Succession 2
Succession 2
Succession 2
Unfortunately, this was not the end of litigation. On May 2, 2002, petitioners filed a verified Motion to Set Aside
LAZARO PASCO and LAURO PASCO, Petitioners, Decision11 alleging that the Agreement was written in a language not understood by them, and the terms and conditions thereof
vs. were not fully explained to them. Petitioners further questioned the MTC’s jurisdiction, arguing that the total amount allegedly
HEIRS OF FILOMENA DE GUZMAN, represented by CRESENCIA DE GUZMAN-PRINCIPE, Respondents. covered by the Compromise Agreement amounted to ₱588,500.00, which exceeded the MTC’s ₱200,000.00 jurisdictional
DECISION limit. In an Order12 dated June 28, 2002, the MTC denied the motion; it also granted Cresencia’s prayer for the issuance of a
DEL CASTILLO, J.: writ of execution. The writ of execution13 was subsequently issued on July 3, 2002. Petitioners’ Motion for Reconsideration and
No court should shield a party from compliance with valid obligations based on wholly unsubstantiated claims of mistake or to Quash Writ/Order of Execution14 dated August 1, 2002 was denied by the MTC in an Order15 dated September 5, 2002.
fraud. Having refused to abide by a compromise agreement, the aggrieved party may either enforce it or regard it as rescinded Undeterred, on October 10, 2002, petitioners filed a Petition for Certiorari and Prohibition with Application for Temporary
and insist upon the original demand. Restraining Order/Preliminary Injunction16 before the Regional Trial Court (RTC) of Bocaue. The case was raffled to Branch
This Petition for Review on Certiorari1 assails the May 13, 2004 Decision2 of the Court of Appeals (CA) and its October 5, 82,17 and docketed as Civil Case No. 764-M-2002. In their petition, petitioners argued that the MTC gravely abused its
2004 Resolution3 in CA-G.R. SP No. 81464 which dismissed petitioners’ appeal and affirmed the validity of the parties’ discretion in approving the Compromise Agreement because (1) the amount involved was beyond the jurisdiction of the MTC;
Compromise Agreement. (2) the MTC failed to ascertain that the parties fully understood the contents of the Agreement; (3) Crescencia had no authority
Factual Antecedents to represent her co-heirs because Filomena’s estate had a personality of its own; and (4) the Compromise Agreement was void
The present petition began with a Complaint for Sum of Money and Damages4 filed on December 13, 2000 by respondents, the for failure of the judge and Cresencia to explain the terms and conditions to the petitioners.
heirs of Filomena de Guzman (Filomena), represented by Cresencia de Guzman-Principe (Cresencia), against petitioners Lauro In their Comment18 dated October 29, 2002, respondents argued that (1) the principal claim of ₱140,000.00 was within the
Pasco (Lauro) and Lazaro Pasco (Lazaro). The case was filed before the Municipal Trial Court (MTC) of Bocaue, Bulacan, and MTC’s jurisdiction; and (2) the records reveal that it was the petitioners themselves, assisted by their counsel, who proposed the
docketed as Civil Case No. MM-3191.5 terms of the settlement, which offer of compromise was accepted in open court by the respondents. Thus, the Compromise
In their Complaint,6 herein respondents alleged that on February 7, 1997, petitioners obtained a loan in the amount of Agreement merely reduced the parties’ agreement into writing.
₱140,000.00 from Filomena (now deceased). To secure the petitioners’ loan, Lauro executed a chattel mortgage on his Isuzu Ruling of the Regional Trial Court
Jeep in favor of Filomena. Upon her death, her heirs sought to collect from the petitioners, to no avail. Despite numerous The RTC initially granted petitioners’ prayer for the issuance of a Temporary Restraining Order (TRO) 19 on November 18,
demands, petitioners refused to either pay the balance of the loan or surrender the Isuzu Jeep to the respondents. Thus, 2002, and later issued a preliminary injunction in an Order 20 dated December 10, 2002, primarily on the ground that the SPA did
respondents were constrained to file the collection case to compel the petitioners to pay the principal amount of ₱140,000.00 not specifically authorize Cresencia to settle the case. However, Presiding Judge Herminia V. Pasamba later inhibited
plus damages in the amount of 5% monthly interest from February 7, 1997, 25% attorney’s fees, exemplary damages, and herself,21 so the case was re-raffled to Branch 6, presided over by Judge Manuel D.J. Siayngo.22 The grant of the preliminary
expenses of litigation. injunction was thus reconsidered and set aside in an Order23 dated May 15, 2003. In the same Order, the RTC dismissed the
Filomena’s heirs, consisting of Avelina de Guzman-Cumplido, Cecilia de Guzman, Rosita de Guzman, Natividad de Guzman, petition and held that (1) the MTC had jurisdiction over the subject matter; (2) Cresencia was authorized to institute the action
and Cresencia de Guzman-Principe, authorized Cresencia to act as their attorney-in-fact through a Special Power of and enter into a Compromise Agreement on behalf of her co-heirs; and (3) the MTC’s approval of the Compromise Agreement
Attorney7 (SPA) dated April 6, 1999. The SPA authorized Cresencia to do the following on behalf of the co-heirs: was not done in a capricious, whimsical, or arbitrary manner; thus, petitioners’ resort to certiorari under Rule 65 was improper.
1) To represent us on all matters concerning the intestate estate of our deceased sister, Filomena de Guzman; Petitioners’ Motion for Reconsideration24 was denied,25 hence they sought recourse before the CA.
2) To file cases for collection of all accounts due said Filomena de Guzman or her estate, including the power to file Ruling of the Court of Appeals
petition for foreclosure of mortgaged properties; In its Decision26 dated May 13, 2004 and Resolution27 dated October 5,
3) To do and perform all other acts necessary to carry out the powers hereinabove conferred. 2004, the CA dismissed petitioners’ appeal, and held that:
During the pre-trial of the case on February 15, 2002, the parties verbally agreed to settle the case. On February 21, 2002, the 1) the MTC had jurisdiction, since the principal amount of the loan only amounted to ₱140,000.00;
parties jointly filed a Compromise Agreement8 that was signed by the parties and their respective counsel. Said Compromise 2) Cresencia was duly authorized by her co-heirs to enter into the Compromise Agreement;
Agreement, approved by the MTC in an Order9 dated April 4, 2002, contained the following salient provisions: 3) Petitioners improperly sought recourse before the RTC through a Petition for Certiorari under Rule 65, when the
1. That [petitioners] admit their principal loan and obligation to the [respondents] in the sum of One Hundred Forty proper remedy was a Petition for Relief from Judgment under Rule 38.
Thousand Pesos (₱140,000.00) Philippine currency; in addition to the incidental and other miscellaneous expenses Issues
that they have incurred in the pursuit of this case, in the further sum of ₱18,700.00; Before us, petitioners claim that, first, they correctly resorted to the remedy of certiorari under Rule 65; second, the RTC
2. That, [petitioners] undertake to pay to the [respondents] their aforementioned obligations, together with attorney’s gravely erred in dismissing their Petition for Certiorari and Prohibition, when the matter under consideration was merely the
fees equivalent to ten percentum (10%) of the total sum thereof, directly at the BULACAN OFFICE of the propriety of the grant of the preliminary injunction; and third, that the SPA did not validly authorize Cresencia to enter into the
[respondents’] counsel, located at No. 24 Hornbill Street, St. Francis Subdivision, Bo. Pandayan, Meycauayan, Compromise Agreement on behalf of her co-heirs.
Bulacan, WITHOUT NEED OF FURTHER DEMAND in the following specific manner, to wit: Our Ruling
₱60,000.00 – to be paid on or before May 15, 2002 We deny the petition.
₱10,000.00 – monthly payments thereafter, starting June 15, 2002 up to and until the aforementioned The MTC had jurisdiction over the case.
obligations shall have been fully paid; It bears stressing that the question of the MTC’s jurisdiction has not been raised before this Court; hence, petitioners appear to
3. That, provided that [petitioners] shall truely [sic] comply with the foregoing specifically agreed manner of have admitted that the MTC had jurisdiction to approve the Compromise Agreement. In any event, it is beyond dispute that the
payments, [respondents] shall forego and waive all the interests charges of 5% monthly from February 7, 1998 and Judiciary Reorganization Act of 1980, or Batas Pambansa (BP) Blg. 129,28 as amended by Republic Act No. 7691,29 fixes the
the 25% attorney’s fees provided for in Annex "AA" of the Complaint; MTC’s jurisdiction over cases where "the demand does not exceed Two hundred thousand pesos (₱200,000.00) exclusive of
4. In the event of failure on the part of the [petitioners] to comply with any of the specific provisions of this interest, damages of whatever kind, attorney's fees, litigation expenses, and costs."30 Thus, respondents’ initiatory complaint,
Compromise Agreement, the [respondents] shall be entitled to the issuance of a "Writ of Execution" to enforce the covering the principal amount of ₱140,000.00, falls squarely within the MTC’s jurisdiction.
satisfaction of [petitioners’] obligations, as mentioned in paragraph 1, together with the 5% monthly interests charges Petitioners properly resorted to the special civil action of certiorari.
and attorney’s fees mentioned in paragraph 3 thereof.10 On the first question, the CA held that the proper remedy from the MTC’s Order approving the Compromise Agreement was a
Ruling of the Municipal Trial Court Petition for Relief from Judgment under Rule 38 and not a Petition for Certiorari under Rule 65. We recall that petitioners filed
1
a verified Motion to Set Aside Decision on May 2, 2002, 31 which was denied by the MTC on June 28, 2002. This Order of compromise agreement. We held then, as we do now, that the SPA necessarily included the power of the attorney-in-fact to
denial was properly the subject of a petition for certiorari, pursuant to Rule 41, Section 1, of the Rules of Court: compromise the case, and that Nenita’s co-heirs could not belatedly disavow their original authorization. 39 This ruling is even
Section 1. Subject of Appeal – An appeal may be taken from a judgment or final order that completely disposes of the case, or of more significant here, where the co-heirs have not taken any action to invalidate the Compromise Agreement or assail their
a particular matter therein when declared by these Rules to be appealable. SPA.
No appeal may be taken from: Moreover, we note that petitioners never assailed the validity of the SPA
xxxx during the pre-trial stage prior to entering the Compromise Agreement. This matter was never even raised as a ground in
(e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or petitioners’ Motion to Set Aside the compromise, or in the initial Petition before the RTC. It was only months later, in
duress, or any other ground vitiating consent. December 2002, that petitioners – rather self-servingly - claimed that the SPA was insufficient.
xxxx The stated interest rate should be reduced.
In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate Although the petition is unmeritorious, we find the 5% monthly interest rate stipulated in Clause 4 of the Compromise
special civil action under Rule 65. Agreement to be iniquitous and unconscionable. Accordingly, the legal interest of 12% per annum must be imposed in lieu of
From the express language of Rule 41, therefore, the MTC’s denial of petitioners’ Motion to Set Aside Decision could not have the excessive interest stipulated in the agreement. As we held in Castro v. Tan:40
been appealed. Indeed, a decision based on a compromise agreement is immediately final and executory and cannot be the In several cases, we have ruled that stipulations authorizing iniquitous or unconscionable interests are contrary to morals, if not
subject of appeal,32 for when parties enter into a compromise agreement and request a court to render a decision on the basis of against the law. In Medel v. Court of Appeals, we annulled a stipulated 5.5% per month or 66% per annum interest on a
their agreement, it is presumed that such action constitutes a waiver of the right to appeal said decision.33 While there may have ₱500,000.00 loan and a 6% per month or 72% per annum interest on a ₱60,000.00 loan, respectively, for being excessive,
been other remedies available to assail the decision,34 petitioners were well within their rights to institute a special civil action iniquitous, unconscionable and exorbitant. In Ruiz v. Court of Appeals, we declared a 3% monthly interest imposed on four
under Rule 65. separate loans to be excessive. In both cases, the interest rates were reduced to 12% per annum.
The Regional Trial Court rightly dismissed the petition for certiorari. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, stipulated in the Kasulatan is even higher
On the second issue, petitioners argue that the RTC, in reconsidering the order granting the application for writ of preliminary than the 3% monthly interest rate imposed in the Ruiz case. Thus, we similarly hold the 5% monthly interest to be excessive,
injunction, should not have gone so far as dismissing the main case filed by the petitioners. They claim that the issue in their iniquitous, unconscionable and exorbitant, contrary to morals, and the law. It is therefore void ab initio for being violative of
application for writ of preliminary injunction was different from the issues in the main case for certiorari, and that the Article 1306 of the Civil Code. x x x (citations omitted)
dissolution of the preliminary injunction should have been without prejudice to the conduct of further proceedings in the main The proceeds of the loan should be released to Filomena’s heirs only upon settlement of her estate.
case. They also claim that the RTC did not have the power to dismiss the case without requiring the parties to file memoranda. Finally, it is true that Filomena’s estate has a different juridical personality than that of the heirs. Nonetheless, her heirs certainly
These assertions are belied, however, by petitioners’ own submissions. have an interest in the preservation of the estate and the recovery of its properties, 41 for at the moment of Filomena’s death, the
Their arguments were exactly the same, whether relating to the preliminary or permanent injunction. Identical matters were at heirs start to own the property, subject to the decedent's liabilities. In this connection, Article 777 of the Civil Code states that
issue – the MTC’s jurisdiction, petitioners’ alleged vitiated consent, and the propriety of enforcing the Compromise Agreement. "[t]he rights to the succession are transmitted from the moment of the death of the decedent."42
The reliefs sought, too, were the same, that is, the grant of an injunction against the enforcement of the compromise:35 Unfortunately, the records before us do not show the status of the proceedings for the settlement of the estate of Filomena, if
WHEREFORE, it is most respectfully prayed that: any. But to allow the release of the funds directly to the heirs would amount to a distribution of the estate; which distribution
1) A Temporary Restraining Order and/or Preliminary Injunction issue ex parte directing the respondents to cease and and delivery should be made only after, not before, the payment of all debts, charges, expenses, and taxes of the estate have
desist from enforcing, executing, or implementing in any manner the Decision dated April 4, 2002 and acting in Civil been paid.43 We thus decree that respondent Cresencia should deposit the amounts received from the petitioners with the MTC
Case No. MM-3191 until further orders from this Honorable Court. of Bocaue, Bulacan and in turn, the MTC of Bocaue, Bulacan should hold in abeyance the release of the amounts to Filomena’s
2) After hearing, the temporary restraining order/ex parte injunction be replaced by a writ of preliminary injunction. heirs until after a showing that the proper procedure for the settlement of Filomena’s estate has been followed.
3) After hearing on the merits, judgment be rendered: WHEREFORE, the petition is DENIED. The May 13, 2004 Decision of the Court of Appeals and its October 5, 2004
a. Making the injunction permanent. Resolution are AFFIRMED with MODIFICATIONS that the interest rate of 5% per month (60% per annum) is ordered
Since the RTC found at the preliminary injunction phase that petitioners were not entitled to an injunction (whether preliminary reduced to 12 % per annum. Respondent Cresencia De Guzman-Principe is DIRECTED to deposit with the Municipal Trial
or permanent), that petitioners’ arguments were insufficient to support the relief sought, and that the MTC’s approval of the Court of Bocaue, Bulacan the amounts received from the petitioners. The Municipal Trial Court of Bocaue, Bulacan is
Compromise Agreement was not done in a capricious, whimsical, or arbitary manner, the RTC was not required to engage in likewise DIRECTED to hold in abeyance the release of any amounts recovered from the petitioners until after a showing that
unnecessary duplication of proceedings. As such, it rightly dismissed the petition. the procedure for settlement of estates of Filomena de Guzman’s estate has been followed, and after all charges on the estate
In addition, nothing in the Rules of Court commands the RTC to require the parties to file Memoranda. Indeed, Rule 65, Sec. 8 have been fully satisfied.
is explicit in that the court "may dismiss the petition if it finds the same to be patently without merit, prosecuted manifestly for
delay, or that the questions raised therein are too unsubstantial to require consideration."36 G.R. No. 125835 July 30, 1998
Cresencia was authorized to enter into the Compromise Agreement. NATALIA CARPENA OPULENCIA, petitioner,
As regards the third issue, petitioners maintain that the SPA was fatally defective because Cresencia was not specifically vs.
authorized to enter into a compromise agreement. Here, we fully concur with the findings of the CA that: COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL OLIVAN, respondents.
x x x It is undisputed that Cresencia’s co-heirs executed a Special Power of Attorney, dated 6 April 1999, designating the
former as their attorney-in-fact and empowering her to file cases for collection of all the accounts due to Filomena or her estate. PANGANIBAN, J.:
Consequently, Cresencia entered into the subject Compromise Agreement in order to collect the overdue loan obtained by Pasco Is a contract to sell a real property involved in restate proceedings valid and binding without the approval of the probate court?
from Filomena. In so doing, Cresencia was merely performing her duty as attorney-in-fact of her co-heirs pursuant to the Statement of the Case
Special Power of Attorney given to her.371avvphi1 This is the main question raised in this petition for review before us, assailing the Decision 1 of the Court of Appeals 2 in CA-
Our ruling in Trinidad v. Court of Appeals38 is illuminating. In Trinidad, the heirs of Vicente Trinidad executed a SPA in favor GR CV No. 41994 promulgated on February 6, 1996 and its Resolution 3 dated July 19, 1996. The challenged Decision disposed
of Nenita Trinidad (Nenita) to be their representative in litigation involving the sale of real property covered by the decedent’s as follows:
estate. As here, there was no specific authority to enter into a Compromise Agreement. When a compromise agreement was WHEREFORE, premises considered, the order of the lower court dismissing the complaint is SET ASIDE
finally reached, the heirs later sought to invalidate it, claiming that Nenita was not specifically authorized to enter into the and judgment is hereby rendered declaring the CONTRACT TO SELL executed by appellee in favor of
2
appellants as valid and binding, subject to the result of the administration proceedings of the testate Estate The trial court's order of dismissal was elevated to the Court of Appeals by private respondents who alleged:
of Demetrio Carpena. 1. The lower court erred in concluding that the contract to sell is null and void, there being no approval of the probate court.
SO ORDERED. 4 2. The lower court erred in concluding that [petitioner] in good faith offers to return the money to [private respondents].
Petitioner's Motion for Reconsideration was denied in the challenged Resolution. 5 3. The lower court erred in concluding that [petitioner] is not under estoppel to question the validity of the contract to sell.
The Facts 4. The lower court erred in not ruling on the consideration of the contract to sell which is tantamount to plain unjust enrichment
The antecedent facts, as succinctly narrated by Respondent Court of Appeals, are: of [petitioner] at the expense of [private respondents]. 7
In a complaint for specific performance filed with the court a quo [herein private respondents] Aladin Simundac and Miguel Public Respondent's Ruling
Oliven alleged that [herein petitioner] Natalia Carpena Opulencia executed in their favor a "CONTRACT TO SELL" Lot 2125 Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on Demetrio Carpena's estate, the
of the Sta. Rosa Estate, consisting of 23,766 square meters located in Sta. Rosa, Laguna at P150.00 per square meter; that appellate court set aside the trial court's dismissal of the complaint and correctly ruled as follows:
plaintiffs paid a downpayment of P300,000.00 but defendant, despite demands, failed to comply with her obligations under the It is apparent from the appealed order that the lower court treated the contract to sell executed by appellee as one made by the
contract. [Private respondents] therefore prayed that [petitioner] be ordered to perform her contractual obligations and to further administratrix of the Estate of Demetrio Carpena for the benefit of the estate. Hence, its main reason for voiding the contract in
pay damages, attorney's fee and litigation expenses. question was the absence of the probate court's approval. Presumably, what the lower court had in mind was the sale of the
In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and receipt of P300,000.00 as estate or part thereof made by the administrator for the benefit of the estate, as authorized under Rule 89 of the Revised Rules of
downpayment. However, she put forward the following affirmative defenses: that the property subject of the contract formed Court, which requires the approval of the probate court upon application therefor with notice to the heirs, devisees and legatees.
part of the Estate of Demetrio Carpena (petitioner's father), in respect of which a petition for probate was filed with the Regional However, as adverted to by appellants in their brief, the contract to sell in question is not covered by Rule 89 of the Revised
Trial Court, Branch 24, Biñan, Laguna; that at the time the contract was executed, the parties were aware of the pendency of the Rules of Court since it was made by appellee in her capacity as an heir, of a property that was devised to her under the will
probate proceeding; that the contract to sell was not approved by the probate court; that realizing the nullity of the contract sought to be probated. Thus, while the document inadvertently stated that appellee executed the contract in her capacity as
[petitioner] had offered to return the downpayment received from [private respondents], but the latter refused to accept it; that "executrix and administratrix" of the estate, a cursory reading of the entire text of the contract would unerringly show that what
[private respondents] further failed to provide funds for the tenant who demanded P150,00.00 in payment of his tenancy rights she undertook to sell to appellants was one of the "other properties given to her by her late father," and more importantly, it was
on the land; that [petitioner] had chosen to rescind the contract. not made for the benefit of the estate but for her own needs. To illustrate this point, it is apropos to refer to the preambular or
At the pre-trial conference the parties stipulated on [sic] the following facts: preliminary portion of the document, which reads:
1. That on February 3, 1989, [private respondents] and [petitioner] entered into a contract to sell involving WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more particularly described as follows:
a parcel of land situated in Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the Sta. Rosa Estate. x x x x x x x x x
2. That the price or consideration of the said sell [sic] is P150.00 per square meters; x x x x x x x x x
3. That the amount of P300,000.00 had already been received by [petitioner]; x x x x x x x x x
4. That the parties have knowledge that the property subject of the contract to sell is subject of the probate WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of the above-described property,
proceedings; "which property was only one among the other properties given to her by her late father," to anyone who can wait for complete
5. That [as] of this time, the probate Court has not yet issued an order either approving or denying the said clearance of the court on the Last Will Testament of her father.
sale. (p. 3, appealed Order of September 15, 1992, pp. 109-112, record). WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said property at ONE HUNDRED FIFTY
[Private respondents] submitted their evidence in support of the material allegations of the complaint. In addition to testimonies PESOS (150.00) Philippine Currency, per square meter unto the BUYERS, and with this offer, the latter has accepted to buy
of witnesses, [private respondents] presented the following documentary evidences: (1) Contract to Sell (Exh A); (2) machine and/or purchase the same, less the area for the road and other easements indicated at the back of Transfer Certificate of Title No.
copy of the last will and testament of Demetrio Carpena (defendant's father) to show that the property sold by defendant was 2125 duly confirmed after the survey to be conducted by the BUYER's Licensed Geodetic Engineer, and whatever area [is] left.
one of those devised to her in said will (Exh B); (3) receipts signed by defendant for the downpayment in the total amount of (Emphasis added).
P300,000.00 (Exhs C, D & E); and (4) demand letters sent to defendant (Exhs F & G). To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot 2125 not in her capacity as
It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence. In essence, defendant maintained executrix of the will or administratrix of the estate of her father, but as an heir and more importantly as owner of said lot which,
that the contract to sell was null and void for want of approval by the probate court. She further argued that the contract was along with other properties, was devised to her under the will sought to be probated. That being so, the requisites stipulated in
subject to a suspensive condition, which was the probate of the will of defendant's father Demetrio Carpena. An Opposition was Rule 89 of the Revised Rules of Court which refer to a sale made by the administrator for the benefit of the estate do not apply.
filed by [private respondents]. It appears further that in an Order dated December 15, 1992 the court a quo granted the demurrer x x x x x x x x x
to evidence and dismissed the complaint. It justified its action in dismissing the complaint in the following manner: It is noteworthy that in a Manifestation filed with this court by appellants, which is not controverted by appellee, it is mentioned
It is noteworthy that when the contract to sell was consummated, no petition was filed in the Court with notice to the heirs of the that the last will and testament of Demetrio Carpena was approved in a final judgment rendered in Special Proceeding No. B-
time and place of hearing, to show that the sale is necessary and beneficial. A sale of properties of an estate as beneficial to the 979 by the Regional Trial Court, Branch 24 Biñan, Laguna. But of course such approval does not terminate the proceeding[s]
interested parties must comply with the requisites provided by law, (Sec. 7, Rule 89, Rules of Court) which are mandatory, and since the settlement of the estate will ensue. Such proceedings will consist, among others, in the issuance by the court of a
without them, the authority to sell, the sale itself, and the order approving it, would be null and void ab initio. (Arcilla vs. notice to creditors (Rule 86), hearing of money claims and payment of taxes and estate debts (Rule 88) and distribution of the
David, 77 Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2 Phil. 755) Besides, it is residue to the heirs or persons entitled thereto (Rule 90). In effect, the final execution of the deed of sale itself upon appellants'
axiomatic that where the estate of a deceased person is already the subject of a testate or intestate proceeding, the administrator payment of the balance of the purchase price will have to wait for the settlement or termination of the administration
cannot enter into any transaction involving it without prior approval of the probate Court. (Estate of Obave, vs. Reyes, 123 proceedings of the Estate of Demetrio Carpena. Under the foregoing premises, what the trial court should have done with the
SCRA 767). complaint was not to dismiss it but to simply put on hold further proceedings until such time that the estate or its residue will be
As held by the Supreme Court, a decedent's representative (administrator) is not estopped from questioning the validity of his distributed in accordance with the approved will.
own void deed purporting to convey land. (Bona vs. Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the illegality The rule is that when a demurrer to the evidence is granted by the trial court but reversed on appeal,
of the transaction[,] has interposed the nullity of the contract as her defense, there being no approval from the probate Court, defendant loses the right to adduce his evidence. In such a case, the appellate court will decide the
and, in good faith offers to return the money she received from the [private respondents]. Certainly, the administratrix is not controversy on the basis of plaintiff's evidence. In the case at bench, while we find the contract to sell valid
estop[ped] from doing so and the action to declare the inexistence of contracts do not prescribe. This is what precipitated the and binding between the parties, we cannot as yet order appellee to perform her obligations under the
filing of [petitioner's] demurrer to evidence. 6 contract because the result of the administration proceedings of the testate Estate of Demetrio Carpena has
3
to be awaited. Hence, we shall confine our adjudication to merely declaring the validity of the questioned perfected between the petitioner and private respondents during the pendency of the probate proceedings, the consummation of
Contract to Sell. the sale or the transfer of ownership over the parcel of land to the private respondents is subject to the full payment of the
Hence, this appeal. 8 purchase price and to the termination and outcome of the testate proceedings. Therefore, there is no basis for petitioner's
The Issue apprehension that the Contract to Sell may result in a premature partition and distribution of the properties of the estate. Indeed,
Petitioner raises only one issue: it is settled that "the sale made by an heir of his share in an inheritance, subject to the pending administration, in no wise stands
Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and [p]rivate in the way of such administration." 20
[r]espondent[s] without the requisite probate court approval is valid. Estoppel
The Court's Ruling Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sell with private respondents,
The petition has no merit. from whom she had already received P300,000 as initial payment of the purchase price. Petitioner may not renege on her own
Contract to Sell Valid acts and representations, to the prejudice of the private respondents who have relied on them. 21 Jurisprudence teaches us that
In a nutshell, petitioner contends that "where the estate of the deceased person is already the subject of a testate or intestate neither the law nor the courts will extricate a party from an unwise or undesirable contract he or she entered into with all the
proceeding, the administrator cannot enter into any transaction involving it without prior approval of the Probate Court." 9 She required formalities and with full awareness of its consequences. 22
maintains that the Contract to Sell is void because it was not approved by the probate court, as required by Section 7, Rule 89 of WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against
the Rules of Court: petitioner.
Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. — The court
having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell, G.R. No. 146006 February 23, 2004
mortgage, or otherwise encumber real estate, in cases provided by these rules and when it appears JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and Corporate Secretary, respectively, of
necessary or beneficial, under the following regulations: Philippines International Life Insurance Company, and FILIPINO LOAN ASSISTANCE GROUP, petitioners
x x x x x x x x x vs.
Insisting that the above rule should apply to this case, petitioner argues that the stipulations in the Contract to Sell require her to REGIONAL TRIAL COURT OF QUEZON CITY BRANCH 85 presided by JUDGE PEDRO M. AREOLA, BRANCH
act in her capacity as an executrix or administratrix. She avers that her obligation to eject tenants pertains to the administratrix CLERK OF COURT JANICE Y. ANTERO, DEPUTY SHERIFFS ADENAUER G. RIVERA and PEDRO L. BORJA,
or executrix, the estate being the landlord of the said tenants. 10 Likewise demonstrating that she entered into the contract in her all of the Regional Trial Court of Quezon City Branch 85, MA. DIVINA ENDERES claiming to be Special
capacity as executor is the stipulation that she must effect the conversion of subject land from irrigated rice land to residential Administratrix, and other persons/ public officers acting for and in their behalf, respondents.
land and secure the necessary clearances from government offices. Petitioner alleges that these obligations can be undertaken DECISION
only by an executor or administrator of an estate, and not by an heir. 11 CORONA, J.:
The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of the Rules of Court is not This is a petition for review under Rule 45 of the Rules of Court seeking to reverse and set aside the decision1 of the Court of
applicable, because petitioner entered into the Contract to Sell in her capacity as an heiress, not as an executrix or administratrix Appeals, First Division, dated July 26, 2000, in CA G.R. 59736, which dismissed the petition for certiorari filed by petitioners
of the estate. In the contract, she represented herself as the "lawful owner" and seller of the subject parcel of land. 12 She also Jose C. Lee and Alma Aggabao (in their capacities as president and secretary, respectively, of Philippine International Life
explained the reason for the sale to be "difficulties in her living" conditions and consequent "need of cash." 13 These Insurance Company) and Filipino Loan Assistance Group.
representations clearly evince that she was not acting on behalf of the estate under probate when she entered into the Contract to The antecedent facts follow.
Sell. Accordingly, the jurisprudence cited by petitioners has no application to the instant case. Dr. Juvencio P. Ortañez incorporated the Philippine International Life Insurance Company, Inc. on July 6, 1956. At the time of
We emphasize that hereditary rights are vested in the heir or heirs from the moment of the decedent's death. 14 Petitioner, the company’s incorporation, Dr. Ortañez owned ninety percent (90%) of the subscribed capital stock.
therefore, became the owner of her hereditary share the moment her father died. Thus, the lack of judicial approval does not On July 21, 1980, Dr. Ortañez died. He left behind a wife (Juliana Salgado Ortañez), three legitimate children (Rafael, Jose and
invalidate the Contract to Sell, because the petitioner has the substantive right to sell the whole or a part of her share in the Antonio Ortañez) and five illegitimate children by Ligaya Novicio (herein private respondent Ma. Divina Ortañez-Enderes and
estate of her late father. 15 Thus, in Jakosalem vs. Rafols, 16 the Court resolved an identical issue under the old Civil Code and her siblings Jose, Romeo, Enrico Manuel and Cesar, all surnamed Ortañez).2
held: On September 24, 1980, Rafael Ortañez filed before the Court of First Instance of Rizal, Quezon City Branch (now Regional
Art. 440 of the Civil Code provides that "the possession of hereditary property is deemed to be transmitted to the heir without Trial Court of Quezon City) a petition for letters of administration of the intestate estate of Dr. Ortañez, docketed as SP Proc. Q-
interruption from the instant of the death of the decedent, in case the inheritance be accepted." And Manresa with reason states 30884 (which petition to date remains pending at Branch 85 thereof).
that upon the death of a person, each of his heirs "becomes the undivided owner of the whole estate left with respect to the part Private respondent Ma. Divina Ortañez-Enderes and her siblings filed an opposition to the petition for letters of administration
or portion which might be adjudicated to him, a community of ownership being thus formed among the coowners of the estate and, in a subsequent urgent motion, prayed that the intestate court appoint a special administrator.
while it remains undivided." . . . And according to article 399 of the Civil Code, every part owner may assign or mortgage his On March 10, 1982, Judge Ernani Cruz Paño, then presiding judge of Branch 85, appointed Rafael and Jose Ortañez joint
part in the common property, and the effect of such assignment or mortgage shall be limited to the portion which may be special administrators of their father’s estate. Hearings continued for the appointment of a regular administrator (up to now no
allotted him in the partition upon the dissolution of the community. Hence, where some of the heirs, without the concurrence of regular administrator has been appointed).
the others, sold a property left by their deceased father, this Court, speaking thru its then Chief Justice Cayetano Arellano, said As ordered by the intestate court, special administrators Rafael and Jose Ortañez submitted an inventory of the estate of their
that the sale was valid, but that the effect thereof was limited to the share which may be allotted to the vendors upon the father which included, among other properties, 2,029 3 shares of stock in Philippine International Life Insurance Company
partition of the estate. (hereafter Philinterlife), representing 50.725% of the company’s outstanding capital stock.
Administration of the Estate Not On April 15, 1989, the decedent’s wife, Juliana S. Ortañez, claiming that she owned 1,014 4 Philinterlife shares of stock as her
Prejudiced by the Contract to Sell conjugal share in the estate, sold said shares with right to repurchase in favor of herein petitioner Filipino Loan Assistance
Petitioner further contends that "[t]o sanction the sale at this stage would bring about a partial distribution of the decedent's Group (FLAG), represented by its president, herein petitioner Jose C. Lee. Juliana Ortañez failed to repurchase the shares of
estate pending the final termination of the testate proceedings." 17 This becomes all the more significant in the light of the trial stock within the stipulated period, thus ownership thereof was consolidated by petitioner FLAG in its name.
court's finding, as stated in its Order dated August 20, 1997, that "the legitimate of one of the heirs has been impaired." 18 On October 30, 1991, Special Administrator Jose Ortañez, acting in his personal capacity and claiming that he owned the
Petitioner's contention is not convincing. The Contract to Sell stipulates that petitioner's offer to sell is contingent on the remaining 1,0115 Philinterlife shares of stocks as his inheritance share in the estate, sold said shares with right to repurchase also
"complete clearance of the court on the Last Will Testament of her father." 19 Consequently, although the Contract to Sell was
4
in favor of herein petitioner FLAG, represented by its president, herein petitioner Jose C. Lee. After one year, petitioner FLAG Commission filed by private respondent-Special Administratrix Enderes against petitioner Jose Lee and other members of the
consolidated in its name the ownership of the Philinterlife shares of stock when Jose Ortañez failed to repurchase the same. FLAG-controlled board of Philinterlife on November 7, 1994. Thereafter, various cases were filed by Jose Lee as president of
It appears that several years before (but already during the pendency of the intestate proceedings at the Regional Trial Court of Philinterlife and Juliana Ortañez and her sons against private respondent-Special Administratrix Enderes in the SEC and civil
Quezon City, Branch 85), Juliana Ortañez and her two children, Special Administrators Rafael and Jose Ortañez, entered into a courts.10 Somehow, all these cases were connected to the core dispute on the legality of the sale of decedent Dr. Ortañez’s
memorandum of agreement dated March 4, 1982 for the extrajudicial settlement of the estate of Dr. Juvencio Ortañez, Philinterlife shares of stock to petitioner FLAG, represented by its president, herein petitioner Jose Lee who later became the
partitioning the estate (including the Philinterlife shares of stock) among themselves. This was the basis of the number of shares president of Philinterlife after the controversial sale.
separately sold by Juliana Ortañez on April 15, 1989 (1,014 shares) and by Jose Ortañez on October 30, 1991 (1,011 shares) in On May 2, 2000, private respondent-Special Administratrix Enderes and her siblings filed a motion for execution of the Orders
favor of herein petitioner FLAG. of the intestate court dated August 11 and August 29, 1997 because the orders of the intestate court nullifying the sale (upheld
On July 12, 1995, herein private respondent Ma. Divina Ortañez–Enderes and her siblings (hereafter referred to as private by the Court of Appeals and the Supreme Court) had long became final. Respondent-Special Administratrix Enderes served a
respondents Enderes et al.) filed a motion for appointment of special administrator of Philinterlife shares of stock. This move copy of the motion to petitioners Jose Lee and Alma Aggabao as president and secretary, respectively, of Philinterlife, 11 but
was opposed by Special Administrator Jose Ortañez. petitioners ignored the same.
On November 8, 1995, the intestate court granted the motion of private respondents Enderes et al. and appointed private On July 6, 2000, the intestate court granted the motion for execution, the dispositive portion of which read:
respondent Enderes special administratrix of the Philinterlife shares of stock. WHEREFORE, premises considered, let a writ of execution issue as follows:
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to declare void ab initio the memorandum of 1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in the name of the Estate of Dr. Juvencio Ortañez
agreement dated March 4, 1982. On January 9, 1996, she filed a motion to declare the partial nullity of the extrajudicial to Filipino Loan Assistance Group (FLAG);
settlement of the decedent’s estate. These motions were opposed by Special Administrator Jose Ortañez. 2. Commanding the President and the Corporate Secretary of Philinterlife to reinstate in the stock and transfer book
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to declare void ab initio the deeds of sale of of Philinterlife the 2,029 Philinterlife shares of stock in the name of the Estate of Dr. Juvencio P. Ortañez as the
Philinterlife shares of stock, which move was again opposed by Special Administrator Jose Ortañez. owner thereof without prejudice to other claims for violation of pre-emptive rights pertaining to the said 2,029
On February 4, 1997, Jose Ortañez filed an omnibus motion for (1) the approval of the deeds of sale of the Philinterlife shares Philinterlife shares;
of stock and (2) the release of Ma. Divina Ortañez-Enderes as special administratrix of the Philinterlife shares of stock on the 3. Directing the President and the Corporate Secretary of Philinterlife to issue stock certificates of Philinterlife for
ground that there were no longer any shares of stock for her to administer. 2,029 shares in the name of the Estate of Dr. Juvencio P. Ortañez as the owner thereof without prejudice to other
On August 11, 1997, the intestate court denied the omnibus motion of Special Administrator Jose Ortañez for the approval of claims for violations of pre-emptive rights pertaining to the said 2,029 Philinterlife shares and,
the deeds of sale for the reason that: 4. Confirming that only the Special Administratrix, Ma. Divina Ortañez-Enderes, has the power to exercise all the
Under the Godoy case, supra, it was held in substance that a sale of a property of the estate without an Order of the probate rights appurtenant to the said shares, including the right to vote and to receive dividends.
court is void and passes no title to the purchaser. Since the sales in question were entered into by Juliana S. Ortañez and Jose S. 5. Directing Philinterlife and/or any other person or persons claiming to represent it or otherwise, to acknowledge and
Ortañez in their personal capacity without prior approval of the Court, the same is not binding upon the Estate. allow the said Special Administratrix to exercise all the aforesaid rights on the said shares and to refrain from
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of Philinterlife shares of stock and release of Ma. Divina resorting to any action which may tend directly or indirectly to impede, obstruct or bar the free exercise thereof under
Ortañez-Enderes as Special Administratrix is hereby denied.6 pain of contempt.
On August 29, 1997, the intestate court issued another order granting the motion of Special Administratrix Enderes for the 6. The President, Corporate Secretary, any responsible officer/s of Philinterlife, or any other person or persons
annulment of the March 4, 1982 memorandum of agreement or extrajudicial partition of estate. The court reasoned that: claiming to represent it or otherwise, are hereby directed to comply with this order within three (3) days from receipt
In consonance with the Order of this Court dated August 11, 1997 DENYING the approval of the sale of Philinterlife shares of hereof under pain of contempt.
stocks and release of Ma. Divina Ortañez-Enderes as Special Administratrix, the "Urgent Motion to Declare Void Ab 7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby directed to implement the writ of execution with
Initio Memorandum of Agreement" dated December 19, 1995. . . is hereby impliedly partially resolved insofar as the dispatch to forestall any and/or further damage to the Estate.
transfer/waiver/renunciation of the Philinterlife shares of stock are concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of SO ORDERED.12
the Memorandum of Agreement. In the several occasions that the sheriff went to the office of petitioners to execute the writ of execution, he was barred by the
WHEREFORE, this Court hereby declares the Memorandum of Agreement dated March 4, 1982 executed by Juliana S. security guard upon petitioners’ instructions. Thus, private respondent-Special Administratrix Enderes filed a motion to cite
Ortañez, Rafael S. Ortañez and Jose S. Ortañez as partially void ab initio insofar as the transfer/waiver/renunciation of the herein petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of Philinterlife) in contempt.13
Philinterlife shares of stocks are concerned.7 Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a petition for certiorari, docketed as CA G.R. SP
Aggrieved by the above-stated orders of the intestate court, Jose Ortañez filed, on December 22, 1997, a petition for certiorari in No. 59736. Petitioners alleged that the intestate court gravely abused its discretion in (1) declaring that the ownership of FLAG
the Court of Appeals. The appellate court denied his petition, however, ruling that there was no legal justification whatsoever over the Philinterlife shares of stock was null and void; (2) ordering the execution of its order declaring such nullity and (3)
for the extrajudicial partition of the estate by Jose Ortañez, his brother Rafael Ortañez and mother Juliana Ortañez during the depriving the petitioners of their right to due process.
pendency of the settlement of the estate of Dr. Ortañez, without the requisite approval of the intestate court, when it was clear On July 26, 2000, the Court of Appeals dismissed the petition outright:
that there were other heirs to the estate who stood to be prejudiced thereby. Consequently, the sale made by Jose Ortañez and We are constrained to DISMISS OUTRIGHT the present petition for certiorari and prohibition with prayer for a temporary
his mother Juliana Ortañez to FLAG of the shares of stock they invalidly appropriated for themselves, without approval of the restraining order and/or writ of preliminary injunction in the light of the following considerations:
intestate court, was void.8 1. The assailed Order dated August 11, 1997 of the respondent judge had long become final and executory;
Special Administrator Jose Ortañez filed a motion for reconsideration of the Court of Appeals decision but it was denied. He 2. The certification on non-forum shopping is signed by only one (1) of the three (3) petitioners in violation of the
elevated the case to the Supreme Court via petition for review under Rule 45 which the Supreme Court dismissed on October 5, Rules; and
1998, on a technicality. His motion for reconsideration was denied with finality on January 13, 1999. On February 23, 1999, the 3. Except for the assailed orders and writ of execution, deed of sale with right to repurchase, deed of sale of shares of
resolution of the Supreme Court dismissing the petition of Special Administrator Jose Ortañez became final and was stocks and omnibus motion, the petition is not accompanied by such pleadings, documents and other material
subsequently recorded in the book of entries of judgments. portions of the record as would support the allegations therein in violation of the second paragraph, Rule 65 of the
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the FLAG-controlled board of directors, increased 1997 Rules of Civil Procedure, as amended.
the authorized capital stock of Philinterlife, diluting in the process the 50.725% controlling interest of the decedent, Dr. Petition is DISMISSED.
Juvencio Ortañez, in the insurance company.9 This became the subject of a separate action at the Securities and Exchange SO ORDERED.14
5
The motion for reconsideration filed by petitioners Lee and Aggabao of the above decision was denied by the Court of Appeals ruled that petitioners cannot be enjoined by respondent Enderes from exercising their power as directors and officers
on October 30, 2000: of Philinterlife and that the intestate court in charge of the intestate proceedings cannot adjudicate title to properties
This resolves the "urgent motion for reconsideration" filed by the petitioners of our resolution of July 26, 2000 dismissing claimed to be part of the estate and which are equally CLAIMED BY petitioner FLAG.17
outrightly the above-entitled petition for the reason, among others, that the assailed Order dated August 11, 1997 of the The petition has no merit.
respondent Judge had long become final and executory. Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG, assail before us not only the validity of the writ
Dura lex, sed lex. of execution issued by the intestate court dated July 7, 2000 but also the validity of the August 11, 1997 order of the intestate
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack of merit. court nullifying the sale of the 2,029 Philinterlife shares of stock made by Juliana Ortañez and Jose Ortañez, in their personal
SO ORDERED.15 capacities and without court approval, in favor of petitioner FLAG.
On December 4, 2000, petitioners elevated the case to the Supreme Court through a petition for review under Rule 45 but on We cannot allow petitioners to reopen the issue of nullity of the sale of the Philinterlife shares of stock in their favor because
December 13, 2000, we denied the petition because there was no showing that the Court of Appeals in CA G.R. SP No. 59736 this was already settled a long time ago by the Court of Appeals in its decision dated June 23, 1998 in CA-G.R. SP No. 46342.
committed any reversible error to warrant the exercise by the Supreme Court of its discretionary appellate jurisdiction.16 This decision was effectively upheld by us in our resolution dated October 9, 1998 in G.R. No. 135177 dismissing the petition
However, upon motion for reconsideration filed by petitioners Lee and Aggabao, the Supreme Court granted the motion and for review on a technicality and thereafter denying the motion for reconsideration on January 13, 1999 on the ground that there
reinstated their petition on September 5, 2001. The parties were then required to submit their respective memoranda. was no compelling reason to reconsider said denial.18 Our decision became final on February 23, 1999 and was accordingly
Meanwhile, private respondent-Special Administratrix Enderes, on July 19, 2000, filed a motion to direct the branch clerk of entered in the book of entry of judgments. For all intents and purposes therefore, the nullity of the sale of the Philinterlife shares
court in lieu of herein petitioners Lee and Aggabao to reinstate the name of Dr. Ortañez in the stock and transfer book of of stock made by Juliana Ortañez and Jose Ortañez in favor of petitioner FLAG is already a closed case. To reopen said issue
Philinterlife and issue the corresponding stock certificate pursuant to Section 10, Rule 39 of the Rules of Court which provides would set a bad precedent, opening the door wide open for dissatisfied parties to relitigate unfavorable decisions no end. This is
that "the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and completely inimical to the orderly and efficient administration of justice.
the act when so done shall have the effect as if done by the party." Petitioners Lee and Aggabao opposed the motion on the The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the nullity of the sale made by Jose Ortañez and
ground that the intestate court should refrain from acting on the motion because the issues raised therein were directly related to his mother Juliana Ortañez of the Philinterlife shares of stock read:
the issues raised by them in their petition for certiorari at the Court of Appeals docketed as CA-G.R. SP No. 59736. On October Petitioner’s asseverations relative to said [memorandum] agreement were scuttled during the hearing before this Court thus:
30, 2000, the intestate court granted the motion, ruling that there was no prohibition for the intestate court to execute its orders JUSTICE AQUINO:
inasmuch as the appellate court did not issue any TRO or writ of preliminary injunction. Counsel for petitioner, when the Memorandum of Agreement was executed, did the children of Juliana Salgado know
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari in the Court of Appeals, docketed as CA-G.R. already that there was a claim for share in the inheritance of the children of Novicio?
SP No. 62461, questioning this time the October 30, 2000 order of the intestate court directing the branch clerk of court to issue ATTY. CALIMAG:
the stock certificates. They also questioned in the Court of Appeals the order of the intestate court nullifying the sale made in Your Honor please, at that time, Your Honor, it is already known to them.
their favor by Juliana Ortañez and Jose Ortañez. On November 20, 2002, the Court of Appeals denied their petition and upheld JUSTICE AQUINO:
the power of the intestate court to execute its order. Petitioners Lee and Aggabao then filed motion for reconsideration which at What can be your legal justification for extrajudicial settlement of a property subject of intestate proceedings when
present is still pending resolution by the Court of Appeals. there is an adverse claim of another set of heirs, alleged heirs? What would be the legal justification for extra-
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of Philinterlife) and FLAG now raise the judicially settling a property under administration without the approval of the intestate court?
following errors for our consideration: ATTY. CALIMAG:
The Court of Appeals committed grave reversible ERROR: Well, Your Honor please, in that extra-judicial settlement there is an approval of the honorable court as to the
A. In failing to reconsider its previous resolution denying the petition despite the fact that the appellate court’s property’s partition x x x. There were as mentioned by the respondents’ counsel, Your Honor.
mistake in apprehending the facts had become patent and evident from the motion for reconsideration and the ATTY. BUYCO:
comment of respondent Enderes which had admitted the factual allegations of petitioners in the petition as well as in No…
the motion for reconsideration. Moreover, the resolution of the appellate court denying the motion for reconsideration JUSTICE AQUINO:
was contained in only one page without even touching on the substantive merits of the exhaustive discussion of facts The point is, there can be no adjudication of a property under intestate proceedings without the approval of the court.
and supporting law in the motion for reconsideration in violation of the Rule on administrative due process; That is basic unless you can present justification on that. In fact, there are two steps: first, you ask leave and then
B. in failing to set aside the void orders of the intestate court on the erroneous ground that the orders were final and execute the document and then ask for approval of the document executed. Now, is there any legal justification to
executory with regard to petitioners even as the latter were never notified of the proceedings or order canceling its exclude this particular transaction from those steps?
ownership; ATTY. CALIMAG:
C. in not finding that the intestate court committed grave abuse of discretion amounting to excess of jurisdiction (1) None, Your Honor.
when it issued the Omnibus Order nullifying the ownership of petitioner FLAG over shares of stock which were ATTY. BUYCO:
alleged to be part of the estate and (2) when it issued a void writ of execution against petitioner FLAG as present With that admission that there is no legal justification, Your Honor, we rest the case for the private respondent. How
owner to implement merely provisional orders, thereby violating FLAG’s constitutional right against deprivation of can the lower court be accused of abusing its discretion? (pages 33-35, TSN of January 29, 1998).
property without due process; Thus, We find merit in the following postulation by private respondent:
D. In failing to declare null and void the orders of the intestate court which nullified the sale of shares of stock What we have here is a situation where some of the heirs of the decedent without securing court approval have appropriated as
between the legitimate heir Jose S. Ortañez and petitioner FLAG because of settled law and jurisprudence, i.e., that their own personal property the properties of [the] Estate, to the exclusion and the extreme prejudice of the other claimant/heirs.
an heir has the right to dispose of the decedent’s property even if the same is under administration pursuant to Civil In other words, these heirs, without court approval, have distributed the asset of the estate among themselves and proceeded to
Code provision that possession of hereditary property is transmitted to the heir the moment of death of the decedent dispose the same to third parties even in the absence of an order of distribution by the Estate Court. As admitted by petitioner’s
(Acedebo vs. Abesamis, 217 SCRA 194); counsel, there was absolutely no legal justification for this action by the heirs. There being no legal justification, petitioner has
E. In disregarding the final decision of the Supreme Court in G.R. No. 128525 dated December 17, 1999 involving no basis for demanding that public respondent [the intestate court] approve the sale of the Philinterlife shares of the Estate by
substantially the same parties, to wit, petitioners Jose C. Lee and Alma Aggabao were respondents in that case while Juliana and Jose Ortañez in favor of the Filipino Loan Assistance Group.
respondent Ma. Divina Enderes was the petitioner therein. That decision, which can be considered law of the case,
6
It is an undisputed fact that the parties to the Memorandum of Agreement dated March 4, 1982 (see Annex 7 of the Comment). . power to authorize and/or approve the sale (Section 4 and 7, Rule 89), hence, a fortiori, it is said court that can declare it null
. are not the only heirs claiming an interest in the estate left by Dr. Juvencio P. Ortañez. The records of this case. . . clearly show and void for as long as the proceedings had not been closed or terminated. To uphold petitioner’s contention that the probate
that as early as March 3, 1981 an Opposition to the Application for Issuance of Letters of Administration was filed by the court cannot annul the unauthorized sale, would render meaningless the power pertaining to the said court. (Bonga vs. Soler, 2
acknowledged natural children of Dr. Juvencio P. Ortañez with Ligaya Novicio. . . This claim by the acknowledged natural SCRA 755). (emphasis ours)
children of Dr. Juvencio P. Ortañez is admittedly known to the parties to the Memorandum of Agreement before they executed Our jurisprudence is therefore clear that (1) any disposition of estate property by an administrator or prospective heir pending
the same. This much was admitted by petitioner’s counsel during the oral argument. xxx final adjudication requires court approval and (2) any unauthorized disposition of estate property can be annulled by the probate
Given the foregoing facts, and the applicable jurisprudence, public respondent can never be faulted for not approving. . . the court, there being no need for a separate action to annul the unauthorized disposition.
subsequent sale by the petitioner [Jose Ortañez] and his mother [Juliana Ortañez] of the Philinterlife shares belonging to the The question now is: can the intestate or probate court execute its order nullifying the invalid sale?
Estate of Dr. Juvencio P. Ortañez." (pages 3-4 of Private Respondent’s Memorandum; pages 243-244 of the Rollo) We see no reason why it cannot. The intestate court has the power to execute its order with regard to the nullity of an
Amidst the foregoing, We found no grave abuse of discretion amounting to excess or want of jurisdiction committed by unauthorized sale of estate property, otherwise its power to annul the unauthorized or fraudulent disposition of estate property
respondent judge.19 would be meaningless. In other words, enforcement is a necessary adjunct of the intestate or probate court’s power to annul
From the above decision, it is clear that Juliana Ortañez, and her three sons, Jose, Rafael and Antonio, all surnamed Ortañez, unauthorized or fraudulent transactions to prevent the dissipation of estate property before final adjudication.
invalidly entered into a memorandum of agreement extrajudicially partitioning the intestate estate among themselves, despite Moreover, in this case, the order of the intestate court nullifying the sale was affirmed by the appellate courts (the Court of
their knowledge that there were other heirs or claimants to the estate and before final settlement of the estate by the intestate Appeals in CA-G.R. SP No. 46342 dated June 23, 1998 and subsequently by the Supreme Court in G.R. No. 135177 dated
court. Since the appropriation of the estate properties by Juliana Ortañez and her children (Jose, Rafael and Antonio Ortañez) October 9, 1998). The finality of the decision of the Supreme Court was entered in the book of entry of judgments on February
was invalid, the subsequent sale thereof by Juliana and Jose to a third party (FLAG), without court approval, was likewise void. 23, 1999. Considering the finality of the order of the intestate court nullifying the sale, as affirmed by the appellate courts, it
An heir can sell his right, interest, or participation in the property under administration under Art. 533 of the Civil Code which was correct for private respondent-Special Administratrix Enderes to thereafter move for a writ of execution and for the
provides that possession of hereditary property is deemed transmitted to the heir without interruption from the moment of death intestate court to grant it.
of the decedent.20 However, an heir can only alienate such portion of the estate that may be allotted to him in the division of the Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the probate court could not issue a writ of execution
estate by the probate or intestate court after final adjudication, that is, after all debtors shall have been paid or the devisees or with regard to its order nullifying the sale because said order was merely provisional:
legatees shall have been given their shares. 21 This means that an heir may only sell his ideal or undivided share in the estate, not The only authority given by law is for respondent judge to determine provisionally whether said shares are included or excluded
any specific property therein. In the present case, Juliana Ortañez and Jose Ortañez sold specific properties of the estate (1,014 in the inventory… In ordering the execution of the orders, respondent judge acted in excess of his jurisdiction and grossly
and 1,011 shares of stock in Philinterlife) in favor of petitioner FLAG. This they could not lawfully do pending the final violated settled law and jurisprudence, i.e., that the determination by a probate or intestate court of whether a property is
adjudication of the estate by the intestate court because of the undue prejudice it would cause the other claimants to the estate, included or excluded in the inventory of the estate being provisional in nature, cannot be the subject of execution .24 (emphasis
as what happened in the present case. ours)
Juliana Ortañez and Jose Ortañez sold specific properties of the estate, without court approval. It is well-settled that court Petitioners’ argument is misplaced. There is no question, based on the facts of this case, that the Philinterlife shares of stock
approval is necessary for the validity of any disposition of the decedent’s estate. In the early case of Godoy vs. Orellano,22 we were part of the estate of Dr. Juvencio Ortañez from the very start as in fact these shares were included in the inventory of the
laid down the rule that the sale of the property of the estate by an administrator without the order of the probate court is void and properties of the estate submitted by Rafael Ortañez after he and his brother, Jose Ortañez, were appointed special
passes no title to the purchaser. And in the case of Dillena vs. Court of Appeals,23 we ruled that: administrators by the intestate court.25
[I]t must be emphasized that the questioned properties (fishpond) were included in the inventory of properties of the estate The controversy here actually started when, during the pendency of the settlement of the estate of Dr. Ortañez, his wife Juliana
submitted by then Administratrix Fausta Carreon Herrera on November 14, 1974. Private respondent was appointed as Ortañez sold the 1,014 Philinterlife shares of stock in favor petitioner FLAG without the approval of the intestate court. Her son
administratrix of the estate on March 3, 1976 in lieu of Fausta Carreon Herrera. On November 1, 1978, the questioned deed of Jose Ortañez later sold the remaining 1,011 Philinterlife shares also in favor of FLAG without the approval of the intestate
sale of the fishponds was executed between petitioner and private respondent without notice and approval of the probate court. court.
Even after the sale, administratrix Aurora Carreon still included the three fishponds as among the real properties of the estate in We are not dealing here with the issue of inclusion or exclusion of properties in the inventory of the estate because there is no
her inventory submitted on August 13, 1981. In fact, as stated by the Court of Appeals, petitioner, at the time of the sale of the question that, from the very start, the Philinterlife shares of stock were owned by the decedent, Dr. Juvencio Ortañez. Rather,
fishponds in question, knew that the same were part of the estate under administration. we are concerned here with the effect of the sale made by the decedent’s heirs, Juliana Ortañez and Jose Ortañez,
x x x x x x x x x without the required approval of the intestate court. This being so, the contention of petitioners that the determination of the
The subject properties therefore are under the jurisdiction of the probate court which according to our settled jurisprudence has intestate court was merely provisional and should have been threshed out in a separate proceeding is incorrect.
the authority to approve any disposition regarding properties under administration. . . More emphatic is the declaration We The petitioners Jose Lee and Alma Aggabao next contend that the writ of execution should not be executed against them
made in Estate of Olave vs. Reyes (123 SCRA 767) where We stated that when the estate of the deceased person is already the because they were not notified, nor they were aware, of the proceedings nullifying the sale of the shares of stock.
subject of a testate or intestate proceeding, the administrator cannot enter into any transaction involving it without prior We are not persuaded. The title of the purchaser like herein petitioner FLAG can be struck down by the intestate court after a
approval of the probate court. clear showing of the nullity of the alienation. This is the logical consequence of our ruling in Godoy and in several subsequent
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We held that the sale of an immovable property cases.26 The sale of any property of the estate by an administrator or prospective heir without order of the probate or
belonging to the estate of a decedent, in a special proceedings, needs court approval. . . This pronouncement finds support in the intestate court is void and passes no title to the purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto, G.R. No.
previous case of Dolores Vda. De Gil vs. Agustin Cancio (14 SCRA 797) wherein We emphasized that it is within the 56451, June 19, 1985, we ordered the probate court to cancel the transfer certificate of title issued to the vendees at the instance
jurisdiction of a probate court to approve the sale of properties of a deceased person by his prospective heirs before final of the administrator after finding that the sale of real property under probate proceedings was made without the prior approval
adjudication. x x x of the court. The dispositive portion of our decision read:
It being settled that property under administration needs the approval of the probate court before it can be disposed of, any IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated February 18, 1981 of the respondent Judge
unauthorized disposition does not bind the estate and is null and void. As early as 1921 in the case of Godoy vs. Orellano (42 approving the questioned Amicable Settlement is declared NULL and VOID and hereby SET ASIDE. Consequently, the sale in
Phil 347), We laid down the rule that a sale by an administrator of property of the deceased, which is not authorized by the favor of Sotero Dioniosio III and by the latter to William Go is likewise declared NULL and VOID. The Transfer Certificate of
probate court is null and void and title does not pass to the purchaser. Title issued to the latter is hereby ordered cancelled.
There is hardly any doubt that the probate court can declare null and void the disposition of the property under administration,
made by private respondent, the same having been effected without authority from said court. It is the probate court that has the
7
It goes without saying that the increase in Philinterlife’s authorized capital stock, approved on the vote of petitioners’ non- Association, Inc. (which motion was, however, later abandoned).30 All this sufficiently proves that petitioners, through their
existent shareholdings and obviously calculated to make it difficult for Dr. Ortañez’s estate to reassume its controlling interest counsels, knew of the pending settlement proceedings.
in Philinterlife, was likewise void ab initio. Finally, petitioners filed several criminal cases such as libel (Criminal Case No. 97-7179-81), grave coercion (Criminal Case
Petitioners next argue that they were denied due process. No. 84624) and robbery (Criminal Case No. Q-96-67919) against private respondent’s mother Ligaya Novicio who was a
We do not think so. director of Philinterlife,31 all of which criminal cases were related to the questionable sale to petitioners of the Philinterlife
The facts show that petitioners, for reasons known only to them, did not appeal the decision of the intestate court nullifying the shares of stock.
sale of shares of stock in their favor. Only the vendor, Jose Ortañez, appealed the case. A careful review of the records shows Considering these circumstances, we cannot accept petitioners’ claim of denial of due process. The essence of due process is the
that petitioners had actual knowledge of the estate settlement proceedings and that they knew private respondent Enderes was reasonable opportunity to be heard. Where the opportunity to be heard has been accorded, there is no denial of due process. 32 In
questioning therein the sale to them of the Philinterlife shares of stock. this case, petitioners knew of the pending instestate proceedings for the settlement of Dr. Juvencio Ortañez’s estate but for
It must be noted that private respondent-Special Administratrix Enderes filed before the intestate court (RTC of Quezon City, reasons they alone knew, they never intervened. When the court declared the nullity of the sale, they did not bother to appeal.
Branch 85) a "Motion to Declare Void Ab Initio Deeds of Sale of Philinterlife Shares of Stock" on March 22, 1996. But as early And when they were notified of the motion for execution of the Orders of the intestate court, they ignored the same. Clearly,
as 1994, petitioners already knew of the pending settlement proceedings and that the shares they bought were under the petitioners alone should bear the blame.
administration by the intestate court because private respondent Ma. Divina Ortañez-Enderes and her mother Ligaya Novicio Petitioners next contend that we are bound by our ruling in G.R. No. 128525 entitled Ma. Divina Ortañez-Enderes vs. Court of
had filed a case against them at the Securities and Exchange Commission on November 7, 1994, docketed as SEC No. 11-94- Appeals, dated December 17, 1999, where we allegedly ruled that the intestate court "may not pass upon the title to a certain
4909, for annulment of transfer of shares of stock, annulment of sale of corporate properties, annulment of subscriptions on property for the purpose of determining whether the same should or should not be included in the inventory but such
increased capital stocks, accounting, inspection of corporate books and records and damages with prayer for a writ of determination is not conclusive and is subject to final decision in a separate action regarding ownership which may be
preliminary injunction and/or temporary restraining order.27 In said case, Enderes and her mother questioned the sale of the constituted by the parties."
aforesaid shares of stock to petitioners. The SEC hearing officer in fact, in his resolution dated March 24, 1995, deferred to the We are not unaware of our decision in G.R. No. 128525. The issue therein was whether the Court of Appeals erred in affirming
jurisdiction of the intestate court to rule on the validity of the sale of shares of stock sold to petitioners by Jose Ortañez and the resolution of the SEC that Enderes et al. were not entitled to the issuance of the writ of preliminary injunction. We ruled that
Juliana Ortañez: the Court of Appeals was correct in affirming the resolution of the SEC denying the issuance of the writ of preliminary
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortañez who died, in 1980, are part of his estate which is injunction because injunction is not designed to protect contingent rights. Said case did not rule on the issue of the validity of
presently the subject matter of an intestate proceeding of the RTC of Quezon City, Branch 85. Although, private respondents the sale of shares of stock belonging to the decedent’s estate without court approval nor of the validity of the writ of execution
[Jose Lee et al.] presented the documents of partition whereby the foregoing share of stocks were allegedly partitioned and issued by the intestate court. G.R. No. 128525 clearly involved a different issue and it does not therefore apply to the present
conveyed to Jose S. Ortañez who allegedly assigned the same to the other private respondents, approval of the Court was not case.
presented. Thus, the assignments to the private respondents [Jose Lee et al.] of the subject shares of stocks are void. Petitioners and all parties claiming rights under them are hereby warned not to further delay the execution of the Orders of the
x x x x x x x x x intestate court dated August 11 and August 29, 1997.
With respect to the alleged extrajudicial partition of the shares of stock owned by the late Dr. Juvencio Ortañez, we rule that the WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R. S.P. No. 59736 dated July
matter properly belongs to the jurisdiction of the regular court where the intestate proceedings are currently pending.28 26, 2000, dismissing petitioners’ petition for certiorari and affirming the July 6, 2000 order of the trial court which ordered the
With this resolution of the SEC hearing officer dated as early as March 24, 1995 recognizing the jurisdiction of the intestate execution of its (trial court’s) August 11 and 29, 1997 orders, is hereby AFFIRMED.
court to determine the validity of the extrajudicial partition of the estate of Dr. Ortañez and the subsequent sale by the heirs of
the decedent of the Philinterlife shares of stock to petitioners, how can petitioners claim that they were not aware of the intestate G.R. No. 168970 January 15, 2010
proceedings? CELESTINO BALUS, Petitioner,
Furthermore, when the resolution of the SEC hearing officer reached the Supreme Court in 1996 (docketed as G.R. 128525), vs.
herein petitioners who were respondents therein filed their answer which contained statements showing that they knew of the SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents.
pending intestate proceedings: DECISION
[T]he subject matter of the complaint is not within the jurisdiction of the SEC but with the Regional Trial Court; Ligaya Novicio PERALTA, J.:
and children represented themselves to be the common law wife and illegitimate children of the late Ortañez; that on March 4, Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the Decision 1 of the Court of
1982, the surviving spouse Juliana Ortañez, on her behalf and for her minor son Antonio, executed a Memorandum of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which set aside the February 7, 1997 Decision of the Regional
Agreement with her other sons Rafael and Jose, both surnamed Ortañez, dividing the estate of the deceased composed of his Trial Court (RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
one-half (1/2) share in the conjugal properties; that in the said Memorandum of Agreement, Jose S. Ortañez acquired as his The facts of the case are as follows:
share of the estate the 1,329 shares of stock in Philinterlife; that on March 4, 1982, Juliana and Rafael assigned their respective Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus. Sebastiana died on September 6,
shares of stock in Philinterlife to Jose; that contrary to the contentions of petitioners, private respondents Jose Lee, Carlos Lee, 1978, while Rufo died on July 6, 1984.
Benjamin Lee and Alma Aggabao became stockholders of Philinterlife on March 23, 1983 when Jose S. Ortañez, the principal On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan he obtained from the Rural Bank of
stockholder at that time, executed a deed of sale of his shares of stock to private respondents; and that the right of petitioners to Maigo, Lanao del Norte (Bank). The said property was originally covered by Original Certificate of Title No. P-439(788) and
question the Memorandum of Agreement and the acquisition of shares of stock of private respondent is barred by prescription.29 more particularly described as follows:
Also, private respondent-Special Administratrix Enderes offered additional proof of actual knowledge of the settlement A parcel of land with all the improvements thereon, containing an area of 3.0740 hectares, more or less, situated in the Barrio of
proceedings by petitioners which petitioners never denied: (1) that petitioners were represented by Atty. Ricardo Calimag Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded on the NE., along line 1-2, by Lot 5122, Csd-292; along
previously hired by the mother of private respondent Enderes to initiate cases against petitioners Jose Lee and Alma Aggabao line 2-12, by Dodiongan River; along line 12-13 by Lot 4649, Csd-292; and along line 12-1, by Lot 4661, Csd-292. x x x 2
for the nullification of the sale of the shares of stock but said counsel made a conflicting turn-around and appeared instead as Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and was subsequently sold to the Bank as the
counsel of petitioners, and (2) that the deeds of sale executed between petitioners and the heirs of the decedent (vendors Juliana sole bidder at a public auction held for that purpose. On November 20, 1981, a Certificate of Sale3 was executed by the sheriff
Ortañez and Jose Ortañez) were acknowledged before Atty. Ramon Carpio who, during the pendency of the settlement in favor of the Bank. The property was not redeemed within the period allowed by law. More than two years after the auction,
proceedings, filed a motion for the approval of the sale of Philinterlife shares of stock to the Knights of Columbus Fraternal or on January 25, 1984, the sheriff executed a Definite Deed of Sale 4 in the Bank's favor. Thereafter, a new title was issued in
the name of the Bank.
8
On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of Estate 5 adjudicating to each of At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subject property was exclusively
them a specific one-third portion of the subject property consisting of 10,246 square meters. The Extrajudicial Settlement also owned by petitioner and respondents' father, Rufo, at the time that it was mortgaged in 1979. This was stipulated by the parties
contained provisions wherein the parties admitted knowledge of the fact that their father mortgaged the subject property to the during the hearing conducted by the trial court on October 28, 1996.12 Evidence shows that a Definite Deed of Sale13 was issued
Bank and that they intended to redeem the same at the soonest possible time. in favor of the Bank on January 25, 1984, after the period of redemption expired. There is neither any dispute that a new title
Three years after the execution of the Extrajudicial Settlement, herein respondents bought the subject property from the Bank. was issued in the Bank's name before Rufo died on July 6, 1984. Hence, there is no question that the Bank acquired exclusive
On October 12, 1992, a Deed of Sale of Registered Land6 was executed by the Bank in favor of respondents. Subsequently, ownership of the contested lot during the lifetime of Rufo.
Transfer Certificate of Title (TCT) No. T-39,484(a.f.) 7 was issued in the name of respondents. Meanwhile, petitioner continued The rights to a person's succession are transmitted from the moment of his death. 14 In addition, the inheritance of a person
possession of the subject lot. consists of the property and transmissible rights and obligations existing at the time of his death, as well as those which have
On June 27, 1995, respondents filed a Complaint 8 for Recovery of Possession and Damages against petitioner, contending that accrued thereto since the opening of the succession. 15 In the present case, since Rufo lost ownership of the subject property
they had already informed petitioner of the fact that they were the new owners of the disputed property, but the petitioner still during his lifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed part of his estate to
refused to surrender possession of the same to them. Respondents claimed that they had exhausted all remedies for the amicable which his heirs may lay claim. Stated differently, petitioner and respondents never inherited the subject lot from their father.
settlement of the case, but to no avail. Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of the subject lot. Thus, any issue
On February 7, 1997, the RTC rendered a Decision9 disposing as follows: arising from the supposed right of petitioner as co-owner of the contested parcel of land is negated by the fact that, in the eyes of
WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in favor of the defendant, the the law, the disputed lot did not pass into the hands of petitioner and respondents as compulsory heirs of Rufo at any given point
one-third share of the property in question, presently possessed by him, and described in the deed of partition, as follows: in time.
A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate of Title No. P-788, now in The foregoing notwithstanding, the Court finds a necessity for a complete determination of the issues raised in the instant case
the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated at Lagundang, Bunawan, Iligan City, bounded on the to look into petitioner's argument that the Extrajudicial Settlement is an independent contract which gives him the right to
North by Lot 5122; East by shares of Saturnino Balus and Leonarda Balus-Calunod; South by Lot 4649, Dodiongan River; West enforce his right to claim a portion of the disputed lot bought by respondents.1avvphi1
by Lot 4661, consisting of 10,246 square meters, including improvements thereon. It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mere consent; and from that
and dismissing all other claims of the parties. moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences
The amount of ₱6,733.33 consigned by the defendant with the Clerk of Court is hereby ordered delivered to the plaintiffs, as which, according to their nature, may be in keeping with good faith, usage and law.
purchase price of the one-third portion of the land in question. Article 1306 of the same Code also provides that the contracting parties may establish such stipulations, clauses, terms and
Plaintiffs are ordered to pay the costs. conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public
SO ORDERED.10 policy.
The RTC held that the right of petitioner to purchase from the respondents his share in the disputed property was recognized by In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any express stipulation for
the provisions of the Extrajudicial Settlement of Estate, which the parties had executed before the respondents bought the petitioner and respondents to continue with their supposed co-ownership of the contested lot.
subject lot from the Bank. On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support petitioner's
Aggrieved by the Decision of the RTC, herein respondents filed an appeal with the CA. contention that it was his and his sibling's intention to buy the subject property from the Bank and continue what they believed
On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting aside the Decision of the RTC and to be co-ownership thereof. It is a cardinal rule in the interpretation of contracts that the intention of the parties shall be
ordering petitioner to immediately surrender possession of the subject property to the respondents. The CA ruled that when accorded primordial consideration.16 It is the duty of the courts to place a practical and realistic construction upon it, giving due
petitioner and respondents did not redeem the subject property within the redemption period and allowed the consolidation of consideration to the context in which it is negotiated and the purpose which it is intended to serve. 17 Such intention is
ownership and the issuance of a new title in the name of the Bank, their co-ownership was extinguished. determined from the express terms of their agreement, as well as their contemporaneous and subsequent acts. 18 Absurd and
Hence, the instant petition raising a sole issue, to wit: illogical interpretations should also be avoided.19
WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS OVER THE PROPERTY For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblings to continue what they
PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OF TITLE TO THE BANK) BY VIRTUE OF THE thought was their ownership of the subject property, even after the same had been bought by the Bank, is stretching the
PARTIES' AGREEMENT PRIOR TO THE REPURCHASE THEREOF BY THE RESPONDENTS; THUS, WARRANTING interpretation of the said Extrajudicial Settlement too far.
THE PETITIONER'S ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS In the first place, as earlier discussed, there is no co-ownership to talk about and no property to partition, as the disputed lot
(PETITIONER'S) JUST SHARE OF THE REPURCHASE PRICE.11 never formed part of the estate of their deceased father.
The main issue raised by petitioner is whether co-ownership by him and respondents over the subject property persisted even Moreover, petitioner's asseveration of his and respondents' intention of continuing with their supposed co-ownership is negated
after the lot was purchased by the Bank and title thereto transferred to its name, and even after it was eventually bought back by by no less than his assertions in the present petition that on several occasions he had the chance to purchase the subject property
the respondents from the Bank. back, but he refused to do so. In fact, he claims that after the Bank acquired the disputed lot, it offered to re-sell the same to him
Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputed property was already in the but he ignored such offer. How then can petitioner now claim that it was also his intention to purchase the subject property from
name of the Bank, they still proceeded to execute the subject Extrajudicial Settlement, having in mind the intention of the Bank, when he admitted that he refused the Bank's offer to re-sell the subject property to him?
purchasing back the property together with petitioner and of continuing their co-ownership thereof. In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of the execution thereof, the parties were
Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him and respondents, because it not yet aware that the subject property was already exclusively owned by the Bank. Nonetheless, the lack of knowledge on the
contains a provision whereby the parties agreed to continue their co-ownership of the subject property by "redeeming" or part of petitioner and respondents that the mortgage was already foreclosed and title to the property was already transferred to
"repurchasing" the same from the Bank. This agreement, petitioner contends, is the law between the parties and, as such, binds the Bank does not give them the right or the authority to unilaterally declare themselves as co-owners of the disputed property;
the respondents. As a result, petitioner asserts that respondents' act of buying the disputed property from the Bank without otherwise, the disposition of the case would be made to depend on the belief and conviction of the party-litigants and not on the
notifying him inures to his benefit as to give him the right to claim his rightful portion of the property, comprising 1/3 thereof, evidence adduced and the law and jurisprudence applicable thereto.
by reimbursing respondents the equivalent 1/3 of the sum they paid to the Bank. Furthermore, petitioner's contention that he and his siblings intended to continue their supposed co-ownership of the subject
The Court is not persuaded. property contradicts the provisions of the subject Extrajudicial Settlement where they clearly manifested their intention of
Petitioner and respondents are arguing on the wrong premise that, at the time of the execution of the Extrajudicial Settlement, having the subject property divided or partitioned by assigning to each of the petitioner and respondents a specific 1/3 portion of
the subject property formed part of the estate of their deceased father to which they may lay claim as his heirs. the same. Partition calls for the segregation and conveyance of a determinate portion of the property owned in common. It seeks
9
a severance of the individual interests of each co-owner, vesting in each of them a sole estate in a specific property and giving represent his alleged father in the succession of the latter in the intestate estate of the late Evarista Dela Merced, because of the
each one a right to enjoy his estate without supervision or interference from the other. 20 In other words, the purpose of partition barrier in Art. 992 of the New Civil Code which states that:
is to put an end to co-ownership,21 an objective which negates petitioner's claims in the present case. An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother, nor
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, dated May 31, 2005 in CA- shall such children or relatives inherit in the same manner from the illegitimate child.
G.R. CV No. 58041, is AFFIRMED. The application of Art. 992 cannot be ignored in the instant case, it is clearly worded in such a way that there can be no room
for any doubts and ambiguities. This provision of the law imposes a barrier between the illegitimate and the legitimate family. . .
G.R. No. 126707 February 25, 1999 . (Rollo, p. 87-88)
BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUTIA M. MACATANGAY, MA. OLIVIA Not satisfied with the dismissal of his petition, the private respondent appealed to the Court of Appeals.
M. PAREDES, TERESITA P. RUPISAN, RUBEN M. ADRIANO, HERMINIO M. ADRIANO, JOSELITO M. In its Decision of October 17, 1996, the Court of Appeals reversed the decision of the trial court of origin and ordered the
ADRIANO, ROGELIO M. ADRIANO, WILFREDO M. ADRIANO, VICTOR M. ADRIANO, CORAZON A. petitioners to execute an amendatory agreement which shall form part of the original settlement, so as to include private
ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M. ADRIANO, petitioners, respondent Joselito as a co-heir to the estate of Francisco, which estate includes one-third (1/3) pro indiviso of the latter's
vs. inheritance from the deceased Evarista.
JOSELITO P. DELA MERCED, respondent. The relevant and dispositive part of the Decision of the Court of Appeals, reads:
xxx xxx xxx
PURISIMA, J.: It is a basic principle embodied in Article 777, New Civil Code that the rights to the succession are transmitted from the
This is a Petition for Review on Certiorari of the Decision of the Court of Appeals, dated October 17, 1996, in CA-G.R. CV No. moment of the death of the decedent, so that Francisco dela Merced inherited 1/3 of his sister's estate at the moment of the
41283, which reversed the decision, dated June 10, 1992, of the Regional Trial Court, Branch 67, Pasig City, in Civil Case No. latter's death. Said 1/3 of Evarista's estate formed part of Francisco's estate which was subsequently transmitted upon his death
59705. on March 23, 1987 to his legal heirs, among whom is appellant as his illegitimate child. Appellant became entitled to his share
The facts of the case are, as follows: in Francisco's estate from the time of the latter's death in 1987. The extrajudicial settlement therefore is void insofar as it
On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five (5) parcels of land situated in Orambo, deprives plaintiff-appellant of his share in the estate of Francisco M. dela Merced. As a consequence, the cancellation of the
Pasig City. notice of lis pendens is not in order because the property is directly affected. Appellant has the right to demand a partition of his
At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco M. dela Merced, her legitimate brother; father's estate which includes 1/3 of the property inherited from Evarista dela Merced.
(2) Teresita P. Rupisan, her niece who is the only daughter of Rosa dela Merced-Platon (a sister who died in 1943); and (3) the WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE. Defendants-appellees are
legitimate children of Eugenia dela Merced-Adriano (another sister of Evarista who died in 1965), namely: Herminio, Ruben, hereby ordered to execute an amendatory agreement/settlement to include herein plaintiff-appellant Joselito dela Merced as co-
Joselito, Rogelio, Wilfredo, Victor and Constantino, all surnamed Adriano, Corazon Adriano-Ongoco and Jasmin Adriano- heir to the estate of Francisco dela Merced which includes 1/3 of the estate subject of the questioned Deed of Extrajudicial
Mendoza. Settlement of the Estate of Evarista M. dela Merced dated April 20, 1989. The amendatory agreement/settlement shall form part
Almost a year later or on March 19, 1988, to be precise, Francisco (Evarista's brother) died. He was survived by his wife of the original Extrajudicial Settlement. With costs against defendants-appellees.
Blanquita Errea dela Merced and their three legitimate children, namely, Luisito E. dela Merced, Blanquita M. Macatangay and SO ORDERED. (Rollo, p. 41)
Ma. Olivia M. Paredes. In the Petition under consideration, petitioners insist that being an illegitimate child, private respondent Joselito is barred from
On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced, referring to (1) the abovenamed heirs of inheriting from Evarista because of the provision of Article 992 of the New Civil Code, which lays down an impassable barrier
Francisco; (2) Teresita P. Rupisan and (3) the nine [9] legitimate children of Eugenia, executed an extrajudicial settlement, between the legitimate and illegitimate families.
entitled "Extrajudicial Settlement of the Estate of the Deceased Evarista M. dela Merced" adjudicating the properties of Evarista The Petition is devoid of merit.
to them, each set with a share of one-third (1/3) pro-indiviso. Article 992 of the New Civil Code is not applicable because involved here is not a situation where an illegitimate child would
On July 26, 1990, private respondent Joselito P. Dela Merced, illegitimate son of the late Francisco de la Merced, filed a inherit ab intestato from a legitimate sister of his father, which is prohibited by the aforesaid provision of law. Rather, it is a
"Petition for Annulment of the Extrajudicial Settlement of the Estate of the Deceased Evarista M. Dela Merced with Prayer for a scenario where an illegitimate child inherits from his father, the latter's share in or portion of, what the latter already inherited
Temporary Restraining Order", alleging that he was fraudulently omitted from the said settlement made by petitioners, who from the deceased sister, Evarista.
were fully aware of his relation to the late Francisco. Claiming successional rights, private respondent Joselito prayed that he be As opined by the Court of Appeals, the law in point in the present case is Article 777 of the New Civil Code which provides that
included as one of the beneficiaries, to share in the one-third (1/3) pro-indiviso share in the estate of the deceased Evarista, the rights to succession are transmitted from the moment of death of the decedent.
corresponding to the heirs of Francisco. Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the estate of the former as one of her heirs.
On August 3, 1990, the trial court issued the temporary restraining order prayed for by private respondent Joselito, enjoining the Subsequently, when Francisco died, his heirs, namely: his spouse, legitimate children, and the private respondent, Joselito, an
sale of any of the real properties of the deceased Evarista. illegitimate child, inherited his (Francisco's) share in the estate of Evarista. It bears stressing that Joselito does not claim to be an
After trial, however, or on June 10, 1992, to be definite, the trial court dismissed the petition, lifted the temporary restraining heir of Evarista by right of representation but participates in his own right, as an heir of the late Francisco, in the latter's share
order earlier issued, and cancelled the notice of lis pendens on the certificates of title covering the real properties of the (or portion thereof) in the estate of Evarista.
deceased Evarista. Petitioners argue that if Joselito desires to assert successional rights to the intestate estate of his father, the proper forum should
In dismissing the petition, the trial court stated: be in the settlement of his own father's intestate estate, as this Court held in the case of Gutierrez vs. Macandog (150 SCRA 422
The factual setting of the instant motion after considering the circumstances of the entire case and the other evidentiary facts [1987])
and documents presented by the herein parties points only to one issue which goes into the very skeleton of the controversy, to Petitioners' reliance on the case of Gutierrez vs. Macandog (supra) is misplaced. The said case involved a claim for support
wit: "Whether or not the plaintiff may participate in the intestate estate of the late Evarista M. Dela Merced in his capacity as filed by one Elpedia Gutierrez against the estate of the decedent, Agustin Gutierrez, Sr., when she was not even an heir to the
representative of his alleged father, Francisdo Dela Merced, brother of the deceased, whose succession is under consideration. estate in question, at the time, and the decedent had no obligation whatsoever to give her support. Thus, this Court ruled that
xxx xxx xxx Elpedia should have asked for support pendente lite before the Juvenile and Domestic Relations Court in which court her
It is to be noted that Francisco Dela Merced, alleged father of the herein plaintiff, is a legitimate child, not an illegitimate. husband (one of the legal heirs of the decedent) had instituted a case for legal separation against her on the ground of an attempt
Plaintiff, on the other hand, is admittedly an illegitimate child of the late Francisco Dela Merced. Hence, as such, he cannot against his life. When Mauricio (her husband) died, she should have commenced an action for the settlement of the estate of her
husband, in which case she could receive whatever allowance the intestate court would grant her.
10
The present case, however, relates to the rightful and undisputed right of an heir to the share of his late father in the estate of the On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag
decedent Evarista, ownership of which had been transmitted to his father upon the death of Evarista. There is no legal obstacle (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has
for private respondent Joselito, admittedly the son of the late Francisco, to inherit in his own right as an heir to his father's paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")
estate, which estate includes a one-third (1/3) undivided share in the estate of Evarista. For this reason, Coronels canceled and rescinded the contract (Exh. "A") with Ramona by depositing the down payment paid by
WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed Decision of the Court of Appeals Concepcion in the bank in trust for Ramona Patricia Alcaraz.
AFFIRMED in toto. On February 22, 1985, Concepcion, et al., filed a complaint for specific performance against the Coronels and caused the
annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. "E"; Exh. "5").
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of
Deeds of Quezon City (Exh. "F"; Exh. "6").
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina (Exh. "G";
G.R. No. 103577 October 7, 1996 Exh. "7").
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. "H";
herself and on behalf of Florida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, Exh. "8").
and CATALINA BALAIS MABANAG, petitioners, (Rollo, pp. 134-136)
vs. In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit the case for
THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIA ALCARAZ, assisted by decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now private respondents) proffered their
GLORIA F. NOEL as attorney-in-fact, respondents. documentary evidence accordingly marked as Exhibits "A" through "J", inclusive of their corresponding submarkings. Adopting
these same exhibits as their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits "1"
through "10", likewise inclusive of their corresponding submarkings. Upon motion of the parties, the trial court gave them thirty
MELO, J.:p (30) days within which to simultaneously submit their respective memoranda, and an additional 15 days within which to submit
The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named, their corresponding comment or reply thereof, after which, the case would be deemed submitted for resolution.
Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to
Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00. preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by Judge Roura from his
The undisputed facts of the case were summarized by respondent court in this wise: regular bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:
On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafter referred to as Coronels) executed a document WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed
entitled "Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No.
Ramona) which is reproduced hereunder: 331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and
RECEIPT OF DOWN PAYMENT encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof,
P1,240,000.00 — Total amount the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of
50,000 — Down payment the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds for
——————————— Quezon City in the name of intervenor is hereby canceled and declared to be without force and effect. Defendants and
P1,190,000.00 — Balance intervenor and all other persons claiming under them are hereby ordered to vacate the subject property and deliver possession
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of thereof to plaintiffs. Plaintiffs' claim for damages and attorney's fees, as well as the counterclaims of defendants and intervenors
our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount of are hereby dismissed.
P1,240,000.00. No pronouncement as to costs.
We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of So Ordered.
title immediately upon receipt of the down payment above-stated. Macabebe, Pampanga for Quezon City, March 1, 1989.
On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and (Rollo, p. 106)
Miss Ramona Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00. A motion for reconsideration was filed by petitioner before the new presiding judge of the Quezon City RTC but the same was
Clearly, the conditions appurtenant to the sale are the following: denied by Judge Estrella T. Estrada, thusly:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon execution of the document aforestated; The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding
2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father Judge should be denied for the following reasons: (1) The instant case became submitted for decision as of April 14, 1988 when
upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment; the parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was
3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Judge Reynaldo Roura. The fact that they were allowed to file memoranda at some future date did not change the fact that the
Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) hearing of the case was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2)
Pesos. When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother rendition of the decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending
of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2"). incident in Civil Case No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now
On February 6, 1985, the property originally registered in the name of the Coronels' father was transferred in their names under estopped from questioning said authority of Judge Roura after they received the decision in question which happens to be
TCT adverse to them; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he
No. 327043 (Exh. "D"; Exh. "4") was in all respects the Presiding Judge with full authority to act on any pending incident submitted before this Court during his
incumbency. When he returned to his Official Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve
such cases submitted to him for decision or resolution because he continued as Judge of the Regional Trial Court and is of co-
11
equal rank with the undersigned Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to whom a Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is
case is submitted for decision has the authority to decide the case notwithstanding his transfer to another branch or region of the retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition
same court (Sec. 9, Rule 135, Rule of Court). and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey
Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution title from acquiring binding force.
of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the
presented by the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should prospective seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes
not be disturbed. demandable as provided in Article 1479 of the Civil Code which states:
IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
the Incumbent Presiding Judge" dated March 20, 1989 is hereby DENIED. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the
SO ORDERED. promise is supported by a consideration distinct from the price.
Quezon City, Philippines, July 12, 1989. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the
(Rollo, pp. 108-109) ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property
Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.
Santos (P), JJ.) rendered its decision fully agreeing with the trial court. A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may
Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents' Reply Memorandum, was likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional
filed on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on August 28, 1996, due to the contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event
voluntary inhibition of the Justice to whom the case was last assigned. which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely
While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial abated (cf. Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is
court's decision, we definitely find the instant petition bereft of merit. fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of
The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the precise the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having
determination of the legal significance of the document entitled "Receipt of Down Payment" which was offered in evidence by to be performed by the seller.
both parties. There is no dispute as to the fact that said document embodied the binding contract between Ramona Patricia In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective
TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows: seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.
Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject
to the other, to give something or to render some service. property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a
While, it is the position of private respondents that the "Receipt of Down Payment" embodied a perfected contract of sale, contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the
which perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the
document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the
of Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract absolute property will transfer to the buyer after registration because there is no defect in the owner-seller's title per se, but the latter, of
sale. course, may be used for damages by the intending buyer.
Plainly, such variance in the contending parties' contentions is brought about by the way each interprets the terms and/or In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this
conditions set forth in said private instrument. Withal, based on whatever relevant and admissible evidence may be available on will definitely affect the seller's title thereto. In fact, if there had been previous delivery of the subject property, the seller's
record, this, Court, as were the courts below, is now called upon to adjudge what the real intent of the parties was at the time the ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to
said document was executed. transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had
The Civil Code defines a contract of sale, thus: actual or constructive knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the
of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its second buyer, the first buyer may seek reconveyance of the property subject of the sale.
equivalent. With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of by petitioners and private respondents.
sale are the following: It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in
b) Determinate subject matter; and the said "Receipt of Down Payment" that they —
c) Price certain in money or its equivalent. Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is Pesos purchase price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of
lacking. In a contract to sell, the prospective seller explicity reserves the transfer of title to the prospective buyer, meaning, the Deeds of Quezon City, in the total amount of P1,240,000.00.
prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed
happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller is that they sold their property.
agrees or obliges himself to do is to fulfill is promise to sell the subject property when the entire amount of the purchase price is When the "Receipt of Down Payment" is considered in its entirety, it becomes more manifest that there was a clear intent on the
delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioner's father,
which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price.
remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule: Therefore, petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause
the issuance of a new certificate of title in their names from that of their father, after which, they promised to present said title,
12
now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only, they contend,
balance of the purchase price. continuing in the same paragraph, that:
The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or . . . Had petitioners-sellers not complied with this condition of first transferring the title to the property
title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute under their names, there could be no perfected contract of sale. (Emphasis supplied.)
contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the (Ibid.)
purchase price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate not aware that they set their own trap for themselves, for Article 1186 of the Civil Code expressly provides that:
of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
could not have been executed and consummated right there and then. Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical arguments is the fact
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the properly to private that the condition herein referred to was actually and indisputably fulfilled on February 6, 1985 , when a new title was issued in
respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, the names of petitioners as evidenced by TCT No. 327403 (Exh. "D"; Exh. "4").
they undertook to have the certificate of title changed to their names and immediately thereafter, to execute the written deed of The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as "Receipt of Down
absolute sale. Payment" (Exh. "A"; Exh. "1"), the parties entered into a contract of sale subject only to the suspensive condition that the sellers
Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms shall effect the issuance of new certificate title from that of their father's name to their names and that, on February 6, 1985, this
and conditions, promised to sell the property to the latter. What may be perceived from the respective undertakings of the condition was fulfilled (Exh. "D"; Exh. "4").
parties to the contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely We, therefore, hold that, in accordance with Article 1187 which pertinently provides —
willing to transfer full ownership of the subject house and lot to the buyer if the documents were then in order. It just happened, Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact
however, that the transfer certificate of title was then still in the name of their father. It was more expedient to first effect the to the day of the constitution of the obligation . . .
change in the certificate of title so as to bear their names. That is why they undertook to cause the issuance of a new transfer of In obligation to do or not to do, the courts shall determine, in each case, the retroactive effect of the
the certificate of title in their names upon receipt of the down payment in the amount of P50,000.00. As soon as the new condition that has been complied with.
certificate of title is issued in their names, petitioners were committed to immediately execute the deed of absolute sale. Only the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and
then will the obligation of the buyer to pay the remainder of the purchase price arise. demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that
There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller against a buyer point in time, reciprocal obligations of both seller and buyer arose.
who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet the absolute
therefor, in the contract entered into in the case at bar, the sellers were the one who were unable to enter into a contract of owners of the inherited property.
absolute sale by reason of the fact that the certificate of title to the property was still in the name of their father. It was the sellers We cannot sustain this argument.
in this case who, as it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale. Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:
What is clearly established by the plain language of the subject document is that when the said "Receipt of Down Payment" was Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to be
prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed to a conditional contract of sale, extent and value of the inheritance of a person are transmitted through his death to another or others by his
consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners' father, will or by operation of law.
Constancio P. Coronel, to their names. Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are
The Court significantly notes this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. "D"; Exh. "4"). Thus, on compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew his last
said date, the conditional contract of sale between petitioners and private respondent Ramona P. Alcaraz became obligatory, the breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or
only act required for the consummation thereof being the delivery of the property by means of the execution of the deed of obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to the
absolute sale in a public instrument, which petitioners unequivocally committed themselves to do as evidenced by the "Receipt succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva,
of Down Payment." 90 Phil. 850 [1952]).
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus, Be it also noted that petitioners' claim that succession may not be declared unless the creditors have been paid is rendered moot
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which by the fact that they were able to effect the transfer of the title to the property from the decedent's name to their names on
is the object of the contract and upon the price. February 6, 1985.
From the moment, the parties may reciprocally demand performance, subject to the provisions of the law Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at that time
governing the form of contracts. and they cannot be allowed to now take a posture contrary to that which they took when they entered into the agreement with
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of private respondent Ramona P. Alcaraz. The Civil Code expressly states that:
those already acquired, shall depend upon the happening of the event which constitutes the condition. Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making
Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners' names was fulfilled it, and cannot be denied or disproved as against the person relying thereon.
on February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable, that is, Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot claim
petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent now that they were not yet the absolute owners thereof at that time.
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P. Alcaraz, the
forthwith pay the balance of the purchase price amounting to P1,190,000.00. latter breached her reciprocal obligation when she rendered impossible the consummation thereof by going to the United States
It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted that: of America, without leaving her address, telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with
3. The petitioners-sellers Coronel bound themselves "to effect the transfer in our names from our deceased Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were
father Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment correct in unilaterally rescinding rescinding the contract of sale.
above-stated". The sale was still subject to this suspensive condition. (Emphasis supplied.) We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant case. We note that these
(Rollo, p. 16) supposed grounds for petitioners' rescission, are mere allegations found only in their responsive pleadings, which by express
provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
13
Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners' allegations. We have stressed essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in
time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02
vs. Embisan, 2 SCRA 598 [1961]. Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]). September 1992).
Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we cannot justify (J. Vitug Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
petitioner-sellers' act of unilaterally and extradicially rescinding the contract of sale, there being no express stipulation Petitioner point out that the notice of lis pendens in the case at bar was annoted on the title of the subject property only on
authorizing the sellers to extarjudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag was supposedly perfected
Vda. de Leon, 132 SCRA 722 [1984]) prior thereto or on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the
Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on property under a clean title, she was unaware of any adverse claim or previous sale, for which reason she is buyer in good faith.
record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. We are not persuaded by such argument.
Alcaraz, Ramona's mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith
payment was made by Concepcion D. Alcaraz with her own personal check (Exh. "B"; Exh. "2") for and in behalf of Ramona P. but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the
Alcaraz. There is no evidence showing that petitioners ever questioned Concepcion's authority to represent Ramona P. Alcaraz title of the property sold.
when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the sale entered
person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer
the contract of sale. certificate of title in the names of petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price the time of registration, therefore, petitioner Mabanag knew that the same property had already been previously sold to private
is concerned. Petitioners who are precluded from setting up the defense of the physical absence of Ramona P. Alcaraz as above- respondents, or, at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Petitioner
explained offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their names Mabanag cannot close her eyes to the defect in petitioners' title to the property at the time of the registration of the property.
and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramona's This Court had occasions to rule that:
corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due If a vendee in a double sale registers that sale after he has acquired knowledge that there was a previous
and demandable and, therefore, she cannot be deemed to have been in default. sale of the same property to a third party or that another person claims said property in a pervious sale, the
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default, registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs.
to wit: Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
or extrajudicially demands from them the fulfillment of their obligation. Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to
xxx xxx xxx that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her
comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in
his obligation, delay by the other begins. (Emphasis supplied.) her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and
There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents. daughter. Thus, We will not touch this issue and no longer disturb the lower courts' ruling on this point.
With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED.
Article 1544 of the Civil Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred G.R. No. 61584 November 25, 1992
to the person who may have first taken possession thereof in good faith, if it should be movable property. DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners,
Should if be immovable property, the ownership shall belong to the person acquiring it who in good faith vs. COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN, ANITA
first recorded it in Registry of Property. PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO PAULMITAN, respondents.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the ROMERO, J.:
possession; and, in the absence thereof to the person who presents the oldest title, provided there is good This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals, dated July 14, 1982 in
faith. CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato Sagario Paulmitan, et al." which affirmed the decision 2 of the
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second contract of sale was then Court of First Instance (now RTC) of Negros Occidental, 12th Judicial District, Branch IV, Bacolod City, in Civil Case
registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of No. 11770.
Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply. The antecedent facts are as follows:
The above-cited provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being: (a) when Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land located in the Province of
the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the Negros Occidental: (1) Lot No. 757 with an area of 1,946 square meters covered by Original Certificate of Title (OCT) No. RO-
two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the 8376; and (2) Lot No. 1091 with an area of 69,080 square meters and covered by OCT No. RO-11653. From her marriage with
second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer. Ciriaco Paulmitan, who is also now deceased, Agatona begot two legitimate children, namely: Pascual Paulmitan, who also died
In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the Court, Justice in 1953, 4 apparently shortly after his mother passed away, and Donato Paulmitan, who is one of the petitioners. Petitioner
Jose C. Vitug, explains: Juliana P. Fanesa is Donato's daughter while the third petitioner, Rodolfo Fanes, is Juliana's husband. Pascual Paulmitan, the
The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the other son of Agatona Sagario, is survived by the respondents, who are his children, name: Alicio, Elena, Abelino, Adelina,
second sale cannot defeat the first buyer's rights except when the second buyer first registers in good faith the second sale Anita, Baking and Anito, all surnamed Paulmitan.
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two lots mentioned above remained
even if he is first to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. in the name of Agatona. However, on August 11, 1963, petitioner Donato Paulmitan executed an Affidavit of Declaration of
No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it has held that it is Heirship, extrajudicially adjudicating unto himself Lot No. 757 based on the claim that he is the only surviving heir of Agatona
14
Sagario. The affidavit was filed with the Register of Deeds of Negros Occidental on August 20, 1963, cancelled OCT No. RO- At the time of the relevant transactions over the properties of decedent Agatona Sagario Paulmitan, her son Pascual had died,
8376 in the name of Agatona Sagario and issued Transfer Certificate of Title (TCT) No. 35979 in Donato's name. survived by respondents, his children. It is, thus, tempting to apply the principles pertaining to the right of representation as
As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in favor of petitioner Juliana P. regards respondents. It must, however, be borne in mind that Pascual did no predecease his mother, 8 thus precluding the
Fanesa, his daughter. 5 operation of the provisions in the Civil Code on the right of representation 9 with respect to his children, the respondents. When
In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and sold at a public auction, with the Agatona Sagario Paulmitan died intestate in 1952, her two (2) sons Donato and Pascual were still alive. Since it is well-settled
Provincial Government of Negros Occidental being the buyer. A Certificate of Sale over the land was executed by the by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of the
Provincial Treasurer in favor of the Provincial Board of Negros Occidental. 6 decedent," 10 the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was
On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of Negros Occidental for the automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of
amount of P2,959.09. 7 Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance, the relative nearest in degree
On learning of these transactions, respondents children of the late Pascual Paulmitan filed on January 18, 1975 with the Court of excludes the more distant
First Instance of Negros Occidental a Complaint against petitioners to partition the properties plus damages. ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother.
Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative defense, contending that the From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate
Complaint was filed more than eleven years after the issuance of a transfer certificate of title to Donato Paulmitan over the land remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the
as consequence of the registration with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto himself Lot decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." 12 Donato
No. 757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the Complaint that she acquired and Pascual Paulmitan were, therefore, co-owners of the estate left by their mother as no partition was ever made.
exclusive ownership thereof not only by means of a deed of sale executed in her favor by her father, petitioner Donato When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-ownership of the
Paulmitan, but also by way of redemption from the Provincial Government of Negros Occidental. disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children,
Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial court issued an order dated who, from the time of Pascual's death, became co-owners with their uncle Donato over the disputed decedent estate.
April 22, 1976 dismissing the complaint as to the said property upon finding merit in petitioners' affirmative defense. This Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions, namely: (a) the sale made in her
order, which is not the object of the present petition, has become final after respondents' failure to appeal therefrom. favor by her father Donato Paulmitan; and (b) her redemption of the land from the Provincial of Negros Occidental after it was
Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court decided in favor of respondents forfeited for non-payment of taxes.
as to Lot No. 1091. According to the trial court, the respondents, as descendants of Agatona Sagario Paulmitan were entitled to When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with
one-half (1/2) of Lot No. 1091, pro indiviso. The sale by petitioner Donato Paulmitan to his daughter, petitioner Juliana P. respondents and as such, he could only sell that portion which may be allotted to him upon termination of the co-
Fanesa, did not prejudice their rights. And the repurchase by Juliana P. Fanesa of the land from the Provincial Government of ownership. 13 The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they
Negros Occidental did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be reimbursed inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's pro-
for the amount paid to redeem the property. The trial court ordered the partition of the land and directed petitioners Donato indiviso share in the property 14 and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-
Paulmitan and Juliana P. Fanesa to pay private respondents certain amounts representing the latter's share in the fruits of the Casilao v. Court of Appeals, 15 the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without
land. On the other hand, respondents were directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price the consent of all the co-owners, thus:
paid by Fanesa to the Provincial Government of Negros Occidental. The dispositive portion of the trial court's decision reads: The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code, Thus:
WHEREFORE, judgment is hereby rendered on the second cause of action pleaded in the complain as Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may
follows: therefore alienate, assign or mortgage it and even substitute another person its enjoyment, except when personal rights are
1. The deed of sale (Exh. "F") dated May 28, 1974 is valid insofar as the one-half undivided portion of Lot 1091 is concerned as involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may
to vest ownership over said half portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa, while the be allotted to him in the division upon the termination of the co-ownership. [Emphasis supplied.]
remaining half shall belong to plaintiffs, pro-indiviso; As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own
2. Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental, now covered by TCT No. RO-11653 (N.A.), is share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is
ordered partitioned. The parties must proceed to an actual partition by property instrument of partition, submitting the because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the
corresponding subdivision within sixty (60) days from finality of this decision, and should they fail to agree, commissioners of transferee gets only what would correspond to his grantor in the partition of the thing owned in common [Ramirez v. Bautista,
partition may be appointed by the Court; 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect
3. Pending the physical partition, the Register of Deeds of Negros Occidental is ordered to cancel Original Certificate of Title to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable,
No. RO-11653 (N.A.) covering Lot 1091, Pontevedra Cadastre, and to issue in lieu thereof a new certificate of title in the name the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales
of plaintiffs and defendants, one-half portion each, pro-indiviso, as indicated in paragraph 1 above; produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].
4. Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa the amount of P1,479.55 with interest at the legal From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property
rate from May 28, 1974 until paid; by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-
5 Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are ordered to account to plaintiffs and to pay them, seller are transferred, thereby making the buyer a co-owner of the property.
jointly and severally, the value of the produce from Lot 1091 representing plaintiffs' share in the amount of P5,000.00 per year Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana
from 1966 up to the time of actual partition of the property, and to pay them the sum of P2,000.00 as attorney's fees as well as P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided
the costs of the suit. share of her father, thus making her the co-owner of the land in question with the respondents, her first cousins.
x x x x x x x x x Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact that when the Provincial
On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition. Government of Negros Occidental bought the land after it was forfeited for non-payment of taxes, she redeemed it.
To determine the rights and obligations of the parties to the land in question, it is well to review, initially, the relatives who The contention is without merit.
survived the decedent Agatona Sagario Paulmitan. When Agatona died in 1953, she was survived by two (2) sons, Donato and The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land subject of the
Pascual. A few months later in the same year, Pascual died, leaving seven children, the private respondents. On the other had, co-ownership. Speaking on the same issue raised by petitioners, the Court, in Adille v. Court of Appeals, 16 resolved the same
Donato's sole offspring was petitioner Juliana P. Fanesa. with the following pronouncements:
15
The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners were able to obtain a loan
Essentially, it is the petitioners' contention that the property subject of dispute devolved upon him upon the failure of his co- of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the
heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil extra-judicial settlement.7
Code, Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property. On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for Letters of Administration docketed as
There is no merit in this petition. S.P. Case No. 5118 before the Regional Trial Court of Angeles City, praying that letters of administration encompassing the
The right of repurchase may be exercised by co-owner with respect to his share alone (CIVIL CODE, art. 1612, CIVIL CODE estate of Alfonso P. Orfinada, Jr. be issued to him.8
(1889), art. (1514.). While the records show that petitioner redeemed the property in its entirety, shouldering the expenses On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra Judicial Settlement of Estate of a
therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership Deceased Person with Quitclaim, Real Estate Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983,
(Supra, Art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: 63985 and 63984 and Other Related Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the
Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the Register of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City.9
thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the defense that the property subject
so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it of the contested deed of extra-judicial settlement pertained to the properties originally belonging to the parents of Teodora
is prejudicial to the co-ownership. Riofero10 and that the titles thereof were delivered to her as an advance inheritance but the decedent had managed to register
The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the them in his name.11 Petitioners also raised the affirmative defense that respondents are not the real parties-in-interest but rather
Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the administration proceedings. 12 On April 29, 1996,
its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro petitioners filed a Motion to Set Affirmative Defenses for Hearing 13 on the aforesaid ground.
to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the The lower court denied the motion in its Order14 dated June 27, 1996, on the ground that respondents, as heirs, are the real
redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership. parties-in-interest especially in the absence of an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners
Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she moved for its reconsideration15 but the motion was likewise denied.16
did acquire the right to reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule 65 of the Rules of Court
on behalf of her co-owners. Until reimbursed, Fanesa hold a lien upon the subject property for the amount due her. 17 docketed as CA G.R. S.P. No. 42053.17 Petitioners averred that the RTC committed grave abuse of discretion in issuing the
Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents assailed order which denied the dismissal of the case on the ground that the proper party to file the complaint for the annulment
P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of of the extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the respondents.18
the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however raises a The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating that it discerned no grave abuse of
factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings discretion amounting to lack or excess of jurisdiction by the public respondent judge when he denied petitioners’ motion to set
of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. 18 affirmative defenses for hearing in view of its discretionary nature.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED. A Motion for Reconsideration was filed by petitioners but it was denied.20 Hence, the petition before this Court.
G.R. No. 129008 January 13, 2004 The issue presented by the petitioners before this Court is whether the heirs have legal standing to prosecute the rights
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY EVANGELISTA, belonging to the deceased subsequent to the commencement of the administration proceedings.21
ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband BEDA UNGOS, petitioners, Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary hearing on their affirmative
vs. defense that the proper party to bring the action is the estate of the decedent and not the respondents. It must be stressed that the
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO ORFINADA, NANCY holding of a preliminary hearing on an affirmative defense lies in the discretion of the court. This is clear from the Rules of
P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P. Court, thus:
ORFINADA, respondents. SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal provided for in this rule, except
DECISION improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a
TINGA, J.: motion to dismiss had been filed.22 (Emphasis supplied.)
Whether the heirs may bring suit to recover property of the estate pending the appointment of an administrator is the issue in Certainly, the incorporation of the word "may" in the provision is clearly indicative of the optional character of the preliminary
this case. hearing. The word denotes discretion and cannot be construed as having a mandatory effect. 23 Subsequently, the electivity of the
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside the Decision1 of the Court of proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase "in the discretion
Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well as its Resolution2 dated March 26, 1997, denying of the Court", apart from the retention of the word "may" in Section 6,24 in Rule 16 thereof.
petitioners’ motion for reconsideration. Just as no blame of abuse of discretion can be laid on the lower court’s doorstep for not hearing petitioners’ affirmative defense,
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several personal and real properties it cannot likewise be faulted for recognizing the legal standing of the respondents as heirs to bring the suit.
located in Angeles City, Dagupan City and Kalookan City.3 He also left a widow, respondent Esperanza P. Orfinada, whom he Pending the filing of administration proceedings, the heirs without doubt have legal personality to bring suit in behalf of the
married on July 11, 1960 and with whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada, estate of the decedent in accordance with the provision of Article 777 of the New Civil Code "that (t)he rights to succession are
Alfonso "Clyde" P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso transmitted from the moment of the death of the decedent." The provision in turn is the foundation of the principle that the
Mike P. Orfinada (deceased) and Angelo P. Orfinada.4 property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to
Apart from the respondents, the demise of the decedent left in mourning his paramour and their children. They are petitioner another or others by his will or by operation of law.25
Teodora Riofero, who became a part of his life when he entered into an extra-marital relationship with her during the Even if administration proceedings have already been commenced, the heirs may still bring the suit if an administrator has not
subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners Veronica5, Alberto and Rowena.6 yet been appointed. This is the proper modality despite the total lack of advertence to the heirs in the rules on party
On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on June 29, 1995, petitioner Teodora representation, namely Section 3, Rule 326 and Section 2, Rule 8727 of the Rules of Court. In fact, in the case of Gochan v.
Rioferio and her children executed an Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving the Young,28 this Court recognized the legal standing of the heirs to represent the rights and properties of the decedent under
properties of the estate of the decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan issued administration pending the appointment of an administrator. Thus:
Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica Orfinada-Evangelista,
16
The above-quoted rules,29 while permitting an executor or administrator to represent or to bring suits on behalf of the regards petitioner's argument of lack of jurisdiction over the action because the prescribed docket fee was not paid considering
deceased, do not prohibit the heirs from representing the deceased. These rules are easily applicable to cases in the huge amount involved in the claim, the trial court noted that a request for accounting was made in order that the exact value
which an administrator has already been appointed. But no rule categorically addresses the situation in which of the partnership may be ascertained and, thus, the correct docket fee may be paid. Finally, the trial court held that the heirs of
special proceedings for the settlement of an estate have already been instituted, yet no administrator has been Tabanao had aright to sue in their own names, in view of the provision of Article 777 of the Civil Code, which states that the
appointed. In such instances, the heirs cannot be expected to wait for the appointment of an administrator; then wait rights to the succession are transmitted from the moment of the death of the decedent.6
further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of The following day, respondents filed an amended complaint,7 incorporating the additional prayer that petitioner be ordered to
the deceased; and in the meantime do nothing while the rights and the properties of the decedent are violated or "sell all (the partnership's) assets and thereafter pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share in
dissipated. the proceeds thereof. In due time, petitioner filed a manifestation and motion to dismiss,8 arguing that the trial court did not
Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if the executor or administrator is acquire jurisdiction over the case due to the plaintiffs' failure to pay the proper docket fees. Further, in a supplement to his
unwilling or refuses to bring suit;30 and (2) when the administrator is alleged to have participated in the act complained of31 and motion to dismiss,9 petitioner also raised prescription as an additional ground warranting the outright dismissal of the complaint.
he is made a party defendant.32 Evidently, the necessity for the heirs to seek judicial relief to recover property of the estate is as On June 15, 1995, the trial court issued an Order, 10 denying the motion to dismiss inasmuch as the grounds raised therein were
compelling when there is no appointed administrator, if not more, as where there is an appointed administrator but he is either basically the same as the earlier motion to dismiss which has been denied. Anent the issue of prescription, the trial court ruled
disinclined to bring suit or is one of the guilty parties himself. that prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Hence,
All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property of the estate during the prescription has not set in the absence of a final accounting. Moreover, an action based on a written contract prescribes in ten
pendency of administration proceedings has three exceptions, the third being when there is no appointed administrator such as years from the time the right of action accrues.
in this case. Petitioner filed a petition for certiorari before the Court of Appeals,11 raising the following issues:
As the appellate court did not commit an error of law in upholding the order of the lower court, recourse to this Court is not I. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in taking
warranted. cognizance of a case despite the failure to pay the required docket fee;
WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the Court of Appeals are hereby II. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in insisting to try
AFFIRMED. No costs. the case which involve (sic) a parcel of land situated outside of its territorial jurisdiction;
G.R. No. 126334 November 23, 2001 III. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in allowing the
EMILIO EMNACE, petitioner, estate of the deceased to appear as party plaintiff, when there is no intestate case and filed by one who was never
vs. appointed by the court as administratrix of the estates; and
COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM IV. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in not dismissing
TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and the case on the ground of prescription.
VINCENT TABANAO, respondents. On August 8, 1996, the Court of Appeals rendered the assailed decision,12 dismissing the petition for certiorari, upon a finding
YNARES-SANTIAGO, J.: that no grave abuse of discretion amounting to lack or excess of jurisdiction was committed by the trial court in issuing the
Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma questioned orders denying petitioner's motions to dismiss.
Fishing Industry. Sometime in January of 1986, they decided to dissolve their partnership and executed an agreement of Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by the Court of Appeals, namely:
partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the I. Failure to pay the proper docket fee;
partnership.1 Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land located at II. Parcel of land subject of the case pending before the trial court is outside the said court's territorial jurisdiction;
Sto. Niño and Talisay, Negros Occidental, and cash deposits in the local branches of the Bank of the Philippine Islands and III. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and
Prudential Bank. IV. Prescription of the plaintiff heirs' cause of action.
Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in 1994, petitioner failed to It can be readily seen that respondents' primary and ultimate objective in instituting the action below was to recover the
submit to Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the decedent's 1/3 share in the partnership' s assets. While they ask for an accounting of the partnership' s assets and finances, what
partnership's finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the deceased's 1/3 share in the total they are actually asking is for the trial court to compel petitioner to pay and turn over their share, or the equivalent value thereof,
assets of the partnership, amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for payment from the proceeds of the sale of the partnership assets. They also assert that until and unless a proper accounting is done, the
thereof.2 exact value of the partnership' s assets, as well as their corresponding share therein, cannot be ascertained. Consequently, they
Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting, payment of shares, division feel justified in not having paid the commensurate docket fee as required by the Rules of Court.1âwphi1.nêt
of assets and damages.3 In their complaint, respondents prayed as follows: We do not agree. The trial court does not have to employ guesswork in ascertaining the estimated value of the partnership's
1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the partnership at bar; and assets, for respondents themselves voluntarily pegged the worth thereof at Thirty Million Pesos (P30,000,000.00). Hence, this
2. After due notice and hearing defendant be ordered to pay/remit/deliver/surrender/yield to the plaintiffs the case is one which is really not beyond pecuniary estimation, but rather partakes of the nature of a simple collection case where
following: the value of the subject assets or amount demanded is pecuniarily determinable. 13 While it is true that the exact value of the
A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing vessels, trucks, partnership's total assets cannot be shown with certainty at the time of filing, respondents can and must ascertain, through
motor vehicles, and other forms and substance of treasures which belong and/or should belong, had informed and practical estimation, the amount they expect to collect from the partnership, particularly from petitioner, in order
accrued and/or must accrue to the partnership; to determine the proper amount of docket and other fees. 14 It is thus imperative for respondents to pay the corresponding docket
B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages; fees in order that the trial court may acquire jurisdiction over the action.15
C. Attorney's fees equivalent to Thirty Percent (30%) of the entire share/amount/award which the Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,16 where there was clearly an effort to
Honorable Court may resolve the plaintiffs as entitled to plus P1,000.00 for every appearance in court.4 defraud the government in avoiding to pay the correct docket fees, we see no attempt to cheat the courts on the part of
Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, lack of jurisdiction over the nature of the respondents. In fact, the lower courts have noted their expressed desire to remit to the court "any payable balance or lien on
action or suit, and lack of capacity of the estate of Tabanao to sue. 5 On August 30, 1994, the trial court denied the motion to whatever award which the Honorable Court may grant them in this case should there be any deficiency in the payment of the
dismiss. It held that venue was properly laid because, while realties were involved, the action was directed against a particular docket fees to be computed by the Clerk of Court." 17 There is evident willingness to pay, and the fact that the docket fee paid so
person on the basis of his personal liability; hence, the action is not only a personal action but also an action in personam. As far is inadequate is not an indication that they are trying to avoid paying the required amount, but may simply be due to an
17
inability to pay at the time of filing. This consideration may have moved the trial court and the Court of Appeals to declare that requirement, the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In
the unpaid docket fees shall be considered a lien on the judgment award. the latter case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff will be
Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the non-payment of the proper legal considered a lien or any award he may obtain in his favor. (Underscoring ours)
fees and in allowing the same to become a lien on the monetary or property judgment that may be rendered in favor of Accordingly, the trial court in the case at bar should determine the proper docket fee based on the estimated amount that
respondents. There is merit in petitioner's assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states respondents seek to collect from petitioner, and direct them to pay the same within a reasonable time, provided the applicable
that: prescriptive or reglementary period has not yet expired, Failure to comply therewith, and upon motion by petitioner, the
The legal fees shall be a lien on the monetary or property judgment in favor of the pauper-litigant. immediate dismissal of the complaint shall issue on jurisdictional grounds.
Respondents cannot invoke the above provision in their favor because it specifically applies to pauper-litigants. Nowhere in the On the matter of improper venue, we find no error on the part of the trial court and the Court of Appeals in holding that the case
records does it appear that respondents are litigating as paupers, and as such are exempted from the payment of court fees.18 below is a personal action which, under the Rules, may be commenced and tried where the defendant resides or may be found,
The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of Court, which defines the two kinds of claims as: or where the plaintiffs reside, at the election of the latter.26
(1) those which are immediately ascertainable; and (2) those which cannot be immediately ascertained as to the exact amount. Petitioner, however, insists that venue was improperly laid since the action is a real action involving a parcel of land that is
This second class of claims, where the exact amount still has to be finally determined by the courts based on evidence presented, located outside the territorial jurisdiction of the court a quo. This contention is not well-taken. The records indubitably show
falls squarely under the third paragraph of said Section 5(a), which provides: that respondents are asking that the assets of the partnership be accounted for, sold and distributed according to the agreement of
In case the value of the property or estate or the sum claimed is less or more in accordance with the appraisal of the the partners. The fact that two of the assets of the partnership are parcels of land does not materially change the nature of the
court, the difference of fee shall be refunded or paid as the case may be. (Underscoring ours) action. It is an action in personam because it is an action against a person, namely, petitioner, on the basis of his personal
In Pilipinas Shell Petroleum Corporation v. Court of Appeals, 19 this Court pronounced that the above-quoted provision "clearly liability. It is not an action in rem where the action is against the thing itself instead of against the person. 27 Furthermore, there
contemplates an Initial payment of the filing fees corresponding to the estimated amount of the claim subject to adjustment as to is no showing that the parcels of land involved in this case are being disputed. In fact, it is only incidental that part of the assets
what later may be proved."20 Moreover, we reiterated therein the principle that the payment of filing fees cannot be made of the partnership under liquidation happen to be parcels of land.
contingent or dependent on the result of the case. Thus, an initial payment of the docket fees based on an estimated amount must The time-tested case of Claridades v. Mercader, et al.,28 settled this issue thus:
be paid simultaneous with the filing of the complaint. Otherwise, the court would stand to lose the filing fees should the The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond in question, did not
judgment later turn out to be adverse to any claim of the respondent heirs. change the nature or character of the action, such sale being merely a necessary incident of the liquidation of the
The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the handling partnership, which should precede and/or is part of its process of dissolution.
of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the payment of The action filed by respondents not only seeks redress against petitioner. It also seeks the enforcement of, and petitioner's
docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant. compliance with, the contract that the partners executed to formalize the partnership's dissolution, as well as to implement the
Applied to the instant case, respondents have a specific claim - 1/3 of the value of all the partnership assets - but they did not liquidation and partition of the partnership's assets. Clearly, it is a personal action that, in effect, claims a debt from petitioner
allege a specific amount. They did, however, estimate the partnership's total assets to be worth Thirty Million Pesos and seeks the performance of a personal duty on his part. 29 In fine, respondents' complaint seeking the liquidation and partition
(P30,000,000.00), in a letter21 addressed to petitioner. Respondents cannot now say that they are unable to make an estimate, for of the assets of the partnership with damages is a personal action which may be filed in the proper court where any of the parties
the said letter and the admissions therein form part of the records of this case. They cannot avoid paying the initial docket fees reside.30 Besides, venue has nothing to do with jurisdiction for venue touches more upon the substance or merits of the case.31 As
by conveniently omitting the said amount in their amended complaint. This estimate can be made the basis for the initial docket it is, venue in this case was properly laid and the trial court correctly ruled so.
fees that respondents should pay. Even if it were later established that the amount proved was less or more than the amount On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was
alleged or estimated, Rule 141, Section 5(a) of the Rules of Court specifically provides that the court may refund the 'excess or never appointed as administratrix or executrix of his estate. Petitioner's objection in this regard is misplaced. The surviving
exact additional fees should the initial payment be insufficient. It is clear that it is only the difference between the amount spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her
finally awarded and the fees paid upon filing of this complaint that is subject to adjustment and which may be subjected to alien. children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao' s
In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion, 22 this Court held that when the specific claim death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are
"has been left for the determination by the court, the additional filing fee therefor shall constitute a lien on the judgment and it transmitted from the moment of death of the decedent.32
shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by
additional fee." Clearly, the rules and jurisprudence contemplate the initial payment of filing and docket fees based on the operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and
estimated claims of the plaintiff, and it is only when there is a deficiency that a lien may be constituted on the judgment award obligations to the extent of the value of the inheritance of a person are transmitted.33 Moreover, respondents became owners of
until such additional fee is collected. their respective hereditary shares from the moment Vicente Tabanao died.34
Based on the foregoing, the trial court erred in not dismissing the complaint outright despite their failure to pay the proper A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary
docket fees. Nevertheless, as in other procedural rules, it may be liberally construed in certain cases if only to secure a just and for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his death,
speedy disposition of an action. While the rule is that the payment of the docket fee in the proper amount should be adhered to, they can commence any action originally pertaining to the decedent.35 From the moment of his death, his rights as a partner and
there are certain exceptions which must be strictly construed.23 to demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were transmitted to respondents.
In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine, allowing the plaintiff to pay the proper They, therefore, had the capacity to sue and seek the court's intervention to compel petitioner to fulfill his obligations.
docket fees within a reasonable time before the expiration of the applicable prescriptive or reglementary period.24 Finally, petitioner contends that the trial court should have dismissed the complaint on the ground of prescription, arguing that
In the recent case of National Steel Corp. v. Court of Appeals,25 this Court held that: respondents' action prescribed four (4) years after it accrued in 1986. The trial court and the Court of Appeals gave scant
The court acquires jurisdiction over the action if the filing of the initiatory pleading is accompanied by the payment consideration to petitioner's hollow arguments, and rightly so.
of the requisite fees, or, if the fees are not paid at the time of the filing of the pleading, as of the time of full payment The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination. 36 The partnership, although
of the fees within such reasonable time as the court may grant, unless, of course, prescription has set in the meantime. dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs,
It does not follow, however, that the trial court should have dismissed the complaint for failure of private respondent including the partitioning and distribution of the net partnership assets to the partners. 37 For as long as the partnership exists, any
to pay the correct amount of docket fees. Although the payment of the proper docket fees is a jurisdictional of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only upon the
requirement, the trial court may allow the plaintiff in an action to pay the same within a reasonable time before the dissolution of the partnership when the final accounting is done.38
expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply within this
18
Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in WHEREFORE, in the light of the foregoing ratiocination, judgment is hereby rendered in favor of the [Estate of Vipa] and
1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article against [Rafael], ordering the latter, to wit:
1842 of the Civil Code provides: 1. to vacate the premises subject of this case and covered by TCT No. T-26576 and to peacefully turn over
The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up the possession of the same to the [Estate of Vipa];
partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in 2. to pay the [Estate of Vipa] the amount of Php271,150.00 as payment for the unpaid rentals with 12%
the absence of any agreement to the contrary. interest per annum from the last demand on May 3, 2003 until the whole amount is paid;
Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above-cited provision states that the 3. to pay the [Estate of Vipa] the amount of Php3,000.00 per month with 12% interest per annum for the use
right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final and occupancy of the premises computed from the date of the filing of this case on June 12, 2003 until
accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that fully paid;
is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an 4. to pay the [Estate of Vipa] attorney's fees in the amount of Php20,000.00; [and]
accounting of the partnership's business and assets. Hence, the said action is not barred by prescription. 5. to pay the costs of suit.
In fine, the trial court neither erred nor abused its discretion when it denied petitioner's motions to dismiss. Likewise, the Court SO ORDERED.17
of Appeals did not commit reversible error in upholding the trial court's orders. Precious time has been lost just to settle this The MTCC found that after Vipa's death in 1994 until 1998, Rafael was paying the rent for the lease of the subject property to
preliminary issue, with petitioner resurrecting the very same arguments from the trial court all the way up to the Supreme Court. Grace Joy.18 That the real reason why Patria claimed to be the heir of Vipa is because she owed Rafael money which she could
The litigation of the merits and substantial issues of this controversy is now long overdue and must proceed without further not pay. Patria then charged the debt she owes to Rafael from the monthly rent of the subject property, an arrangement that
delay. Rafael took advantage to avoid paying Grace Joy the monthly rents. The MTCC further opined that the consignations made by
WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and the case is REMANDED to Rafael in the total amount of P16,000.00 are not valid since there was no prior tender of payment.19
the Regional Trial Court of Cadiz City, Branch 60, which is ORDERED to determine the proper docket fee based on the On appeal, the RTC, in its Decision20 dated April 15, 2009, reversed the MTCC's Decision dated June 12, 2008 and, thus,
estimated amount that plaintiffs therein seek to collect, and direct said plaintiffs to pay the same within a reasonable time, dismissed the complaint for unlawful detainer filed by the Estate of Vipa. Thus:
provided the applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ORDERED to WHEREFORE, premises considered, the Decision appealed from is REVERSED and SET ASIDE; and the herein complaint is
conduct the appropriate proceedings in Civil Case No. 416-C. hereby DISMISSED for lack of merit; and further DISMISSING [Rafael's] counterclaim for failure to substantiate the same.
Costs against petitioner.1âwphi1.nêt SO ORDERED.21
G.R. No. 200612, April 05, 2017 The RTC opined that Grace Joy was actually the plaintiff in the case and not the Estate of Vipa. It then pointed out that Grace
RAFAEL C. UY (CABANGBANG STORE), Petitioner, v. ESTATE OF VIPA FERNANDEZ, Respondents. Joy failed to bring the dispute to the barangay for conciliation prior to filing the complaint for unlawful detainer.22
DECISION The RTC further held that the MTCC erred in including the entire subject property as part of the Estate of Vipa. The RTC
REYES, J.: explained that the subject property was acquired by Vipa during the subsistence of her marriage with Levi and, as such, is part
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the of their conjugal properties. That after Vipa's death, the conjugal partnership was terminated, entitling Levi to one-half of the
Decision2 dated November 26, 2010 and Resolution 3 dated January 24, 2012 issued by the Court of Appeals (CA) in CA-G.R. property.23 The RTC then pointed out that Levi sold his share in the subject property to Rafael, as evidenced by a Deed of
SP No. 04481. Sale24 dated December 29, 2005.25 Accordingly, the RTC ruled that Rafael, as co-owner of the subject property, having bought
Facts Levi's one-half share thereof, had the right to possess the same.26
Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land situated in Lopez Jaena Street, Jaro, Iloilo City The Estate of Vipa sought a reconsideration27 of the Decision dated April 15, 2009, but it was denied by the RTC in its Order
covered by Transfer Certificate of Title No. T-26576 (subject property).4 Vipa and her husband, Levi Lahaylahay (Levi), have dated July 28; 2009.28
two children – Grace Joy Somosierra (Grace Joy) and Jill Frances Lahaylahay (Jill Frances).5 The Estate of Vipa then filed a Petition for Review 29 with the CA. On November 26, 2010, the CA rendered a Decision, 30 which
Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy (Rafael) over the subject property and the declared:
improvements thereon, pursuant to which, Rafael bound himself to pay Vipa, as consideration for the lease of the property, the WHEREFORE, in view of all the foregoing, the instant petition for review is GRANTED and the April 15, 2009 Decision of
amount of P3,000.00 per month, with a provision for a 10% increase every year thereafter.6 the court a quo in Civil Case No. 08-29842 is hereby REVERSED and SET ASIDE. Accordingly, the June 12, 2008 Decision of
On March 5, 1994, Vipa died leaving no will or testament whatsoever. Grace Joy became the de facto administrator of the the Municipal Trial Court, Branch 4, Iloilo City, in Civil Case No. 03-208 is hereby REINSTATED.
estate of Vipa. After Vipa's death, Levi lived in Aklan.7 SO ORDERED.31
In June 1998, Rafael stopped paying the monthly rents.8 Consequently, on June 12, 2003, the Estate of Vipa, through Grace Joy, The CA held that there was no necessity to bring the dispute before the barangay for conciliation since the Estate of Vipa, being
filed a complaint9 for unlawful detainer with the Municipal Trial Court in Cities (MTCC) of Iloilo City against Rafael. It was a juridical person, cannot be impleaded to a barangay conciliation proceeding. The CA likewise pointed out that any allegations
alleged therein that, as of June 1998, Rafael was already bound to pay rent at the amount of P3,300.00 per month and that his against Grace Joy's authority to represent the Estate of Vipa had been laid to rest when she was appointed as administrator of the
last payment was made in May 1998. Accordingly, at the time of the filing of the Complaint, Rafael's unpaid rents amounted to Estate of Vipa in Special Proceedings No. 6910 pending before the RTC.32
P271,150.00.10 The Estate of Vipa claimed that despite repeated demands, Rafael refused to pay the rents due.11 Further, the CA held that Rafael raised the issue of ownership of the subject property, i.e., Levi's sale of his one-half share in
In his Answer,12 Rafael denied that he refused to pay the rent for the lease of the subject property. He claimed that sometime in the subject property to Rafael, only for the first time in his appeal with the RTC. Accordingly, it was error on the part of the
June 1998 Patria Fernandez-Cuenca (Patria), Vipa's sister, demanded for the payment of the rents, claiming that she is the RTC to have resolved the issue of ownership of the subject property. 33 Furthermore, the CA agreed with the MTCC that Rafael's
rightful heir of Vipa.13 Since he had no idea on who is entitled to receive the rent for the subject property, he deposited the consignation of the rent to the RTC is ineffective. It ruled that Rafael made the consignation only twice and the amount
amount of P10,000.00 with the Office of the Clerk of Court of the Regional Trial Court (RTC) of Iloilo City on November 20, consigned was patently insignificant compared to the amount of rent due.34
1998 and that Grace Joy was informed of such consignation.14 He claimed that a case for the settlement of the Estate of Vipa Rafael's motion for reconsideration35 was denied by the CA in its Resolution36 dated January 24, 2012.
was instituted by Patria with the RTC, which was docketed as Special Proceeding No. 6910. He averred that he is willing to pay Hence, the instant petition.
the rent on the leased property to the rightful heirs of Vipa and that he made another consignation with the RTC in the amount Rafael maintains that Grace Joy has no authority to represent the Estate of Vipa and, when she filed the complaint for unlawful
of P6,000.00.15 detainer with the MTCC, she did so in her personal capacity. Thus, Rafael claims that the dispute should have been brought to
On June 12, 2008, the MTCC rendered a Decision,16 the decretal portion of which reads: the barangay for conciliation before the complaint was filed in the MTCC.37 He further claims that the CA erred in . reversing
19
the RTC's ruling on the issue of ownership of the subject property. He insists that he already purchased Levi's one-half share in of Vipa and Levi considering that the same was acquired during the subsistence of their marriage and there being no proof to the
the subject property.38 contrary.50
On the other hand, the Estate of Vipa, in its Comment, 39 avers that the supposed lack of authority of Grace Joy to file the When Vipa died on March 5, 1994, the conjugal partnership was automatically terminated. 51 Under Article 130 of the Family
complaint for unlawful detainer and the ownership of the subject property were never raised in the proceedings before the Code, the conjugal partnership property, upon its dissolution due to the death of either spouse, should be liquidated either in the
MTCC and, hence, could not be passed upon by the RTC in the appellate proceedings. In any case, it pointed out that the RTC's same proceeding for the settlement of the estate of the deceased or, in the absence thereof, by the surviving spouse within one
Decision40 dated October 28, 2005 in Special Proceedings No. 6910, which appointed Grace Joy as the administrator of the year from the death of the deceased spouse. That absent any liquidation, any disposition or encumbrance of the conjugal
intestate estate of Vipa, recognized that the latter and Jill Frances are legitimate children of Vipa and Levi. partnership property is void. Thus:
Issue Article 130. Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated in the same
Essentially, the issue set forth for the Court's resolution is whether the CA erred in reversing the RTC's Decision dated April 15, proceeding for the settlement of the estate of the deceased.
2009. If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal partnership property
Ruling of the Court either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six-
The petition is partly meritorious. month period no liquidation is made, any disposition or encumbrance involving the conjugal partnership property of the
Rafael's claim that the complaint below should have been dismissed since Grace Joy has no authority to represent the Estate of terminated marriage shall be void.
Vipa and that there was lack of prior barangay conciliation is untenable. Unlawful detainer cases are covered by the Rules on Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory
Summary Procedure.41 Section 5 of the 1991 Revised Rules on Summary Procedure provides that affirmative and negative regime of complete separation of property shall govern the property relations of the subsequent marriage. (Emphasis ours)
defenses not pleaded in the answer shall be deemed waived, except lack of jurisdiction over the subject matter. Article 130 of the Family Code is applicable to conjugal partnership of gains already established between the spouses prior to
Rafael failed to plead in the answer he filed with the MTCC that Grace Joy has no authority to represent the Estate of Vipa. the effectivity of the Family Code pursuant to Article 105 thereof, viz.:
Neither did he raise therein the lack of barangay conciliation between the parties herein prior to the filing of the complaint for Article 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall
unlawful detainer. Accordingly, the foregoing defenses are already deemed waived. govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.
In any case, the issue of the supposed lack of authority of Grace Joy to represent the Estate of Vipa had already been rendered The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses
moot with the RTC's appointment of Grace Joy as the administrator of the Estate of Vipa in Special Proceedings No. 6910. before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or
Also, there was no need to refer the dispute between the parties herein to the barangay for conciliation pursuant to other laws as provided in Article 256. (Emphasis ours)
the Katarungang Pambarangay Law.42 It bears stressing that only individuals may be parties to barangay conciliation Rafael bought Levi's one-half share in the subject property in consideration of P500,000.00 as evidenced by the Deed of
proceedings either as complainants or respondents. Complaints by or against corporations, partnerships or other juridical entities Sale52 dated December 29, 2005. At that time, the conjugal partnership properties of Levi and Vipa were not yet liquidated.
may not be filed with, received or acted upon by the barangay for conciliation.43 The Estate of Vipa, which is the complainant However, such disposition, notwithstanding the absence of liquidation of the conjugal partnership properties, is not necessarily
below, is a juridical entity that has a personality, which is separate and distinct from that of Grace Joy. 44 Thus, there is no void.
necessity to bring the dispute to the barangay for conciliation prior to filing of the complaint for unlawful detainer with the It bears stressing that under the regime of conjugal partnership of gains, the husband and wife are co-owners of all the property
MTCC. of the conjugal partnership.53 Thus, upon the termination of the conjugal partnership of gains due to the death of either spouse,
The CA, nevertheless, erred in hastily dismissing Rafael's allegation as regards the ownership of the subject property. In the surviving spouse has an actual and vested one-half undivided share of the properties, which does not consist of determinate
disregarding Rafael's claim that he owns Levi's one-half undivided share in the subject property, the CA ruled that the said issue and segregated properties until liquidation and partition of the conjugal partnership. 54 With respect, however, to the deceased
was raised for the first time on appeal and should thus not have been considered by the RTC, viz.: spouse's share in the conjugal partnership properties, an implied ordinary co-ownership ensues among the surviving spouse and
On the second issue, the records show that [Rafael] raised the issue of ownership only for the first time on appeal; hence, the the other heirs of the deceased.55
[RTC] erred in deciding the appeal before it on the findings that part of the subject premises is owned by petitioners, allegedly Thus, upon Vipa's death, one half of the subject property was automatically reserved in favor of the surviving spouse, Levi, as
having bought the same from [Levi], the husband of [Vipa]. his share in the conjugal partnership. The other half, which is Vipa's share, was transmitted to Vipa's heirs – Grace Joy, Jill
The Court is not unmindful that in forcible entry and unlawful detainer cases, the MTC may rule on the issue [of] ownership in Frances, and her husband Levi, who is entitled to the same share as that of a legitimate child. The ensuing implied co-ownership
order to determine the issue of possession. However, the issue of ownership must be raised by the defendant on the earliest is governed by Article 493 of the Civil Code, which provides:
opportunity; otherwise, it is already deemed waived. Moreover, the instant case was covered by the Rules on Summary Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he
Procedure, which expressly provide that affirmative and negative defenses not pleaded therein shall be deemed waived, except may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal
for lack of jurisdiction over the subject matter. Thus, the [RTC] erred in resolving the issue of ownership for the first time on rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
appeal.45 (Citations omitted) portion which may be allotted to him in the division upon the termination of the co-ownership. (Emphasis ours)
It is true that fair play, justice, and due process dictate that parties should not raise for the first time on appeal issues that they Although Levi became a co-owner of the conjugal partnership properties with Grace Joy and Jill Frances, he could not yet assert
could have raised but never did during trial. However, before a party may be barred from raising an issue for the first time on or claim title to any specific portion thereof without an actual partition of the property being first done either by agreement or by
appeal, it is imperative that the issue could have been raised during the trial.46 What escaped the appellate court's attention is that judicial decree. Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite
the sale of the one-half undivided share in the subject property to Rafael was consummated only on December 29, 2005, more portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or thing.56
than two years after Rafael filed with the MTCC his answer to the complaint for unlawful detainer on July 18, Nevertheless, a co-owner could sell his undivided share; hence, Levi had the right to freely sell and dispose of his undivided
2003.47 Obviously, Rafael could not have raised his acquisition of Levi's share in the subject property as an affirmative defense interest. Thus, the sale by Levi of his one-half undivided share in the subject property was not necessarily void, for his right as a
in the answer he filed with the MTCC. co-owner thereof was effectively transferred, making the buyer, Rafael, a co-owner of the subject property. It must be stressed
Moreover, Rafael's ownership of the one-half undivided share in the subject property would necessarily affect the property that the binding force of a contract must be recognized as far as it is legally possible to do so (quando res non valet ut ago,
relations between the parties herein. Thus, the CA should have exerted efforts to resolve the said issue instead of dismissing the valeat quantum valere potest).57
same on the flimsy ground that it was not raised during the proceedings before the MTCC. However, Rafael became a co-owner of the subject property only on December 29, 2005 – the time when Levi sold his one-half
Levi and Vipa were married on March 24, 1961 48 and, in the absence of a marriage settlement, the system of conjugal undivided share over the subject property to the former. Thus, from December 29, 2005 Rafael, as a co-owner, has the right to
partnership of gains governs their property relations.49 It is presumed that the subject property is part of the conjugal properties possess the subject property as an incident of ownership. Otherwise stated, prior to his acquisition of Levi's one-half undivided
share, Rafael was a mere lessee of the subject property and is thus obliged to pay the rent for his possession thereof.
20
Accordingly, Rafael could no longer be directed to vacate the subject property since he is already a co-owner thereof. the Municipality of San Juan and to sell the ice produced from said plant in the said Municipality of San Juan and in the
Nevertheless, Rafael is still bound to pay the unpaid rentals from June 1998 until April 2003 in the amount of P271,150.00. Municipality of Mandaluyong, Rizal, and in Quezon City", subject to the conditions therein set forth in detail (petitioner's brief,
In Nacar v. Gallery Frames, et al.,58 the Court pointed out that pursuant to Resolution No. 796 of the Bangko Sentral ng pp. 33-34).
Pilipinas Monetary Board, the interest rate of loans or forbearance of money, in the absence of stipulation shall be six percent Petitioner makes four assignments of error in his brief as follows:
(6%) effective only from July 1, 2013. Thus, prior to July 1, 2013, the rate of interest on loans or forbearance of money, in the 1. The decision of the Public Service Commission is not in accordance with law.
absence of stipulation, is still 12%. Accordingly, the amount of P271,150.00, representing the unpaid rentals shall earn interest 2. The decision of the Public Service Commission is not reasonably supported by evidence.
at the rates of 12% per annum from the date of the last demand on May 3, 2003 until June 30, 2013 and 6% per annum from 3. The Public Service Commission erred in not giving petitioner and the Ice and Cold Storage Industries of the
July 1, 2013 until fully paid. Philippines, Inc., as existing operators, a reasonable opportunity to meet the increased demand.
Further, Rafael is likewise bound to pay reasonable rent for the use and occupancy of the subject property from May 2003 until 4. The decision of the Public Service Commission is an unwarranted departure from its announced policy with
December 28, 2005 at the rate of P3,000.00 per month with interest at the rate of 12% per annum from the date of the last respect to the establishment and operation of ice plant. (Pp. 1-2, petitioner's brief.)
demand, i.e., the filing of the complaint with the MTCC on June 12, 2003, until June 30, 2013 and 6% per annum from July 1, In his argument petitioner contends that it was error on the part of the commission to allow the substitution of the legal
2013 until fully paid. representative of the estate of Pedro O. Fragante for the latter as party applicant in the case then pending before the commission,
The award of attorney's fees of P20,000.00 is likewise proper. Attorney's fees can be awarded in the cases enumerated in Article and in subsequently granting to said estate the certificate applied for, which is said to be in contravention of law.
2208 of the Civil Code, specifically: If Pedro O. Fragante had not died, there can be no question that he would have had the right to prosecute his application before
Article 2208. x x x the commission to its final conclusion. No one would have denied him that right. As declared by the commission in its decision,
xxxx he had invested in the ice plant in question P 35,000, and from what the commission said regarding his other properties and
(2) Where the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to business, he would certainly have been financially able to maintain and operate said plant had he not died. His transportation
protect his interest[.] business alone was netting him about P1,440 a month. He was a Filipino citizen and continued to be such till his demise. The
Certainly, because of Rafael's unjustified refusal to pay the rents due on the lease of the subject prope1iy, the Estate of Vipa was commission declared in its decision, in view of the evidence before it, that his estate was financially able to maintain and
put to unnecessary expense and trouble to protect its interest under paragraph (2), Article 2208 of the Civil Code. In unlawful operate the ice plant. The aforesaid right of Pedro O. Fragante to prosecute said application to its conclusion was one which by
detainer cases, where attorney's fees are awarded, the same shall not exceed P20,000.00.59 its nature did not lapse through his death. Hence, it constitutes a part of the assets of his estate, for which a right was property
WHEREFORE, in view of the foregoing disquisitions, the petition for review on certiorari is PARTIALLY GRANTED. The despite the possibility that in the end the commission might have denied application, although under the facts of the case, the
Decision dated November 26, 2010 and Resolution dated January 24, 2012 issued by the Court of Appeals in CA-G.R. SP No. commission granted the application in view of the financial ability of the estate to maintain and operate the ice plant. Petitioner,
04481 are hereby REVERSED and SET ASIDE. Petitioner Rafael C. Uy is hereby directed to pay the Estate of Vipa in his memorandum of March 19, 1947, admits (page 3) that the certificate of public convenience once granted "as a rule,
Fernandez the following: should descend to his estate as an asset". Such certificate would certainly be property, and the right to acquire such a certificate,
1. The amount of P271,150.00, representing the unpaid rentals, with interest at the rates of twelve percent (12%) per by complying with the requisites of the law, belonged to the decedent in his lifetime, and survived to his estate and judicial
annum from the date of the last demand on May 3, 2003 until June 30, 2013, and six percent (6%) per annum from administrator after his death.
July 1, 2013 until fully paid; If Pedro O. Fragrante had in his lifetime secured an option to buy a piece of land and during the life of the option he died, if the
2. Reasonable rent for the use and occupancy of the subject property from May 2003 until December 28, 2005 at the option had been given him in the ordinary course of business and not out of special consideration for his person, there would be
rate of P3,000.00 per month with interest at the rates of twelve percent (12%) per annum from the date of the last no doubt that said option and the right to exercise it would have survived to his estate and legal representatives. In such a case
demand, i.e., the filing of the complaint for unlawful detainer on June 12, 2003, until June 30, 2013, and six percent there would also be the possibility of failure to acquire the property should he or his estate or legal representative fail to comply
(6%) per annum from July 1, 2013 until fully paid; and with the conditions of the option. In the case at bar Pedro O. Fragrante's undoubted right to apply for and acquire the desired
3. The amount of P20,000.00 as attorney's fees. certificate of public convenience — the evidence established that the public needed the ice plant — was under the law
conditioned only upon the requisite citizenship and economic ability to maintain and operate the service. Of course, such right
to acquire or obtain such certificate of public convenience was subject to failure to secure its objective through nonfulfillment of
G.R. No. L-770 April 27, 1948 the legal conditions, but the situation here is no different from the legal standpoint from that of the option in the illustration just
ANGEL T. LIMJOCO, petitioner, given.
vs. Rule 88, section 2, provides that the executor or administrator may bring or defend actions, among other cases, for the
INTESTATE ESTATE OF PEDRO O. FRAGRANTE, deceased, respondent. protection of the property or rights of the deceased which survive, and it says that such actions may be brought or defended "in
Angel Limjoco, Jr. and Delfin L. Gonzales for petitioner. the right of the deceased".
Bienvenido A. Tan for respondent. Rule 82, section 1, paragraph (a), mentions among the duties of the executor or administrator, the making of an inventory of all
HILADO, J.: goods, chattels, rights, credits, and estate of the deceased which shall come to his possession or knowledge, or to the possession
Under date of May 21, 1946, the Public Service Commission, through Deputy Commissioner Fidel Ibañez, rendered its decision of any other person for him.
in case No. 4572 of Pedro O. Fragante, as applicant for a certificate of public convenience to install, maintain and operate an ice In his commentaries on the Rules of Court (Volume II, 2nd ed., pages 366, 367) the present chief Justice of this Court draws the
plant in San Juan, Rizal, whereby said commission held that the evidence therein showed that the public interest and following conclusion from the decisions cited by him:
convenience will be promoted in a proper and suitable manner "by authorizing the operation and maintenance of another ice Therefore, unless otherwise expressly provided by law, any action affecting the property or rights (emphasis
plant of two and one-half (2-½) tons in the municipality of San Juan; that the original applicant Pedro O. Fragante was a supplied) of a deceased person which may be brought by or against him if he were alive, may likewise be instituted
Filipino Citizen at the time of his death; and that his intestate estate is financially capable of maintaining the proposed service". and prosecuted by or against the administrator, unless the action is for recovery of money, debt or interest thereon, or
The commission, therefore, overruled the opposition filed in the case and ordered "that under the provisions of section 15 of unless, by its very nature, it cannot survive, because death extinguishes the right . . . .
Commonwealth Act No. 146, as amended a certificate of public convenience be issued to the Intestate Estate of the deceased It is true that a proceeding upon the application for a certificate of public convenience before the Public Service Commission is
Pedro Fragante, authorizing said Intestate Estate through its Special or Judicial Administrator, appointed by the proper court of not an "action". But the foregoing provisions and citations go to prove that the decedent's rights which by their nature are not
competent jurisdiction, to maintain and operate an ice plant with a daily productive capacity of two and one-half (2-1/2) tons in extinguished by death go to make up a part and parcel of the assets of his estate which, being placed under the control and
management of the executor or administrator, can not be exercised but by him in representation of the estate for the benefit of
21
the creditors, devisees or legatees, if any, and the heirs of the decedent. And if the right involved happens to consist in the . . . the judgment appealed from must be affirmed so far as it holds that defendants Concepcion and Whitaker are
prosecution of an unfinished proceeding upon an application for a certificate of public convenience of the deceased before the indebted to he plaintiffs in the amount of P245,804.69 . . . .
Public Service Commission, it is but logical that the legal representative be empowered and entitled in behalf of the estate to Under the regime of the Civil Code and before the enactment of the Code of Civil Procedure, the heirs of a deceased person
make the right effective in that proceeding. were considered in contemplation of law as the continuation of his personality by virtue of the provision of article 661 of the
Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and article 336 of the Civil Code, respectively, consider first Code that the heirs succeed to all the rights and obligations of the decedent by the mere fact of his death. It was so held by
as immovable and movable things rights which are not material. The same eminent commentator says in the cited volume (p. this Court in Barrios vs. Dolor, 2 Phil., 44, 46. However, after the enactment of the Code of Civil Procedure, article 661 of the
45) that article 336 of the Civil Code has been deficiently drafted in that it is not sufficiently expressive of all incorporeal rights Civil Code was abrogated, as held in Suiliong & Co. vs. Chio-Taysan, 12 Phil., 13, 22. In that case, as well as in many others
which are also property for juridical purposes. decided by this Court after the innovations introduced by the Code of Civil Procedure in the matter of estates of deceased
Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the term, property includes, among other things, "an option", and persons, it has been the constant doctrine that it is the estate or the mass of property, rights and assets left by the decedent,
"the certificate of the railroad commission permitting the operation of a bus line", and on page 748 of the same volume we read: instead of the heirs directly, that becomes vested and charged with his rights and obligations which survive after his demise.
However, these terms (real property, as estate or interest) have also been declared to include every species of The heirs were formerly considered as the continuation of the decedent's personality simply by legal fiction, for they might not
title, inchoate or complete, and embrace rights which lie in contract, whether executory or executed. (Emphasis have been flesh and blood — the reason was one in the nature of a legal exigency derived from the principle that the heirs
supplied.) succeeded to the rights and obligations of the decedent. Under the present legal system, such rights and obligations as survive
Another important question raised by petitioner is whether the estate of Pedro O. Fragrante is a "person" within the meaning of after death have to be exercised and fulfilled only by the estate of the deceased. And if the same legal fiction were not indulged,
the Public Service Act. there would be no juridical basis for the estate, represented by the executor or administrator, to exercise those rights and to
Words and Phrases, First Series, (Vol. 6, p, 5325), states the following doctrine in the jurisdiction of the State of Indiana: fulfill those obligations of the deceased. The reason and purpose for indulging the fiction is identical and the same in both cases.
As the estate of the decedent is in law regarded as a person, a forgery committed after the death of the man whose This is why according to the Supreme Court of Indiana in Billings vs. State, supra, citing 2 Rapalje & L. Dictionary, 954,
name purports to be signed to the instrument may be prosecuted as with the intent to defraud the estate. Billings vs. among the artificial persons recognized by law figures "a collection of property to which the law attributes the capacity of
State, 107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am. Rep. 77. having rights and duties", as for instance, the estate of a bankrupt or deceased person.
The Supreme Court of Indiana in the decision cited above had before it a case of forgery committed after the death of one Petitioner raises the decisive question of whether or not the estate of Pedro O. Fragrante can be considered a "citizen of the
Morgan for the purpose of defrauding his estate. The objection was urged that the information did not aver that the forgery was Philippines" within the meaning of section 16 of the Public Service Act, as amended, particularly the proviso thereof expressly
committed with the intent to defraud any person. The Court, per Elliott, J., disposed of this objection as follows: and categorically limiting the power of the commission to issue certificates of public convenience or certificates of public
. . . The reason advanced in support of this proposition is that the law does not regard the estate of a decedent as a convenience and necessity "only to citizens of the Philippines or of the United States or to corporations, copartnerships,
person. This intention (contention) cannot prevail. The estate of the decedent is a person in legal contemplation. "The associations, or joint-stock companies constituted and organized under the laws of the Philippines", and the further proviso that
word "person" says Mr. Abbot, "in its legal signification, is a generic term, and includes artificial as well as natural sixty per centum of the stock or paid-up capital of such entities must belong entirely to citizens of the Philippines or of the
persons," 2 Abb. Dict. 271; Douglas vs. Pacific, etc. Co., 4 Cal. 304; Planters', etc., Bank vs. Andrews, 8 Port. (Ala.) United States.
404. It said in another work that 'persons are of two kinds: natural and artificial. A natural person is a human being. Within the Philosophy of the present legal system, the underlying reason for the legal fiction by which, for certain purposes, the
Artificial persons include (1) a collection or succession of natural persons forming a corporation; (2) a collection of estate of the deceased person is considered a "person" is the avoidance of injustice or prejudice resulting from the impossibility
property to which the law attributes the capacity of having rights and duties. The latter class of artificial persons is of exercising such legal rights and fulfilling such legal obligations of the decedent as survived after his death unless the fiction
recognized only to a limited extent in our law. "Examples are the estate of a bankrupt or deceased person." 2 Rapalje is indulged. Substantially the same reason is assigned to support the same rule in the jurisdiction of the State of Indiana, as
& L. Law Dict. 954. Our own cases inferentially recognize the correctness of the definition given by the authors from announced in Billings vs. State, supra, when the Supreme Court of said State said:
whom we have quoted, for they declare that it is sufficient, in pleading a claim against a decedent's estate, to . . . It seems reasonable that the estate of a decedent should be regarded as an artificial person. it is the creation of law
designate the defendant as the estate of the deceased person, naming him. Ginn vs. Collins, 43 Ind. 271. Unless we for the purpose of enabling a disposition of the assets to be properly made . . . .
accept this definition as correct, there would be a failure of justice in cases where, as here, the forgery is committed Within the framework and principles of the constitution itself, to cite just one example, under the bill of rights it seems clear that
after the death of a person whose name is forged; and this is a result to be avoided if it can be done consistent with while the civil rights guaranteed therein in the majority of cases relate to natural persons, the term "person" used in section 1 (1)
principle. We perceive no difficulty in avoiding such a result; for, to our minds, it seems reasonable that the estate of and (2) must be deemed to include artificial or juridical persons, for otherwise these latter would be without the constitutional
a decedent should be regarded as an artificial person. It is the creation of law for the purpose of enabling a disposition guarantee against being deprived of property without due process of law, or the immunity from unreasonable searches and
of the assets to be properly made, and, although natural persons as heirs, devises, or creditors, have an interest in the seizures. We take it that it was the intendment of the framers to include artificial or juridical, no less than natural, persons in
property, the artificial creature is a distinct legal entity. The interest which natural persons have in it is not complete these constitutional immunities and in others of similar nature. Among these artificial or juridical persons figure estates of
until there has been a due administration; and one who forges the name of the decedent to an instrument purporting to deceased persons. Hence, we hold that within the framework of the Constitution, the estate of Pedro O. Fragrante should be
be a promissory note must be regarded as having intended to defraud the estate of the decedent, and not the natural considered an artificial or juridical person for the purposes of the settlement and distribution of his estate which, of course,
persons having diverse interests in it, since ha cannot be presumed to have known who those persons were, or what include the exercise during the judicial administration thereof of those rights and the fulfillment of those obligations of his
was the nature of their respective interest. The fraudulent intent is against the artificial person, — the estate — and which survived after his death. One of those rights was the one involved in his pending application before the Public Service
not the natural persons who have direct or contingent interest in it. (107 Ind. 54, 55, 6 N.E. 914-915.) Commission in the instant case, consisting in the prosecution of said application to its final conclusion. As stated above, an
In the instant case there would also be a failure of justice unless the estate of Pedro O. Fragrante is considered a "person", for injustice would ensue from the opposite course.
quashing of the proceedings for no other reason than his death would entail prejudicial results to his investment amounting to How about the point of citizenship? If by legal fiction his personality is considered extended so that any debts or obligations left
P35,000.00 as found by the commission, not counting the expenses and disbursements which the proceeding can be presumed to by, and surviving, him may be paid, and any surviving rights may be exercised for the benefit of his creditors and heirs,
have occasioned him during his lifetime, let alone those defrayed by the estate thereafter. In this jurisdiction there are ample respectively, we find no sound and cogent reason for denying the application of the same fiction to his citizenship, and for not
precedents to show that the estate of a deceased person is also considered as having legal personality independent of their heirs. considering it as likewise extended for the purposes of the aforesaid unfinished proceeding before the Public Service
Among the most recent cases may be mentioned that of "Estate of Mota vs. Concepcion, 56 Phil., 712, 717, wherein the Commission. The outcome of said proceeding, if successful, would in the end inure to the benefit of the same creditors and the
principal plaintiff was the estate of the deceased Lazaro Mota, and this Court gave judgment in favor of said estate along with heirs. Even in that event petitioner could not allege any prejudice in the legal sense, any more than he could have done if
the other plaintiffs in these words: Fragrante had lived longer and obtained the desired certificate. The fiction of such extension of his citizenship is grounded upon
the same principle, and motivated by the same reason, as the fiction of the extension of personality. The fiction is made
22
necessary to avoid the injustice of subjecting his estate, creditors and heirs, solely by reason of his death to the loss of the half of the property left by said decedent; (2) the trial court erred in holding the certificate of sale of lot No. 1058, exhibit 9,
investment amounting to P35,000, which he has already made in the ice plant, not counting the other expenses occasioned by executed by the deceased Cecilio Joya in favor of defendant Florentino Joya, to be null and void; (3) the trial court erred in
the instant proceeding, from the Public Service Commission of this Court. finding that when plaintiff signed the agreement of partition, Exhibit 7, she was unaware of the contents of the same, and that
We can perceive no valid reason for holding that within the intent of the constitution (Article IV), its provisions on Philippine said agreement of partition has not become legally effective as against the plaintiff; (4) the trial court erred in holding it to be a
citizenship exclude the legal principle of extension above adverted to. If for reasons already stated our law indulges the fiction fact admitted by both parties that lots 1153 and 2352 were not donated by Pedro Tiongco to Cecilio Joya, the corresponding
of extension of personality, if for such reasons the estate of Pedro O. Fragrante should be considered an artificial or juridical certificates of transfer by donation, Exhibits F and G, notwithstanding; (5) the trial court erred in giving more credit to the
person herein, we can find no justification for refusing to declare a like fiction as to the extension of his citizenship for the testimony of the plaintiff Basilia Arayata than to that of the defendant Florentino Joya; (6) the trial court erred in admitting
purposes of this proceeding. plaintiff's Exhibits J, M, N and N-1; (7) the trial court erred in ordering each and every one of the defendants, Florentino,
Pedro O. Fragrante was a Filipino citizen, and as such, if he had lived, in view of the evidence of record, he would have Feliciano and Pablo Joya, Asuncion Bobadilla Delfin and Feliciana Blancaflor to deliver lots Nos. 1031, 1038, 1086, 1153 and
obtained from the commission the certificate for which he was applying. The situation has suffered but one change, and that is, 2352 to the administrator of the estate of the deceased Cecilio Joya in order that he might proceed with the liquidation, partition,
his death. His estate was that of a Filipino citizen. And its economic ability to appropriately and adequately operate and and distribution of the said deceased's estate in accordance with the decision rendered in this case by said trial court; (8) the trial
maintain the service of an ice plant was the same that it received from the decedent himself. In the absence of a contrary court erred in holding plaintiff to be sole and exclusive owner of the lots question, or such portions thereof, or their value as
showing, which does not exist here, his heirs may be assumed to be also Filipino citizens; and if they are not, there is the simple may be due her as a result of said liquidation.
expedient of revoking the certificate or enjoining them from inheriting it. The following are the pertinent and controverted facts necessary for the decision of this case:
Upon the whole, we are of the opinion that for the purposes of the prosecution of said case No. 4572 of the Public Service Cecilio Joya, during his lifetime, inherited from his deceased parents the right of lease to six lots of the friar lands at Santa Crus
Commission to its final conclusion, both the personality and citizenship of Pedro O. Fragrante must be deemed extended, within de Malabon, municipality of Tanza, Province of Cavite. On June 4, 1906, Cecilio Joya married the herein plaintiff, Basilia
the meaning and intent of the Public Service Act, as amended, in harmony with the constitution: it is so adjudged and decreed. Arayata. When the Insular Government acquired the said land, Cecilio Joya continued his lease in accordance with the
Decision affirmed, without costs. So ordered. provisions of the Act of Congress of July 1, 1902 and Act No. 1120 of the Philippine Commission. While married to the herein
G.R. No. L-28067 March 10, 1928 plaintiff-appellant, Cecilio Joya purchase the lots he had been leasing, on installments, from the Government, under said Act
BASILIA ARAYATA, plaintiff-appellant, No. 1120, which were designated as lots Nos. 1031 (Exhibit C), 1058 (Exhibit D), 1086 (Exhibit E), 1153 (Exhibit F), 2352
vs. (Exhibit G) and 547 (Exhibit H). as the number of lots which a purchaser could acquire under the law was limited, lots Nos.
FLORENTINO JOYA, ET AL., defendants-appellants. 1153 and 2352 were excluded and put up for sale. In order not to lose them, Cecilio Joya had Pedro Tiongco buy them,
Emiliano T. Tirona and Andres R. Faustino for plaintiff-appellant. supplying him with the necessary funds. Subsequently, Pedro Tiongco transferred his right to said lots to Cecilio Joya by
Fidel Ibanez for defendants-appellants. donation, as appears from Exhibits F and G. These transfers were approved by the Director of Lands and noted in the proper
VILLA-REAL, J.: registry book. On April 24 1919, Cecilio Joya conveyed his right to lot No. 1058 to Florentino Joya consideration of the sum of
In this instance both parties have appealed from the judgment of the Court of First Instance of Cavite, the dispositive part of P2,000 said conveyance having been approved by the Director of Lands and registered in the proper registry book (Exhibit 9).
which, as amended, is as follows; On May 11, 1919, Cecilio Joya conveyed his right to lot No. 547 to Marcelina Joya and Francisco Joya in consideration of the
Wherefore, the testamentary clauses and dispositions made by the late Cecilio Joya concerning one-half of the sum of P450, conveyance having been approved by the Director of Lands and registered in the proper registry book (Exhibit
property left by the deceased and pertaining to the plaintiff, are hereby declared void in so far as they infringe upon 10). On April 27, 1919, Cecilio Joya executed a will devising lot No. 1058 to Florentino Joya, lot No. 1086 to Pablo Joya, lot
said plaintiff's right, as being contrary to law; the certificate of sale of lot No. 1058, Exhibit 9, executed by the No. 1031 to Delfin and Felicisima Blancaflor, lot No. 1153 to the brothers Agustin and Pedro Joya, lot No. 2352 to Feliciano
deceased in favor of defendant Florentino Joya is null and void, and the plaintiff is hereby declared the sole and and Asuncion Bobadilla, and lot No. 547 (Exhibit Y) to Marcelina and Francisca Joya. At the time of his death, Cecilio Joya
exclusive owner of said lots, or such portions thereof or their value, as the plaintiff may be entitled to as a result of had not yet completed the payment of the price of the lots mentioned above to the Insular Government. All the lots in question
the liquidation of the testamentary estate; and each and every one of the defendants, Florentino and Pablo Joya, except lot No. 547, are in the possession of the defendants, who enjoy their products. On May 10, 1920 lots Nos. 2352, 1086,
Asuncion Bobadilla, and Delfin and Felicisima Blancaflor, are hereby ordered to deliver lots Nos. 1031, 1058, 1086, 1153 and 1031, were transferred to Florentino Joya as administrator of the estate of the deceased Cecilio Joya. (Exhibits 3, 4, 5
1153, and 2352 to the administrator of the estate of the deceased in order that he may proceed to the liquidation, and 6.)
partition and distribution of the latter's estate in accordance with the law and this judgment, as soon as it becomes On May 26, 1919, Cecilio Joya died, and on June 9, 1919, his executor, the herein defendant Florentino Joya, presented said
final and executory, the Director of Lands being hereby ordered to cancel the certificates of transfer of said lots Nos. will for probate to the Court of First Instance of Cavite, which was probated after the proper proceedings. In March, 1920, in the
1031, 1058, 1086, 1153 and 2352 registered in the name of said defendants, Florentino Joya on his own behalf and course of the testamentary proceedings, the executor Florentino Joya presented an alleged agreement of partition by the
that of Pablo Joya, Felicisimo Joya, Asuncion Bobadilla, Delfin and Felicisima Blancaflor, with the costs of the legatees, which agreement was disapproved by the court in view of the herein plaintiff's opposition, who alleged that her
action against the defendants. So ordered. signature had been obtained by fraud.
In support of her appeal, plaintiff-appellant assigns the following alleged errors as committed by the trial court in its decision, to The questions to be determined in this appeal are purely legal, and, briefly,, are as follows: (1) Were Cecilio Joya's conveyances
wit: (1) The lower court erred in declaring the plaintiff owner of only one-half of lots Nos. 1031, 1058, 1086, 1153, and 2352, of his interest in lot No. 1958 to Florentino Joya and in No. 547 to the sisters Marcelina and Francisca Joya fraudulent? (2)
as conjugal property possessed with the deceased Cecilio Joya, instead of holding her to be the absolute and exclusive owner of Were Cecilio Joya's legacies of lots Nos. 1031, 1086, 1153 and 2352 to the other defendants null and void? (3) Has the plaintiff-
said lots, in accordance with section 16 of Act No. 1120; (2) the lower court erred in not holding the document of sale of lot No. appellant, as the surviving spouse, exclusive right to all the lots in question? (4) In case she has, is she entitled to the possession
547, Exhibit 10, fraudulent, (3) the lower court erred in amending its judgment of December 17, 1926, thereby exempting the and products thereof?
defendants from the obligation to pay plaintiff the products of the lots in question, from the year 1920 until their restitution; (4) As to the first question, the pertinent part of section 16 of Act No. 1120 says the following:
the lower court erred in amending its judgment rendered on December 17, 1926, ordering the delivery of all the lots in question SEC. 16. . . . In case the holder of the certificate shall have his interest in the land before having complied with all the
to the administrator of the estate of the deceased Cecilio Joya, in order that he might proceed to the liquidation and distribution conditions thereof, the purchaser from the holder of the certificate shall be entitled to all the rights of the holder of the
of the latter's estate in accordance with the law and its judgment; (5) the lower court erred in not passing upon petition contained certificate upon presenting his assignment to the Chief of the Bureau of Public Lands for registration.
in the complaint to the effect that defendant, Florentino Joya, who was appointed administrator of the estate of the deceased It will be seen that the holder of a certificate off sale of friar has a right to sell his interest therein, even before having fully paid
Cecilio Joya in case No. 1241, be relieved from such duty; (6) the lower court erred in denying plaintiff's motion for a new trial. the purchase price and upon presentation of the certificate of transfer to the Chief of the Bureau of Public Lands for registration,
The defendants-appellants, in turn, assign the following alleged errors as committed by the trial court in its decision, to wit: (1) he is subrogated to all the rights of the holder of the certificate.
The trial court erred in annulling the clauses and provisions of the decedent Cecilio Joya's will, Exhibit Y, with respect to one-
23
The evidence shows that during his lifetime Cecilio Joya conveyed his interest in lot No. 1058 to Florentino Joya for the sum of consents to the heirs continuing in possession thereof. But such consent does not, however, relieve the administrator of all
P2,000, said conveyance having been approved by the Director of Lands, and registered in the proper register book of said responsibility for the management of the same and its fruits; because until the judicial partition is made, said property continues
office. (Exhibit 9.) His right to lot No. 547 was also conveyed by Cecilio Joya to Marcelina and Francisca Joya during his to belong to the testamentary estate. (Pimentel vs. Palanca, 5 Phil., 436; Fernandez vs. Tria, 22 Phil., 603.)
lifetime, said transfer having been approved by the Director of Lands, and registered in the proper book in the Bureau of Public Being a matter of law, the defendants-appellants cannot plead ignorance of the fact that until a judicial partition of the property
Lands. (Exhibit 10.) Said conveyance having been made in accordance with the provisions of the law, Florentino Joya on the left by Cecilio Joya is made, said property belongs to the lather's estate and it together with its products, is subject to the
one hand, and Marcelina and Francisca Joya on the other, were subrogated to all of Cecilio Joya's rights to said lots, and there is payment of the testator's debts, if any. Only after judicial partition has been made do they acquire the title to their respective
nothing in the record to show conclusively that said conveyances were fraudulently obtained. The fact that the testator included legacies, if the latter are valid. (Santos vs. Roman Catholic Bishop of Nueva Caceres, 45 Phil., 895.)
said lots in his will and disposed of them in the form of legacies in favor of said persons, does not in itself show the existence of We have seen that the legacies given by Cecilio Joya to the defendants were void. If the lands, which are the subject matter of
any fraud. At most, it may be held as an act of ratification. said legacies and which are in the possession of the defendants, still belong to Cecilio Joya's estate, because no judicial partition
In regard to the second and third questions, that is, whether or not the legacies are null and void, and the plaintiff-appellant, as has as yet been made of the property he left, which is subject, together with its fruits, to the payment of his debts, said
the surviving spouse, is entitled exclusively to the lots in question, the pertinent part of said section 16 of Act No. 1120 provides defendants cannot invoke the provisions of the Civil Code with respect to possession in good faith insofar as the fruits are
as follows: concerned; because even when the legacies are valid they acquired only when the latter judicially assigned to them in the final
SEC. 16. In the event of the death of a holder of a certificate the issuance of which is provided for in section twelve partition, and because, while said lands are under administration, the administrator is obliged to render an account of his
hereof, prior to the execution of a deed by the Government to any purchaser, his widow shall be entitled to receive a management of the same and the products thereof.
deed of the land stated in the certificate upon showing that she has complied with the requirements of law for the In conclusion, them we hold that the defendants are not entitled to the possession of the lands in question or their products, and
purchase of the same. they are bound to return them to the herein plaintiff-appellant, after deducting the necessary expenses for cultivation and
In the case of Jocson vs. Soriano, as administrator of the intestate estate of Silvestre Estacion (45 Phil., 375), this court, preservation. (Art 453, Civil Code.)
interpreting the above-quoted legal provision, laid down the following doctrine: Summarizing all that has been said above, we find:
FRIAR ESTATE LANDS; RIGHTS OF THE WIDOW OF THE PURCHASER AFTER THE DEATH OF THE 1. That Cecilio Joya's transfers during his lifetime of lot No. 1058 to Florentino Joya and lot No. 547 to the sisters
LATTER. — Under the provisions of section 16 of Act No. 1120, the widow of a purchaser of a parcel of land Marcelina and Francisca Joya, with the approval of the Director of Lands, are bona fide, and therefore legal and
belonging to the Friar Estate, purchased by the Government, after the death of her husband (the purchaser), is entitled valid.
to have a patent issued to her of the lands purchased, upon a proper showing that she has completed the payment of 2. That Cecilio Joya's legacies in his will of lot No. 1031 to Delfin and Felicisima Blancaflor, lot No. 1086 to Pablo
the purchase price. The right granted to the original settlers of the friar estate lands to purchase the parcel occupied by Joya, lot No. 1152 to the brothers Agustin and Pedro Joya, and lot No. 2352 to Feliciano and Asuncion Bobadilla are
them at the time of the purchase by the Government, is a right conceded by the Government, analogous to the null and void, being contrary to the provisions of section 16 of Act No. 1120 which grants his widow, the herein
homestead laws. A homestead privilege does not terminate on the husband's death, but is transferred to his widow plaintiff-appellant the ownership of the lands purchased and not transferred by him during his lifetime, provided that
and his family. A homestead selected by the husband in his lifetime vests absolute in his surviving wife, and her she complies with the legal requirements for the purchase of the same.
rights are governed by the law in force at the time of the death of her husband. Neither does she lose said right by a 3. The plaintiff-appellant is entitled to the exclusive ownership and possession of the aforementioned lots Nos. 1031,
second marriage upon the death of her husband, the purchaser. She may continue to occupy the whole of the 1086, 1153, and 2352 and to their fruits, after deducting the necessary expenses of preservation, cultivation and
homestead. production.
We have seen, in discussing and solving the first question, that the holder of a certificate of sale of friar lands, who has not fully For the foregoing, the judgment appealed from is modified, and it is ordered that Feliciano and Pablo Joya, Asuncion Bobadilla,
paid the purchase price may transfer and convey his rights, but that the transferee or grantee is not subrogated to all the Delfin and Felicisima Blancaflor return lots Nos. 1031, 1086, 1153, and 2352 to the plaintiff-appellant, Basilia Arayata, together
transferor's right until the transfer has been approved by the Director of Lands and registered in the registry book in the Bureau with their products, or the latter's equivalent in cash from the year 1920 until their restitution, deducting the necessary expenses
of Public Lands. In other words, in order that a transfer of the rights of a holder of a certificate of sale of friar lands may be of cultivation, preservation, and production. Without any special pronouncement as to costs, it is so ordered.
legally effective, it is necessary that a formal certificate of transfer be drawn up and submitted to the Chief of the Bureau of G.R. No. L-68053 May 7, 1990
Public Lands for his approval and registration. The law authorizes no other way of transferring the rights of a holder of a LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,
certificate of sale of friar lands. It provides, however, that in case of the death of said holder, the surviving spouse shall be vs.
entitled to receive the title to the land, upon compliance with the requirements of the law. If, as it was held in the aforecited case THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA YANES, ANTONIO
of Jocson vs. Soriano, the right conferred by Act No. 1120 on the holder of a certificate of sale of friar lands in similar to that YANES, ROSARIO YANES, and ILUMINADO YANES, respondents.
conferred on the holder of a "homestead," and if the latter has no right to dispose of said certificate by will to the prejudice of Francisco G. Banzon for petitioner.
his surviving spouse and for his children (29 C. J., 930, par. 342), then by analogy, the holder of a certificate of sale of friar Renecio R. Espiritu for private respondents.
lands cannot dispose of his rights to said lands by will to the prejudice of his widow and children.
The provisions of the Civil Code referring to conjugal property cannot be applied in this case, as was done by the trial court, FERNAN, C.J.:
because the law regulating the acquisition, disposition, and transmission of rights to the friar lands acquired by the Insular This is a petition for review on certiorari seeking the reversal of: (a) the decision of the Fourth Civil Cases Division of the
Government, lays down rules in conflict with the aforesaid provisions of the Civil Code; and as the said Code is of a general Intermediate Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo
character, while Act No. 1120 is a special law, the latter should prevail. Siason et al." affirming the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as it ordered
With respect to the fourth question raised, namely, whether or not the herein plaintiff-appellant is entitled to the possession and the petitioners to pay jointly and severally the private respondents the sum of P20,000.00 representing the actual value of Lots
the products of the friar lands acquired by the Insular Government, which, by virtue of the law, pass exclusively to the surviving Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the subject decision insofar as it
spouse upon compliance of the legal requirements, the answer must be in the affirmative. The defendants, who are in possession awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively
of the said lands, cannot invoke the provisions of the Civil Code relative to possession in good faith, inasmuch as the principle and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for reconsideration of its decision.
on which the right of a holder in good faith is based is the belief that his possession is with just title under claim of ownership. The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were originally known as Lot
While a deceased heirs or legatees acquire the ownership of the property given them in the will and may taken possession of 773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square meters, was registered in the
their respective portions upon the death of their predecessor, yet upon the appointment of an administrator, the latter, by virtue name of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on October 9, 1917 by the
of his appointment, acquires a right to the possession of the property of estate, subject to the orders of the court, unless he Register of Deeds of Occidental Negros (Exh. A).
24
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, Estelita, Iluminado and Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823, "in good
Jesus, are the children of Rufino who died in 1962 while the other private respondents, Antonio and Rosario Yanes, are children faith and for a valuable consideration without any knowledge of any lien or encumbrances against said properties"; that the
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 decision in the cadastral proceeding 19 could not be enforced against him as he was not a party thereto; and that the decision in
case. Civil Case No. 5022 could neither be enforced against him not only because he was not a party-litigant therein but also because
Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823 as she could not attend to the other it had long become final and executory. 20 Finding said manifestation to be well-founded, the cadastral court, in its order of
portions of the two lots which had a total area of around twenty-four hectares. The record does not show whether the children of September 4, 1965, nullified its previous order requiring Siason to surrender the certificates of title mentioned therein. 21
Felipe also cultivated some portions of the lots but it is established that Rufino and his children left the province to settle in In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in Civil Case No. 5022. Siason
other places as a result of the outbreak of World War II. According to Estelita, from the "Japanese time up to peace time", they opposed it. 22 In its order of September 28, 1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted
did not visit the parcels of land in question but "after liberation", when her brother went there to get their share of the sugar another action for the recovery of the land in question, ruled that at the judgment therein could not be enforced against Siason as
produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot he was not a party in the case. 23
773. 2 The action filed by the Yaneses on February 21, 1968 was for recovery of real property with damages. 24 Named defendants
It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797) therein were Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros
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 Occidental. The Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for being null and
the cadastral survey of Murcia and as originally registered under OCT No. 8804. void; the issuance of a new certificate of title in the name of the Yaneses "in accordance with the sheriffs return of service dated
The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in the name of Fortunato D. Santiago October 20, 1965;" Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery thereof could not be effected, or,
on September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to the 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
effect that Lot 773-B was originally registered under OCT No. 8804. P45,000.00. They also prayed that Siason render an accounting of the fruits of Lot 773 from November 13, 1961 until the filing
On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of of the complaint; and that the defendants jointly and severally pay the Yaneses moral damages of P20,000.00 and exemplary
P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuentebella's name. 6 damages of P10,000.00 plus attorney's fees of P4, 000.00. 25
After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R. Vda. de Fuentebella, his 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
wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a motion requesting authority to by the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped from questioning said
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 order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause of action had been "barred by res judicata,
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- statute of limitation and estoppel." 27
A and 773-B were respectively issued to Rosendo Alvarez. 10 In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties in question thru an
Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely, Estelita, Iluminado and agent as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration.
Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de Although the Yaneses were negligent in their failure to place a notice of lis pendens "before the Register of Deeds of Negros
Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return" of the ownership and possession of Lots Occidental in order to protect their rights over the property in question" in Civil Case No. 5022, equity demanded that they
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 recover the actual value of the land because the sale thereof executed between Alvarez and Siason was without court
made by the defendants, that after court approval of said accounting, the share or money equivalent due the plaintiffs be approval. 28 The dispositive portion of the decision states:
delivered to them, and that defendants be ordered to pay plaintiffs P500.00 as damages in the form of attorney's fees. 11 IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the following
During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B and another lot for manner:
P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13 who thereafter, A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic) hereby
declared the two lots in his name for assessment purposes. 14 dismmissed,
Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other plaintiffs, and assisted by their B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate children of the
counsel, filed a manifestation in Civil Case No. 5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of
claim, monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection with the above-entitled case." 15 P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros
On October 11, 1963, a decision was rendered by the Court of First Instance of Negros Occidental in Civil Case No. 5022, the Occidental; the sum of P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00
dispositive portion of which reads: representing moral damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from
WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to reconvey to the date of the filing of this complaint up to final payment.
plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia, Negros Occidental, now covered by C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora and
Transfer Certificates of Title Nos. T-23165 and T-23166 in the name of said defendant, and thereafter to Raymundo, all surnamed Alvarez is hereby dismissed.
deliver the possession of said lots to the plaintiffs. No special pronouncement as to costs. D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to pay the costs of
SO ORDERED. 16 this suit.
It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in the aforesaid decision. SO ORDERED. 29
However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of service dated October 20, The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed the lower
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 court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of
name" of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental,
Siason was "not a party per writ of execution." 17 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
The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private respondents (the Yaneses) filed on attorney's fees, respectively." 31 The dispositive portion of said decision reads:
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 WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to pay
declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo jointly and severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots
Siason to produce the certificates of title covering Lots 773 and 823. Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it
25
awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's Petitioners further contend that the liability arising from the sale of Lots No. 773-A and 773-B made by Rosendo Alvarez to Dr.
fees, respectively. No costs. Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his estate, after his death.
SO ORDERED. 32 Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the general transmissibility of the
Finding no cogent reason to grant appellants motion for reconsideration, said appellate court denied the same. rights and obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the Civil Code state:
Hence, the instant petition. ln their memorandum petitioners raised the following issues: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the
1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and extent of the value of the inheritance, of a person are transmitted through his death to another or others
raised by the petitioners in the lower court. either by his will or by operation of law.
2. Whether or not the cause and/or causes of action of the private respondents, if ever there are any, as Art. 776. The inheritance includes all the property, rights and obligations of a person which are not
alleged in their complaint dated February 21, 1968 which has been docketed in the trial court as Civil Case extinguished by his death.
No. 8474 supra, are forever barred by statute of limitation and/or prescription of action and estoppel. Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where the
3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by
petitioners become a privy and/or party to the waiver (Exhibit 4-defendant Siason) in Civil Case No. provision of law. The heir is not liable beyond the value of the property received from the decedent.
8474, supra where the private respondents had unqualifiedly and absolutely waived, renounced and 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
quitclaimed all their alleged rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our
Murcia Cadastre as appearing in their written manifestation dated November 6, 1962 (Exhibits "4" Siason) Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the
which had not been controverted or even impliedly or indirectly denied by them. residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from
4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A the state is ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact
and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or diminishes or reduces the shares that the heirs would have been entitled to receive.
transmitted by operations (sic) of law to the petitioners without violation of law and due process . 33 Under our law, therefore. the general rule is that a party's contractual rights and obligations are
The petition is devoid of merit. transmissible to the successors.
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 The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as
Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said decision had long observed by Victorio Polacco has characterized the history of these institutions. From the Roman concept
become final and executory and with the possible exception of Dr. Siason, who was not a party to said case, the decision in of a relation from person to person, the obligation has evolved into a relation from patrimony to patrimony
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 with the persons occupying only a representative position, barring those rare cases where the obligation is
decision against them. 34 strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific
Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so person and by no other.
long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate. 35 As xxx xxx xxx
consistently ruled by this Court, every litigation must come to an end. Access to the court is guaranteed. But there must be a Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's transaction,
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 which gave rise to the present claim for damages. That petitioners did not inherit the property involved herein is of no moment
an unbridled license to return for another try. The prevailing party should not be harassed by subsequent suits. For, if endless because by legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary estate, and we have
litigation were to be allowed, unscrupulous litigations will multiply in number to the detriment of the administration of ruled that the hereditary assets are always liable in their totality for the payment of the debts of the estate. 42
justice. 36 It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With this
There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil Case No. clarification and considering petitioners' admission that there are other properties left by the deceased which are sufficient to
5022. As found by the lower court, from the uncontroverted evidence presented, the Yaneses have been illegally deprived of cover the amount adjudged in favor of private respondents, we see no cogent reason to disturb the findings and conclusions of
ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review, arose from the failure to the Court of Appeals.
execute Civil Case No. 5022, as subject lots can no longer be reconveyed to private respondents Yaneses, the same having been WHEREFORE, subject to the clarification herein above stated, the assailed decision of the Court of Appeals is hereby
sold during the pendency of the case by the petitioners' father to Dr. Siason who did not know about the controversy, there being AFFIRMED. Costs against petitioners.
no lis pendens annotated on the titles. Hence, it was also settled beyond question that Dr. Siason is a purchaser in good faith. G.R. No. 124715 January 24, 2000
Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason on November 11, RUFINA LUY LIM, petitioner,
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 vs.
plaintiffs (private respondents herein) the amount of P20,000.00 representing the actual value of the subdivided lots in dispute. COURT OF APPEALS, AUTO TRUCK TBA CORPORATION, SPEED DISTRIBUTING, INC., ACTIVE
It did not order defendant Siason to pay said amount. 38 DISTRIBUTORS, ALLIANCE MARKETING CORPORATION, ACTION COMPANY, INC. respondents.
As to the propriety of the present case, it has long been established that the sole remedy of the landowner whose property has BUENA, J.:
been wrongfully or erroneously registered in another's name is to bring an ordinary action in the ordinary court of justice for May a corporation, in its universality, be the proper subject of and be included in the inventory of the estate of a deceased
reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 39 "It is one thing to person?
protect an innocent third party; it is entirely a different matter and one devoid of justification if deceit would be rewarded by Petitioner disputes before us through the instant petition for review on certiorari, the decision1 of the Court of Appeals
allowing the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by the undeviating line of decisions promulgated on 18 April 1996, in CA-GR SP No. 38617, which nullified and set aside the orders dated 04 July 1995 2 , 12
coming from this Court, such an undesirable eventuality is precisely sought to be guarded against." 40 September 19953 and 15 September 19954 of the Regional Trial Court of Quezon City, Branch 93, sitting as a probate court.
The issue on the right to the properties in litigation having been finally adjudicated in Civil Case No. 5022 in favor of private Petitioner Rufina Luy Lim is the surviving spouse of late Pastor Y. Lim whose estate is the subject of probate proceedings in
respondents, it cannot now be reopened in the instant case on the pretext that the defenses of prescription and estoppel have not Special Proceedings Q-95-23334, entitled, "In Re: Intestate Estate of Pastor Y. Lim Rufina Luy Lim, represented by George
been properly considered by the lower court. Petitioners could have appealed in the former case but they did not. They have Luy, Petitioner".1âwphi1.nêt
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.
26
Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing, Inc., Active Distributing, xxx xxx xxx
Inc. and Action Company are corporations formed, organized and existing under Philippine laws and which owned real
properties covered under the Torrens system. k. Auto Truck TCT No. 617726 Sto. Domingo TBA
On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as surviving spouse and duly represented by her nephew Corporation Cainta, Rizal
George Luy, fried on 17 March 1995, a joint petition5 for the administration of the estate of Pastor Y. Lim before the Regional
q. Alliance Marketing TCT No. 27896 Prance, Metro Manila
Trial Court of Quezon City.
Private respondent corporations, whose properties were included in the inventory of the estate of Pastor Y. Lim, then filed a Copies of the above-mentioned Transfer Certificate of Title and/or Tax Declarations are hereto attached as Annexes
motion6 for the lifting of lis pendens and motion7 for exclusion of certain properties from the estate of the decedent. "C" to "W".
In an order8 dated 08 June 1995, the Regional Trial Court of Quezon City, Branch 93, sitting as a probate court, granted the xxx xxx xxx
private respondents' twin motions, in this wise: 7. The aforementioned properties and/or real interests left by the late Pastor Y. Lim, are all conjugal in nature, having
Wherefore, the Register of Deeds of Quezon City is hereby ordered to lift, expunge or delete the annotation of lis been acquired by him during the existence of his marriage with petitioner.
pendens on Transfer Certificates of Title Nos. 116716, 116717, 116718, 116719 and 5182 and it is hereby further 8. There are other real and personal properties owned by Pastor Y. Lim which petitioner could not as yet identify.
ordered that the properties covered by the same titles as well as those properties by (sic) Transfer Certificate of Title Petitioner, however will submit to this Honorable Court the identities thereof and the necessary documents covering
Nos. 613494, 363123, 236236 and 263236 are excluded from these proceedings. the same as soon as possible.
SO ORDERED. On 04 July 1995, the Regional Trial Court acting on petitioner's motion issued an order10 , thus:
Subsequently, Rufina Luy Lim filed a verified amended petition9 which contained the following averments: Wherefore, the order dated 08 June 1995 is hereby set aside and the Registry of Deeds of Quezon City is hereby
3. The late Pastor Y. Lim personally owned during his lifetime the following business entities, to wit: directed to reinstate the annotation of lis pendens in case said annotation had already been deleted and/or cancelled
said TCT Nos. 116716, 116717, 116718, 116719 and 51282.
Business Entity Address:
Further more (sic), said properties covered by TCT Nos. 613494, 365123, 236256 and 236237 by virtue of the
xxx xxx xxx petitioner are included in the instant petition.
SO ORDERED.
Alliance Block 3, Lot 6, Dacca BF Homes, On 04 September 1995, the probate court appointed Rufina Lim as special administrator 11 and Miguel Lim and Lawyer Donald
Marketing, Inc. Parañaque, Metro Manila. Lee, as co-special administrators of the estate of Pastor Y. Lim, after which letters of administration were accordingly issued.
xxx xxx xxx In an order12 dated 12 September 1995, the probate court denied anew private respondents' motion for exclusion, in this wise:
The issue precisely raised by the petitioner in her petition is whether the corporations are the mere alter egos or
Speed 910 Barrio Niog, Aguinaldo Highway, instrumentalities of Pastor Lim, Otherwise (sic) stated, the issue involves the piercing of the corporate veil, a matter
Distributing Inc. Bacoor, Cavite. that is clearly within the jurisdiction of this Honorable Court and not the Securities and Exchange Commission. Thus,
in the case of Cease vs. Court of Appeals, 93 SCRA 483, the crucial issue decided by the regular court was whether
xxx xxx xxx
the corporation involved therein was the mere extension of the decedent. After finding in the affirmative, the Court
Auto Truck TBA ruled that the assets of the corporation are also assets of the estate.
2251 Roosevelt Avenue, Quezon City. A reading of P.D. 902, the law relied upon by oppositors, shows that the SEC's exclusive (sic) applies only to intra-
Corp.
corporate controversy. It is simply a suit to settle the intestate estate of a deceased person who, during his lifetime,
xxx xxx xxx acquired several properties and put up corporations as his instrumentalities.
Active Block 3, Lot 6, Dacca BF Homes, SO ORDERED.
Distributors, Inc. Parañaque, Metro Manila. On 15 September 1995, the probate court acting on an ex parte motion filed by petitioner, issued an order13 the dispositive
portion of which reads:
xxx xxx xxx Wherefore, the parties and the following banks concerned herein under enumerated are hereby ordered to comply
strictly with this order and to produce and submit to the special administrators, through this Honorable Court within
Action Company 100 20th Avenue Murphy, Quezon City (5) five days from receipt of this order their respective records of the savings/current accounts/time deposits and other
or 92-D Mc-Arthur Highway Valenzuela deposits in the names of Pastor Lim and/or corporations above-mentioned, showing all the transactions made or done
Bulacan. concerning savings/current accounts from January 1994 up to their receipt of this court order.
3.1 Although the above business entities dealt and engaged in business with the public as corporations, all xxx xxx xxx
their capital, assets and equity were however, personally owned by the late Pastor Y Lim. Hence the SO ORDERED.
alleged stockholders and officers appearing in the respective articles of incorporation of the above business Private respondent filed a special civil action for certiorari14 , with an urgent prayer for a restraining order or writ of preliminary
entities were mere dummies of Pastor Y. Lim, and they were listed therein only for purposes of registration injunction, before the Court of Appeals questioning the orders of the Regional Trial Court, sitting as a probate court.
with the Securities and Exchange Commission. On 18 April 1996, the Court of Appeals, finding in favor of herein private respondents, rendered the assailed decision 15 , the
4. Pastor Lim, likewise, had Time, Savings and Current Deposits with the following banks: (a) Metrobank, Grace decretal portion of which declares:
Park, Caloocan City and Quezon Avenue, Quezon City Branches and (b) First Intestate Bank (formerly Producers Wherefore, premises considered, the instant special civil action for certiorari is hereby granted, The impugned orders
Bank), Rizal Commercial Banking Corporation and in other banks whose identities are yet to be determined. issued by respondent court on July 4, 1995 and September 12, 1995 are hereby nullified and set aside. The impugned
5. That the following real properties, although registered in the name of the above entities, were actually acquired by order issued by respondent on September 15, 1995 is nullified insofar as petitioner corporations" bank accounts and
Pastor Y. Lim during his marriage with petitioner, to wit: records are concerned.
Corporation Title Location SO ORDERED.
27
Through the expediency of Rule 45 of the Rules of Court, herein petitioner Rufina Luy Lim now comes before us with a lone However, the court's determination is only provisional in character, not conclusive, and is subject to the final decision
assignment of in a separate action which may be instituted by the parties.
error16 : Further, in MORALES vs. CFI OF CAVITE20 citing CUIZON vs. RAMOLETE21 , We made an exposition on the probate court's
The respondent Court of Appeals erred in reversing the orders of the lower court which merely allowed the limited jurisdiction:
preliminary or provisional inclusion of the private respondents as part of the estate of the late deceased (sic) Pastor Y. It is a well-settled rule that a probate court or one in charge of proceedings whether testate or intestate cannot
Lim with the respondent Court of Appeals arrogating unto itself the power to repeal, to disobey or to ignore the clear adjudicate or determine title to properties claimed to be a part of the estate and which are equally claimed to belong
and explicit provisions of Rules 81,83,84 and 87 of the Rules of Court and thereby preventing the petitioner, from to outside parties. All that the said court could do as regards said properties is to determine whether they should or
performing her duty as special administrator of the estate as expressly provided in the said Rules. should not be included in the inventory or list of properties to be administered by the administrator. If there is no
Petitioner's contentions tread on perilous grounds. dispute, well and good; but if there is, then the parties, the administrator and the opposing parties have to resort to an
In the instant petition for review, petitioner prays that we affirm the orders issued by the probate court which were subsequently ordinary action for a final determination of the conflicting claims of title because the probate court cannot do so.
set aside by the Court of Appeals. Again, in VALERA vs. INSERTO22 , We had occasion to elucidate, through Mr. Justice Andres Narvasa23 :
Yet, before we delve into the merits of the case, a review of the rules on jurisdiction over probate proceedings is indeed in order. Settled is the rule that a Court of First Instance (now Regional Trial Court), acting as a probate court, exercises but
The provisions of Republic Act 769117 , which introduced amendments to Batas Pambansa Blg. 129, are pertinent: limited jurisdiction, and thus has no power to take cognizance of and determine the issue of title to property claimed
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is by a third person adversely to the decedent, unless the claimant and all other parties having legal interest in the
hereby amended to read as follows: property consent, expressly or impliedly, to the submission of the question to the probate court for adjudgment, or the
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive jurisdiction: interests of third persons are not thereby prejudiced, the reason for the exception being that the question of whether or
xxx xxx xxx not a particular matter should be resolved by the court in the exercise of its general jurisdiction or of its limited
(4) In all matters of probate, both testate and intestate, where the gross value of the estate exceeds One Hundred jurisdiction as a special court (e.g. probate, land registration, etc.), is in reality not a jurisdictional but in essence of
Thousand Pesos (P100,000) or, in probate matters in Metro Manila, where such gross value exceeds Two Hundred procedural one, involving a mode of practice which may be waived. . . .
Thousand Pesos (P200,000); . . . . These considerations assume greater cogency where, as here, the Torrens title is not in the decedent's name but
xxx xxx xxx in others, a situation on which this Court has already had occasion to rule . . . . (emphasis Ours)
Sec. 3. Section 33 of the same law is hereby amended to read as follows: Petitioner, in the present case, argues that the parcels of land covered under the Torrens system and registered in the name of
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial private respondent corporations should be included in the inventory of the estate of the decedent Pastor Y. Lim, alleging that
Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial after all the determination by the probate court of whether these properties should be included or not is merely provisional in
Courts shall exercise: nature, thus, not conclusive and subject to a final determination in a separate action brought for the purpose of adjudging once
1. Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including and for all the issue of title.
the grant of provisional remedies in proper cases, where the value of the personal property, estate or Yet, under the peculiar circumstances, where the parcels of land are registered in the name of private respondent corporations,
amount of the demand does not exceed One Hundred Thousand Pesos (P100,000) or, in Metro Manila the jurisprudence pronounced in BOLISAY vs., ALCID 24 is of great essence and finds applicability, thus:
where such personal property, estate or amount of the demand does not exceed Two Hundred Thousand It does not matter that respondent-administratrix has evidence purporting to support her claim of ownership, for, on
Pesos (P200,000), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and the other hand, petitioners have a Torrens title in their favor, which under the law is endowed with incontestability
costs, the amount of which must be specifically alleged, Provided, that interest, damages of whatever kind, until after it has been set aside in the manner indicated in the law itself, which of course, does not include, bringing
attorney's, litigation expenses and costs shall be included in the determination of the filing fees, Provided up the matter as a mere incident in special proceedings for the settlement of the estate of deceased persons. . . .
further, that where there are several claims or causes of actions between the same or different parties, . . . . In regard to such incident of inclusion or exclusion, We hold that if a property covered by Torrens title is
embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the involved, the presumptive conclusiveness of such title should be given due weight, and in the absence of strong
causes of action, irrespective of whether the causes of action arose out of the same or different compelling evidence to the contrary, the holder thereof should be considered as the owner of the property in
transactions; controversy until his title is nullified or modified in an appropriate ordinary action, particularly, when as in the case at
xxx xxx xxx bar, possession of the property itself is in the persons named in the title. . . .
Simply put, the determination of which court exercises jurisdiction over matters of probate depends upon the gross value of the A perusal of the records would reveal that no strong compelling evidence was ever presented by petitioner to bolster her bare
estate of the decedent. assertions as to the title of the deceased Pastor Y. Lim over the properties. Even so, P.D. 1529, otherwise known as, "The
As to the power and authority of the probate court, petitioner relies heavily on the principle that a probate court may pass upon Property Registration Decree", proscribes collateral attack on Torrens Title, hence:
title to certain properties, albeit provisionally, for the purpose of determining whether a certain property should or should not be xxx xxx xxx
included in the inventory. Sec. 48. Certificate not subject to collateral attack. — A certificate of title shall not be subject to collateral attack. It
In a litany of cases, We defined the parameters by which the court may extend its probing arms in the determination of the cannot be altered, modified or cancelled except in a direct proceeding in accordance with law.
question of title in probate proceedings. In CUIZON vs. RAMOLETE, where similarly as in the case at bar, the property subject of the controversy was duly registered
This Court, in PASTOR, JR. vs. COURT OF APPEALS,18 held: under the Torrens system, We categorically stated:
. . . As a rule, the question of ownership is an extraneous matter which the probate court cannot resolve with finality. . . . Having been apprised of the fact that the property in question was in the possession of third parties and more
Thus, for the purpose of determining whether a certain property should or should not be included in the inventory of important, covered by a transfer certificate of title issued in the name of such third parties, the respondent court
estate properties, the Probate Court may pass upon the title thereto, but such determination is provisional, not should have denied the motion of the respondent administrator and excluded the property in question from the
conclusive, and is subject to the final decision in a separate action to resolve title. inventory of the property of the estate. It had no authority to deprive such third persons of their possession and
We reiterated the rule in PEREIRA vs. COURT OF APPEALS19 : ownership of the property. . . .
. . . The function of resolving whether or not a certain property should be included in the inventory or list of Inasmuch as the real properties included in the inventory of the estate of the Late Pastor Y. Lim are in the possession of and are
properties to be administered by the administrator is one clearly within the competence of the probate court. registered in the name of private respondent corporations, which under the law possess a personality separate and distinct from
28
their stockholders, and in the absence of any cogency to shred the veil of corporate fiction, the presumption of conclusiveness of Granting arguendo that the Regional Trial Court in this case was not merely acting in a limited capacity as a probate court,
said titles in favor of private respondents should stand undisturbed. petitioner nonetheless failed to adduce competent evidence that would have justified the court to impale the veil of corporate
Accordingly, the probate court was remiss in denying private respondents' motion for exclusion. While it may be true that the fiction. Truly, the reliance reposed by petitioner on the affidavits executed by Teresa Lim and Lani Wenceslao is unavailing
Regional Trial Court, acting in a restricted capacity and exercising limited jurisdiction as a probate court, is competent to issue considering that the aforementioned documents possess no weighty probative value pursuant to the hearsay rule. Besides it is
orders involving inclusion or exclusion of certain properties in the inventory of the estate of the decedent, and to adjudge, albeit, imperative for us to stress that such affidavits are inadmissible in evidence inasmuch as the affiants were not at all presented
provisionally the question of title over properties, it is no less true that such authority conferred upon by law and reinforced by during the course of the proceedings in the lower court. To put it differently, for this Court to uphold the admissibility of said
jurisprudence, should be exercised judiciously, with due regard and caution to the peculiar circumstances of each individual documents would be to relegate from Our duty to apply such basic rule of evidence in a manner consistent with the law and
case. jurisprudence.
Notwithstanding that the real properties were duly registered under the Torrens system in the name of private respondents, and Our pronouncement in PEOPLE BANK AND TRUST COMPANY vs. LEONIDAS35 finds pertinence:
as such were to be afforded the presumptive conclusiveness of title, the probate court obviously opted to shut its eyes to this Affidavits are classified as hearsay evidence since they are not generally prepared by the affiant but by another who
gleamy fact and still proceeded to issue the impugned orders. uses his own language in writing the affiant's statements, which may thus be either omitted or misunderstood by the
By its denial of the motion for exclusion, the probate court in effect acted in utter disregard of the presumption of one writing them. Moreover, the adverse party is deprived of the opportunity to cross-examine the affiants. For this
conclusiveness of title in favor of private respondents. Certainly, the probate court through such brazen act transgressed the reason, affidavits are generally rejected for being hearsay, unless the affiant themselves are placed on the witness
clear provisions of law and infringed settled jurisprudence on this matter. stand to testify thereon.
Moreover, petitioner urges that not only the properties of private respondent corporations are properly part of the decedent's As to the order36 of the lower court, dated 15 September 1995, the Court of Appeals correctly observed that the Regional Trial
estate but also the private respondent corporations themselves. To rivet such flimsy contention, petitioner cited that the late Court, Branch 93 acted without jurisdiction in issuing said order; The probate court had no authority to demand the production
Pastor Y. Lim during his lifetime, organized and wholly-owned the five corporations, which are the private respondents in the of bank accounts in the name of the private respondent corporations.
instant case.25 Petitioner thus attached as Annexes "F"26 and "G"27 of the petition for review affidavits executed by Teresa Lim WHEREFORE, in view of the foregoing disquisitions, the instant petition is hereby DISMISSED for lack of merit and the
and Lani Wenceslao which among others, contained averments that the incorporators of Uniwide Distributing, Inc. included on decision of the Court of Appeals which nullified and set aside the orders issued by the Regional Trial Court, Branch 93, acting
the list had no actual and participation in the organization and incorporation of the said corporation. The affiants added that the as a probate court, dated 04 July 1995 and 12 September 1995 is AFFIRMED.1âwphi1.nêt
persons whose names appeared on the articles of incorporation of Uniwide Distributing, Inc., as incorporators thereof, are mere G.R. No. 145736 March 4, 2009
dummies since they have not actually contributed any amount to the capital stock of the corporation and have been merely ESTATE OF ORLANDO LLENADO and WENIFREDA T. LLENADO, in her capacity as (a) Administratrix of the
asked by the late Pastor Y. Lim to affix their respective signatures thereon. Estate of Orlando A. Llenado and (b) Judicial Guardian of the Minor children of Orlando A. Llenado, and (c) in her
It is settled that a corporation is clothed with personality separate and distinct from that of the persons composing it. It may not Own behalf as the Surviving Spouse and Legal Heir of Orlando A. Llenado, Petitioners,
generally be held liable for that of the persons composing it. It may not be held liable for the personal indebtedness of its vs.
stockholders or those of the entities connected with it.28 EDUARDO LLENADO, JORGE LLENADO, FELIZA GALLARDO VDA. DE LLENADO and REGISTER OF
Rudimentary is the rule that a corporation is invested by law with a personality distinct and separate from its stockholders or DEEDS of Valenzuela City, Metro Manila, Respondents.
members. In the same vein, a corporation by legal fiction and convenience is an entity shielded by a protective mantle and DECISION
imbued by law with a character alien to the persons comprising it. YNARES-SANTIAGO, J.:
Nonetheless, the shield is not at all times invincible. Thus, in FIRST PHILIPPINE INTERNATIONAL BANK vs. COURT OF This petition for review on certiorari assails the May 30, 2000 Decision 1 of the Court of Appeals in CA-G.R. CV No. 58911
APPEALS29 , We enunciated: which reversed the May 5, 1997 Decision 2 of the Regional Trial Court of Valenzuela City, Branch 75 in Civil Case No. 4248-V-
. . . When the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an 93, and the October 6, 2000 Resolution 3 which denied the motion for reconsideration. The appellate court dismissed for lack of
existing obligation, the circumvention of statutes, the achievement or perfection of a monopoly or generally the merit the complaint for annulment of deed of conveyance, title and damages filed by petitioner against herein respondents.
perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or The subject of this controversy is a parcel of land denominated as Lot 249-D-1 (subject lot) consisting of 1,554 square meters
stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals. . . . located in Barrio Malinta, Valenzuela, Metro Manila and registered in the names of Eduardo Llenado (Eduardo) and Jorge
Piercing the veil of corporate entity requires the court to see through the protective shroud which exempts its stockholders from Llenado (Jorge) under Transfer of Certificate of Title (TCT) No. V-1689. 4 The subject lot once formed part of Lot 249-D owned
liabilities that ordinarily, they could be subject to, or distinguishes one corporation from a seemingly separate one, were it not by and registered in the name of their father, Cornelio Llenado (Cornelio), under TCT No. T-16810.
for the existing corporate fiction.30 On December 2, 1975, Cornelio leased Lot 249-D-1 to his nephew, Romeo Llenado (Romeo), for a period of five years,
The corporate mask may be lifted and the corporate veil may be pierced when a corporation is just but the alter ego of a person renewable for another five years at the option of Cornelio. On March 31, 1978, Cornelio, Romeo and the latter’s cousin Orlando
or of another corporation. Where badges of fraud exist, where public convenience is defeated; where a wrong is sought to be Llenado (Orlando) executed an Agreement 5 whereby Romeo assigned all his rights to Orlando over the unexpired portion of the
justified thereby, the corporate fiction or the notion of legal entity should come to naught.31 aforesaid lease contract. The parties further agreed that Orlando shall have the option to renew the lease contract for another
Further, the test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows: 1) Control, three years commencing from December 3, 1980, up to December 2, 1983, renewable for another four years or up to December
not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice 2, 1987, and that "during the period that [this agreement] is enforced, the x x x property cannot be sold, transferred, alienated or
in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or conveyed in whatever manner to any third party."
existence of its own; (2) Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the Shortly thereafter or on June 24, 1978, Cornelio and Orlando entered into a Supplementary Agreement 6 amending the March 31,
violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiffs legal right; and (3) 1978 Agreement. Under the Supplementary Agreement, Orlando was given an additional option to renew the lease contract for
The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. The absence of any of an aggregate period of 10 years at five-year intervals, that is, from December 3, 1987 to December 2, 1992 and from December
these elements prevent "piercing the corporate veil".32 3, 1992 to December 2, 1997. The said provision was inserted in order to comply with the requirements of Mobil Philippines,
Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not Inc. for the operation of a gasoline station which was subsequently built on the subject lot.
of itself a sufficient reason for disregarding the fiction of separate corporate personalities.33 Upon the death of Orlando on November 7, 1983, his wife, Wenifreda Llenado (Wenifreda), took over the operation of the
Moreover, to disregard the separate juridical personality of a corporation, the wrong-doing must be clearly and convincingly gasoline station. Meanwhile, on January 29, 1987, Cornelio sold Lot 249-D to his children, namely, Eduardo, Jorge, Virginia
established. It cannot be presumed.34 and Cornelio, Jr., through a deed of sale, denominated as "Kasulatan sa Ganap Na Bilihan," 7 for the sum of P160,000.00. As
29
stated earlier, the subject lot, which forms part of Lot 249-D, was sold to Eduardo and Jorge, and titled in their names under 4) And, because this Court is not only a court of law, but of equity, it hereby rendered the following damages to be
TCT No. V-1689. Several months thereafter or on September 7, 1987, Cornelio passed away. paid by the [respondents], as the [respondents] litigated under bonafide assertions that they have meritorious defense,
Sometime in 1993, Eduardo informed Wenifreda of his desire to take over the subject lot. However, the latter refused to vacate viz:
the premises despite repeated demands. Thus, on September 24, 1993, Eduardo filed a complaint for unlawful detainer before a) P400,000.00 as moral damages;
the Metropolitan Trial Court of Valenzuela, Metro Manila against Wenifreda, which was docketed as Civil Civil Case No. 6074. b) 10,000.00 as nominal damages;
On July 22, 1996, the Metropolitan Trial Court rendered its Decision in favor of Eduardo and ordered Wenifreda to: (1) vacate c) 10,000.00 as temperate damages;
the leased premises; (2) pay Eduardo reasonable compensation for the use and occupation of the premises plus attorney’s fees, d) 10,000.00 as exemplary damages;
and (3) pay the costs of the suit. e) 10,000.00 attorney’s fees on the basis of quantum merit; and
Wenifreda appealed to the Regional Trial Court of Valenzuela, Metro Manila, which reversed the decision of the court a quo. f) costs of suit.
Thus, Eduardo appealed to the Court of Appeals which rendered a Decision8 on March 31, 1998 reversing the decision of the SO ORDERED.13
Regional Trial Court and reinstating the decision of the Metropolitan Trial Court. It also increased the amount of reasonable The Regional Trial Court found that upon the death of Orlando on November 7, 1983, his rights under the lease contract were
compensation awarded to Eduardo for the use of the leased premises. Wenifreda’s appeal to this Court, docketed as G.R. No. transmitted to his heirs; that since the lease was in full force and effect at the time the subject lot was sold by Cornelio to his
135001, was dismissed in a Resolution9 dated December 2, 1998. Accordingly, an Entry of Judgment 10 was made in due course sons, the sale violated the prohibitory clause in the said lease contract. Further, Cornelio’s promise to sell the subject lot to
on July 8, 1999. Orlando may be established by parole evidence since an option to buy is not covered by the statute of frauds. Hence, the same is
Previously, after Eduardo instituted the aforesaid unlawful detainer case on September 24, 1993, herein petitioner Wenifreda, in binding on Cornelio and his heirs.
her capacity as administratrix of the estate of Orlando Llenado, judicial guardian of their minor children, and surviving spouse Respondents appealed before the Court of Appeals which rendered the assailed May 30, 2000 Decision reversing the judgment
and legal heir of Orlando, commenced the subject Complaint,11 later amended, on November 10, 1993 for annulment of deed of of the Regional Trial Court and dismissing the Complaint. The appellate court held that the death of Orlando did not extinguish
conveyance, title and damages against herein respondents Eduardo, Jorge, Feliza Llenado (mother of the Llenado brothers), and the lease agreement and had the effect of transmitting his lease rights to his heirs. However, the breach of the non-alienation
the Register of Deeds of Valenzuela, Metro Manila. The case was docketed as Civil Case No. 4248-V-93 and raffled to Branch clause of the said agreement did not nullify the sale between Cornelio and his sons because the heirs of Orlando are mere
75 of the Regional Trial Court of Valenzuela, Metro Manila. lessees on the subject lot and can never claim a superior right of ownership over said lot as against the registered owners
Petitioner alleged that the transfer and conveyance of the subject lot by Cornelio in favor of respondents Eduardo and Jorge, thereof. It further ruled that petitioner failed to establish by a preponderance of evidence that Cornelio made a verbal promise to
was fraudulent and in bad faith considering that the March 31, 1978 Agreement provided that while the lease is in force, the Orlando granting the latter the right of first refusal if and when the subject lot was sold.
subject lot cannot be sold, transferred or conveyed to any third party; that the period of the lease was until December 3, 1987 Upon the denial of its motion for reconsideration, petitioner is now before this Court on the following assignment of errors:
with the option to renew granted to Orlando; that the subject lot was transferred and conveyed to respondents Eduardo and Jorge [T]he Court of Appeals erred:
on January 29, 1987 when the lease was in full force and effect making the sale null and void; that Cornelio verbally promised 1.- In finding and concluding that there is no legal basis to annul the deed of conveyance involved in the case and in
Orlando that in case he (Cornelio) decides to sell the subject lot, Orlando or his heirs shall have first priority or option to buy the not applying R.A. No. 3516, further amending R.A. No. 1162; and
subject lot so as not to prejudice Orlando’s business and because Orlando is the owner of the property adjacent to the subject 2.- In not finding and holding as null and void the subject deed of conveyance, the same having been executed in
lot; and that this promise was wantonly disregarded when Cornelio sold the said lot to respondents Jorge and Eduardo. direct violation of an expressed covenant in said deed and in total disregard of the pre-emptive, or preferential rights
In their Answer,12 respondents Eduardo and Jorge claimed that they bought the subject lot from their father, Cornelio, for value of the herein petitioners to buy the property subject of their lease contract under said R.A. No. 3516, further
and in good faith; that the lease agreement and its supplement were not annotated at the back of the mother title of the subject amending R.A. No. 1162.14
lot and do not bind them; that said agreements are personal only to Cornelio and Orlando; that the lease expired upon the death The petition lacks merit.
of Orlando on November 7, 1983; that they were not aware of any verbal promise to sell the subject lot granted by Cornelio to Petitioner contends that the heirs of Orlando are entitled to the rights of a tenant under Republic Act (R.A.) No. 1162, 15 as
Orlando and, even if there was, said option to buy is unenforceable under the statute of frauds. amended by R.A. No. 3516.16 The right of first refusal or preferential right to buy the leased premises is invoked pursuant to
After the parties presented their respective evidence, the Regional Trial Court rendered judgment on May 5, 1997 in favor of Section 517 of said law and this Court’s ruling in Mataas Na Lupa Tenants Association, Inc. v. Dimayuga.18
petitioner, viz: This issue is being raised for the first time on appeal. True, in Mataas Na Lupa Tenants Association, Inc., the Court explained
WHEREFORE, PREMISES CONSIDERED, this Court finds the [petitioner’s] civil action duly established by preponderance that Section 1 of R.A. No. 1162, as amended by R.A. No. 3516, authorizes the expropriation of any piece of land in the City of
of evidence, renders judgment (adjudicates) in favor of the [petitioner], Estate of Orlando Llenado represented by Wenifreda Manila, Quezon City and suburbs which have been and are actually being leased to tenants for at least 10 years, provided said
Llenado, and against [respondents] e.g. Jorge, Eduardo, Felisa Gallardo, all surnamed Llenado, and the Register of Deeds of lands have at least 40 families of tenants thereon.19 Prior to and pending the expropriation, the tenant shall have a right of first
Valenzuela, Metro Manila, as follows: refusal or preferential right to buy the leased premises should the landowner sell the same. However, compliance with the
1) It hereby judicially declare as non-existence (sic) and null and void, the following: conditions for the application of the aforesaid law as well as the qualifications of the heirs of Orlando to be beneficiaries
a) The Kasulatan Sa Ganap na Kasunduan or Deed of Sale; thereunder were never raised before the trial court, or even the Court of Appeals, because petitioner solely anchored its claim of
b) TCT- Transfer Certificate of Title No. V-9440, in the name of [respondent] Eduardo Llenado, TCT- ownership over the subject lot on the alleged violation of the prohibitory clause in the lease contract between Cornelio and
Transfer Certificate of Title No. V-1689, in the name of Jorge Llenado, and Eduardo Llenado, and all Orlando, and the alleged non-performance of the right of first refusal given by Cornelio to Orlando. The rule is settled, impelled
deeds, documents or proceedings leading to the issuance of said title, and all subsequent title issued by basic requirements of due process, that points of law, theories, issues and arguments not adequately brought to the attention
therefrom and likewise whatever deeds, documents or proceedings leading to the issuance of said of the lower court will not be ordinarily considered by a reviewing court as they cannot be raised for the first time on
subsequent titles; appeal.20 As the issue of the applicability of R.A. No. 1162, as amended, was neither averred in the pleadings nor raised during
2) It hereby orders the reconveyance of the said properties embraced in the said TCTs-Transfer Certificate of Title the trial below, the same cannot be raised for the first time on appeal.
Nos. V-9440 and V-1689 to the [petitioner] for the same consideration, or purchase price, paid by [respondents] At any rate, the allegations in the Complaint and the evidence presented during the trial below do not establish that Orlando or
Eduardo Llenado and Jorge Llenado for the same properties; his heirs are covered by R.A. No. 1162, as amended. It was not alleged nor shown that the subject lot is part of the landed estate
3) It hereby orders [respondent], Register of Deeds of Valenzuela, Metro Manila, to cause the issuance of new or haciendas in the City of Manila which were authorized to be expropriated under said law; that the Solicitor General has
transfer certificates of title over the said property in the name of the [petitioner]; instituted the requisite expropriation proceedings pursuant to Section 2 21 thereof; that the subject lot has been actually leased for
a period of at least ten (10) years; and that the subject lot has at least forty (40) families of tenants thereon. Instead, what was
merely established during the trial is that the subject lot was leased by Cornelio to Orlando for the operation of a gasoline
30
station, thus, negating petitioner’s claim that the subject lot is covered by the aforesaid law. In Mataas Na Lupa Tenants of the option to renew be inferred from their persistence to remain in the premises despite petitioners’ demand for them to
Association, Inc., the Court further explained that R.A. No. 1162, as amended, has been superseded by Presidential Decree vacate. x x x.35
(P.D.) No. 151722 entitled "Proclaiming Urban Land Reform in the Philippines and Providing for the Implementing Machinery Similarly, the election of the option to renew the lease in this case cannot be inferred from petitioner Wenifreda’s continued
Thereof."23 However, as held in Tagbilaran Integrated Settlers Association Incorporated v. Court of Appeals,24 P.D. No. 1517 is possession of the subject lot and operation of the gasoline station even after the death of Orlando on November 7, 1983 and the
applicable only in specific areas declared, through presidential proclamation, 25 to be located within the so-called urban expiration of the lease contract on December 3, 1983. In the unlawful detainer case against petitioner Wenifreda and in the
zones.26 Further, only legitimate tenants who have resided on the land for ten years or more who have built their homes on the subject complaint for annulment of conveyance, respondents consistently maintained that after the death of Orlando, the lease
land and residents who have legally occupied the lands by contract, continuously for the last ten years, are given the right of was terminated and that they permitted petitioner Wenifreda and her children to remain in possession of the subject property out
first refusal to purchase the land within a reasonable time. 27 Consequently, those lease contracts entered into for commercial use of tolerance and respect for the close blood relationship between Cornelio and Orlando. It was incumbent, therefore, upon
are not covered by said law.28 Thus, considering that petitioner failed to prove that a proclamation has been issued by the petitioner as the plaintiff with the burden of proof during the trial below to establish by some positive act that Orlando or his
President declaring the subject lot as within the urban land reform zone and considering further that the subject lot was leased heirs exercised the option to renew the lease. After going over the records of this case, we find no evidence, testimonial or
for the commercial purpose of operating a gasoline station, P.D. No. 1517 cannot be applied to this case. documentary, of such nature was presented before the trial court to prove that Orlando or his heirs exercised the option to renew
In fine, the only issue for our determination is whether the sale of the subject lot by Cornelio to his sons, respondents Eduardo prior to or at the time of the expiration of the lease on December 3, 1983. In particular, the testimony of petitioner Wenifreda is
and Jorge, is invalid for (1) violating the prohibitory clause in the lease agreement between Cornelio, as lessor-owner, and wanting in detail as to the events surrounding the implementation of the subject lease agreement after the death of Orlando and
Orlando, as lessee; and (2) contravening the right of first refusal of Orlando over the subject lot. any overt acts to establish the renewal of said lease.
It is not disputed that the lease agreement contained an option to renew and a prohibition on the sale of the subject lot in favor of Given the foregoing, it becomes unnecessary to resolve the issue on whether the violation of the prohibitory clause invalidated
third persons while the lease is in force. Petitioner claims that when Cornelio sold the subject lot to respondents Eduardo and the sale and conferred ownership over the subject lot to Orlando’s heirs, who are mere lessees, considering that at the time of
Jorge the lease was in full force and effect, thus, the sale violated the prohibitory clause rendering it invalid. In resolving this said sale on January 29, 1987 the lease agreement had long been terminated for failure of Orlando or his heirs to validly renew
issue, it is necessary to determine whether the lease agreement was in force at the time of the subject sale and, if it was in force, the same. As a result, there was no obstacle to the sale of the subject lot by Cornelio to respondents Eduardo and Jorge as the
whether the violation of the prohibitory clause invalidated the sale. prohibitory clause under the lease contract was no longer in force.
Under Article 1311 of the Civil Code, the heirs are bound by the contracts entered into by their predecessors-in-interest except Petitioner also anchors its claim over the subject lot on the alleged verbal promise of Cornelio to Orlando that should he
when the rights and obligations therein are not transmissible by their nature, by stipulation or by provision of law. A contract of (Cornelio) sell the same, Orlando would be given the first opportunity to purchase said property. According to petitioner, this
lease is, therefore, generally transmissible to the heirs of the lessor or lessee. It involves a property right and, as such, the death amounted to a right of first refusal in favor of Orlando which may be proved by parole evidence because it is not one of the
of a party does not excuse non-performance of the contract. 29 The rights and obligations pass to the heirs of the deceased and the contracts covered by the statute of frauds. Considering that Cornelio sold the subject lot to respondents Eduardo and Jorge
heir of the deceased lessor is bound to respect the period of the lease.30 The same principle applies to the option to renew the without first offering the same to Orlando’s heirs, petitioner argues that the sale is in violation of the latter’s right of first refusal
lease. As a general rule, covenants to renew a lease are not personal but will run with the land. 31 Consequently, the successors- and is, thus, rescissible.
in-interest of the lessee are entitled to the benefits, while that of the lessor are burdened with the duties and obligations, which The question as to whether a right of first refusal may be proved by parole evidence has been answered in the affirmative by this
said covenants conferred and imposed on the original parties. Court in Rosencor Development Corporation v. Inquing:36
The foregoing principles apply with greater force in this case because the parties expressly stipulated in the March 31, 1978 We have previously held that not all agreements "affecting land" must be put into writing to attain enforceability. Thus, we have
Agreement that Romeo, as lessee, shall transfer all his rights and interests under the lease contract with option to renew "in held that the setting up of boundaries, the oral partition of real property, and an agreement creating a right of way are not
favor of the party of the Third Part (Orlando), the latter’s heirs, successors and assigns" 32 indicating the clear intent to allow the covered by the provisions of the statute of frauds. The reason simply is that these agreements are not among those enumerated
transmissibility of all the rights and interests of Orlando under the lease contract unto his heirs, successors or assigns. in Article 1403 of the New Civil Code.
Accordingly, the rights and obligations under the lease contract with option to renew were transmitted from Orlando to his heirs A right of first refusal is not among those listed as unenforceable under the statute of frauds. Furthermore, the application of
upon his death on November 7, 1983. Article 1403, par. 2(e) of the New Civil Code presupposes the existence of a perfected, albeit unwritten, contract of sale. A right
It does not follow, however, that the lease subsisted at the time of the sale of the subject lot on January 29, 1987. When Orlando of first refusal, such as the one involved in the instant case, is not by any means a perfected contract of sale of real property. At
died on November 7, 1983, the lease contract was set to expire 26 days later or on December 3, 1983, unless renewed by best, it is a contractual grant, not of the sale of the real property involved, but of the right of first refusal over the property
Orlando’s heirs for another four years. While the option to renew is an enforceable right, it must necessarily be first exercised to sought to be sold.
be given effect.33 As the Court explained in Dioquino v. Intermediate Appellate Court:34 It is thus evident that the statute of frauds does not contemplate cases involving a right of first refusal. As such, a right of first
A clause found in an agreement relative to the renewal of the lease agreement at the option of the lessee gives the latter an refusal need not be written to be enforceable and may be proven by oral evidence.37
enforceable right to renew the contract in which the clause is found for such time as provided for. The agreement is understood In the instant case, the Regional Trial Court ruled that the right of first refusal was proved by oral evidence while the Court of
as being in favor of the lessee, and the latter is authorized to renew the contract and to continue to occupy the leased Appeals disagreed by ruling that petitioner merely relied on the allegations in its Complaint to establish said right. We have
property after notifying the lessor to that effect. A lessor’s covenant or agreement to renew gives a privilege to the tenant, but is reviewed the records and find that no testimonial evidence was presented to prove the existence of said right. The testimony of
nevertheless an executory contract, and until the tenant has exercised the privilege by way of some affirmative act, he cannot be petitioner Wenifreda made no mention of the alleged verbal promise given by Cornelio to Orlando. The two remaining
held for the additional term. In the absence of a stipulation in the lease requiring notice of the exercise of an option or an witnesses for the plaintiff, Michael Goco and Renato Malindog, were representatives from the Register of Deeds of Caloocan
election to renew to be given within a certain time before the expiration of the lease, which of course, the lessee must comply City who naturally were not privy to this alleged promise. Neither was it established that respondents Eduardo and Jorge were
with, the general rule is that a lessee must exercise an option or election to renew his lease and notify the lessor thereof before, aware of said promise prior to or at the time of the sale of the subject lot. On the contrary, in their answer to the Complaint,
or at least at the time of the expiration of his original term, unless there is a waiver or special circumstances warranting respondents denied the existence of said promise for lack of knowledge thereof. 38 Within these parameters, petitioner’s
equitable relief.1avvphi1.zw+ allegations in its Complaint cannot substitute for competent proof on such a crucial factual issue. Necessarily, petitioner’s
There is no dispute that in the instant case, the lessees (private respondents) were granted the option to renew the lease for claims based on this alleged right of first refusal cannot be sustained for its existence has not been duly established.
another five (5) years after the termination of the original period of fifteen years. Yet, there was never any positive act on the WHEREFORE, the petition is DENIED. The May 30, 2000 Decision of the Court of Appeals in CA-G.R. CV No. 58911
part of private respondents before or after the termination of the original period to show their exercise of such option. The dismissing the complaint for annulment of deed of conveyance, title and damages, and the October 6, 2000 Resolution denying
silence of the lessees after the termination of the original period cannot be taken to mean that they opted to renew the contract the motion for reconsideration, are AFFIRMED.
by virtue of the promise by the lessor, as stated in the original contract of lease, to allow them to renew. Neither can the exercise G.R. No. 118248 April 5, 2000
31
DKC HOLDINGS CORPORATION,petitioner, After trial on the merits, the RTC of Valenzuela, Branch 172 rendered its Decision on January 4, 1993, dismissing the
vs. Complaint and ordering petitioner to pay Victor P30,000.00 as attorney's fees. On appeal to the CA, the Decision was
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO MANILA, DISTRICT affirmed in toto.
III, respondents. Hence, the instant Petition assigning the following errors:
YNARES-SANTIAGO, J.: (A)
This is a petition for review on certiorari seeking the reversal of the December 5, 1994 Decision of the Court of Appeals in CA- FIRST ASSIGNMENT OF ERROR
G.R. CV No. 40849 entitled "DKC Holdings Corporation vs. Victor U. Bartolome, et al.",1 affirming in toto the January 4, 1993 THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PROVISION ON THE NOTICE TO
Decision of the Regional Trial Court of Valenzuela, Branch 172,2 which dismissed Civil Case No. 3337-V-90 and ordered EXERCISE OPTION WAS NOT TRANSMISSIBLE.
petitioner to pay P30,000.00 as attorney's fees. (B)
The subject of the controversy is a 14,021 square meter parcel of land located in Malinta, Valenzuela, Metro Manila which was SECOND ASSIGNMENT OF ERROR
originally owned by private respondent Victor U. Bartolome's deceased mother, Encarnacion Bartolome, under Transfer THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE NOTICE OF OPTION MUST BE
Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila, District III. This lot was in front of one of the textile SERVED BY DKC UPON ENCARNACION BARTOLOME PERSONALLY.
plants of petitioner and, as such, was seen by the latter as a potential warehouse site. (C)
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with Encarnacion Bartolome, whereby THIRD ASSIGNMENT OF ERROR
petitioner was given the option to lease or lease with purchase the subject land, which option must be exercised within a period THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT WAS ONE-SIDED
of two years counted from the signing of the Contract. In turn, petitioner undertook to pay P3,000.00 a month as consideration AND ONEROUS IN FAVOR OF DKC.
for the reservation of its option. Within the two-year period, petitioner shall serve formal written notice upon the lessor (D)
Encarnacion Bartolome of its desire to exercise its option. The contract also provided that in case petitioner chose to lease the FOURTH ASSIGNMENT OF ERROR
property, it may take actual possession of the premises. In such an event, the lease shall be for a period of six years, renewable THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE EXISTENCE OF A REGISTERED
for another six years, and the monthly rental fee shall be P15,000.00 for the first six years and P18,000.00 for the next six years, TENANCY WAS FATAL TO THE VALIDITY OF THE CONTRACT.
in case of renewal. (E)
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion until her death in January 1990. FIFTH ASSIGNMENT OF ERROR
Thereafter, petitioner coursed its payment to private respondent Victor Bartolome, being the sole heir of Encarnacion. Victor, THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-APPELLANT WAS
however, refused to accept these payments. LIABLE TO DEFENDANT-APPELLEE FOR ATTORNEY'S FEES.8
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over all the properties of Encarnacion, The issue to be resolved in this case is whether or not the Contract of Lease with Option to Buy entered into by the late
including the subject lot. Accordingly, respondent Register of Deeds cancelled Transfer Certificate of Title No. B-37615 and Encarnacion Bartolome with petitioner was terminated upon her death or whether it binds her sole heir, Victor, even after her
issued Transfer Certificate of Title No. V-14249 in the name of Victor Bartolome. demise.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it was exercising its option to lease the Both the lower court and the Court of Appeals held that the said contract was terminated upon the death of Encarnacion
property, tendering the amount of P15,000.00 as rent for the month of March. Again, Victor refused to accept the tendered Bartolome and did not bind Victor because he was not a party thereto.
rental fee and to surrender possession of the property to petitioner. Art. 1311 of the Civil Code provides, as follows —
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking Corporation, Cubao Branch, in the name Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and
of Victor Bartolome and deposited therein the P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.
months of February and March. The heir is not liable beyond the value of the property he received from the decedent.
Petitioner also tried to register and annotate the Contract on the title of Victor to the property. Although respondent Register of x x x x x x x x x
Deeds accepted the required fees, he nevertheless refused to register or annotate the same or even enter it in the day book or The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the
primary register.1âwphi1.nêt rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law.
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and damages against Victor and the Register of In the case at bar, there is neither contractual stipulation nor legal provision making the rights and obligations under the contract
Deeds,3 docketed as Civil Case No. 3337-V-90 which was raffled off to Branch 171 of the Regional Trial Court of Valenzuela. intransmissible. More importantly, the nature of the rights and obligations therein are, by their nature, transmissible.
Petitioner prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms; the The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as follows:
surrender of title for registration and annotation thereon of the Contract; and the payment of P500,000.00 as actual damages, Among contracts which are intransmissible are those which are purely personal, either by provision of law, such as in
P500,000.00 as moral damages, P500,000.00 as exemplary damages and P300,000.00 as attorney's fees. cases of partnerships and agency, or by the very nature of the obligations arising therefrom, such as those requiring
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss4 was filed by one Andres Lanozo, who claimed special personal qualifications of the obligor. It may also be stated that contracts for the payment of money debts are
that he was and has been a tenant-tiller of the subject property, which was agricultural riceland, for forty-five years. He not transmitted to the heirs of a party, but constitute a charge against his estate. Thus, where the client in a contract
questioned the jurisdiction of the lower court over the property and invoked the Comprehensive Agrarian Reform Law to for professional services of a lawyer died, leaving minor heirs, and the lawyer, instead of presenting his claim for
protect his rights that would be affected by the dispute between the original parties to the case. professional services under the contract to the probate court, substituted the minors as parties for his client, it was
On May 18, 1990, the lower court issued an Order5 referring the case to the Department of Agrarian Reform for preliminary held that the contract could not be enforced against the minors; the lawyer was limited to a recovery on the basis
determination and certification as to whether it was proper for trial by said court. of quantum meruit.9
On July 4, 1990, the lower court issued another Order6 referring the case to Branch 172 of the RTC of Valenzuela which was In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special knowledge, genius, skill, taste,
designated to hear cases involving agrarian land, after the Department of Agrarian Reform issued a letter-certification stating ability, experience, judgment, discretion, integrity, or other personal qualification of one or both parties, the agreement is of a
that referral to it for preliminary determination is no longer required. personal nature, and terminates on the death of the party who is required to render such service." 10
On July 16, 1990, the lower court issued an Order denying the Motion to Intervene,7 holding that Lanozo's rights may well be It has also been held that a good measure for determining whether a contract terminates upon the death of one of the parties is
ventilated in another proceeding in due time. whether it is of such a character that it may be performed by the promissor's personal representative. Contracts to perform
personal acts which cannot be as well performed by others are discharged by the death of the promissor. Conversely, where the
32
service or act is of such a character that it may as well be performed by another, or where the contract, by its terms, shows that It appears, therefore, that the exercise by petitioner of its option to lease the subject property was made in accordance with the
performance by others was contemplated, death does not terminate the contract or excuse nonperformance. 11 contractual provisions. Concomitantly, private respondent Victor Bartolome has the obligation to surrender possession of and
In the case at bar, there is no personal act required from the late Encarnacion Bartolome. Rather, the obligation of Encarnacion lease the premises to petitioner for a period of six (6) years, pursuant to the Contract of Lease with Option to Buy.
in the contract to deliver possession of the subject property to petitioner upon the exercise by the latter of its option to lease the Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the present petition. We note that the
same may very well be performed by her heir Victor. Motion to Intervene and to Dismiss of the alleged tenant, Andres Lanozo, was denied by the lower court and that such denial
As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs." 12 In 1952, it was ruled that if the was never made the subject of an appeal. As the lower court stated in its Order, the alleged right of the tenant may well be
predecessor was duty-bound to reconvey land to another, and at his death the reconveyance had not been made, the heirs can be ventilated in another proceeding in due time.
compelled to execute the proper deed for reconveyance. This was grounded upon the principle that heirs cannot escape the legal WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals
consequence of a transaction entered into by their predecessor-in-interest because they have inherited the property subject to the in CA-G.R. CV No. 40849 and that of the Regional Trial Court of Valenzuela in Civil Case No. 3337-V-90 are both SET
liability affecting their common ancestor. 13 ASIDE and a new one rendered ordering private respondent Victor Bartolome to:
It is futile for Victor to insist that he is not a party to the contract because of the clear provision of Article 1311 of the Civil (a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of Title No. V-14249 by
Code. Indeed, being an heir of Encarnacion, there is privity of interest between him and his deceased mother. He only succeeds way of lease to petitioner and to perform all obligations of his predecessor-in-interest, Encarnacion Bartolome, under
to what rights his mother had and what is valid and binding against her is also valid and binding as against him. 14 This is clear the subject Contract of Lease with Option to Buy;
from Parañaque Kings Enterprises vs. Court of Appeals, 15 where this Court rejected a similar defense — (b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent Register of Deeds for
With respect to the contention of respondent Raymundo that he is not privy to the lease contract, not being the lessor registration and annotation thereon of the subject Contract of Lease with Option to Buy;
nor the lessee referred to therein, he could thus not have violated its provisions, but he is nevertheless a proper party. (c) pay costs of suit.
Clearly, he stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject Contract of Lease with Option to Buy
obligations of the lessor under the lease contract. Moreover, he received benefits in the form of rental payments. at the back of Transfer Certificate of Title No. V-14249 upon submission by petitioner of a copy thereof to his office.
Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the properties to him. Both G.R. No. 121940 December 4, 2001
pleadings also alleged collusion between him and respondent Santos which defeated the exercise by petitioner of its JESUS SAN AGUSTIN, petitioner,
right of first refusal. vs.
In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if not indispensable, HON. COURT OF APPEALS and MAXIMO MENEZ, JR., respondents.
party to the case. A favorable judgment for the petitioner will necessarily affect the rights of respondent Raymundo QUISUMBING, J.:
as the buyer of the property over which petitioner would like to assert its right of first option to buy. This petition for review on certiorari seeks the reversal of the decision 1 of the Court of Appeals dated May 19, 1995, affirming
In the case at bar, the subject matter of the contract is likewise a lease, which is a property right. The death of a party does not that of the Regional Trial Court in LRC Case No. R-4659.
excuse nonperformance of a contract which involves a property right, and the rights and obligations thereunder pass to the The relevant facts, as summarized by the CA, are as follows:
personal representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other On February 11, 1974, the Government Service Insurance System (GSIS) sold to a certain Macaria Vda. de Caiquep, a parcel of
party has a property interest in the subject matter of the contract. 16 residential land with an area of 168 square meters located in Rosario, Pasig City and denominated as Lot 13, Block 7, Pcs-5816
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the subject Contract of Lease with of the Government Service and Insurance System Low Cost Housing Project (GSIS-LCHP). The sale is evidenced by a Deed of
Option to Buy. Absolute Sale. 2 On February 19, 1974, the Register of Deeds of Rizal issued in the name of Macaria Vda. de Caiquep. Transfer
That being resolved, we now rule on the issue of whether petitioner had complied with its obligations under the contract and Certificate of Title (TCT) No. 436465 with the following encumbrance annotated at the back of the title:
with the requisites to exercise its option. The payment by petitioner of the reservation fees during the two-year period within This Deed of Absolute Sale is subject to the conditions enumerated below which shall be permanent encumbrances
which it had the option to lease or purchase the property is not disputed. In fact, the payment of such reservation fees, except on the property, the violation of any of which shall entitle the vendor to cancel x x x. this Deed of Absolute Sale and
those for February and March, 1990 were admitted by Victor. 17 This is clear from the transcripts, to wit — reenter the property;
ATTY. MOJADO: The purpose of the sale be to aid the vendee in acquiring a lot for himself/themselves and not to provide him/them
One request, Your Honor. The last payment which was allegedly made in January 1990 just indicate in that with a means for speculation or profit by a future assignment of his/their right herein acquired or the resale of the lot
stipulation that it was issued November of 1989 and postdated January 1990 and then we will admit all. through rent, lease or subletting to others of the lot and subject of this deed, and therefore, the vendee shall not sell,
COURT: convey, lease or sublease, or otherwise encumber the property in favor of any other party within five (5) years from
All reservation fee? the dates final and absolute ownership thereof becomes vested in the vendee, except in cases of hereditary succession
ATTY. MOJADO: or resale in favor of the vendor:
Yes, Your Honor. x x x (emphasis supplied).3
COURT: A day after We issuance of TCT No. 436465, or on February 20, 1974, Macaria Vda. de Caiquep sold the subject lot to private
All as part of the lease? respondent, Maximo Menez, Jr., as evidenced by a Deed of Absolute Sale (Exhibit "D").4 This deed was notarized but was not
ATTY. MOJADO: registered immediately upon its execution in 1974 because GSIS prohibited him from registering the same in view of the five-
Reservation fee, Your Honor. There was no payment with respect to payment of rentals. 18 year prohibition to sell during the period ending in 1979.
Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing the same in China Bank Savings Sometime in 1979, for being suspected as a subversive, an Arrest, Search and Seizure Order (ASSO) was issued against private
Account No. 1-04-02558-I-1, in the name of Victor as the sole heir of Encarnacion Bartolome, 19 for the months of March to respondent. Military men ransacked his house in Cainta, Rizal. Upon learning that he was wanted by the military, he voluntarily
July 30, 1990, or a total of five (5) months, despite the refusal of Victor to turn over the subject property. 20 surrendered and was detained for two (2) years. When released, another order for his re-arrest was issued so he hid in Mindanao
Likewise, petitioner complied with its duty to inform the other party of its intention to exercise its option to lease through its for another four (4) years or until March 1984. In December of 1990, he discovered that the subject TCT was missing. He
letter dated Match 12, 1990, 21 well within the two-year period for it to exercise its option. Considering that at that time consulted a lawyer but the latter did not act immediately on the matter. Upon consulting a new counsel, an Affidavit of
Encarnacion Bartolome had already passed away, it was legitimate for petitioner to have addressed its letter to her heir.1âwphi1 Loss5 was filed with the Register of Deeds of Pasig and a certified copy6 of TCT No. 436465 was issued. Private respondent
also declared the property for tax purposes and obtained a certification thereof from the Assessor's Office.7
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Private respondent sent notices to the registered owner at her address appearing in the title and in the Deed of Sale. And, with duplicate certificate, but shall in all respects be entitled to like faith and credit as the original duplicate, and shall thereafter be
his counsel, he searched for the ,registered owner in Metro Manila and Rizal and as far as Samar, Leyte, Calbayog City, regarded as such for all purposes of this decree.
Tacloban City, and in Eastern and Northern Samar. However, their search proved futile. In Office of Court Administrator vs. Matas, A.M. No. RTJ-92-836, 247 SCRA 9, 16-17 (1995), we held:
On July 8, 1992 private respondent filed a petition docketed as LRC Case No. R-4659 with the RTC, Branch 154, Pasig, Metro In the case at bar, the respective certificate of title of the properties in question on file with the Register of Deeds are existing,
Manila for the issuance of owner's duplicate copy of TCT No. 436465 to replace the lost one. To show he was the owner of the and it is the owner's copy of the certificate of title that was alleged to have been lost or destroyed. Thus, it is Section 109 of P.D.
contested lot, he showed the Deed of Absolute Sale, Exhibit "D". The petition was set for hearing and the court's order dated 1529 which was approved on June 11, 1978 that becomes effective and is applicable, a reading of which shows that it is
July 10, 1992 was published once in Malaya, a nationally circulated newspaper in the Philippines.8 practically the same as Section 109 of Act No. 496, governing reconstitution of a duplicate certificate of title lost or destroyed.
During the hearing on September 3, 1992, only Menez and his counsel appeared. The Register of Deeds who was not served Consequently, it is sufficient that the notice under Section 109 is sent to the Register of Deeds and to those persons who are
notice, and the Office of the Solicitor General and the Provincial Prosecutor who were notified did not attend. known to have, or appear to have, an interest in the property as shown in the Memorandum of encumbrances at the back of the
On September 18, 1992, there being no opposition, Menez presented his evidence ex-parte. The trial court granted his petition original or transfer certificate of title on file in the office of the Register of Deeds. From a legal standpoint, there are no other
in its decision9 dated September 30, 1992, the dispositive portion of which reads: interested parties who should be notified, except those abovementioned since they are the only ones who may be deemed to have
WHEREFORE, the petition is hereby GRANTED and the Registry of Deeds of Pasig, Metro Manila, is hereby directed to issue a claim to the property involved. A person dealing with registered is not charged with notice of encumbrances not annotated on
a new Owner's Duplicate Copy of Transfer Certificate of Title No. 436465 based on the original thereon filed in his office the back of the title. (Emphasis supplied.)
which shall contain the memorandum of encumbrance and an additional memorandum of the fact that it was issued in place of Here, petitioner does not appear to have an interest in the property based on the memorandum of encumbrances annotated at the
the lost duplicate and which shall, in all respect, be entitled to like faith and credit as the original duplicate, for all legal intents back of the title. His claim, that he is an heir (nephew) of the original owner of the lot covered by the disputed lot and the
and purposes. present occupant thereof is not annotated in the said memorandum of encumbrances. Neither was his claim entered on the
Issuance of new owner's duplicate copy shall be made only after this decision shall have become final and executory. The said Certificate of Titles in the name of their original/former owners on file with the Register of Deeds at the time of the filing or
lost owner's duplicate is hereby declared null and void. pendency of LRC Case No. R-4659. Clearly, petitioner is not entitled to notice.
Petitioner shall pay all legal fees in connection with the issuance of the new owner's copy. Noteworthy is the fact that there was compliance by private respondent of the RTC's order of publication of the petition in a
Let copies of this Order be furnished the petitioner, the registered owner of his given address in the title, in the deed newspaper of general circulation. This is sufficient notice of the petition to the public at large.
of sale, and in the tax declaration; the Registry of Deeds of Pasig, the Office of the Solicitor General; and the Petitioner contends that as possessor or actual occupant of the lot in controversy, he is entitled under the law to be notified. He
Provincial Fiscal of Pasig, Metro Manila. relies on Alabang Development Corporation vs. Valenzuela, G.R. No. L-54094, 116 SCRA 261, 277 (1982)) which held that in
SO ORDERED.10 reconstitution proceedings, courts must make sure that indispensable parties, i.e.. the actual owners and possessors of the lands
On October 13, 1992, herein petitioner, Jesus San Agustin, received a copy of the abovecited decision. He-claimed this was the involved, are duly served with actual and personal notice of the petition. As pointed out by the appellate court, his reliance
first time he became aware of the case of her aunt, Macaria Vda. de Caiquep who, according to him, died sometime in 1974. on Alabang is misplaced because the cause of action in that case is based on Republic Act i No. 26, entitled "An Act Providing
Claiming that he was the present occupant of the property and the heir of Macaria, he filed his "Motion to Reopen A Special Procedure for the Reconstitution of Torrens Certificate of Title Lost or Destroyed," while the present case is based on
Reconstitution Proceedings''11 on October 27, 1992. On December 3, 1992, RTC issued an order denying said motion.12 Section 109 of P.D. 1529 as above explained.
Petitioner filed an appeal with the Court of Appeals, which, as earlier stated, was denied in its decision of May 19, 1995. Under Republic Act No. 26, reconstitution is validly made only in case the original copy of the certificate of title with the
Petitioner moved for a reconsideration, but it was denied in a resolution dated September 11, 1995.13 Register of Deeds is lost or destroyed. And if no notice of the date of hearing of a reconstitution case is served on a possessor or
Thus, the present petition, attributing the following errors to the court a quo: one having interest in the property involved, he is deprived of his day in court and the order of reconstitution is null and
A. void.16 The case at bar is not for reconstitution, but merely for replacement of lost duplicate certificate.
THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT LRC CASE NO. R-4659 BEING ONLY A On the second assigned error, petitioner contends that Exhibit "D" is null and void under Article 1409 of the Civil Code,
PETITION FOR THE ISSUANCE OF A NEW OWNER'S DUPLICATE OF TITLE, THERE IS NO NEED OF PERSONAL specifically paragraph (7),17 because the deed of sale was executed within the five-year prohibitory period under
NOTICE TO THE PETITIONER, THE ACTUAL POSSESSOR [WHO HAS] AND ACTUALLY BEEN PAYING THE Commonwealth Act No. 141, as amended, otherwise known as "The Public Land Act."18
REAL ESTATE TAX, DESPITE PRIVATE RESPONDENT'S KNOWLEDGE OF ACTUAL POSSESSION OF AND We find petitioner's contention less than meritorious. We agree with respondent court that the proscription under Com. Act No.
INTEREST OVER THE PROPERTY COVERED BY TCT NO. 436465.14 141 on sale within the 5-year restrictive period refers to homestead lands only. Here the lot in dispute is not a homestead land,
B. as found by the trial and appellate courts. Said lot is owned by GSIS, under TCT No. 10028 in its proprietary capacity.
RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE SALE BETWEEN THE PRIVATE RESPONDENT Moreover, as far as the violation of the 5-year restrictive condition imposed by GSIS in its contract with petitioner's
AND MACARIA VDA. DE CAIQUEP IS NOT NULL AND VOID AND UNDER ARTICLE 1409 OF THE CIVIL CODE predecessor-in-interest is concerned, it is the GSIS and not petitioner who had a cause of action against private respondent. Vide
SPECIFICALLY PARAGRAPH (7) THEREOF WHICH REFERS TO CONTRACTS EXPRESSLY PROHIBITED OR the instructive case of Sarmiento vs. Salud:
DECLARED VOID BY LAW.15 The condition that the appellees Sarmiento spouses could not resell the property except to the People's Homesite and
Considering the above assignment of errors, let us resolve the corresponding issues raised by petitioner. Housing Corporation (PHHC for short) within the next 25 years after appellees' purchasing the lot is manifestly a
The first issue involves private respondent's alleged failure to send notice to petitioner who is the actual possessor of the condition in favor of the PHHC, and not one in favor of the Sarmiento spouses. The condition conferred no
disputed lot. Stated briefly, is petitioner entitled to notice? Our finding is in the negative. actionable right on appellees herein, since it operated as a restriction upon their jus disponendi of the property they
Presidential Decree No. 1529, otherwise known as the "Property Registration Decree" is decisive. It provides: bought, and thus limited their right of ownership. It follows that on the assumption that the mortgage to appellee
Sec. 109. Notice and replacement of lost duplicate certificate. — In case of loss or theft of an owner's duplicate certificate of Salud and the foreclosure sale violated the condition in the Sarmiento contract, only the PHHC was entitled to invoke
title, due notice under oath shall be sent by the owner or by someone in his behalf to the Register of Deeds of the province or the condition aforementioned, and not the Sarmientos. The validity or invalidity of the sheriff's foreclosure sale to
city where the land lies as soon as the loss or theft is discovered. If a duplicate certificate is lost or destroyed, or cannot be appellant Salud thus violative of its right of exclusive reacquisition; but it (PHHC) also could waive the condition and
produced by a person applying for the entry of a new certificate to him or for :the registration of any instrument, a sworn treat the sale as good, in which event, the sale can not be assailed for breach of the condition aforestated.19
statement of the fact of such loss or destruction may be filed by the registered owner or other person it interest and registered. In this case, the GSIS has not filed any action for the annulment of Exhibit "D", nor for the forfeiture of the lot in question. In
Upon the petition of the registered owner or other person in interest, the court may, after notice and due hearing, direct the our view, the contract of sale remains valid between the parties, unless and until annulled in the proper suit filed by the rightful
issuance of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost party, the GSIS. For now, the said contract of sale is binding upon the heirs of Macaria Vda. de Caiquep, including petitioner
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who alleges to be one of her heirs, in line with the rule that heirs are bound by contracts entered into by their predecessors-in-
interest.20
We are not unmindful of the social justice policy of R.A. 8291 otherwise known as "Government Service Insurance Act of
1997" in granting housing assistance to the less-privileged GSIS members and their dependents payable at an affordable
payment scheme.21 This is the same policy which the 5-year restrictive clause in the contract seeks to implement by stating in
the encumbrance itself annotated at the back of TCT No. 436465 that, "The purpose of the sale is to aid the vendee in acquiring
a lot for himself/themselves and not to provide him/them with a means for speculation or profit by a future assignment of
his/their right herein acquired or the resale of the lot through rent, lease or subletting to others of the lot and subject of this deed,
. . . within five (5) years from the date final and absolute ownership thereof becomes vested in the vendee, except in cases of
hereditary succession or resale in favor of the vendor." 22 However, absent the proper action taken by the GSIS as the original
vendor referred to, the contract between petitioner's predecessor-in-interest and private respondent deserves to be upheld. For as
pointed out by said private respondent, it is protected by the Constitution under Section 10, Article III, of the Bill of Rights
stating that, "No law impairing the obligation of contracts shall be passed." Much as we would like to see a salutary policy
triumph, that provision of the Constitution duly calls for compliance.
More in point, however, is the fact that, following Sarmiento v. Salud,23 "Even if the transaction between the original awardee
and herein petitioner were wrongful, still, as between themselves, the purchaser and the seller were both in pari delicto,
being participes criminis as it were." As in Sarmiento, in this case both were aware of the existence of the stipulated condition
in favor of the original seller, GSIS, yet both entered into an agreement violating said condition and nullifying its effects.
Similarly, as Acting Chief Justice JBL Reyes concluded in Sarmiento, "Both parties being equally guilty, neither is entitled to
complain against the other. Having entered into the transaction with open eyes, and having benefited from it, said parties should
be held in estoppel to assail and annul their own deliberate acts."
WHEREFORE, the appeal is DENIED, and the decision of the respondent court is AFFIRMED.
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