of
Jose de Borja in finally seeking a court order for
its approval and enforcement from the Court of
First Instance of Rizal, which, as heretofore
described, decreed that the agreement be
ultimately performed within 120 days from the
finality of the order, now under appeal.
We conclude that in so doing, the Rizal court
acted in accordance with law, and, therefore, its
order should be upheld, while the contrary
resolution of the Court of First Instance of
Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that
the time elapsed in the appeal has affected her
unfavorably, in that while the purchasing power
of the agreed price of P800,000 has diminished,
the value of the Jalajala property has increased.
But the fact is that her delay in receiving the
payment of the agreed price for her hereditary
interest was primarily due to her attempts to
nullify the agreement (Annex "A") she had
formally entered into with the advice of her
counsel, Attorney Panaguiton. And as to the
devaluation de facto of our currency, what We
said in Dizon Rivera vs. Dizon, L-24561, 30
June 1970, 33 SCRA 554, that "estates would
never be settled if there were to be a revaluation
with every subsequent fluctuation in the values
of currency and properties of the estate", is
particularly opposite in the present case.
Coming now to Case G.R. No. L-28611, the
issue is whether the Hacienda de Jalajala
(Poblacion), concededly acquired by Francisco
de Borja during his marriage to his first wife,
Josefa Tangco, is the husband's private property
(as contended by his second spouse, Tasiana
Ongsingco), or whether it forms part of the
conjugal (ganancial) partnership with Josefa
Tangco. The Court of First Instance of Rizal
(Judge Herminio Mariano, presiding) declared
that there was adequate evidence to overcome
the presumption in favor of its conjugal
character established by Article 160 of the Civil
Code.
We are of the opinion that this question as
between Tasiana Ongsingco and Jose de Borja
has become moot and academic, in view of the
conclusion reached by this Court in the two
preceding cases (G.R. No. L-28568), upholding
as valid the cession of Tasiana Ongsingco's
eventual share in the estate of her late husband,
Francisco de Borja, for the sum of P800,000
with the accompanying reciprocal quit-claims
between the parties. But as the question may
affect the rights of possible creditors and
legatees, its resolution is still imperative.
It is undisputed that the Hacienda Jalajala, of
around 4,363 hectares, had been originally
acquired jointly by Francisco de Borja, Bernardo
de Borja and Marcelo de Borja and their title
thereto was duly registered in their names as co-
owners in Land Registration Case No. 528 of the
province of Rizal, G.L.R.O. Rec. No. 26403 (De
Barjo vs. Jugo, 54 Phil. 465). Subsequently, in
1931, the Hacienda was partitioned among the
co-owners: the Punta section went to Marcelo de
Borja; the Bagombong section to Bernardo de
Borja, and the part in Jalajala proper (Poblacion)
corresponded to Francisco de Borja (V. De Borja
vs. De Borja 101 Phil. 911, 932).
The lot allotted to Francisco was described as
Una Parcela de terreno en
Poblacion, Jalajala: N. Puang
River; E. Hermogena Romero;
S. Heirs of Marcelo de Borja O.
Laguna de Bay; containing an
area of 13,488,870 sq. m. more
or less, assessed at P297,410.
(Record on Appeal, pages 7 and
105)
On 20 November 1962, Tasiana O. Vda. de
Borja, as Administratrix of the Testate Estate of
Francisco de Borja, instituted a complaint in the
Court of First Instance of Rizal (Civil Case No.
7452) against Jose de Borja, in his capacity as
Administrator of Josefa Tangco (Francisco de
Borja's first wife), seeking to have the Hacienda
above described declared exclusive private
property of Francisco, while in his answer
defendant (now appellant) Jose de Borja claimed
that it was conjugal property of his parents
(Francisco de Borja and Josefa Tangco),
conformably to the presumption established by
Article 160 of the Philippine Civil Code
(reproducing Article 1407 of the Civil Code of
1889), to the effect that:
Art. 160. All property of the
marriage is presumed to belong
 to the conjugal partnership,
unless it be proved that it
pertains exclusively to the
husband or to the wife.
Defendant Jose de Borja further counterclaimed
for damages, compensatory, moral and
exemplary, as well as for attorney's fees.
After trial, the Court of First Instance of Rizal,
per Judge Herminio Mariano, held that the
plaintiff had adduced sufficient evidence to rebut
the presumption, and declared the Hacienda de
Jalajala (Poblacion) to be the exclusive private
property of the late Francisco de Borja, and his
Administratrix, Tasiana Ongsingco Vda. de
Borja, to be entitled to its possession. Defendant
Jose de Borja then appealed to this Court.
The evidence reveals, and the appealed order
admits, that the character of the Hacienda in
question as owned by the conjugal partnership
De Borja-Tangco was solemnly admitted by the
late Francisco de Borja no less than two times:
first, in the Reamended Inventory that, as
executor of the estate of his deceased wife Josefa
Tangco, he filed in the Special Proceedings No.
7866 of the Court of First Instance of Rizal on
23 July 1953 (Exhibit "2"); and again, in the
Reamended Accounting of the same date, also
filed in the proceedings aforesaid (Exhibit "7").
Similarly, the plaintiff Tasiana O. Vda. de Borja,
herself, as oppositor in the Estate of Josefa
Tangco, submitted therein an inventory dated 7
September 1954 (Exhibit "3") listing the Jalajala
property among the "Conjugal Properties of the
Spouses Francisco de Borja and Josefa Tangco".
And once more, Tasiana Ongsingco, as
administratrix of the Estate of Francisco de
Borja, in Special Proceedings No. 832 of the
Court of First Instance of Nueva Ecija,
submitted therein in December, 1955, an
inventory wherein she listed the Jalajala
Hacienda under the heading "Conjugal Property
of the Deceased Spouses Francisco de Borja and
Josefa Tangco, which are in the possession of
the Administrator of the Testate Estate of the
Deceased Josefa Tangco in Special Proceedings
No. 7866 of the Court of First Instance of Rizal"
(Exhibit "4").
Notwithstanding the four statements aforesaid,
and the fact that they are plain admissions
against interest made by both Francisco de Borja
and the Administratrix of his estate, in the
course of judicial proceedings in the Rizal and
Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal
community, the Court below declared that the
Hacienda de Jalajala (Poblacion) was not
conjugal property, but the private exclusive
property of the late Francisco de Borja. It did so
on the strength of the following evidences: (a)
the sworn statement by Francis de Borja on 6
August 1951 (Exhibit "F") that
He tomado possession del
pedazo de terreno ya delimitado
(equivalente a 1/4 parte, 337
hectareas) adjunto a mi terreno
personal y exclusivo (Poblacion
de Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son
of Bernardo de Borja, that the entire Hacienda
had been bought at a foreclosure sale for
P40,100.00, of which amount P25,100 was
contributed by Bernardo de Borja and P15,000.
by Marcelo de Borja; that upon receipt of a
subsequent demand from the provincial treasurer
for realty taxes the sum of P17,000, Marcelo told
his brother Bernardo that Francisco (son of
Marcelo) wanted also to be a co-owner, and
upon Bernardo's assent to the proposal, Marcelo
issue a check for P17,000.00 to pay the back
taxes and said that the amount would represent
Francisco's contribution in the purchase of the
Hacienda. The witness further testified that
Marcelo de Borja said that that
money was entrusted to him by
Francisco de Borja when he was
still a bachelor and which he
derived from his business
transactions. (Hearing, 2
February 1965, t.s.n., pages 13-
15) (Emphasis supplied)
The Court below, reasoning that not only
Francisco's sworn statement overweighed the
admissions in the inventories relied upon by
defendant-appellant Jose de Borja since probate
courts can not finally determine questions of
ownership of inventoried property, but that the
testimony of Gregorio de Borja showed that
Francisco de Borja acquired his share of the
original Hacienda with his private funds, for
which reason that share can not be regarded as
conjugal partnership property, but as exclusive
property of the buyer, pursuant to Article
1396(4) of Civil Code of 1889 and Article
148(4) of the Civil Code of the Philippines.
The following shall be the exclusive property of
each spouse:
xxx xxx xxx
(4) That which is purchased
with exclusive money of the
wife or of the husband.
We find the conclusions of the lower court to be
untenable. In the first place, witness Gregorio de
Borja's testimony as to the source of the money
paid by Francisco for his share was plain
hearsay, hence inadmissible and of no probative
value, since he was merely repeating what
Marcelo de Borja had told him (Gregorio). There
is no way of ascertaining the truth of the
statement, since both Marcelo and Francisco de
Borja were already dead when Gregorio
testified. In addition, the statement itself is
improbable, since there was no need or occasion
for Marcelo de Borja to explain to Gregorio how
and when Francisco de Borja had earned the
P17,000.00 entrusted to Marcelo. A ring of
artificiality is clearly discernible in this portion
of Gregorio's testimony.
As to Francisco de Borja's affidavit, Exhibit "F",
the quoted portion thereof (ante, page 14) does
not clearly demonstrate that the "mi terreno
personal y exclusivo (Poblacion de Jalajala,
Rizal) " refers precisely to the Hacienda in
question. The inventories (Exhibits 3 and 4)
disclose that there were two real properties in
Jalajala owned by Francisco de Borja, one of
72.038 sq. m., assessed at P44,600, and a much
bigger one of 1,357.260.70 sq. m., which is
evidently the Hacienda de Jalajala (Poblacion).
To which of these lands did the affidavit of
Francisco de Borja (Exhibit "F") refer to? In
addition, Francisco's characterization of the land
as "mi terreno personal y exclusivo" is plainly
self-serving, and not admissible in the absence
of cross examination.
It may be true that the inventories relied upon by
defendant-appellant (Exhibits "2", "3", "4" and
"7") are not conclusive on the conjugal character
of the property in question; but as already noted,
they are clear admissions against the pecuniary
interest of the declarants, Francisco de Borja and
his executor-widow, Tasiana Ongsingco, and as
such of much greater probative weight than the
self-serving statement of Francisco (Exhibit
"F"). Plainly, the legal presumption in favor of
the conjugal character of the Hacienda de
Jalajala (Poblacion) now in dispute has not been
rebutted but actually confirmed by proof. Hence,
the appealed order should be reversed and the
Hacienda de Jalajala (Poblacion) declared
property of the conjugal partnership of Francisco
de Borja and Josefa Tangco.
No error having been assigned against the ruling
of the lower court that claims for damages
should be ventilated in the corresponding special
proceedings for the settlement of the estates of
the deceased, the same requires no pro
announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed
order of the Court of First Instance of Rizal in
Case No. L-28040 is hereby affirmed; while
those involved in Cases Nos. L-28568 and L-
28611 are reversed and set aside. Costs against
the appellant Tasiana Ongsingco Vda. de Borja
in all three (3) cases.
6. MARIA USON, plaintiff-appellee,
vs.
MARIA DEL ROSARIO, CONCEPCION
NEBREDA, CONRADO NEBREDA,
DOMINADOR NEBREDA, AND
FAUSTINO NEBREDA, Jr., defendants-
appellants.
Priscilo Evangelista for appellee.
Brigido G. Estrada for appellant.
BAUTISTA ANGELO, J.:
This is an action for recovery of the ownership
and possession of five (5) parcels of land
situated in the Municipality of Labrador,
Province of Pangasinan, filed by Maria Uson
against Maria del Rosario and her four children
named Concepcion, Conrado, Dominador, and
Faustino, surnamed Nebreda, who are all of
minor age, before the Court of First Instance of
Pangasinan.
Maria Uson was the lawful wife of Faustino
Nebreda who upon his death in 1945 left the
lands involved in this litigation. Faustino
Nebreda left no other heir except his widow
Maria Uson. However, plaintiff claims that when
Faustino Nebreda died in 1945, his common-law
wife Maria del Rosario took possession illegally
of said lands thus depriving her of their
possession and enjoyment.
Defendants in their answer set up as special
defense that on February 21, 1931, Maria Uson
and her husband, the late Faustino Nebreda,
executed a public document whereby they
agreed to separate as husband and wife and, in
consideration of their separation, Maria Uson
was given a parcel of land by way of alimony
and in return she renounced her right to inherit
any other property that may be left by her
husband upon his death (Exhibit 1).
After trial, at which both parties presented their
respective evidence, the court rendered decision
ordering the defendants to restore to the plaintiff
the ownership and possession of the lands in
dispute without special pronouncement as to
costs. Defendants interposed the present appeal.
There is no dispute that Maria Uson, plaintiff-
appellee, is the lawful wife of Faustino Nebreda,
former owner of the five parcels of lands
litigated in the present case. There is likewise no
dispute that Maria del Rosario, one of the
defendants-appellants, was merely a common-
law wife of the late Faustino Nebreda with
whom she had four illegitimate children, her
now co-defendants. It likewise appears that
Faustino Nebreda died in 1945 much prior to the
effectivity of the new Civil Code. With this
background, it is evident that when Faustino
Nebreda died in 1945 the five parcels of land he
was seized of at the time passed from the
moment of his death to his only heir, his widow
Maria Uson (Article 657, old Civil Code).As this
Court aptly said, "The property belongs to the
heirs at the moment of the death of the ancestor
as completely as if the ancestor had executed
and delivered to them a deed for the same before
his death" (Ilustre vs. Alaras Frondosa, 17 Phil.,
321). From that moment, therefore, the rights of
inheritance of Maria Uson over the lands in
question became vested.
The claim of the defendants that Maria Uson had
relinquished her right over the lands in question
because she expressly renounced to inherit any
future property that her husband may acquire
and leave upon his death in the deed of
separation they had entered into on February 21,
1931, cannot be entertained for the simple
reason that future inheritance cannot be the
subject of a contract nor can it be renounced (1
Manresa, 123, sixth edition; Tolentino on Civil
Code, p. 12; Osorio vs. Osorio and Ynchausti
Steamship Co., 41 Phil., 531).
But defendants contend that, while it is true that
the four minor defendants are illegitimate
children of the late Faustino Nebreda and under
the old Civil Code are not entitled to any
successional rights, however, under the new
Civil Code which became in force in June, 1950,
they are given the status and rights of natural
children and are entitled to the successional
rights which the law accords to the latter (article
2264 and article 287, new Civil Code), and
because these successional rights were declared
for the first time in the new code, they shall be
given retroactive effect even though the event
which gave rise to them may have occurred
under the prior legislation (Article 2253, new
Civil Code).
There is no merit in this claim. Article 2253
above referred to provides indeed that rights
which are declared for the first time shall have
retroactive effect even though the event which
gave rise to them may have occurred under the
former legislation, but this is so only when the
new rights do not prejudice any vested or
acquired right of the same origin. Thus, said
article provides that "if a right should be
declared for the first time in this Code, it shall be
effective at once, even though the act or event
which gives rise thereto may have been done or
may have occurred under the prior legislation,
provided said new right does not prejudice or
impair any vested or acquired right, of the same
origin." As already stated in the early part of this
decision, the right of ownership of Maria Uson
over the lands in question became vested in 1945
upon the death of her late husband and this is so
because of the imperative provision of the law
which commands that the rights to succession
are transmitted from the moment of death
(Article 657, old Civil Code). The new right
recognized by the new Civil Code in favor of the
illegitimate children of the deceased cannot,
therefore, be asserted to the impairment of the
vested right of Maria Uson over the lands in
dispute.
As regards the claim that Maria Uson, while her
deceased husband was lying in state, in a gesture
of pity or compassion, agreed to assign the lands
in question to the minor children for the reason
that they were acquired while the deceased was
living with their mother and Maria Uson wanted
to assuage somewhat the wrong she has done to
them, this much can be said; apart from the fact
that this claim is disputed, we are of the opinion
that said assignment, if any, partakes of the
nature of a donation of real property, inasmuch
as it involves no material consideration, and in
order that it may be valid it shall be made in a
public document and must be accepted either in
the same document or in a separate one (Article
633, old Civil Code). Inasmuch as this essential
formality has not been followed, it results that
the alleged assignment or donation has no valid
effect.
WHEREFORE, the decision appealed from is
affirmed, without costs.
7. ROSALIO BONILLA (a minor)
SALVACION BONILLA (a minor) and
PONCIANO BONILLA (their father) who
represents the minors, petitioners,
vs.
LEON BARCENA, MAXIMA ARIAS
BALLENA, ESPERANZA BARCENA,
MANUEL BARCENA, AGUSTINA NERI,
widow of JULIAN TAMAYO and HON.
LEOPOLDO GIRONELLA of the Court of
First Instance of Abra, respondents.
MARTIN, J:
This is a petition for review 1 of the Order of the
Court of First Instance of Abra in Civil Case No.
856, entitled Fortunata Barcena vs. Leon
Barcena, et al., denying the motions for
reconsideration of its order dismissing the
complaint in the aforementioned case.
On March 31, 1975 Fortunata Barcena, mother
of minors Rosalio Bonilla and Salvacion Bonilla
and wife of Ponciano Bonilla, instituted a civil
action in the Court of First Instance of Abra, to
quiet title over certain parcels of land located in
Abra.
On May 9, 1975, defendants filed a written
motion to dismiss the complaint, but before the
hearing of the motion to dismiss, the counsel for
the plaintiff moved to amend the complaint in
order to include certain allegations therein. The
motion to amend the complaint was granted and
on July 17, 1975, plaintiffs filed their amended
complaint.
On August 4, 1975, the defendants filed another
motion to dismiss the complaint on the ground
that Fortunata Barcena is dead and, therefore,
has no legal capacity to sue. Said motion to
dismiss was heard on August 14, 1975. In said
hearing, counsel for the plaintiff confirmed the
death of Fortunata Barcena, and asked for
substitution by her minor children and her
husband, the petitioners herein; but the court
after the hearing immediately dismissed the case
on the ground that a dead person cannot be a real
party in interest and has no legal personality to
sue.
On August 19, 1975, counsel for the plaintiff
received a copy of the order dismissing the
complaint and on August 23, 1975, he moved to
set aside the order of the dismissal pursuant to
Sections 16 and 17 of Rule 3 of the Rules of
Court. 2
On August 28, 1975, the court denied the motion
for reconsideration filed by counsel for the
plaintiff for lack of merit. On September 1,
1975, counsel for deceased plaintiff filed a
written manifestation praying that the minors
Rosalio Bonilla and Salvacion Bonilla be
allowed to substitute their deceased mother, but
the court denied the counsel's prayer for lack of
merit. From the order, counsel for the deceased
plaintiff filed a second motion for
reconsideration of the order dismissing the
complaint claiming that the same is in violation
of Sections 16 and 17 of Rule 3 of the Rules of
Court but the same was denied.
Hence, this petition for review.
The Court reverses the respondent Court and
sets aside its order dismissing the complaint in
Civil Case No. 856 and its orders denying the
motion for reconsideration of said order of
dismissal. While it is true that a person who is
dead cannot sue in court, yet he can be
substituted by his heirs in pursuing the case up
to its completion. The records of this case show
that the death of Fortunata Barcena took place
on July 9, 1975 while the complaint was filed on
March 31, 1975. This means that when the
complaint was filed on March 31, 1975,
Fortunata Barcena was still alive, and therefore,
the court had acquired jurisdiction over her
person. If thereafter she died, the Rules of Court
prescribes the procedure whereby a party who
died during the pendency of the proceeding can
be substituted. Under Section 16, Rule 3 of the
Rules of Court "whenever a party to a pending
case dies ... it shall be the duty of his attorney to
inform the court promptly of such death ... and
to give the name and residence of his executor,
administrator, guardian or other legal
representatives." This duty was complied with
by the counsel for the deceased plaintiff when he
manifested before the respondent Court that
Fortunata Barcena died on July 9, 1975 and
asked for the proper substitution of parties in the
case. The respondent Court, however, instead of
allowing the substitution, dismissed the
complaint on the ground that a dead person has
no legal personality to sue. This is a grave error.
Article 777 of the Civil Code provides "that the
rights to the succession are transmitted from the
moment of the death of the decedent." From the
moment of the death of the decedent, the heirs
become the absolute owners of his property,
subject to the rights and obligations of the
decedent, and they cannot be deprived of their
rights thereto except by the methods provided
for by law. 3 The moment of death is the
determining factor when the heirs acquire a
definite right to the inheritance whether such
right be pure or contingent. 4 The right of the
heirs to the property of the deceased vests in
them even before judicial declaration of their
being heirs in the testate or intestate
proceedings. 5 When Fortunata Barcena,
therefore, died her claim or right to the parcels
of land in litigation in Civil Case No. 856, was
not extinguished by her death but was
transmitted to her heirs upon her death. Her heirs
have thus acquired interest in the properties in
litigation and became parties in interest in the
case. There is, therefore, no reason for the
respondent Court not to allow their substitution
as parties in interest for the deceased plaintiff.
Under Section 17, Rule 3 of the Rules of Court
"after a party dies and the claim is not thereby
extinguished, the court shall order, upon proper
notice, the legal representative of the deceased to
appear and be substituted for the deceased,
within such time as may be granted ... ." The
question as to whether an action survives or not
depends on the nature of the action and the
damage sued for. 6 In the causes of action which
survive the wrong complained affects primarily
and principally property and property rights, the
injuries to the person being merely incidental,
while in the causes of action which do not
survive the injury complained of is to the person,
the property and rights of property affected
being incidental. 7 Following the foregoing
criterion the claim of the deceased plaintiff
which is an action to quiet title over the parcels
of land in litigation affects primarily and
principally property and property rights and
therefore is one that survives even after her
death. It is, therefore, the duty of the respondent
Court to order the legal representative of the
deceased plaintiff to appear and to be substituted
for her. But what the respondent Court did, upon
being informed by the counsel for the deceased
plaintiff that the latter was dead, was to dismiss
the complaint. This should not have been done
for under the same Section 17, Rule 3 of the
Rules of Court, it is even the duty of the court, if
the legal representative fails to appear, to order
the opposing party to procure the appointment of
a legal representative of the deceased. In the
instant case the respondent Court did not have to
bother ordering the opposing party to procure
the appointment of a legal representative of the
deceased because her counsel has not only asked
that the minor children be substituted for her but
also suggested that their uncle be appointed as
guardian ad litem for them because their father is
busy in Manila earning a living for the family.
But the respondent Court refused the request for
substitution on the ground that the children were
still minors and cannot sue in court. This is
another grave error because the respondent
Court ought to have known that under the same
Section 17, Rule 3 of the Rules of Court, the
court is directed to appoint a guardian ad
litem for the minor heirs. Precisely in the instant
case, the counsel for the deceased plaintiff has
suggested to the respondent Court that the uncle
of the minors be appointed to act as guardian ad
litem for them. Unquestionably, the respondent
Court has gravely abused its discretion in not
complying with the clear provision of the Rules
of Court in dismissing the complaint of the
plaintiff in Civil Case No. 856 and refusing the
substitution of parties in the case.

IN VIEW OF THE FOREGOING, the order of

the respondent Court dismissing the complaint
in Civil Case No. 856 of the Court of First
Instance of Abra and the motions for
reconsideration of the order of dismissal of said
complaint are set aside and the respondent Court
is hereby directed to allow the substitution of the
minor children, who are the petitioners therein
for the deceased plaintiff and to appoint a
qualified person as guardian ad litem for them.
Without pronouncement as to costs.

SO ORDERED.

8.
9.
10.